1. We note that the ACZ1 Schedule[6] sets out criteria to assist in the exercise of discretion to allow higher built form. Mr Biasci identified a superior design outcome, respect for the heritage setting, improved passive surveillance of the surrounding streets and significant economic benefits through job creation as meeting these criteria.
2. Council asserts that these benefits are not significant community benefits, and they in the main assume that the work will be undertaken by Council, for example the Simmons Street plaza.
3. We consider that notwithstanding these submissions, the Applicant's concept does provide the type of broader community benefit envisaged by the ACZ1. We will require further resolution of the design to address these issues.

1. We turn now to the critical issue of the proceeding - the merits or otherwise of the design response.
2. Whilst acknowledging the weight of strategic support for the proposal, Council's grounds of refusal relate primarily to design issues. It identifies height, the street wall, the impact on the public realm, the presentation to surrounds and Bray Street, the response to heritage, and the proposed materiality as aspects of the design which it finds unacceptable.
3. In criticising the design treatment proposed, Mr Tweedie referred to an early design response[7] submitted by the Applicant. He noted the more sculptural forms suggested for the tower building, the midblock break and a transition in both plan and height. He says these, along with a consistent height along the Chapel Street frontage and an appreciable modular breakup of the facades, identified as important in that document, have been lost in the current design. Whilst we are required to consider the proposal before us, we agree with Mr Tweedie that these design ideas are worthy of close consideration in any future iteration of the proposal which this interim decision invites.
4. We have concluded that it is the combination of a number of design elements of the proposal which taken together make the current iteration unacceptable.
5. We have already indicated that we are comfortable with the interface between the proposed new buildings and the adjacent area to the north-east and south-east. To the north-east there is already the visually prominent 13 storey 'Society' apartment building. To the east are the robust 13 storey two public housing towers. We find the general appearance of the proposed built form when viewed from these three directions acceptable.
6. Much of the hearing focused on whether or not the design response was an acceptable balance between the proposed built form and its impact on the more sensitive interface of Chapel Street and the character.
7. We agree with Council that this section of the Chapel Street streetscape has a high level of sensitivity, which constitutes a significant constraint on how much new built form the subject land (despite its many other positive attributes) can realistically accommodate. As Mr Tweedie submitted, the subject land's significant frontage to this section of Chapel Street is both a benefit and a constraint for the review site.
8. The impact on Chapel Street comes from a combination of the three elements of the proposal which we have already identified - the tower, the 'box', and the street façade.

1. We acknowledge that there is a consistent line of Tribunal decisions (notably Rowcliffe Pty Ltd v Stonnington CC (No. 1) [2004] VCAT 46) that the 'mere visibility' of new built form should not in itself be treated as a negative factor - the real issue is assessing the anticipated views of the proposed building in its particular context. However even allowing for this, we see two other important aspects of this particular location which we consider call for a more tempered design response.
2. The overwhelming character of the section of Chapel Street between Commercial Road to the south and the railway line to the north is one of two storey Victorian shop fronts, despite interruptions like the buildings on the subject site and some higher and lower period buildings.
3. Further to the south, Chapel Street includes larger 'emporium' buildings and to the north 'Como' and Forrest Hill. However, this particular section of Chapel Street is more low-key and low rise. This is an important factor in assessing proposals for new developments.
4. The need for the design of new development to properly take account of the existing characteristics of any one area in this municipality is reinforced by Clause 21.06 (Built Form Character). The policy aims pursued in that clause include:
   • Ensuring new development does not undermine the valued character of the City.
   • Providing special protection for areas of highly consistent character.
   • Avoiding excessive site coverage and reducing the impact of the building footprint on the site.
   • Ameliorating the potential adverse impacts from higher density development on the existing surrounding traditional pattern of development.
   • Ensuring appropriate integration of new development with its surroundings.
5. Similarly the following text from Clause 2 (Built form)[8] in the ACZ Schedule document points to the need for a sympathetic design response:

To protect and restore the built form heritage of the Activity Centre through the conservation, re-use and restoration of heritage buildings.

To significantly improve the public realm at the street level throughout the Activity Centre.

To ensure that new development responds sympathetically to the Activity Centre's historical urban fabric, identity and character.

Although we also acknowledge that another preferred outcome under this same heading is:

To facilitate the redevelopment and/or revitalisation of identified Key Strategic Development Sites and Response Sites consistent with the requirements of this Schedule.

1. A key part of the Applicant's case on this issue is that a person moving along Chapel Street:
   • Typically has a more restricted viewcone, which means that whilst views of the new podium are appreciated, the impression of the new tower behind is limited. Mr Barrett used the term 'passive observation' by passers-by on Chapel Street.
   • Longer-range views are already flavoured by the 13 storey 'Society' apartment building and public housing towers further to the east, both of which are clearly apparent from Chapel Street to describe this phenomenon.
2. We find this approach assumes the pedestrian's focus is confined to shopping level. No doubt the retail offer in Chapel Street is very attractive, but we are not persuaded that built form behind the podium will go unnoticed.
3. In relation to more distant views from Chapel Street, we agree with Council that comparing views of the 'Society' and the Horace Petty towers to those anticipated of the new development ignores the difference in their setback from Chapel Street. The new tower will sit much closer to Chapel Street. Further, the 'spoke' design of the public housing towers means that their visual bulk recedes. The greater distance between these higher forms and Chapel Street reduces their visual impact. The photomontages, whatever their limitations, demonstrate that depending on one's viewpoint, the proposed tower either masks the existing higher built form, or occupies what are currently sky views. This clearly is an important factor to consider in the massing of the development.

1. The subject land forms part of a precinct-based Heritage Overlay HO126 extending from the railway line to the north down to Dandenong Road to the south. The A-2 graded and 9.5 metre high Temperance Hotel adjacent to the north of the subject site is individually listed under that overlay. As noted above, the ACZ1 Schedule requires development to respond sympathetically to the historic urban fabric. "Heritage Sites" provisions[9] include the following preferred policy outcome:

For sites within or adjoining a Heritage Overlay, appropriately respond to the heritage significance of the heritage place.

In the current case, the 'heritage place' is the HO126 precinct - notably this particular section of it.

1. The question then arises whether the proposed development is a sufficiently respectful heritage outcome, in respect of:
   • The podium which is four storeys high at the northern end, opposite the A-2 graded 9.5 metre high Temperance Hotel.
   • The mid-rise 'box' which presents a glazed façade to the street and rises to six storeys at a setback of between 5 and 5.69 metres.
   • The main tower is 35 metres/10 storeys high along most of its north-south length at a setback from Chapel Street which varies between 14-20 metres.
2. This question arises less acutely in some other strip shopping centre-based activity centres in metropolitan Melbourne affected by a heritage overlay, where the general setting is pleasant but limited heritage fabric compromises its value. In contrast, our site inspection confirmed the remarkably intact nature of the Victorian 1-2 storey street wall along this section of Chapel Street. Indeed it is the existing two storey building on the subject land which stands out as one of the few visually nondescript buildings in the area.
3. The high heritage values of this locality are reinforced by the 'Chapel Street Precinct: Heritage Precinct Citation'. Some key passages of relevance from that document are as follows:
   • Under the heading "Statement of Significance"[10], the text reads - "Chapel Street is a remarkably intact commercial strip comprised principally off late-nineteenth and early-twentieth century shops..."
   • "South of High Street and north of Commercial Road (and in Commercial Road itself), the scale of the streetscape are similar to those of other Melbourne suburban shopping strips. Streetscapes north of Commercial Road retain long sequences of shops and retail groups of ornate boom-era premises such as Conway's buildings, (Nos 411-425), 393-401 and the intact group to the east side of Chapel Street between Malvern Road and Grey Street, alongside important Edwardian premises such as the group at No. 403-409. The former Jam Factory dominates the northern section of the precinct...";[11] (our underlining).
   • "Elements which contribute to the significance of the precinct include...", the first of a number of bullet points underneath reads "The consistent two-storey height and modest scale of the built form north of Commercial Road and South of High Street..."[12].
   • "Chapel Street is architecturally significant for its intact streetscapes of nineteenth and early twentieth century commercial buildings, particularly its concentration of boom period shops and its large, early twentieth century shopping emporia usually more closely associated with the central city shopping area. These emporia are architecturally significant for the large range of styles used and their references to American rather than to British antecedents. While a number of remarkable buildings and urban environments survive around Chapel Street, it is the general level of intactness and the consistency of scale within each block that makes the whole street one of great importance"[13].
4. In summary, these heritage considerations emphasise the importance of achieving an acceptable relationship between the proposed new buildings and Chapel Street.

1. The overall height of the proposal is not one of the issues where we accept Council's position. We agree with the evidence of Mr Biasci, Ms Roberts and Mr Hutson (under cross examination) that the 10 storey height of the 'tower' is appropriate on this site. Rather it is the composition and massing of the tower which requires further consideration.
2. We say the height per se of the tower is acceptable for the following reasons:
   • The proximity of the Society and Horace Petty built form.
   • The setback from Chapel Street of 14-20 metres means that its form relates more to the emerging Bray Street area.
   • The marginal increase in overshadowing of the public realm that will result from the tower.
   • The curved façade treatments which introduce articulation and interest into the façade.
3. Having said that, we consider, as explored in some detail with Mr Biasci and Mr Hutson at the hearing, that further articulation of the tower element is required, both vertically and in plan. We see no reason why both the northern most portion and the southernmost part of the hotel (on the 'dogleg' part of the site) could not be marginally higher, if, for example, a more appreciable break in the building was achieved. The building could still achieve a transition in height to the south, which we would support. Given that the hotel will require substantial reconfiguration due to the agreed additional setback from the south and our findings on the 'box' element, we consider this eminently achievable.
4. We place no weight on Drawing 2.15 of the amended plans which the Applicant claims demonstrates that the upper levels will be substantially obscured. Several of the sections shown were incorrect and in any event we do not think a view from any precise spot is relevant to our consideration. It is the visual impact of the building on the pedestrian experience generally which is the issue. This rear building will be clearly visible. The does not make it unacceptable.

1. Mr Barrett's evidence is that the width of Simmons Street provides adequate separation between the Temperance Hotel and the four storey corner element of the proposal to make it acceptable from a heritage perspective. We note that a local policy objective for Activity Centres is to 'encourage a continuous street wall of a uniform height at street level'.[14]
2. Whilst our primary concern with this corner element is its undue prominence within a streetscape that has a largely consistent wall height of two Victorian storeys plus parapet as a strong character element, we also find the juxtaposition of the hotel and the north-west corner of the proposal discordant. The photo montage from the north-west clearly demonstrates this. Even if we accepted the Applicant's proposition that a strong built form set back 5 metres from the hotel parapet along Chapel Street, could be envisaged, (which we do not), we consider that the four storey corner element would still be unacceptable in urban design terms.
3. We agree with Mr Hutson that as it is significantly higher than the prevailing scale of the Chapel Street shop fronts nearby, the proposed four storey element of the podium would 'diminish the relatively consistent urban reading of the Chapel Street scale'. We also agree with him that the architectural treatment exacerbates this discordance. However we doubt whether setting back the upper level as he suggests would ameliorate the impact sufficiently to make it acceptable.
4. In this location the façade should be no higher than three storeys. We agree with Council's heritage adviser that there may be an opportunity for a higher street wall along some part of the frontage, but not at the north-west corner where it interfaces with the hotel. We note that, whilst the proposal successfully breaks down the Chapel Street façade into segments and a distinctive hotel entrance element, the Applicant agrees that aspects of the street wall design warrant reconsideration. It needs to be further broken down to better respond to the character of Chapel Street, and the existing built fabric. We agree with Ms Roberts who suggests that the height of the street wall could be varied, more solid vertical elements and diverse materials incorporated into the design and consideration given to the introduction of a plinth to some shop fronts.

1. Mr Hutson's concerns about this element related in the main to its bland glazed presentation. We have deeper concerns: we think that it should be set back so that it is subsumed into the higher rear form. We say this because in its current configuration, by attaching itself to the rear tower element, it serves to having the mass closer to Chapel Street - the building becomes as Mr Tweedie observed in a different context, foreground rather than background. It confuses the distinction between the tower and the lower podium element.
2. This element should be subsumed into the tower. We acknowledge that reconfiguration of the hotel rooms would be required but we note that this is already required by the agreement with Dangabe. We observe that although the substituted plans show hotel rooms extending to gridline 'E', the section shows them to gridline 'D' and we presume this is from a previous version of the development. We conclude that other arrangements could be considered.

1. This is a generally well designed development. The layout and orientation of the apartments and townhouses are commendable. No room relies on borrowed light, the central corridors have natural light, the street entrance is generous and well positioned and the lifts conveniently located. However, we agree with Ms Roberts that there seems no good reason that 8 sqm balconies not be provided in a development such as this to all new dwellings.
2. The arrangement of the ground floor is well considered, the layout of the ground level shops, restaurant and outdoor seating areas is appropriate and can be expected to provide a boost to this part of Chapel Street. The relationship between the hotel and the function area is good, although in view of the agreement with Dangabe and our findings, the hotel will need to be reconfigured.
3. Council identifies overshadowing of the eastern footpath of Chapel Street between 10 and 12 at the equinox as unacceptable and contrary to the proposed ACZ1[15]. In our reading of the shadow diagrams the overshadowing of the eastern footpath is caused solely by the Chapel Street wall and only marginally increases the existing shadow. Our requirement to reduce the height of the four storey townhouses will further reduce the overshadowing.

1. We agree with Council that the proposal before us has deficiencies which have led us to conclude that it should not be supported in its current form. However, we consider that a modified proposal may strike the right balance, having regard for the test set out in clause 10.04 which requires us to endeavour to integrate the range of relevant policies and balance conflicting objectives in favour of net community benefit and sustainable development.
2. In the next section we summarise the areas where we consider the design needs modification. We fully acknowledge that there are a number of ways in which the proposal can be amended. The purpose of our interim decision is to allow the Applicant some design flexibility in its response. We invite the Applicant to review the design in light of the comments set out in our reasons. The changes which have resulted from the agreement with the neighbour to the south should also be incorporated into any redesign.
3. We emphasise that even with changes, we may not approve the development if we are not satisfied that it results in an acceptable outcome.

1. A new set of plans is to be prepared based on those substituted at the hearing, but with the following areas redesigned to address the issues discussed in our reasons:
   • Reduce the north-west podium element to 3 storeys.
   • Delete the 3 storey 'box' element which projects forward of the curved south-west face of the tower, between levels 4 and 6.
   • Reconfigure the tower element to achieve greater articulation in terms of height, visual separation of parts and façade treatment.
   • Address the materiality and detailing of the Chapel Street façade to reduce the amount of glazing and incorporate diverse materials, and provide clear delineation between individual shop fronts.
   • Provide 8m2 balconies to all apartments.

[1] Section 4(2)(d) of the Victorian Civil & Administrative Tribunal Act 1998 states a failure to make a decision is deemed to be a decision to refuse to make the decision.

[2] We have considered the submissions of all the parties that appeared, all the written and oral evidence, all the exhibits tendered by the parties, and all the statements of grounds filed. We do not recite or refer to all of the contents of those documents in these reasons.

[3] A useful discussion of Amendment C172 is at pages 27 to 32 of the Council written submission.

[4] The Panel Report makes a similar comment at page 72 of that document.

[5] We have deleted the words "strategic areas' from this quote as supplied to us at paragraph 121 of the Council written submission, as we understand the use of these extra words is a 'typo'.

[6] Clause 4.3.3 (Height and massing guidelines).

[7] Proposed mixed use development 402 Chapel Street South Yarra May 2014.