DA & RA Surry Hills Pty Limited v City of Sydney Council

The site and locality

1. The site is on the southern side of Foveaux Street, west of the intersection with Waterloo Street, and has frontages to Foveaux Street and to Sophia Street. The site has an area of 1,368sqm with a frontage of 45m, and slopes from east to west.
2. From the 1960s the site was occupied by Legion Cabs, and operated as a depot and service station until mid 2014.
3. Surrounding land uses are mostly commercial with some residential uses on Foveaux Street. Immediately to the west at 65-67 Foveaux Street is a four storey heritage listed commercial building with a restaurant and bar on the lower levels. Immediately to the east at 83-85 Foveaux Street is a three storey commercial building with a ground floor café.
4. Sophia Street is a narrow, one-way (west to east) street. Development on the opposite side of Sophia Street is the rear of commercial or vacant buildings fronting Kippax Street.
5. A Woolworths supermarket is located to the west of the site at 302-306 Elizabeth Street, on the corner of Foveaux Street and Elizabeth Street. Vehicle access to that supermarket is on Terry Street, which is a one-way street off Foveaux Street.

Issues

1. In the appeal against refusal of the modification application D/2013/1777/B (appeal 11047 of 2014) the Council contends (ex 1) that the proposed modification cannot be approved because the development as modified would not be substantially the same as the development for which consent was originally granted; that the proposal would exceed the maximum permissible FSR; the proposal is inconsistent with the objectives and provisions for the B4 Mixed Use zone; the site is not suitable for the intensified retail use; and the proposal is not in the public interest.
2. In the appeal against refusal of the development application D/2015/422 (appeal 10420 of 2015) the Council contends (ex 6) that the proposal would exceed the maximum permissible FSR, and there is not a sufficient justification to allow the variation of that development standard; the proposal is inconsistent with the objectives and provisions for the B4 Mixed Use zone; the site is not suitable for the intensified retail use; and the proposal is not in the public interest.
3. The applications have been amended during the course of the proceedings, and a number of the issues in contention, including matters on which the Council contended that insufficient information had been provided, have been resolved by agreement between the expert witnesses as an outcome of their joint conferencing and reports, and by the amended plans. In essence the issues in dispute remaining between the parties relate to the increase in FSR and non-compliance with the FSR development standard, the proposed intensification of retail uses, and compatibility with the residential uses on the site, having regard to traffic and servicing and waste generation, and impacts on residential amenity.

Planning controls

1. The site is zoned B4 Mixed Use under the Sydney Local Environmental Plan 2012 (the LEP). The objectives of the B4 zone are: • To provide a mixture of compatible land uses. • To integrate suitable business, office, residential, retail and other development in accessible locations so as to maximise public transport patronage and encourage walking and cycling. • To ensure uses support the viability of centres.
2. The maximum FSR permitted under cl 4.4(2) is 3.5:1.
3. The Sydney Development Control Plan 2012 (the DCP) applies to the site. Section 4.2.9 of the DCP applies to non-residential development in the B4 zone. The Objectives and Provision are: Objectives (a) Ensure non-residential development is compatible with, and does not detract from the amenity of residential development. (b) Protect existing intact pockets of residential development. (c) Ensure that any impacts generated by non-residential development such as operating hours, noise, privacy, vehicular and pedestrian traffic are adequately managed to preserve the quality of life for residents in the area. Provision (1) In granting development consent for non-residential development on sites within proximity to residential uses within the B4 Mixed Uses zone, the consent authority will have regard to the potential impacts on the amenity of existing residential uses. The following matters must be considered and addressed: (a) noise impacts; (b) operating hours; (c) privacy; (d) vehicular and pedestrian traffic; (e) vibration; (f) reflectivity; (g) overlooking; and (h) overshadowing.

Evidence

1. The hearing commenced on site with a view which included Terry Street and the Woolworths supermarket on the corner of Foveaux Street and Elizabeth Street, and Sophia Street at the rear of the site.
2. There were three submissions received in response to the Council's notification of the modification application D/2013/1777/B. The objections included departure from the FSR control, non-compliance with the applicable controls including height, increase in density and traffic with the addition of the supermarket, exacerbation of existing access and congestion issues on Foveaux Street, and inappropriate promotion of available carparking. There was one submission received in response to the Council's notification of the development application D/2015/422, relating to actual or potential damage caused by construction to the property at 63 Foveaux Street. Copies of the submissions are included in the Council's bundle of documents (ex 2), and as exhibit 7.
3. Expert planning evidence was provided on behalf of the applicant by Mr Brett Brown and on behalf of the Council by Ms Silvia Correia. Mr Brown and Ms Correia conferenced and provided a joint report (ex 4), and gave oral evidence in court.
4. Expert evidence on traffic was provided on behalf of the applicant by Mr Robert Varga and on behalf of the Council by Mr Graham Pindar. The traffic experts provided a joint report (ex 5), in which they agreed on a number of amendments to service/delivery spaces proposed on Basement Level 1, and the inclusion of a number of conditions in the development consent including a condition requiring the implementation of a Loading Dock Management Plan. Mr Varga and Mr Pindar gave informal oral evidence on site, outlining the agreed approach to vehicle movements in and out of the site on Sophia Street, and the loading dock area.
5. The applicant relied on a Statement of Evidence by Mr Peter Leyshon addressing an aspect of the Council's contention relating to the public interest, whether the demand for supermarket floorspace in the area has been met (ex D). Mr Leyshon was not required for cross examination.

The applications

1. The modification application and the development application seek to achieve the same outcome. The applicant accepts that if the Court finds that the development as proposed to be modified is not substantially the same as that for which consent was originally granted, it would not have jurisdiction to approve the modification application. Without admission that the modification is not substantially the same, the applicant lodged the development application, and commenced the appeal against the deemed refusal of that application, in order to ensure that should the application be considered satisfactory on the merits there would be no jurisdictional impediment to the granting of approval. Approval of the development application is predicated on the Court upholding the request under cl 4.6 of the LEP to vary the FSR standard.
2. Both parties agree that while the jurisdictional issues are different, in substance the merit issues for both appeals are the same. The applicant submits that the modification application should be considered first; the Council considered that it would not matter which application is considered first. I deal first with the modification application, on the basis that it was the first application made to the Council, and the first appeal commenced in the Court.

Modification application D/2013/1777/B

1. Section 96(2) of the Act enables modification of a development if the consent authority is satisfied that the development to which the consent as modified relates is substantially the same development as the development for which the consent was originally granted, if it has consulted with any relevant Minister, public authority or approval body, and if the application has been properly notified and any submissions are considered. Section 96(3) provides that in determining an application for modification of a consent, the consent authority must take into consideration such of the matters referred to in s 79C (1) of the Act as are of relevance to the development the subject of the application.
2. The changes proposed to the Consent in the modification application can be summarised as follows: 1. Addition of a third basement level, with: 1. 9 residential parking spaces and 1 car share space; 2. 53 storage spaces; 3. retail grease trap room; 1. Ground floor: 1. enlargement of the eastern retail tenancy to accommodate a supermarket with new escalators connecting to a lower level of the supermarket on Basement Level 1; 2. reconfiguration of the Ground Floor including reduction in the size of the eastern plant room, the residential garbage room, the width of the loading dock and entry area; 3. deletion of pedestrian access from Sophia Street, and of visitor bicycle parking; 4. increase in retail staff bicycle parking from 2 spaces to 4; 5. changes to floor levels on the western side of the building and to the configuration of openings at Sophia Street; 1. Basement Level 1: 1. addition of 480.4sqm GFA for lower level of the supermarket; 2. reduction in parking area to accommodate supermarket and provision of 4 retail staff,2 retail delivery and 1 retail staff delivery car spaces and motorcycle parking; 1. Basement Level 2: 1. removal of resident storage (relocated to basement Level 3); 2. increase in residential parking from 13 to 22 spaces; 3. 1 retail staff space; 4. 6 residential visitor bike spaces; 1. Foveaux Street elevation: 1. amendments to ground floor glazing for entry to supermarket and changes to entry to western retail tenancy; 2. new hydrant booster to western side; 1. Sophia Street elevation: 1. changes to configuration and widths of service areas.
3. The Council's contention that the development as modified is not substantially the same as the development for which consent was originally granted is particularised as follows:

• the addition of another basement level and 586sqm of GFA is a significant intensification of the approved density that would not have been approved as part of the original development application which was amended to comply with the FSR control;
• the eastern tenancy increases from 211sqm to 795sqm, and extends over two floors;
• the modification provides 989sqm of retail floor space, more than double the size of the approved retail uses;
• the proposed use as a supermarket is a significant intensification of the approved use having regard to the servicing, delivery loading and waste requirements of a supermarket; and
• even if a different use were proposed, the modification is not substantially the same having regard to the size and potential impacts of a larger retail tenancy compared to the smaller fine-grain retail tenancies approved.

1. The Council submits that on both a quantitative and qualitative consideration the modified development is not substantially the same as the development as originally approved. On a quantitative assessment, there is the addition of a basement level which requires 50% more excavation, and the change from two small retail tenancies to one larger tenancy with a greater area and greater intensity of use. The changes tip the development from one that complies with the FSR control to one that does not, and thus requires a different form of assessment. A greater assessment is also required as a consequence of the greater intensity of proposed use.
2. The applicant's position is that the modification application does not depart from the development being substantially the same as that originally approved, namely a 6 storey mixed use building, with the same building envelope (ground level and above) and design features. The modification is confined to altering the internal ground and sub-ground features of the extant development consent, the fundamental characteristics of which remain unchanged. These include:

• visual impact of the approved development on the streetscape;
• building envelope (from street level and above) including setbacks, height, bulk and scale;
• built form/façade design, façade articulation, roof form, balcony design;
• built form/fine-grain features of the building (including division of the building into two building elements and "step-down" design);
• length and width of building footprint;
• relationship to adjoining buildings;
• overshadowing;
• landscaping;
• number of residential units and residential car spaces; and
• number of car spaces for retail use.

1. The applicant submits that the assertion that there will be a significant intensification in traffic and waste generation is wrong. The assertion that the modification would not have been approved as part of the original consent is not relevant. The size of the eastern retail tenancy was not an important, material, or essential feature to the granting of the Consent.
2. The planners disagreed as to whether the modified development is substantially the same. Mr Brown was of the opinion that it is, on the basis that the general nature of the development is not changed and the proposed development remains a mixed use development comprised of residential and retail use; the western tenancy is reduced in size and remains a retail use, and while the additional space for the proposed use of the eastern tenancy as a supermarket has been designed to accommodate such a supermarket, in terms of the LEP definitions the modification does not change the approved "retail" use; a change in use from retail use to a supermarket does not require development consent pursuant to State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (the Codes SEPP) so a change of intensity within this framework is permitted; the proposal does not change the classification of the building under the Building Code of Australia; the increase in GFA is only 12% of the approved GFA; only 103.5sqm of the additional floor space is above ground level and that is achieved by internal reconfiguration rather than increasing the bulk of the building; there is no increase in car parking; and the only material increase in impacts is from the additional delivery requirements (with an additional 3 delivery spaces proposed) and increased visitation by cyclists and pedestrians. In Mr Brown's opinion while quantitatively the proposed retail space is more than double that approved, qualitatively the differences are minimal.
3. Ms Correia disagreed. In her opinion the potential impacts, servicing requirements, and frequency of servicing of the two smaller fine-grain retail tenancies originally approved were limited by the size of those tenancies and the addition of a large supermarket is a significant intensification of the use. While a change of use is permitted under the Codes SEPP, any change would be limited to the size of the approved retail tenancies and at most a small supermarket of 216sqm could be provided. While the modification does not significantly alter the external appearance of the building, external changes are not essential to a finding that a modified development is not substantially the same; and the building envelope is proposed to be increased by the addition of one basement level.

Findings

1. The requirement that the consent authority be satisfied that the development to which the consent as modified relates is substantially the same development as the development for which the consent was originally granted is a condition precedent to the exercise of the power to modify a consent: Scrap Realty Pty Ltd v Botany Bay City Council (2008) 166 LGERA 342 at 347. The power to modify a consent is a power "to alter without radical transformation": North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 at 474. A qualitative and quantitative comparison between the development as modified and the development as originally granted is required, and the result of that comparison must be a finding that the modified development is "essentially" or "materially" the same as the approved development, as held by Bignold J in Moto Projects (No 2) Pty Ltd v North Sydney Council (1999) 106 LGERA 298 at 309: 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).
2. The specific elements and impacts of the two developments must be compared. In Moto Projects, Bignold J referred (at [41]) to Stein J's warning in Vacik Pty Ltd v Penrith City Council [1992] NSWLEC 2 against an over generalised description or analysis of the relevant development: In approaching the s 102 exercise one should not fall into the trap of saying that the development was for a certain use - extractive industry and, as amended, it will be for precisely the same use and accordingly is substantially the same development. What is important is that a development, particularly extractive industry, must be assumed to include the way in which the development is to be carried out. Otherwise, there may be little purpose in s 102.
3. The Consent described the approved development as: Demolition of existing building (Legion Cabs) and construction of a 6 storey mixed use building with ground floor retail, 53 residential apartments and basement car parking.
4. Considered at a high level of generality, the development as modified could still be so described. However, bearing in mind Stein J's warning in Vacik, and having regard both to the quantitative and qualitative changes proposed, I am not satisfied that the development as modified is substantially the same as the development as originally approved.
5. In quantitative terms, while the increase in GFA may be minor when viewed against that of the development as a whole, the increase in retail GFA from 427sqm to 989sqm more than doubles the size of the approved retail uses. The building envelope above ground does not change, other than for modifications to the ground level on both street frontages to reflect the proposed supermarket use, however the modification would add a new basement level, and requires substantial reconfiguration of the basement levels in terms of plant areas, storage areas, access, and parking arrangements. In qualitative terms, while the proposed use as a supermarket would still constitute a retail use, the addition of a supermarket has potential impacts particularly in relation to servicing, vehicle access and movements, and waste generation, which would be different to those to be expected from the two smaller retail spaces. I am not satisfied that the development as modified can be regarded as "essentially or materially" the same as that originally approved.
6. Section 96(2)(a) is not satisfied. Had it been satisfied, the issue of whether or not the potential impacts from the enlarged supermarket use could be managed or mitigated would be a matter for consideration in accordance with s 96(3) of the Act. The modification application cannot be approved.

Development Application D/2015/422

1. The amended development application plans (ex A) incorporate recommendations made by the traffic experts. Vehicle access to the residential car park is on the western side of the Sophia Street frontage, and the loading dock entry on the eastern side. Pedestrian access from Foveaux Street to the upper levels is from a centrally located entry. The proposed supermarket in the enlarged eastern retail space on ground floor and Basement Level 1 includes an escalator on the eastern side. Basement Level 1 provides for the lower level of the supermarket, four retail staff parking spaces, motorcycle parking, a retail tenancy (east) B99 Light Commercial vehicle space, and a shared residential and retail tenancy (west) B99 Light Commercial vehicle space. Basement Level 2 provides 16 residential car spaces, six adaptable residential car spaces, one adaptable retail staff car space, and bicycle parking. Basement Level 3 provides one residential car share space, two adaptable residential car spaces, seven residential car spaces, 53 residential storage/class 1 bike locker spaces, a residential bulky goods storeroom and retail greasetrap room.
2. There was disagreement between the parties as to the GFA, and FSR, of the amended plans, depending on whether the corridors and internal walls are included in the calculation. On the applicant's calculations (ex A, Analysis Areas GFA) the proposed FSR is 3.77:1; on the Council's calculations (ex 6) it is 3.93:1. It is not necessary to determine this issue, as it was common ground that the proposed development exceeds the maximum FSR of 3.5:1 specified in cl 4.4 of the LEP, and with which the development as approved in the Consent complies. The applicant has provided a request pursuant to cl 4.6 of the LEP to vary the FSR development standard.
3. The Council contends that the cl 4.6 variation should not be upheld, on the basis that the proposal does not meet the objectives of cl 4.4(1); the deviation from the controls results in development that is not appropriate for the site and would set an undesirable precedent; any increase in FSR above the maximum permissible risks creating additional demands on infrastructure which have not been planned for and which may negatively impact on current and future residents and businesses in the area; the applicant has not demonstrated sufficient planning grounds to justify a breach of the FSR control; and the proposed development is an overdevelopment of the site.

Supermarket demand

1. Mr Leyshon, who has qualifications in planning and experience that includes shopping centre research and economic impact assessment, addressed the issue of the level of demand for supermarket floorspace in the area, and whether the Woolworths supermarket at the corner of Elizabeth Street meets the local demand for such floorspace. Mr Leyshon identified the Main Trade Area (MTA) of the proposed supermarket to be the Primary Trade Area (the area bounded by Crown Street in the east, Devonshire Street in the south, Chalmers/Elizabeth Streets in the west and Reservoir Street in the north, all within 500m walking distance of the site), plus a Secondary Trade Area (two areas, North being an area to the north of Reservoir Street and to the east of Riley Street; and South, an area to the east of Chalmers Street, to the north of Cleveland/Belvoir Streets, to the west of Crown Street and to the South of Devonshire Street) (ex D, pp5-6, fig 2.2). In his assessment, on a typical working day the proposed store's MTA would contain approximately 17,700 potential customers, both residents and workers (ex D, p 8). Most retail analysts would regard stores of less than 500sqm gross leasable area (GLA) as more akin to convenience stores; the term "full-line supermarket" is applied to supermarkets generally in excess of 2,500sqm GLA (ex D, p9). The proposed supermarket provides 794.8sqm GLA of supermarket floorspace over the two levels, and in his opinion would be classified as a "small supermarket" (ex D, p 10). Mr Leyshon identified 13 existing supermarkets and convenience stores in Surry Hills, five of which are in the MTA (ex D, p 11). The Woolworths on the corner of Elizabeth Street has an estimated floorspace of 417sqm GLA, and in his opinion carries a very restricted range of packaged food and grocery items together with a range of pre-prepared meals and some fresh food, and would not meet all of the requirements of trade area residents or workers; in his opinion that store effectively fulfils the role of a convenience store (ex D, p 12).
2. Mr Leyshon considered the demography of the Surry Hills trade area, which he described as atypical compared with the Sydney region as a whole in terms of the age structure, household structure, household income, motor vehicle ownership, and concluded that the residents are likely to shop at supermarkets on a very frequent basis, make relatively small purchases per trip, have an above average tendency to purchase pre-prepared food, have a preference of extended hours shopping and are likely to walk to the proposed supermarket rather than drive (ex D, p 18). On his assessment of total theoretical demand for supermarket and convenience floorspace in the Surry Hills trade area (3,030sqm GLA), and the existing supermarket and convenience floorspace (937sqm in the main trade area), the addition of the proposed supermarket would provide supermarket and convenience floorspace well within the theoretical demand (ex D, p 21). In his opinion there is sufficient economic demand for the proposed supermarket based solely on demand generated by residents of the trade area, and it would offer a wider range of goods to trade area residents and workers than is currently provided by the existing Woolworths store or the other convenience stores in the main trade area, by virtue of its significantly larger floorspace when compared with any other existing store in the MTA.

Traffic

1. Mr Pindar and Mr Varga reached agreement on the configuration of the service/delivery spaces and the loading dock, and the amendments to the plans incorporate their recommendations made in the joint report (ex 5). They agreed that 4 delivery spaces are required by the DCP, which can be provided with two spaces in the truck dock at ground floor level fronting Sophia Street and two spaces for light commercial vehicles on Basement Level 1. The traffic experts agreed that based on Mr Varga's traffic surveys existing traffic volumes are low and consistent with the rear service lane nature of Sophia Street. They noted that Sophia Street does not perform any through traffic function given the one-way configuration of Terry Street and Sophia Street, and that the majority of the surveyed volume of 34 vehicles per hour at the peak between 7.45am-8.45am related to entries to development sites upstream (west) of the proposed loading dock. They agreed that subject to the imposition of conditions limiting the number of trucks and supervision of reversing movements, reversing movements into the truck dock could be accommodated. Mr Pindar's evidence on site was that the loading dock can accommodate a 9.3m long vehicle with 2.5m space, which will enable loading and unloading to take place with the loading dock door closed. The experts recommended that the conditions require a Loading Dock Management Plan.
2. The applicant has provided a Loading Dock Management Plan (ex G), which requires appointment of a loading dock manager (an accredited RMS traffic controller) who is to be on duty at all times during loading dock operations, maintain a booking schedule for each of the service/delivery spaces in consultation with the strata manager, and supervise all supermarket loading dock activity including reversing movements into the dock; exclusive use of the ground floor truck docks for the supermarket prior to midday; priority access for trucks; supermarket deliveries by light commercial vehicles to be from the single loading bay on Basement Level 1; medium rigid vehicle (MRV) trucks to use Truck Dock 1 (western side), and small rigid vehicle (SRV) trucks to use Truck Dock 2 (eastern side) unless the Dock Manager and booking schedule allow use of Truck Dock 1; and availability of Truck Dock 1 and Truck Dock 2 for the use of any tenant (retail or residential) after midday subject to compliance with the booking schedule.

Planning

1. The planners disagreed as to whether the proposed development is inconsistent with the objectives for the FSR control or the zone objectives, and whether the site is unsuitable for the intensified retail use.
2. Ms Correia was of the opinion that the variation to the FSR standard should not be upheld based on the site's suitability and impacts as identified in the contentions, and inconsistency with the objectives of the FSR control and the B4 zone. Mixed use developments add to the vitality of streets and are supported as evidenced in the approval in the Consent, however the retail and residential uses cannot co-exist without unreasonable impacts on this site having regard to the size of the supermarket, the required servicing, the narrowness of Sophia Street and the loading and manoeuvring areas available and the close proximity of residents in the apartments facing Sophia Street.
3. In oral evidence Ms Correia maintained her position as stated in the joint report (ex 4) that the cl 4.6 variation should not be upheld. Even if the proposed development complied with the FSR control, she would still not support it for the reasons expressed in the Council's remaining contentions. The FSR control controls the intensity of use of the site, and the small size of the approved retail spaces controlled the intensity of the retail use. While the evidence of Mr Leyshon is that there is demand for a supermarket, there is no guarantee that this site would continue to be used as a supermarket. There will be impacts from the additional excavation. The proposal depends on compliance with a plan of management and having a manager to supervise, and there would be additional activity in Sophia Street including noise from reversing vehicles and voices. The DCP expects that all vehicles would enter and leave in a forward direction, and a flexible approach was adopted in assessment of the original development application to allow for reversing because of the small scale of the retail spaces with fewer deliveries. There is no buffer between the supermarket and residential uses, as is the case with the other supermarkets in Bourke Street and Potts Point. In her opinion the amenity issues for the apartments fronting Sophia Street, which already have poor amenity, have not been addressed.
4. Mr Brown's evidence was that the resolution of the loading dock operation as agreed between the traffic experts, including limiting hours for deliveries, had dealt with many of the planning issues. The site is a large site for Surry Hills and the DCP acknowledges that this part of Surry Hills has larger scale buildings and is the retail part of Surry Hills. In his opinion the proposal meets the objectives of the FSR control and the zone. The additional deliveries are manageable, and at 12 per day would have a low actual impact. The proposal would create activity especially at night.
5. Mr Leyshon's evidence was not challenged, and I accept it. I accept the agreed traffic evidence. That evidence, and the evidence of the planners, is relevant to consideration of whether the cl 4.6 variation can properly be upheld, and if so, whether consent should be granted to the proposed development.

Clause 4.6

1. Clause 4.6 relevantly provides: 4.6 Exceptions to development standards (1) The objectives of this clause are as follows: (a) to provide an appropriate degree of flexibility in applying certain development standards to particular development, (b) to achieve better outcomes for and from development by allowing flexibility in particular circumstances. (2) Development consent may, subject to this clause, be granted for development even though the development would contravene a development standard imposed by this or any other environmental planning instrument. However, this clause does not apply to a development standard that is expressly excluded from the operation of this clause. (3) Development consent must not be granted for development that contravenes a development standard unless the consent authority has considered a written request from the applicant that seeks to justify the contravention of the development standard by demonstrating: (a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and (b) that there are sufficient environmental planning grounds to justify contravening the development standard. (4) Development consent must not be granted for development that contravenes a development standard unless: (a) the consent authority is satisfied that: (i) the applicant's written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and (b) the concurrence of the Director-General has been obtained. (5) In deciding whether to grant concurrence, the Director-General must consider: (a) whether contravention of the development standard raises any matter of significance for State or regional environmental planning, and (b) the public benefit of maintaining the development standard, and (c) any other matters required to be taken into consideration by the Director-General before granting concurrence.
2. The written request is Appendix A to the Statement of Environmental Effects (ex C, tab 3), and Appendix C to the planners' joint report (ex 4).
3. The written request states that compliance with the FSR development standard is unreasonable or unnecessary because: 1. the proposal achieves the objectives of the FSR control: 1. it provides additional floor space in the form of a supermarket and responds to an identified demand. Given the nature of Surry Hills with its predominance of small buildings it is likely that larger floor plates required for a supermarket are not readily available; 2. the proposal does not increase the approved built form, and while it increases the intensity of the use of the site this can be done without adverse impact and to the benefit of the local neighbourhood; 3. the proposal will not place a larger demand on existing infrastructure, facilities and services than the approved development; and 4. the proposal will encourage walking through the provision of a supermarket to cater to the immediate neighbourhood, and is consistent with the provision at section 2.11.7 of the DCP that the area continue to constitute the retail centre of Surry Hills; 1. the proposal achieves the objectives of the B4 zone: 1. the provision of a supermarket at ground level with apartments above is a common occurrence in the B4 zone and while a supermarket may have greater visitation and deliveries than other retail uses the potential impacts are appropriately mitigated through management measures and limits on trading and delivery hours; 2. the proposed mix of residential and retail uses supports walking and public transport use as the site is within walking distance of Central Station; and 3. the provision of a supermarket is consistent with the Locality Statement for Surry Hills Central in the DCP, and is a relatively large site in an area where small lot development predominates; 1. compliance would result in poorer planning outcomes, as the proposal does not alter the approved appearance of the building; increased impacts from excavation will only be during construction; providing additional floor space with an increased range of goods within walking distance of the local neighbourhood is an amenity to local residents and workers; and provision of additional floor space in a manner that does not have unreasonable impacts and achieves the objectives of the standard in an existing urban area well served by public infrastructure is a sensible and economic planning outcome; and 2. there is minimal potential for impact as the non-compliant part of the floor space is below ground level; the adverse impact from increased excavation and additional truck movements is minimal; and the proposal will result in benefits to the local community in having increased shopping opportunities within walking distance.
4. The request states that there are sufficient environmental planning grounds to justify contravening the standard, on the basis that the lack of environmental impact and the environmental benefits that arise from not complying, justify contravening the standard. The proposal demonstrates that the land can be used more economically through the provision of additional floor space without unreasonable adverse impacts, and it is good for the local economy keeping people in the local area for shopping.
5. The Council submits that in considering the cl 4.6 variation it is not sufficient that there may be no environmental impacts: Hooker Corporation Pty Ltd v Hornsby Shire Council (1986) 130 LGERA 438. In the circumstances of this application it is more than the addition of truck reversing noise but whether there are sufficient environmental planning grounds to increase the intensity of retail development with its inevitable consequences. The increase in floor space creating a greater opportunity to generate income is not a reason to justify non-compliance with the standard. There needs to be an explanation as to why it is appropriate for this site to breach the FSR standard to provide a supermarket, not whether the area in general needs another supermarket. The increased intensity of the use matters because of the greater number of movements and truck reversing beeping noise.

Findings

1. The written request addresses the matters specified in cl 4.6(3)(a) and (b). Clause 4.6(4)(a) provides that consent cannot be granted unless the Court, as consent authority, is satisfied (i) that the written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) that the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out.
2. Clause 4.6(4)(a)(ii) requires consideration of whether the proposed development is consistent with the objectives of the standard and the B4 zone. The term "consistent", in the context of zone objectives, is generally interpreted to mean "compatible" or "capable of existing together in harmony", and not confined to the notion of the proposed development not being antipathetic: Dem Gillespies v Warringah Council (2002) 124 LGERA 147; Addenbrooke Pty Ltd v Woollahra Municipal Council [2008] NSWLEC 190.
3. The objectives of the FSR standard are provided in cl 4.4(1): (a) to provide sufficient floor space to meet anticipated development needs for the foreseeable future, (b) to regulate the density of development, built form and land use intensity and to control the generation of vehicle and pedestrian traffic, (c) to provide for an intensity of development that is commensurate with the capacity of existing and planned infrastructure, (d) to ensure that new development reflects the desired character of the locality in which it is located and minimises adverse impacts on the amenity of that locality.
4. In relation to objective (a), based on the evidence of Mr Leyshon I am satisfied that the proposed development provides sufficient floorspace to assist in meeting demand for provision of supermarket facilities in the area, and is consistent with this objective.
5. In relation to objective (b), I accept that the proposed development increases the land use intensity in comparison with that approved in the Consent. The approved built form does not increase above ground. Based on the evidence of the traffic experts, the proposed development with the expanded (east) retail will require additional deliveries each day. The proposed conditions restrict deliveries to a maximum of 12 per day, with a maximum of two to be made by MRV and four by SRV per day (condition 43A). While there will be an increase in vehicle traffic, based on the evidence of Mr Leyshon it is unlikely that the additional floorspace will result in additional vehicle traffic from customers; there will be an increase in pedestrian traffic. Having regard to the proposed management of additional vehicle traffic, I am satisfied that the proposal is consistent with objective (b) which seeks to "regulate" density and "control" vehicle and pedestrian traffic generation, in the sense that it is compatible with those objectives.
6. In relation to objective (c), I accept the unchallenged calculations of Mr Brown in the cl 4.6 request (ex 4) as to the increase in employee numbers by four as a consequence of the increase in floorspace and supermarket use. The evidence before the Court does not identify that the increased intensity of the development as a consequence of the increase in floorspace would place a larger demand on existing or planned infrastructure facilities and services (ex J). I am satisfied that the proposed development is consistent with objective (c).
7. In relation to objective (d), the site is in the B4 Mixed Use zone, and in the Surry Hills Central locality under section 2.11.7 of the DCP, which identifies the desired character of the locality in which the site is located. The DCP describes the locality in the following terms: The area is to continue to constitute the retail centre of Surry Hills with active frontages consolidated along Crown, Foveaux and Kippax Streets. The future built form character is to maintain the transition in scale and use, from large footprint warehouse buildings in the west to small lot retail, shop-top and terrace houses in the east.
8. The proposed development provides for retail use with an active frontage on Foveaux Street, consistent with the desired character of the locality. While there are likely to be some amenity impacts, discussed below, objective (d) seeks to ensure that new development "minimises" adverse impacts on the amenity of the locality, rather than that there be none. I am satisfied that, subject to the conditions proposed including the plans of management, which are discussed further below, the development is consistent with that objective.
9. The objectives of the B4 zone are stated at paragraph [17] above. I am satisfied that in the provision of retail uses in the form of the proposed supermarket and smaller western retail space, and residential apartments above, similar to the developments at Potts Point and Bourke Street discussed in Mr Leyshon's evidence, the proposal provides a mixture of compatible land uses consistent with the first objective. The proposed development is located close to Central railway station and other public transport, and will, on the evidence of Mr Leyshon, be accessed by the majority of its customers on foot, and is consistent with the second objective. Having regard to the locality statement for Surry Hills Central in the DCP, I am satisfied that the proposed development, by assisting in meeting demand for supermarket facilities in the Surry Hills area, will provide a use that will support the viability of the locality, consistent with the third objective.
10. I am satisfied that the proposed development is consistent with the objectives of the FSR control and the B4 zone, and cl 4.6(4)(a)(ii) is satisfied.
11. Clause 4.6(4)(a)(i) requires satisfaction that the written request has "adequately" addressed the two matters required by cl 4.6(3), namely that compliance with the standard is unreasonable or unnecessary in the circumstances of the case, and that there are sufficient environmental planning grounds to justify contravening the development standard. The written request addresses the former by reference to consistency with the objectives of the standard and the zone, and by arguing that compliance would result in poorer planning outcomes, and that the proposal has minimal impact and provides benefits to the local community. The request addresses the latter by reference to the lack of environmental impact and the environmental benefits that arise from not complying and benefits in broader environmental terms consistent with the objective of the Act in s 5(a)(ii).
12. In considering whether the request has adequately addressed the matters in cl 4.6(3), I agree with the Council that it is not sufficient that the proposed development provides a supermarket for which the evidence establishes that there is a demand in the area. However, based on the evidence of Mr Leyshon, in the context of this site the additional floor space enables the provision of a supermarket with 794.8sqm GFA of supermarket floorspace (described by Mr Leyson as a "small supermarket"), the majority of which is located on the basement level, in contrast to the existing stores in the MTA which Mr Leyshon described as convenience stores based on their size and range; the larger supermarkets outside the trade area are located between 0.75 and 1km from the site. The written request identifies that the site is a relatively large site in an area where small lot development predominates, and that the additional floor space enables provision of an increased range of goods, including fresh food, within walking distance of the local neighbourhood, which is an amenity for local residents and workers. The request states that this benefit for the community results in a better planning outcome, so that compliance is unreasonable or unnecessary, and that there are sufficient environmental planning grounds to justify contravening the standard through the use of the land more economically through provision of additional floor space and keeping people within the local area for shopping trips.
13. The Council contended that approval of the application exceeding the maximum permissible FSR has the potential to create an undesirable precedent, so that future development may seek more FSR than permitted; and that if this occurs and an expectation that additional FSR can be achieved the cumulative effect of developments that seek additional GFA may lead to inconsistencies with the desired future character of the area. Further, that a significant deviation from controls developed using studies to determine appropriate levels of FSR and density results in development that is not appropriate for the site and that would set an undesirable precedent. I agree with the applicant that the requirement in cl 4.6(4)(a)(ii) that the proposed development be consistent with the objectives of the FSR development standard, which include objective (d) that it reflect the desired character of the locality and minimise adverse impacts on amenity, before a variation can be made, means that any variation sought for future developments would have to be assessed in the circumstances of the individual case. On that basis, a development that complies with the objective of the FSR standard could not be said to cumulatively contribute to undermining the objective of that standard.
14. Having regard to the context of this site, which is of a size that enables provision of a larger supermarket with a corresponding greater range of goods provided, in a locality identified in the DCP as the retail centre of Surry Hills with active frontages, I am satisfied that the written request has adequately addressed the matters required by cl 4.6(3) of the LEP, and that cl 4.6(4)(a)(i) is satisfied.
15. Clause 4.6(4)(b) requires that the concurrence of the Director-General has been obtained. It was common ground that there is a Planning Circular enabling the consent authority to assume concurrence. There was no submission made that to the extent that the Court might be required to consider the matters specified in cl 4.6(5) (see Wehbe v Pittwater Council (2007) 156 LGERA 446 at [41]), namely whether contravention of the development standard raises any matter of significance for State or regional environmental planning, and the public benefit of maintaining the development standard, that either would be a basis on which to refuse the request to vary the standard.
16. I am satisfied that cl 4.6 is met and there is accordingly power to grant consent to the development application notwithstanding the non-compliance with the FSR development standard.

Whether consent should be granted

1. The Council contends that consent should be refused on the following grounds: 1. The proposal is inconsistent with the zone objectives and provisions for non-residential development in the B4 zone: 1. intensification of the retail uses is not compatible with residential uses on the site; 2. the increased retail floor area and supermarket would have unreasonable impacts on residential amenity having regard to the servicing requirements of a supermarket or other large retail tenancy; and 3. a supermarket with fresh produce is likely to have greater amenity impacts than the small retail tenancies approved, through use of larger trucks, increased number of deliveries and frequency of waste collection. The traffic movements in Sophia Street, and intensity of activity in the loading area and the street, would have a detrimental impact on the amenity of residents as 25 single aspect apartments have their balconies and bedrooms to Sophia Street; 1. The site is not suitable for the intensified retail use, including the addition of a supermarket, having regard to traffic and servicing and residential amenity impacts; 2. The proposal is not in the public interest: 1. there is no sound planning justification for the non-compliance with the FSR standard; 2. the proposal would erode the community's and developers' certainty in the planning controls which have been informed by design studies and in consultation with the local community. Submissions have been received objecting to the proposal on the basis that it is a significant departure from the FSR control; and 3. it is not in the public interest to provide additional floor space having regard to the potential impacts on the amenity of residents and the site's unsuitability for the proposal.
2. The Council submits that the evidence establishes no more than that an additional supermarket in Surry Hills can be supported. The increased intensity of the proposed use is significant, and includes the greater number of vehicle movements and the additional beeping of reversing vehicles, and submits that had this been part of the original application it would have been possible to manage vehicle movements in the basement so entry and exit was in a forward direction. The site is not suitable for the intensified use; and there will be impacts from the extra excavation.
3. Clause 2.3(2) of the LEP requires consideration of the zone objectives. Section 4.2.9 of the DCP (see paragraph [19] above) requires consideration of a number of matters relevant to potential impacts on the amenity of existing residential uses when determining an application for non-residential development within proximity to residential uses within the B4 Mixed Uses zone. It was common ground that while there are no existing residential uses at the rear of the site on Sophia Street, the 53 residential apartments approved in the Consent require consideration of those matters.
4. The objectives of the B4 zone have been identified and considered above in the context of the cl 4.6 request, and relevantly include provision of a mixture of compatible land uses. Section 4.2.9 of the DCP aims to ensure that non-residential development is compatible with and does not detract from the amenity of residential development, and ensure that any impacts are adequately managed to preserve the quality of life for residents in the area.
5. The central issue is whether the intensification of the retail uses through the increased retail floor area and operation of the proposed supermarket would have unreasonable impacts on residential amenity, having regard to the servicing requirements of a supermarket (or any other large retail tenancy).
6. The proposed Conditions require that the supermarket be operated in accordance with the Supermarket Plan of Management (condition (2B)) and the Loading Dock Plan of Management (condition (2C)). The provisions of the Loading Dock Plan of Management are summarised at [47] above. The Supermarket Plan of Management (ex H) identifies the operations which have the potential to adversely impact the amenity of the local community as deliveries and goods handling; store and staff security; waste management; litter management; and trolley management. The proposed trading hours for the supermarket are 7am-10pm. Delivery hours are to be restricted to between 7am-7pm Monday to Friday and 9am-5pm on Saturdays, with no deliveries on Sundays or public holidays. The plan proposes installation of CCTV cameras including cameras directed at shelving, checkouts and the cigarette counter and at entry points to the tenancy and the loading area, and appropriate lighting. In relation to waste management the plan proposes, for store operation, waste collection six days a week between the hours of 7am and 8pm. The estimates for waste generation during the operation phase of the supermarket are (per week) 3m3 cardboard and packaging, 0.2m3 foam packaging, 0.4m3 plastic packaging, 0.3m3 fruit/vegetable waste, and 0.3m3 other waste (eg cleaner containers, paper towels etc). Other waste including out of date stock and fruit and vegetables and other foodstuffs in an unsuitable condition for sale would be disposed of through the putrescibles waste stream, and putrescible waste is to be stored in a sealed bin. Bins are to be stored in the tenancy's "back of house" area and relocated to the waste area in the store room when full. For litter management, general store cleaning is to take place daily, and staff are to patrol the immediate surrounds to retrieve any waste associated with the supermarket operation. Small trolleys are to be provided, and captivated within the store, and there are to be supermarket perimeter checks.
7. Having regard to the approach to management of potential impacts by a plan of management as set out in Renaldo Plus 3 Pty Ltd v Hurstville City Council [2005] NSWLEC 315 and Amazonia Hotels Pty Ltd v Council of the City of Sydney [2014] NSWLEC 1247, I am satisfied that in the circumstances of this development the plans of management for the supermarket and the loading dock appropriately address potential impacts arising from the additional delivery vehicle movements and the operation of the supermarket, and provide some certainty in operations and a reasonable level of amenity for adjoining residents. The traffic experts agreed that with the reconfiguration of the loading dock it is able to accommodate loading and unloading of a truck with the loading dock door closed; that would reduce the potential for noise from those activities, including noise of voices. Ms Correia expressed concern in her oral evidence that there is a potential for non-compliance, however the evidence does not support a finding that the requirements of either management plan would require people to act in a manner that would be unlikely or unreasonable in the circumstances of the case, such that there could be a risk of non-compliance. The management plans are to be enforced as provisions of the consent, and given the proximity of observers both in the residential part of the development and on Foveaux Street the source of any breaches of the plans of management would be readily identified to allow for any enforcement action.
8. The draft Conditions require that the supermarket be operated in accordance with the Supermarket Plan of Management (condition (2B)) and the Loading Dock Plan of Management (condition (2C)). Those conditions should be amended so that the plans are annexed to the Conditions, so as to achieve certainty as to their terms, and accessibility to any member of the public.
9. The Council points to the greater number of vehicle movements, and the additional beeping of reversing vehicles, and submits that had this been part of the original application it would have been possible to manage vehicle movements in the basement so entry and exit was in a forward direction. Clause 3.11.13(1)(c) of the DCP provides that vehicle access for collection and loading is to provide for collection vehicles to be able to enter and exit the premises in a forward direction. Ms Correia noted (ex 4) that the Consent had provided flexibility by varying the controls to allow loading vehicles to reverse into the loading dock, on the basis that those vehicles were servicing two small retail tenancies and the vehicle movements would not cause frequent, ongoing or unreasonable impacts. In oral evidence Ms Correia agreed that the proposal for a split level ground floor and basement level supermarket was acceptable, and that there would be no visible difference when comparing the development as approved with that as proposed, however her concern was with the operation of the loading dock, namely the beeping of the trucks, and the increase in frequency. Ms Correia accepted that the proposed delivery times were during daylight, that there are no present residences in Sophia Street that might be affected, and that there would be sharing of access to the loading dock for the residents and the retail uses.
10. It was common ground that the proposed development would require additional vehicle movements in the form of deliveries and waste collection. Up to 12 deliveries per day are required for the proposed supermarket, and these are limited to a maximum of 12 vehicle trips per day, between the hours of 7am-7pm Monday to Friday and 9am-5pm Saturday. Six of these vehicle trips would require the vehicle to reverse into the loading dock, with the accompanying beeping noise; the other six would be within the basement with movements in and out in a forward direction. Parking on site is limited to staff. In terms of waste generation, the estimated volumes are provided in the Supermarket Plan of Management. The Council's Policy for Waste Minimisation in new Developments (ex 2) estimates that at 846sqm a supermarket would generate 2,030L of waste per day (ex 2, p 250), which is greater than that estimated for the proposed development at 114.28L per day. Even at the rate provided in the Council policy, that would be less than the waste generated by possible restaurant use of both the approved retail spaces (at 1,406L per day per retail space). I accept the applicant's submission that what is relevant is whether the waste generated by the proposed use can be managed and if its collection causes impacts, and that in the context of this application the proposed development provides sufficient capacity for the collection of waste in dedicated areas and for its collection from the loading dock, during day time hours.
11. The proposed conditions include conditions prohibiting removal of trolleys from the store (condition (2E)); delivery hours and requiring that deliveries are made wholly within the site (condition (2F)); collection of waste and recycling between 7am-8pm weekdays and 9am-5pm weekends and public holidays (condition (2G)); and signage (condition (2H)). Conditions (26), (27) and (28) address the retail and residential use of the loading area and delivery spaces; service vehicle size limits; and vehicular access to the loading dock. Conditions (44), (45) and (46) address noise; and condition (46A) provides that the use of the premises must not give rise to the emission of gases, vapour, dusts or other impurities which are a nuisance, injurious or prejudicial to health. Condition (2R) requires that before commencement of work on the third basement level further dilapidation reports are to be undertaken on the adjoining properties and 63 Foveaux Street, with a second dilapidation report at least one month after completion of demolition and excavation works, and rectification of any damage by the applicant or owner. The inclusion of 63 Foveaux Street responds to a submission on behalf of the owners and tenants of 63 Foveaux Street raising concerns that proposed construction of a deep basement would lead to structural damage (ex 7).
12. Having regard to the matters specified at section 4.2.9 of the DCP in the context of the proposed residential use of the approved development, including the single aspect apartments on Sophia Street, I am satisfied that while there will be some noise impacts from vehicle movements, and increased vehicular and increased pedestrian traffic, the operation of the proposed development would not significantly increase traffic generation or waste generation, and the impacts on amenity can be limited and managed by means of the plans of management for the operation of the supermarket and the loading dock, including in particular through the limitation on hours for deliveries. In the context of the location of the site, as recognised in the locality statement in the DCP, I am satisfied that the proposed development is consistent with the objectives of the B4 zone, and that it is appropriate that consent be granted.

Conclusion

1. For the reasons above, modification application D/2013/1777/B cannot be approved. During the course of the hearing the applicant indicated that if that were the conclusion, it might be appropriate to discontinue the appeal under s 97AA of the Act. Unless the parties indicate, no later than close of business Thursday 6 August 2015, why it would not be appropriate to do so, I propose to make orders dismissing the appeal in proceedings 11047 of 2014.
2. As discussed above, I am satisfied that it is appropriate that consent be granted to development application D/2015/422 subject to the agreed Conditions, amended in accordance with paragraph [81] above. The parties are to provide, by close of business Thursday 6 August 2015, agreed amended conditions (2B) and (2C)(a), and a text version of the Loading Dock Management Plan to be annexed to the Conditions. On receipt of those documents, the following Orders will be made in appeal 10420 of 2015: 1. The appeal is upheld. 2. Development Application D/2015/422 for alterations and additions to approved mixed use development comprising an additional basement level and changes to ground floor level to accommodate a supermarket at Lot B in DP413946, 69-81 Foveaux Street Surry Hills, is approved subject to the conditions in Annexure A. 3. The exhibits are returned except for exhibits A, C, G, H, 6 and 9.
3. After the delivery of this judgment the parties provided the advice requested in paragraph [86] and the amendments and document referred to in paragraph [87]. On 6 August 2015 orders were made disposing of both appeals. Linda Pearson Commissioner of the Court 10420 of 2015 6_8_2015 (O) (12.5 KB, pdf) 11047 of 2014 6_8_2015 (O) (12.4 KB, pdf) 10420 of 2015 Pearson (C) (897 KB, pdf)

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