BYT Nominees Pty Limited v North Sydney Council

Dosan v Rockdale City Council (2001) 117 LGERA 363 Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 CASES CITED: Grace v Thomas Street Cafe Pty Limited [2007] NSWCA 359 (12 December 2007) Hurstville City Council v Hutchison 3G Australia Pty Ltd (2003) 127 LGERA 95 No Dump Residents Association Inc v Collex Pty Ltd (No 2) [2005] NSWLEC 136 (29 March 2005) Wollongong City Council v Ensile Pty Ltd; Wollongong City Council v Hogarth (No 4) [2008] NSWLEC 149 (17 April 2008)

APPLICANT Mr I Hemmings (barrister) SOLICITORS Hones La Hood LEGAL REPRESENTATIVES: RESPONDENT Mr J Ayling SC with Mr A Pickles SOLICITORS Mallesons Stephen Jaques

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

1 HIS HONOUR: BYT Nominees Pty Limited has appealed under s 97 of the Environmental Planning and Assessment Act 1979 (the Act) against the decision of North Sydney Council to refuse BYT's development application for the demolition of an existing, two storey apartment building on land at 2 Premier Street, Neutral Bay and the erection of a new, four storey apartment building in its place. 2 The Council states, in its statement of facts and contentions dated 29 January 2008, that the proposed development involving the erection and subsequent use of a new apartment building outside the envelope of the existing apartment building is prohibited under North Sydney Local Environmental Plan 2001 (NSLEP 2001) in the Residential A2 zone in which the land is located. There is no power in the Court to grant development consent to a prohibited development: Grace v Thomas Street Café Pty Limited [2007] NSWCA 359 (12 December 2007) at [116]-[119], [151] and [1]. 3 BYT contends, however, that the Court would have power to grant consent to the new apartment building by dint of the existing use provisions of Division 10 of Part 4 of the Act. BYT contends that the existing apartment building is an existing use within the meaning of that term in s 106(a) of the Act. As a consequence, pursuant to s 107(1), neither the Act nor NSLEP 2001 prevent the continuance of that existing use and, pursuant to s 108(1) and Part 5 of the Environmental Planning and Assessment Regulation 2000, that existing use can be enlarged, expanded, intensified, altered or extended and/or rebuilt. Hence, the existing use provisions operate to make permissible the proposed development of the erection and use of the new apartment building, notwithstanding the provisions of NSLEP 2001. 4 This issue of whether the existing apartment building is an existing use is, therefore, determinative of the Court's power to grant consent to BYT's development application for the new apartment building. The applicant applied for a direction and the Court directed that the following preliminary question be determined: "Whether, notwithstanding North Sydney Local Environmental Plan 2001, the property continues to have existing use rights?" Agreed facts 5 The parties have agreed the following facts: " Current state of Property 1. The property is Strata Plan 13526 (formerly Lot 32 in DP 11150) known as 2 Premier Street, North Sydney ("Property"). The Property is improved with a two-storey building containing four strata subdivided dwellings commonly known as a residential flat building. Background

2. On 17 January 1939 the Respondent approved building approval no. 39/6 for the erection of a residential flat building (the "Building") comprising four flats on the Property ("Building Approval"). The Building Approval was granted under the Local Government Act 1919. 3. The current improvements on the Property comprise the Building. 4. On 31 July 1978 the Respondent approved strata subdivision of the Building. Accordingly, there is presently contained on the Property four strata lots and one common property lot. Chronology of planning controls

5. The following planning schemes applied to the Property since the approval of the Building Approval until 1 June 2001: (a) North Sydney Planning Scheme Ordinance, gazetted 19 April 1963. The Property was zoned Residential "A". In the Residential "A" zone, a "residential flat building" was a purpose for which building or works may be erected or carried out or used with consent. (b) Interim Development Order No. 60, gazetted 29 August 1975. The Property was zoned Residential "A" identified with the symbol 2(a). In the Residential "A" zone, "residential flat buildings" were development permitted under the Order in this zone. (c) North Sydney Local Environmental Plan 1989 ("NSLEP 1989") , gazetted 3 November 1989. The Property was zoned Residential 2(B). In the Residential 2(B) zone, relevantly, "residential flat buildings" were a purpose for which that form of development was prohibited. 6. Given the use of the Property for the purpose of a "residential flat building" was being lawfully carried out as at the coming into force of the NSLEP 1989, the use of the Property for the purpose of a "residential flat building" was permitted to continue by reason of Part 4 Division 10 of the Environmental Planning and Assessment Act 1979 (the "EP&A Act") . Accordingly, the use of the Property as a "residential flat building" was an "existing use" for the purposes of Part 4 Division 10 of the EP&A Act (the "Existing Use" ). 7. The use of the Building has not been "abandoned" for the purposes of Part 4 Division 10 of the EP&A Act. 8. Use of the Property for the purpose of a "residential flat building" was a prohibited use throughout the currency of NSLEP 1989, however that use was permitted to continue as the Existing Use. 9. On 1 June 2001 (the appointed date), with the coming into force of North Sydney Local Environmental Plan 2001 ("NSLEP 2001") , the Property was zoned Residential A2. Relevantly, NSLEP 2001 introduced the following three definitions: (a) "apartment building" means a single residential building containing three or more dwellings but does not include attached dwellings. (b) "established apartment building" means an apartment building lawfully in existence on the appointed day (1 June 2001). (c) "apartment building revision" means: (i) the carrying out of alterations for the purpose of an "apartment building", or (ii) the creation of a new apartment building within the envelope of an apartment building, that lawfully existed on the appointed day. 10. In the Residential A2 zone, an "established apartment building" is development which may be carried out in this zone. Further, "apartment building revision" is also development which may be carried out in this zone. 11. However, an "apartment building" is prohibited development in the Residential A2 zone." BYT's submissions 6 BYT made both written submissions in chief and reply and oral submissions at the hearing. The critical aspects of BYT's submissions on the interpretation of the existing use provisions are as follows. 7 The term "existing use" is a defined term, the definition being in s 106 of the Act. Paragraph (a) of the definition is the relevant one in this case. 8 The use of the existing apartment building became an "existing use" within paragraph (a) of s 106 upon the coming into force of NSLEP 1989 which had the effect of prohibiting residential flat buildings (the relevant purpose of the use of the existing apartment building). 9 Once a use meets the definition of existing use in s 106, it acquires the status of an existing use and cannot lose that status, except by express provision in the Act or an environmental planning instrument. 10 There is no express provision in NSLEP 2001 which would cause the use, in this case, of an existing apartment building to cease to be an existing use within paragraph (a) of the definition in s 106 of the Act. 11 The provisions of NSLEP 2001 which made permissible with consent the continuance of a use of an established apartment building and apartment building revision did not cause the use of the existing apartment building to lose the status of being an existing use. This is because an existing use is always defined by reference to the first point in time when the use became prohibited, in this case, on the coming into force of NSLEP 1989. It is that use that is allowed to be continued by s 107(1) and that can be enlarged, etc, by s 108(1) and Part 5 of the Regulation. Provided that there is no abandonment (in which event s 107(2)(e) will operate to prevent the continuance of the use) the use can be continued, even if there is a subsequent environmental planning instrument which makes permissible the use which was prohibited by a prior environmental planning instrument. 12 Accordingly, the reference in s 106(a) and (b) to "an environmental planning instrument" is a reference only to the environmental planning instrument which first prohibited the use. The removal of such prohibition by a subsequent environmental planning instrument can never have the effect of causing the use to no longer meet the definition of an existing use. 13 BYT's argument on the construction of the existing use provisions is encapsulated in the following paragraphs from its submissions in reply:

"8. It is appropriate to look at the actual words used in s.106(a). The language is complex. It needs to be, because the section: • Assumes a viewer in the present; • Looking to a point in time in the past (immediately before the coming into force of the 1989 LEP); • And then considering the future effect of the LEP (i.e. immediately after the coming into force of LEP 1989). 9. As a result, although the language is complex, the effect is clear. Immediately before the coming into force of LEP 1989 there was a lawful use. At that time (still being "immediately before") the LEP "would, [but for the existing use provisions], have the effect of prohibiting that use." 10. That is, looking back to an earlier time, but at that earlier time looking to a future effect of legislation, the requirements of the definition were satisfied. Once that happens, there is an existing use. Once there is an existing use, the definition (the existing use) is then applied to the operative provisions of the Division. That is, in order for there not to be a continuance of the existing use there must be the express words. There are no express words. 11. The definition of existing use in s 106 is not limited to the period while the use remains prohibited. It addresses the instances in time immediately prior to the making of an environmental planning instrument and the date when the instrument comes into force. 12. If the criteria in s.106(a) is satisfied at the outset then the use becomes and thereafter remains an existing use by definition, irrespective of what occurs subsequently, unless the use is abandoned or the existing use is changed to another use in accordance with s.108 and the incorporated provisions or the use is surrendered in accordance with section 80A(1)(b). Section 107 confirms this unequivocally." 14 BYT submits that insofar as Lloyd J held in Dosan v Rockdale City Council (2001) 117 LGERA 363 at 396 [171] to the contrary, that decision is wrong and ought not to be followed. BYT submits that Talbot J was correct to express doubts as to that decision in No Dump Residents Association Inc v Collex Pty Ltd (No 2) [2005] NSWLEC 136 (29 March 2005) at [63]. The Council's submissions 15 The Council also made both written and oral submissions. The critical aspects of the Council's submissions on the interpretation of the existing use provisions are as follows. 16 Like BYT, the Council submits that a use will only be an existing use if it meets the definition in s 106 of the Act. However, unlike BYT, the Council submits that the reference to "an environmental planning instrument" in s 106(a) or (b) is a reference to an environmental planning instrument that is currently in force. Hence, if the current environmental planning instrument made permissible a use that was prohibited by a previous environmental planning instrument that has been repealed, the use would have ceased to meet the definition of "existing use" in s 106 upon the coming into force of the current environmental planning instrument. The Council advanced five reasons in support of this construction of the existing use provisions. 17 First, Division 10 of Part 4 has a function of allowing certain types of uses, including existing uses, to continue, or in certain circumstances to be expanded, etc, notwithstanding other provisions of the Act or of an environmental planning instrument which may prohibit or restrict the continuance of the uses or the expansion etc of the uses. The provisions of Division 1 of Part 4 operate to prohibit or restrict the carrying out of development. Section 76B, for example, prohibits a person carrying out specified development on land if an environmental planning instrument provides that such development is prohibited on land to which the provision applies. The environmental planning instruments referred to in the provisions of Division 1 of Part 4 are the environmental planning instruments currently in force. 18 The provisions of Division 1 of Part 4 are subject to other provisions of the Act (s 76C), including the provisions of Division 10 of Part 4. The provisions of Division 10 of Part 4, therefore, operate as an exception so as to relieve a person from any liability under Division 1 of Part 4 arising from the operation of an environmental planning instrument that is currently in force. (That Division 10 of Part 4 operates as an exception to the provisions in Division 1 of Part 4 has been recently affirmed in Wollongong City Council v Ensile Pty Ltd; Wollongong City Council v Hogarth (No 4) [2008] NSWLEC 149 (17 April 2008)). 19 Secondly, the existing use provisions in ss 106-108 are part of the package of provisions in Division 10 of Part 4 which operate to relieve a person from liability under Division 1 of Part 4, covering three different situations. Sections 106-108 deal with a situation where an environmental planning instrument has the effect of prohibiting a use; s 109 deals with a situation where an environmental planning instrument requires consent to be obtained to continue the use; and s 109B deals with a situation where an environmental planning instrument requires a further development consent to be obtained for the carrying out of development in accordance with an operative consent. 20 Both ss 109 and 109B make clear that the environmental planning instrument to which they refer and which has the effect of imposing the relevant restriction (of obtaining consent or further consent) is the environmental planning instrument which is currently in force. Those provisions do not refer to a previous environmental planning instrument which had that effect but which is no longer in force. The existing use provisions in ss 106-108 should be interpreted in a manner that is consistent with these other provisions, being part of the package of provisions in Division 10 of Part 4 of the Act. 21 Thirdly, there are two textual indicators in the definition of "existing use" in s 106 that strongly suggest that the existing use is one which is currently prohibited by the existence of an environmental planning instrument. Paragraph (a) of the definition of "existing use" refers to "the coming into force" of an environmental planning instrument which has the effect of prohibiting the use. These words not only indicate the relevance of a particular date, being a point in time in the past, but suggest that the environmental planning instrument must be "in force", having the effect of prohibiting the use, at the subsequent point in time when the status of the use gains planning importance. The definition should be assumed not to be the product of a legislative intention merely to create a class of protected uses in the abstract. Protection is needed only where a threat exists, and that is when measures are in force which impact on the lawfulness of the purpose of use to which the definition relates. 22 Next, the reference in paragraph (a) of the definition of "existing use" is to an environmental planning instrument which "would…have the effect of prohibiting that use", rather than one which "had" that effect. This language suggests that the instrument must presently have that effect and not have ceased to have had that effect. The effect of the instrument in question must be current in order for the use to fall within the definition. 23 Fourthly, the definition of existing use has no operation by itself but rather allows substantive provisions, in ss 107 and 108, to operate. The definition must, therefore, be employed in the substantive provisions to understand its true effect. The substantive provisions, s 107(1) and s 108(2)-(4), refer to "an environmental planning instrument". That is a reference to an environmental planning instrument that is currently in force. When the definition of existing use in s 106 is substituted for the words "existing use" in s 107(1), or in s 108(2)-(4), it becomes clear that the words "an environmental planning instrument" in the substituted full definition refer to the same environmental planning instrument that is referred to in the text of s 107(1) and s 108(2)-(4). Since that environmental planning instrument is the instrument currently in force, the reference to "an environmental planning instrument" in the substituted definition must also be a reference to the environmental planning instrument that is currently in force. 24 Finally, Lloyd J was correct in holding in Dosan v Rockdale City Council (2001) 117 LGERA 363a at 396 [171] that an existing use can no longer be an existing use upon the coming into force of an environmental planning instrument which has the effect of making such a use permissible because the use would then no longer satisfy the condition in s 106. The Court should follow that decision. The use in question is not an existing use 25 The Council's arguments, set out above, as to the construction of the existing use provisions are, to my mind, persuasive. I adopt them as my reasons. 26 The definition of existing use does not operate independently, rather it is an aid to construction of the operative provisions dealing with existing use, namely, ss 107 and 108: see Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 at 635 and Hurstville City Council v Hutchison 3G Australia Pty Ltd (2003) 127 LGERA 95 at 106-107 [63]. When the full definition of "existing use" in s 106 is used in the operative provisions of ss 107 and 108, and the context in which those provisions operate (as exceptions to the provisions of Division 1 of Part 4 which have current operation and effect) is understood, it becomes clear that the reference in paragraphs (a) and (b) of the definition of "existing use" to "an environmental planning instrument" is a reference to an environmental planning instrument that is currently in force and having the effect described in paragraphs (a) and (b). This conforms with the construction, and the operation and effect, of ss 109 and 109B of the Act. 27 Any need to refer to previously in force environmental planning instruments arises, not from the reference to "an environmental planning instrument" in paragraphs (a) and (b) of s 106, but rather from the requirement in paragraph (a) that the use of the building, work or land be for "a lawful purpose" immediately before the coming into force of an environmental planning instrument which has the effect of prohibiting the use. Establishing that a use is for a lawful purpose at this juncture may necessitate: first, tracing the history of the use back in time to establish that when the use commenced it was lawful, such as because the use commenced before there was any requirement under planning law regulating the use or, if there was such a requirement, the use conformed with any environmental planning instrument that was then in force that regulated the use or, if the use commenced unlawfully, it was made lawful by the occurrence of either of the events specified in s 109A(1)(a) or (b) of the Act; and, secondly, that such use, having commenced lawfully or become lawful, continued to be lawful up to the point in time immediately before the coming into force of the environmental planning instrument which has the effect of prohibiting the use. 28 The consequence is that, in order for a use to continue to be an existing use within the definition in s 106, an environmental planning instrument that is in force currently must have the effect of prohibiting the use. If it does not, then the use cannot be an existing use within the definition in s 106 of the Act. This conclusion accords with the conclusion of Lloyd J in Dosan v Rockdale City Council (2001) 117 LGERA 363 at 396 [171]. 29 In this case, although on the coming into force of NSLEP 1989 the use of the existing apartment building became an "existing use" within the definition in s 106(a), it ceased to have the status of an existing use on the coming into force of the subsequent NSLEP 2001 which did not have the effect of prohibiting that use, but rather made the use permissible. 30 For these reasons, the answer to the preliminary question, "Whether, notwithstanding North Sydney Local Environmental Plan 2001, the property continues to have existing use rights? is "no". 31 This conclusion would appear to be dispositive of BYT's appeal which seeks consent for a development which is prohibited, and the prohibition is not excepted by the existing use provisions in Division 10 of Part 4. Therefore, the proper order would appear to be to dismiss BYT's appeal. However, I will afford the parties the opportunity to consider their position and address the Court on the orders that should be made. I will relist the matter at 9.00am on 13 May 2008 for that purpose.

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