Castle Constructions Pty Ltd v North Sydney Council

Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Canham v Australian Guarantee Corporation Ltd (1993) 31 NSWLR 246 Castle Constructions Pty Ltd v North Sydney Council [2008] NSWLEC 1168 Castle Constructions Pty Ltd v North Sydney Council [2008] NSWLEC 137 Castle Constructions Pty Ltd v Director-General, Department of Planning (2007) 157 LGERA 76 Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 563 CASES CITED: Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 459 Castle Constructions Pty Ltd v North Sydney Council (2007) 155 LGERA 52 Castle Constructions Pty Ltd v North Sydney Council [2006] NSWLEC 468 Castle Constructions v North Sydney Council [2006] NSWLEC 5 Design Power Associates Pty Ltd v Willoughby City Council (2005) 148 LGERA 233 Gales Holdings Pty Ltd v Minister for Infrastructure and Planning (2006) 69 NSWLR 156 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24

APPLICANT: Mr J Lazarus SOLICITORS McLachlan Thorpe Partners LEGAL REPRESENTATIVES: RESPONDENT: Mr M J Leeming SC and Ms H Irish SOLICITORS Mallesons Stephen Jaques

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

11010 of 2005 CASTLE CONSTRUCTIONS PTY LTD v NORTH SYDNEY COUNCIL

JUDGMENT 1 HIS HONOUR: This is an appeal pursuant to s 56A of the Land and Environment Court Act 1979. As such, it is limited to questions of law. The appeal is by Castle Constructions Pty Ltd against a decision of a Commissioner of this Court dismissing its appeal against North Sydney Council's refusal of a development application for the demolition of two residential flat buildings and the erection of a 36 storey mixed-use development at 136-140 Walker Street, North Sydney: Castle Constructions Pty Ltd v North Sydney Council [2008] NSWLEC 1168. Background 2 The proceedings have a long and complex history. The site is and was controlled by the provisions of the North Sydney Local Environmental Plan 2001 (LEP). The site is both within the mixed use zone and within the boundaries of the "North Sydney Centre". Division 4 of the LEP makes provision for, inter alia, height and massing controls in respect of buildings in the North Sydney Centre. Division 5 of the LEP, and in particular cl 30, makes provision for, inter alia, building height controls within the mixed use zone. By virtue of cl 28A of the LEP, the provisions of Division 4 prevail over all other relevant provisions of the LEP, including Division 5, to the extent of any inconsistency. 3 The council adopted North Sydney Council Development Control Plan 2002 (DCP) on 18 February 2002. It came into force on 21 February 2002. 4 In March 2003, the DCP was amended to include, inter alia, area character statements for the North Sydney Centre Planning Area (NSCPA). One of the character statements applies specifically to the desired future outcome for development in the "Central Business District" (CBD). The CBD as defined in the DCP is substantially the same as the "North Sydney Centre" as defined in the LEP. 5 Between March 2003 and September 2006, the DCP made provision for, inter alia, notional arcs showing the stepping down in height from the tallest buildings (100 Miller Street and 79-81 Berry Street) towards the boundary of the CBD Centre. That was a specific objective of the building height and massing controls referred to in clause 28D(1)(a) of the LEP as follows: to achieve a transition of building heights generally from 100 Miller St (Northpoint) and 79-81 Berry St (being the location of the tallest buildings) stepping down towards the boundaries of the North Sydney Centre. 6 Paragraph 1.1(h.i.) of the CBD Character Statement is in the following terms: Buildings step down in height from the tallest buildings, being Northpoint (100 Miller Street) and Shopping World (79-81 Berry Street) to the boundary and surrounding residential areas (see fig. 1.1 and fig. 1.2).

I construe the word " boundary " as meaning " the boundary of the CBD ". 7 Figures 1.1 and 1.2 are at the heart of the case. Figures 1.1 and 1.2 depict two notional arcs that describe the stepping down of existing and possible future building heights along, respectively, Miller and Berry Streets. The subject site is not located in Miller or Berry Streets but is located in Walker Street, close to the eastern boundary of the North Sydney Centre. 8 On 21 June 2005, Castle Constructions lodged the development application with the council. On 30 August 2005, the council determined the applicant's development application by refusing consent. Castle Constructions appealed on the merits to the Land and Environment Court. On 12 January 2006, the Senior Commissioner dismissed the appeal: Castle Constructions v North Sydney Council [2006] NSWLEC 5. Castle Constructions appealed from that decision pursuant to s 56A of the Land and Environment Court Act 1979.

9 The appeal was upheld by Talbot J in several respects, but not in others: Castle Constructions Pty Ltd v North Sydney Council [2006] NSWLEC 468. Castle Constructions successfully appealed his Honour's decision to the Court of Appeal: Castle Constructions Pty Ltd v North Sydney Council (2007) 155 LGERA 52, [2007] NSWCA 164. In particular, the Court of Appeal held that cl 30 of the LEP, which is within Division 5, did not apply to the subject land because it was inconsistent with Division 4 of the LEP. The Court of Appeal ordered that the proceedings be remitted to this Court to be determined in accordance with law. 10 In the meantime, on 11 September 2006, the council purported to make amendments to the DCP, which came into effect on 21 September 2006 (the 2006 amending DCP). Amongst the amendments was the deletion of the notional arcs showing the stepping down in figures 1.1 and 1.2. 11 In Class 4 judicial review proceedings brought by Castle Constructions, I concluded that the relevant amendments made by the council in the 2006 amending DCP were ultra vires and made orders which had the effect of reinstating figures 1.1 and 1.2: Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 459 and Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 563. 12 The council took steps to amend the LEP by preparing an amending LEP known as Draft Amendment No 28 (DLEP 28). DLEP 28 sought, inter alia, to impose height restrictions upon sites within the CBD, including on the subject site. Castle Constructions made an unsuccessful challenge to the issuing of a certificate under s 65 of the Environmental Planning and Assessment Act 1979 in respect of DLEP 28: Castle Constructions Pty Ltd v Director-General, Department of Planning (2007) 157 LGERA 76, [2007] NSWLEC 783. However a subsequent challenge by Castle Constructions to the public exhibition process in respect of DLEP 28 was successful: Castle Constructions Pty Ltd v North Sydney Council [2008] NSWLEC 137. Lloyd J made declarations, inter alia, that the resolutions made by council to forward DLEP 28 to the Department of Planning, and any step taken in pursuant of such resolutions, were invalid. 13 The proceedings remitted by the Court of Appeal referred to at [9] above were heard by a Commissioner over a number of days. The Commissioner dismissed the appeal against the council's refusal of development consent: Castle Constructions Pty Ltd v North Sydney Council [2008] NSWLEC 1168. The Commissioner's decision is the subject of the appeal before me. The Commissioner's reasoning 14 The fundamental basis of the Commissioner's decision to dismiss the appeal was that he expected that the building would project well beyond the three dimensional envelope or umbrella generated by the notional arcs in figures 1.1 and 1.2 of the DCP and was therefore much too high. It is common ground that the Commissioner was correct in approaching the matter by reference to that concept of a three dimensional envelope or umbrella. 15 The Commissioner's reasons for judgment included the following: 23 I do not agree with Mr Mossemenear's [a council planning expert] contention that the notional arcs should be disregarded because they are not sufficiently proximate to the site and are inconsistent with the LEP. Instead I accept that they can and should be interpreted in the light of the LEP and for the purposes of understanding the desired future character of the North Sydney Centre particularly in terms of the manner in which new development should fit within and contribute to a skyline of built form. In this context I note that the notional arcs take no account of topography, thus being a skyline or silhouette control.

24 The Miller Street Figure 1.1 (looking east) was reproduced (Exhibit O) with the proposed building superimposed thereon, seemingly indicating a comfortable compliance with that notional arc . Whilst the proposed building was not superimposed on the Berry Street Figure 1.2 it is reasonably apparent that it also does not project above that notional arc . This could be seen to indicate that the proposed building is not too high.

25 However, in my opinion the two notional arcs need to be considered and applied together especially because views of built form as a whole within the North Sydney Centre seem to be very important, particularly taking into account the building heights and massing objective in cl 28D(1)(a) of the LEP. They are also relevant when taking into account aspects of visual dominance and streetscape when viewed from residential areas as required by 28D(1)(e). When the arcs are combined, this produces a three-dimensional umbrella shaped height or skyline envelope . Even taking into account that the site is not positioned directly under either of the arcs , (that have been drawn along Miller Street and Berry Street respectively) I expect that the proposed building would project well beyond the envelope when considered in its three dimensional form .

26 The notional arcs provide an understanding of what the DCP means when it speaks of stepping down to the boundary and surrounding residential areas and it is important to note the indicated (existing and potential) heights of buildings at the edges of the North Sydney Centre as revealed by the arc diagrams. At the extremities of the Berry Street arc , indicated potential top of building RL's in Berry Street are in the order of 135m -145m. Similarly at the extremities of the Miller Street arc , indicated existing top of building RL's are in the order of 110m - 125m.

27 Taking into account the location of the site vis-à-vis the North Sydney Centre boundaries and accepting as I do that these RL's are broadly indicative of a range of appropriate building heights anticipated by the DCP for these boundaries, with the top of the proposed building being at RL 162.5, I conclude that it is much too high. In this context Mr. Byrnes [Castle Construction's planning expert] expressed the opinion that a better response to the notional arcs would be to reduce the building by five storeys or 15m to a top of building RL of 147.5m. (These five storeys would be removed from the middle of the building rather than of [sic] the top because the top has been carefully sculptured and would be a good element to retain). Even with such a reduction in height the three-dimensional envelope would be infringed .

28 Unless the proposed building is lowered significantly it does not meet the requirements of the DCP and would have an unacceptable visual dominance. In my opinion, this is sufficient to warrant refusal of the application.

35 Taking into account the building's podium, the setbacks of the tower from Walker Street and from the site's northern boundary together with the 15 m separation (142 Walker Street to the north) from the North Sydney Centre boundary I accept that there would be no determinative difference between the impacts associated with a building at RL 103m (as sought by the draft LEP) and a building that was no taller than the umbrella formed by the two notional arcs . Considering the position of the site vis a vis the boundary of the North Sydney Centre this would indicate a building with a top of building RL of about 130m, some six levels lower that that suggested by Mr Byrnes. In this regard I have considered the relevantly applicable objectives dealing with pedestrian comfort, streetscape, character and compatibility particularly in the light of the applicable planning controls, including those directed towards future character. Given what I have concluded in relation to compliance with the height and envelope controls I am satisfied that these objectives would not be infringed by a reduced height building and accept that it is not necessary for the built form of the North Sydney Centre to complement, in the sense of being directly responsive to the nearby low-scale residential development. In these circumstances I also conclude that when viewed from residential areas outside the North Sydney Centre a building with a reduced height as described above would probably not exhibit an unacceptable visual dominance. (emphasis added) 16 The word "expect" at the end of [25] anticipates the reasons, which immediately follow, for the Commissioner's expectation that the proposed building would project beyond the envelope or umbrella when considered in its three dimensional form. 17 The Commissioner reasoned that the proposed building would proceed well beyond the three dimensional umbrella. The reasoning at [26] of his judgment was that at the extremities of the Berry Street arc, the potential top of buildings RL in Berry Street is 135 -145 m, and at the extremities of the Miller street arc, the indicated existing top of buildings RL is 110 m - 125 m. The reasoning at [35] was that the arcs and the position of the subject building close to the CBD boundary indicated that its building top should be about RL 130 metres. As the council submits, those conclusions derive support from Exhibit O (to which the Commissioner referred at [24]), which shows the two notional arcs in figures 1.1 and 1.2 with various building heights noted thereon. I do not accept Castle Construction's suggestion that it was not possible for the Commissioner to have expressed those conclusions without a computer generated model.

18 Towards the end of the hearing of the appeal, two grounds of appeal were abandoned. Two closely related grounds of appeal remain. First ground of appeal 19 The first ground of appeal is as follows: The Commissioner made findings that he expected that the proposed building would project well beyond the envelope produced by the combination of the notional arcs set out in figures 1.1 and 1.2 of section 1.1(h) of the North Sydney Centre Character Statement for the Central Business District ([25]), and that even with a reduction in height of 5 storeys or 15 metres the three-dimensional envelope would be infringed ([27]). The Commissioner erred in law in failing to afford the Applicant procedural fairness by making the findings at [25] and [27] without giving the Applicant the opportunity to make submissions in relation to those matters. 20 A failure to afford procedural fairness is an error of law. In Design Power Associates Pty Ltd v Willoughby City Council (2005) 148 LGERA 233, [2005] NSWLEC 470 at [70] Lloyd J held: In Shao v Hornsby Shire Council (2001) 116 LGERA 462, relied upon by the council, Cowdroy J held that a commissioner of the court is not bound to determine the proceedings solely by reference to the issues and that there is no error of law if he or she does so. If, however, the proceedings are to be determined by reference to matters outside the issues, then procedural fairness would require that the parties be put on notice that some additional issue is raised. 21 Castle Constructions submits that:

(a) while the Commissioner was not bound by the statement of issues prepared by the parties, procedural fairness required that the Commissioner put the parties on notice of any matter outside the statement of issues that was to be determined by the Commissioner while it was central to the outcome of the proceedings;

(b) there was no issue raised in either party's statement of issues as to whether the proposal may infringe an envelope created by the combined application of the notional arcs in figures 1.1 and 1.2;

(c) it is clear from the course of the trial that no such issue arose. Submissions were not made on that topic;

(d) had the Commissioner brought the matter to the parties' attention, he would have been directed to Exhibit N and to the evidence of Dr Lamb, Castle Constructions' visual impact assessment expert and an architect, and Mr Byrnes, Castle Constructions' planning expert. 22 The council submits that the Commissioner did not fail to give Castle Constructions the opportunity to make submissions in relation to the three-dimensional notional umbrella, having regard to the following:

(a) Castle Constructions put compliance of the proposed buildings with the notional arcs in issue in one of its Contentions in Reply (filed before the hearing) as follows: Clause 28D(1)(a): The Applicant contends that the proposed development, at a height of RL 162.5, fits within the transitions contemplated by clause 28D(1)(a) of the NSLEP. This is demonstrated by the proposed development falling within the notional arc shown in figures 1.1 and 1.2 of clause 1.1 of the Development Control Plan 2002 ( DCP 2002 ) Character Statement for the Central Business District within the North Sydney Centre ( Character Statement ).

(b) Castle Constructions was sufficiently put on notice by the following two exchanges on different days of the hearing before the Commissioner, as recorded on the transcript: · [Senior Counsel for the applicant]: I think, and Mr Byrnes can speak for himself, but I think his approach is that the present height meets the controls but a better resolution of the arc element in the control would be to reduce it by five storeys. Is that right, Mr Byrnes? WITNESS BYRNES: Yes.

COMMISSIONER: At the end of the day, what do you want me to do, Mr Robertson? At the moment, all the evidence is against the height of the building in its present form.

[Senior Counsel for the applicant]: Well, not all the evidence, Commissioner.

COMMISSIONER: An awful lot of it. … · [Senior Counsel for the applicant]:…And I think the evidence was fairly consistent that the arcs represented both sides of the street and had - were intended to be a kind of three dimensional representation of the future. And we say based upon exhibit O that we fit in to the arc if see in three dimensions as a dome we meet that requirement we see in Mr Byrnes' evidence in exhibit U based on the model in the court where a similar representation is made by him.

(c) Castle Constructions did not draw the Commissioner's attention to the plan in Exhibit N nor to the evidence of Dr Lamb and Mr Byrnes on which they rely in the appeal. 23 Exhibit N includes an architect's plan which shows a notional dome over part of the CBD including the subject site. The notional dome was generated using similar arcs as appear in DCP figures 1.1 and 1.2. The plan bears the following explanation: In the North Sydney character statement, the figures 1.1 and 1.2 illustrate the desirable stepping down of building heights along Miller Street and Berry Street (taking into account potential heights in North Sydney CBD). These figures present two nominal arcs showing the stepping down in height of buildings along both Miller Street and Berry Street.

Using a 3D computer generated model of the North Sydney CBD, we have generated a nominal dome using similar arcs as illustrated in figures 1.1 and 1.2 (described above) of the North Sydney character statement. The skyline shows in this drawing represent the nominal dome with a vertical section taken at Walker Street. This section then generates a nominal curve, which we have used to determine the height limit of the proposed development.

It was determined that a building height of RL 175.0 will remain within the envelope created by the dome described above. 24 Dr Lamb stated in his report dated October 2007 (Exhibit F before the Commissioner): The arcs represent only two alignments along which desired future height disposition is to be judged and as such do not produce a three dimensional shape. The shape which can be inferred is umbrella-like but not symmetrical (i.e., it is elongated north-south). The subject site can be considered to be relatively close to the edge of the northern and eastern boundaries of the CBD. According to the principles shown in the height arcs, the proposed building should have a lower height in relation to the buildings that are located more centrally under the umbrella. The proposed development complies with this requirement as it is well below both the prescribed arcs and the three dimensional surface which can be surmised to join them into an umbrella-like surface. 25 In response to Dr Lamb's evidence, the council filed a statement of evidence by Mr Dickson who, however, did not contest that part of Dr Lamb's evidence. Nor was it contested in an experts' joint report to which they and others were parties. Dr Lamb was cross-examined in relation to notional arcs although not directly on his evidence quoted above. 26 The statement of evidence of Mr Terence Byrnes stated in paragraphs 2.13 and 2.99: 2.13 The transition in building heights intended by clause 28D(1)(a) is illustrated in the North Sydney Centre Character Statement. It is referred to as the notional arc. The proposal is well within the heights of buildings depicted in the notional arc.

2.99 In short, there is nothing in the North Sydney Centre (CBD) Character Statement which the proposal is inconsistent with. Most particularly, the height of the proposal is within the Notional Arc which depicts the desired heights for buildings in the Centre. 27 The council concedes that the only submission it made to the Commissioner concerning the notional arcs were that they should be disregarded because they were not sufficiently proximate to the site and were inconsistent with the LEP. That proposition was considered and rejected by the Commissioner at [23] of his reasons for judgment. The council made no submission to the Commissioner that the proposed building infringed the three-dimensional umbrella. Nor was any such contention made in the council's pre-hearing statement of contentions or at any other time. The exchanges quoted above at [22(b)] were during the course of evidence over many days, not during submissions. 28 The concept of a three dimensional umbrella generated by the notional arcs in DCP figures 1.1 and 1.2 was fundamental to the Commissioner's decision. I accept Castle Construction's submission that had there been any contention or submission by the council before the Commissioner that the proposed building did not satisfy the three dimensional arcs umbrella or any specific suggestion by the Commissioner to that effect at the hearing, Castle Constructions would have made a submission on the point including referring to Exhibit N and the evidence of Dr Lamb and Mr Byrnes. In the circumstances, I am persuaded that the Commissioner made his critical findings without giving Castle Constructions a proper opportunity to do so. I do not think that this is sufficiently answered by the council's submissions. Accordingly, I uphold the first ground of appeal. Second ground of appeal 29 The second ground of appeal, which is closely related to the first, is as follows: The Commissioner erred in law in failing to consider evidence which was material to the Commissioner's ultimate decision, namely Exhibit N, section 2.3 of the Statement of Evidence of Dr Richard Lamb dated October 2007 and paragraphs 2.13 and 2.99 of the Statement of Evidence of Terence Byrnes dated 17 November 2007. 30 In Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 (CA) at 443 Meagher JA identified three fundamental elements of the judicial obligation to give reasons for judgment. Castle Constructions submits that the first element, which was expressed as follows by Meagher JA, was not satisfied in the present case: First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. 31 Castle Constructions also invokes Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 30, 44, 45, 61 and 70 in relation to the obligation of administrative decision-makers to take into account current available information in relation to mandatory considerations. Reference was also made to the application of Peko Wallsend in Canham v Australian Guarantee Corporation Ltd (1993) 31 NSWLR 246 at 265 and Gales Holdings Pty Ltd v Minister for Infrastructure and Planning (2006) 69 NSWLR 156 at [161] - [176]. Those cases were decided in a different context of judicial review of administrative decisions. It is true that a Commissioner of this Court is not a judicial officer and, when exercising a merits review function, stands in the shoes of the council. However, it is common ground that the obligation to give reasons, as expressed in Beale, applies equally to a Commissioner of the Court as to a Judge. In the circumstances, I consider that it is unnecessary to go beyond the statement of principle in Beale. 32 Castle Constructions submits that the first element of the obligation to give reasons for judgment as expressed in Beale was not satisfied because:

(a) Exhibit N included a three dimensional representation of the notional arcs relative to the location of the site, and demonstrates that the building would not protrude above the envelope; (b) Exhibit N was reinforced by the evidence of Dr Lamb and Mr Byrnes; (c) this evidence was all uncontested and the council provided no evidence or submission to the contrary; (d) the question of compliance with the notional arcs, however applied, was never raised as an issue by the council; (e) it was open to the Commissioner to accept or reject or not be satisfied by the said evidence but there is no indication that the Commissioner took it into consideration. 33 The council suggests that it is was unnecessary for the Commissioner to make explicit findings on each piece of disputed evidence, especially if the inference as to what is found is appropriately clear: Beale at 223. That is so, but I do not think it is of significance in the present context where sufficiently important evidence that bore directly on the Commissioner's fundamental reasoning was not referred to at all. 34 The council criticises that evidence (Exhibit N and the evidence of Dr Lamb and Mr Byrnes) and makes submissions as to why (if the matter were to be remitted) the Commissioner should not accept it and should adhere to the conclusions expressed in his existing reasons for judgment. It is true that, if the matter were to be remitted, the Commissioner may well be unmoved by any of that evidence or any submissions by Castle Constructions relating to it, and may adhere to the conclusions that he has already expressed. However, for present purposes, that is not the point. The point is that the Commissioner did not refer to that evidence. The Commissioner decided that the building did not fit within the three-dimensional umbrella. Yet Exhibit N and Dr Lamb's evidence, at least, were to the contrary. It is less clear whether Mr Byrnes was referring to the three-dimensional arcs or only to the two-dimensional arcs. Be that as it may, in my opinion, Exhibit N and Dr Lamb's evidence, at least, were of sufficient important to the Commissioner's decision that they should have been referred to and considered by the Commissioner. I am prepared to draw the inference that as the Commissioner did not refer to that evidence, he overlooked or failed to consider it. That may well have been because neither party referred him to it in submissions, in the circumstances discussed at [27] - [28] above. Orders 35 As the applicant abandoned two of its four grounds of appeal during the hearing (after argument), and succeeded on grounds that included a ground communicated only the day before the hearing, I propose to make no order as to the cost of the appeal. 36 The orders of the Court are as follows:

1. Appeal allowed. 2. The matter is remitted to Commissioner Bly for determination in accordance with my decision. 3. The exhibits and the model aide memoire may be returned.

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.