Archebiosis Design Pty Limited v Council of the City of Sydney

The site and its context

1. The site is legally identified as Lot 1 in Deposited Plan 102340, is irregular in shape and measures approximately 272 m² in area. It has a 17 m frontage to Darlinghurst Road and a 14 m frontage to Roslyn Street.
2. The site currently contains a five-storey building with ground floor retail, cafes and takeaway uses. A vacant sex service premise (brothel) is located above ground level accessible by a separate entry on Darlinghurst Road and the subject backpacker and boarding house is accessed via a separate entry on Roslyn Street.
3. Immediately surrounding development is predominantly commercial at ground floor level including retail, cafes/restaurants and entertainment uses with a number of surrounding sites having residential or visitor accommodation above ground level.
4. The site adjoins a five storey mixed use (restaurant, retail and residential) building to the south east and a four-storey vacant building to the south west.
5. The backpackers use, currently operated as the Mad Monkey Backpackers Kings Cross, occupies the two levels approved under the existing consent and also, the upper floor approved for boarding house use, contrary to the conditions of consent. This unauthorised use is the subject of Orders not subject to this appeal however the Order did result in the applicant lodging the application to modify the consent.

Background and the proposal

1. According to the accompanying planning and building department delegated report that was prepared that assessed the original application (Part of Exhibit 3), use of the first, second and third floor levels since the building's construction has been for residential purposes and these levels were subsequently converted into boarding house accommodation with the site formally licensed as a boarding house with 15 self-contained rooms in 1985 under the provisions of Ordinance 42 of the Local Government Act 1919.
2. Development consent was granted for U98/01048 on 13 December 1999 (original consent) for the use of the first and second floors as a backpacker hostel with 56 beds and the third floor as a five room boarding house.
3. Refusal was issued for SP.98/01048/A on 30 September 2003 for a section 96 modification application proposing to delete condition 3 of the original consent relating to Section 94 contributions and conditions 6, 13, 14 and 15 relating to the use and operation of the third floor boarding house and conditions 8 and 11 relating to the operation of the backpacker hostel. The proposal was refused on the basis that the Section 94 contributions have been levied correctly; that the former Department of Housing did not support the operation of the boarding house by other than a community housing cooperative with other conditions essential to the operation of the boarding house; and the amenity and security of occupants would be unacceptable.
4. The application to modify the consent as lodged with the council sought to amend the consent by deleting the reference the boarding house on level 3 and formalising its use as part of the backpackers and increasing the total number of backpacker beds from 56 to 91. It is the applicant's position that since the grant of the existing consent, level 3 has never been used as a boarding house. Minor works are proposed to level 3 including a new shower, a new bathroom with shower, removal of several walls and new storage cupboards. The most northern rooms on the upper level would be common areas including a kitchen, dining and living area.
5. New works on level 2 (the entry level the backpackers accommodation) include the demolition of an existing kitchen and its conversion to a bathroom adjacent to room 1A that would be provided as a staff/living area, conversion of rooms currently used for storage as a staff room and manager's office, alterations to bathroom areas to room 1B, 1C and 1D so that WC and shower facilities are separated and the provision of storage facilities within all rooms. Similar changes are proposed to the bathrooms on the second floor to Rooms 2B, 2C and 2D. The existing laundry would be modified to provide a separate male bathroom and the bathroom adjacent to the light well modified to provide a female bathroom that would be available for occupants of room 2E.
6. The applicant has amended the proposal so that the number of backpackers to be accommodated would increase from 56 to 82.
7. In addition to the change of use of the upper floor from boarding house to backpacker use through the deletion of condition 5, the applicant also seeks to delete condition 6, an associated condition that requires the boarding house be the subject of a head lease to a community housing cooperative registered with the Department of Housing. In addition, that condition required the cessation of the use of third floor level for backpackers accommodation within 60 days of the grant of consent. Condition 10 required that access to the lobby of the boarding house portion of the site on the third floor the buyer a security door located off stair one that is only accessible by residents of the boarding house, members of the housing cooperative and the owner of the site. Condition 11 required that access to the lobby of the backpackers hostel portion of the site on the first and second floor levels be via a security door located off stair one that is only accessible by the residents of the backpacker hostel, the owner of the site and cleaners. The applicant seeks deletion of those conditions.
8. Condition 14 requires that the bathroom on the third floor level adjoining the light well on the southern boundary is used solely for any boarding house resident of unit 3E and the area fitted with a security door and condition 15 requires that the units and bathroom on the third floor levels shall have kitchens and bathrooms with fixtures, fittings and finishes in an as new condition prior to occupation of these units as a boarding house. These conditions are also sought to be deleted.

The planning controls

1. The site is zoned B2 - Local Centre under Sydney Local Environmental Plan 2012 (LEP) and the proposed tourist and visitor accommodation development is permissible with consent. The LEP imposes a maximum height of 22 m and a maximum floor space ratio (FSR) of 3:1. The site is not listed as a heritage item, however it is located in the Potts Point Conservation Area.
2. Clause 51 of State Environmental Planning Policy (Affordable Rental Housing) 2009 (SEPPARH) provides for the payment of a contribution where the consent authority is satisfied a development will or is likely to reduce the availability of affordable housing within the area.

The issues

1. The contentions in the case are that the development is not substantially the same as that originally approved; that the proposal results in the loss of five boarding house rooms and is therefore subject to a contribution payable for the loss of affordable housing; that insufficient information has been provided to determine if the proposal can comply with the Building Code of Australia (BCA) so as to allow the proper assessment of any health and fire safety impacts on existing and future occupants; and the proposal would not be in the public interest in view of the matters raised by the objectors to the application in response to the Council's notification of the application.

The evidence

1. The hearing commenced with a site view and the Court heard evidence from a number of objectors to the proposal. The matters raised are summarised as follows:

• Adverse amenity impacts from the existing backpacker use including noise, anti-social behaviour and poor management;
• Premises operates contrary to existing consent and its conditions;
• Existing premises is more an entertainment venue than an accommodation venue;
• No after-hours contact available;
• Safety concerns; inadequate CCTV coverage;
• Loss of affordable housing is detrimental to the area;
• Fire safety concerns;
• Draft Plan of Management is unsatisfactory;

1. Expert town planning evidence was heard from Mr C Schulman for the applicant and Ms J Kingsbury for the council. They disagree as to whether the application is substantially the same development from that approved. The parties agree that this is a matter for legal submission and is discussed in detail in my conclusions and findings below.
2. The issue of whether a contribution is payable under SEPPARH is in dispute. the experts agree that the proposal results in the loss of five approved boarding house rooms and because there are currently no boarding house residents there will be no displacement of any residents from the subject premises.
3. Mr Schulman says that no contribution is payable on the basis that, based on a report attached to the Joint Expert Report, Exhibit 6 prepared by MacroPlanDimasi (Macroplan report) and dated 1 October 2015, there will be a minimum reduction in affordable housing on the land; there will be no adverse social and economic effects on the general community as the rooms have not been used for affordable housing purposes; there will be no cumulative loss of affordable housing in the local government area due to the active policies in place in Green Square and Pyrmont to actively increase the amount of affordable housing and that the loss of 5 affordable housing rooms is considered miniscule across the LGA.
4. Ms Kingsbury disagrees and says that although the third floor level has operated as backpacker accommodation in conjunction with the backpacker premises on levels 1 and 2 for a long period of time, if the premises was to comply with the existing consent, 5 boarding house rooms could be immediately available for low cost rental. Her assessment of the Macroplan report is that the Sydney Vacancy rate remains below the 3% benchmark and, in accordance with clause 50(3) of SEPPARH and The Guidelines for Retention of Existing Affordable Rental Housing 2009 sufficient comparable accommodation is conclusively taken to not be available where a rental vacancy rate is less than 3%.
5. The applicant disputed the council's calculation as to the amount payable.
6. Expert evidence in relation to fire safety and BCA compliance was heard from Mr S Connolly for the applicant and Mr A Harriman for the council.
7. The difference between the parties in terms of fire safety is that the council says inadequate information has been provided to ensure the proposal can comply with the BCA or whether alterations to the building are required to achieve compliance. The applicant accepts that further works are required to bring the building into compliance however resists the council's draft condition, condition 48 which originally read as follows: BCA COMPLIANCE - CHANGE OF USE/CLASSIFICATION 1. A report from a fire safety engineer is required for the purpose of reviewing the suitability of the alternative solutions indicated in the 2005 Homes report including: FRL's to timber floors/ceiling; spread of fire between buildings; discharge of exit stair; egress passageway width; door swing of final exit door; and any upgrading works required as a result of the proposal. 2. A BCA compliance report is to be submitted with the Construction Certificate outlining how compliance with the BCA is to be achieved. The report is to address, as a minimum, the following: 1. Fire resistance and stability - Part C1; 2. Compartmentation and separation - Part C2; 3. Protection of openings - Part C3; 4. Provision of escape - Part D1; 5. Construction of exits - part D2; 6. Access for people with disabilities - part D3; 7. Fire fighting equipment - Part E1; 8. Smoke hazard management - Part E2; 9. Emergency lift installation - Part E3; 10. Emergency lighting, exit signs and warning systems - Part E4; 11. Light and Ventilation to rooms - Part F4.
8. At the conclusion of the hearing, the council filed further draft conditions with condition 48 in the following form: 48. BCA COMPLIANCE AND UPGRADE (a) Prior to the issue of a Construction Certificate, a certificate from an Accredited Fire Safety Engineer or an A1 Certifier shall be submitted to Council certifying that all works to be carried out pursuant to this consent comply with the Building Code of Australia. (b) Prior to the issue of a Construction Certificate, a scope of works shall be submitted to Council detailing the scope of works required to upgrade Levels 1, 2 and 3 of the building by the provision of: (i) Fire rated ceilings throughout each level having a resistance to the incipient spread of fire of at least 60 minutes; (ii) A fire resistance level of not less than FRL -/60/60 to any shafts within and between these levels of the building; and (iii) Works and materials necessary to ensure that any service penetrations to the floor, ceiling or shafts are to be in accordance with a tested prototype and complying with Clause C3.15 of the Building Code of Australia. (c) Prior to the issue of the Construction Certificate, the Private Certifier shall be provided with either: (i) a design of an internal hydrant system which complies with the provisions of the Building Code of Australia and AS2419.1 and which is to be installed within the building prior to the issue of an Occupation Certificate; or (ii) written advice from Fire and Rescue NSW attesting to the fact that street hydrant coverage and pressures are satisfactory for fire fighting operations in the building. Any such request for written advice must include a Sydney Water "Statement of available pressure and flow", plans of the building, an invitation and contact details to inspect the premises if required.
9. The applicant proposed an alternate condition as follows: A report from an Accredited Fire Safety Engineer is required for the purpose of reviewing the proposed new works that are the subject of this modification of Development Consent DU/1998/104/B and is to verify that such works do not conflict with the intent and recommendations contained in the Fire Safety Upgrading Report prepared by Holmes Fire and Safety dated 21 January 2005 Version C.
10. Similarly, the council's final conditions amended condition 47 so that it requires the proposed works to comply with the BCA rather than as submitted by Mr Connolly, the original condition requiring total upgrade of the building to comply with the BCA which he says is unreasonable. Mr Harriman agrees the terms of condition 47 should apply to the new work with condition 48 ensuring compliance with the fabric.
11. The Court heard evidence as to the genesis of the Holmes Fire Safety Report (Holmes report) and, based on the evidence before it, I conclude that it was prepared in relation to conditions of consent imposed in relation to the brothel use and a Fire Safety Order issued by the council on 25 November 2004 however was not limited to that part of the building to which the brothel consent applies and has regard to the use of the upper floors of the building that are the subject of this appeal.
12. It is the council's position, and based on Mr Harriman's evidence, that a full review of the building should be conducted and works undertaken to achieve compliance with the BCA. The applicant relies of the works having been carried out in accordance with the Holmes report in 2005 and says the only review required is in relation to the works proposed as part of the modification. Mr Connolly advocates an audit of that work and report whereas Mr Harriman advocates a full review of fire safety within the premises.
13. The experts disagreed on the extent of works that would be required to bring the building into compliance.

Conclusion and findings

1. The modification was lodged pursuant to the provisions of s96(2) of the EP&AAct which is in the following form: (2) Other modifications A consent authority may, on application being made by the applicant or any other person entitled to act on a consent granted by the consent authority and subject to and in accordance with the regulations, modify the consent if: (a) it is satisfied that the development to which the consent as modified relates is substantially the same development as the development for which consent was originally granted and before that consent as originally granted was modified (if at all), and (b) it has consulted with the relevant Minister, public authority or approval body (within the meaning of Division 5) in respect of a condition imposed as a requirement of a concurrence to the consent or in accordance with the general terms of an approval proposed to be granted by the approval body and that Minister, authority or body has not, within 21 days after being consulted, objected to the modification of that consent, and (c) it has notified the application in accordance with: (i) the regulations, if the regulations so require, or (ii) a development control plan, if the consent authority is a council that has made a development control plan that requires the notification or advertising of applications for modification of a development consent, and (d) it has considered any submissions made concerning the proposed modification within the period prescribed by the regulations or provided by the development control plan, as the case may be. Subsections (1) and (1A) do not apply to such a modification.
2. In this case, the provisions of s96(2)(b) are not relevant and I am satisfied that the provisions of s96(2)(c) have been met. The primary test pursuant to s96(2)(a) of the Act is whether the development is substantially the same as the development for which consent was originally granted. If the application fails this jurisdictional test, it must fail, even if I determine that the modified plans merit approval.
3. Guidance on this assessment is found in Moto Projects (No. 2) Pty Limited v North Sydney Council [1999] NSWLEC 280 where, at paras 55 and 56, Bignold J described the process for consideration of proposed modification of development as follows: 55. The requisite factual finding obviously requires a comparison between the development, as currently approved, and the development as proposed to be modified. The result of the comparison must be a finding that the modified development is "essentially or materially" the same as the (currently) approved development. 56. The comparative task does not merely involve a comparison of the physical features or components of the development as currently approved and modified where that comparative exercise is undertaken in some type of sterile vacuum. Rather, the comparison involves an appreciation, qualitative, as well as quantitative, of the developments being compared in their proper contexts (including the circumstances in which the development consent was granted).
4. It is clear from Moto that there are two elements to be determined, they are a qualitative and a quantitative assessment of whether the modified development would be one that is substantially the same development as that originally approved.
5. A quantitative assessment, based on the evidence requires consideration of the changes that are proposed.
6. Essentially, the application proposes the conversion of 5 boarding house rooms into backpacker accommodation that has the effect of increasing occupancy of an existing building from 2 to 3 floors and increasing the number of persons to be accommodated within that premises from 56 to 82 persons. The proposal involves building works on the existing floors of the backpacker's premises and further building works on the upper level to facilitate its conversion.

The applicant's submission

1. Mr Kondilios, for the applicant submits: The proposed modifications proposed minor internal works to accommodate the change of use of the third floor from a boarding house to backpacker accommodation. The majority of the proposed works are required in order to meet the current BCA and fire safety requirements. This is the quantitative description of the modification sought. The proposed modification does not alter the primary use of the subject site as providing accommodation on a commercial basis with shared kitchen, bathroom and laundry facilities. The subject site will still operate both essentially and materially as per the current arrangement, that is, for accommodation, whilst of course permitted in the zone. The proposed modification still provides for the subject site to provide for both commercial and residential uses, as per the objectives of the zone. Altering the third floor of the subject site from a boarding house to backpackers does not alter its overall purpose. This is a qualitative description of the modification sought. If the modification application was to modify the third floor to some non-residential use then perhaps there would be some difficulty of such an application made pursuant to section 96 of the environmental planning and assessment act 1979. The proposed modification does not transform the original proposal in terms of the general operation of the subject site or physical appearance of the subject site. Qualitatively, the use of the third floor as backpacker accommodation does not result in any major physical changes to the approved development, and the subject site will continue to operate essentially the same as the approved arrangement being a nomenclature of accommodation. Quantitatively, the approved five bedroom boarding house on the third floor above a 2 floor backpacker accommodation within the same building, that also comprises other separate uses, is considered a minor component of the building in terms of floor areas as well as the number of beds provided. Applying the substantially the same test described in Moto, the proposed modification is minor both qualitatively and quantitatively.
2. Ms Pearman, for the council, submits that the development is qualitatively different. In accordance with Moto this requires a comparison of the whole of the developments being compared and should not attempt to confine the consideration of the extent of changes to the context of the whole building, notwithstanding that the consent authority is required to consider the whole of the development as proposed for modification and to take into consideration such of the matters referred to in section 79C as are relevant to that development. The focus may be on a critical element of a building which is to be the subject of change in order to determine whether the entire development is substantially the same development.
3. It is necessary for me to consider the original consent. That consent authorised the change of use of two of the three floors of an existing boarding house to a backpackers premises and require, through conditions of consent, the continued operation of the upper floor as a five room boarding house with the boarding house to be managed by a community housing cooperative Registered with the Department of Housing.
4. It is clear to me, based on the evidence before me, that the continued use of the upper floor as a boarding house was an essential element of the consent. The conversion of that area and its integration to the backpacker's premises materially changes the approved development to such an extent, that I'm not satisfied that the modified development is substantially the same as the currently approved development.
5. Nor, quantitatively, would a proposal that increases the number of floors within the building used as the backpackers premises from 2 to 3 and increases the number of persons accommodated within the premises from 56 to 82, be substantially the same development.
6. Accordingly, the jurisdictional test is not passed and the modification power is not available in this case.
7. If I am wrong in the conclusion that I have reached on the jurisdictional test arising under s 96(2), I should proceed to a merit assessment so that, if there were to be a successful appeal on my jurisdictional assessment, the parties could consider the outcome of that merit assessment to assist in ensuring that there could be a just, quick and cheap resolution of the matters as might arise on the remitter so as to facilitate achievement of the objectives of s 56 of the Civil Procedure Act 2005.
8. Those considerations go to 3 matters, being the imposition of a condition that requires contributions to be paid towards affordable housing, the extent of review and assessment of fire safety provisions within the premises and the issues raised by the objectors to the proposal.
9. Based on the evidence before me and having regard to the provisions of SEPPARH I am satisfied that a contribution pursuant to the provisions of clause 51 would be applicable.
10. In relation to the need to ensure our the safety of persons who may occupy the premises, particularly in relation to fire safety, I am not satisfied that the applicant's proposed consent conditions go far enough and therefore I consider the Council's approach to be appropriate in the circumstances of the case.
11. Finally, in relation to the matters raised by objectors to the proposal, I agree that further amendments would be required to the Plan of Management to ensure the backpacker's facility operates in an appropriate manner.
12. The Orders of the court are: 1. The appeal is dismissed. 2. The s96(2) application which seeks to modify development consent (DU/1998/1048/B) to change the use of the third floor of a building from a five room boarding house to backpackers hostel operating in conjunction with the existing facility operated on the first and second floors of that building is refused. 3. The exhibits, other than exhibit A are returned.

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Sue Morris Commissioner of the Court

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 May 2018