IPM Holdings Pty Limited v The Council of the City of Sydney

Overview

1. The applicant, IPM Holdings Pty Ltd has appealed pursuant to s 8.7(1) of the Environmental Planning and Assessment Act 1979 ("EPA Act") from the deemed refusal of development application D/2019/952 ("DA/952"). The application seeks approval for the "occupation and use of 5 residential apartments (Units 305 to 309) within the existing residential flat building" at 161 Brougham Street, Woolloomooloo known as the "Calidad Building" ("the development site").
2. The Council contends that there is no need, and in fact no power under the EPA Act for the Court to grant consent to this application. It maintains that the "occupation" of the Units is not a form of development capable of being the subject of an application for development under the EPA Act, and the residential use has already been approved under development consent (D/2014/1890) (as amended) ("DA/1890"). The Council says that the occupation certificates will issue for the Units once full compliance with relevant conditions (Conditions 8, 9 and 11) of DA/1890 has been satisfied. In the alternative, assuming there is power to grant approval for the use, the Council contends that the exercise of that power in the present circumstances is contrary to the public interest as it would allow occupation and use of the Units without first satisfying the outstanding conditions of DA/1890. In short, it submits that an approval of this application would allow the applicant to take the benefit of the earlier consent without the burden imposed by the conditions of consent.
3. The adjoining landowners who are the Second and Third Respondents and the Strata Plan for the Calidad Building - the Fourth Respondent, also oppose the application for the same reasons as the Council together with some additional grounds.
4. At the hearing, the applicant conceded that "occupation" of the Units is not a form of development capable of being the subject of a development application under the EPA Act (Applicant's Written Submissions in Reply ("AWSR") at par 8) but contended that the application for "use" is plainly a form of development under the EPA Act. And, in circumstances where a commercial dispute between the applicant and the adjoining landowners has prevented the applicant from fully satisfying the outstanding conditions (Conditions 8, 9 and 11) of DA/1890, the applicant submitted the Court can and should grant development consent to the present application on the terms advanced which include a condition of consent for a planning agreement between the applicant and the Council.

Decision

1. For the reasons that follow, I have determined after assessment that the application is not consistent with the orderly and economic use and development of land and is not in the public interest. It is appropriate that the occupation certificates be issued for the Units (305-309) upon compliance with the relevant conditions of consent of DA/1890. Those conditions were imposed to promote the objects of the EPA Act, and there is nothing in the present application to suggest that they no longer serve that purpose. Simply stated, this is a case where the applicant having taken the benefit of the earlier consent now seeks to avoid the burden because of the stalled commercial negotiations with the Second and Third Respondents. These bilateral issues ought not operate to overcome the conditions of the consent to the respondents' disadvantage. Therefore, the application should be refused.

Background facts

1. Figure 1 from the Council's Statement of Facts and Contentions ("SOFAC") provides an overview of the site over time.
2. The development site, the Calidad Building, being Lots 1-30 in SP 99841 on Lot 1 in DP 1217580 is comprised of 30 residential apartments, with 16 apartments located within the Calidad Building adjacent to McElhone Street and 14 apartments within a new building located adjacent to the southern boundary of the site (marked red). The five units at issue are located within the top floor of the Calidad Building. The Strata Plan (SP 98841) creating this lot was registered on 1 November 2018. Although, the Fourth Respondent recalls this date as 21 December 2019 when SP 98841 was registered as a subdivision of Lot 1 in DP 1217580 and the entity known as The Owners Corporation of Strata Scheme 98441 was created.
3. When the DA/1890 for the residential apartments was lodged and assessed, between 1 December 2014 and 15 December 2015, the development site was one large lot known as 153-165 Brougham Street (marked orange).
4. The large lot was subdivided into two lots on 22 December 2016 (generally shown as red and green), and the DA/1890 was subsequently modified on several occasions under s 4.55 of the EPA Act.
5. The allotment now known as 153-159 Brougham Street, being Strata Scheme 16624 contains two strata plans (green area), being: 1. Lot 12 in SP 90950, containing the early 1830's villa known as Telford Lodge (blue area) and owned by The Owners Corporation SP90950, the Second Respondent; 2. Lots 1 and 2 in SP 16624 containing two Victorian terraces (yellow area) and owned by The Owners Corporation SP16624, the Third Respondent; and 3. Common property in SP 16624, being the approximately 7.5-metre-wide paved area between the blue and yellow area in Figure 1 - the old car park area.
6. The listed Heritage Items including the site - the Calidad Building (Heritage Item no 1222), Telford Lodge (Heritage Item no 112129) and the two Victorian Terraces (Heritage Item no 12128) are within the Woolloomooloo Heritage Conservation Area (C71).
7. The entire site (orange outlined area in Figure 1) is subject to the Sydney Local Environmental Plan 2012 ("LEP") and located within the B4 Mixed Use zone.
8. Clause 4.5 of the LEP sets out the calculation of floor space ratio ("FSR") and the site area for developments subject to the LEP. Relevantly, subcl 4.5(6) allows the inclusion of site area from an additional lot or lots on which development is being carried out provided that the proposed development includes "significant development" of the additional lot.

The events leading to the present application

1. DA/1890 was lodged with the Council on 9 December 2014. It was notified and the Council received six submissions, three in support and three objecting.
2. On 22 July 2015, following discussions with the Council the applicant amended its plans to propose "significant development" of the villa, Telford Lodge, as part of the development of the Calidad Building. This enabled the villa, the Telford Lodge site to be included in the calculation of site area and increased the gross floor area ("GFA") for the residential flat building. Additional discussions between the applicant and the Council culminated in the provision of an amended GFA and site area calculations on 18 September 2015.
3. On 14 December 2015, deferred commencement consent was granted for the development of the site for 33 new residential apartments pursuant to DA/1890. The FSR was calculated against the entire site (shown as orange in Figure 1 above) and the following conditions were imposed on the consent DA/1890/A: 1. Condition 7 imposed a requirement that the FSR for the site not exceed 1.5:1 as calculated in accordance with the LEP. 2. Condition 8 required a restrictive covenant pursuant to s 88B of the Conveyancing Act 1919 to be created burdening the development site which is the Fourth Respondent's land and the land comprising SP 16624 and the Third Respondent's land - limiting the total GFA and height of the buildings occupying that development site prior to the issue of occupation certificates. 3. Condition 9 required, prior to the amendments discussed below, that the conservation works for, relevantly, the villa, Telford Lodge as outlined in the Conservation Works and Maintenance Schedule, be carried out to the satisfaction of the Council prior to the issue of any interim or final occupation certificate. 4. Condition 10 required a cyclical maintenance plan "to guide future maintenance of the site which is to be carried out regularly by the owners/operators of the site". The plan was required to be submitted to the satisfaction of Council's Urban Design and Heritage Manager prior to the issue of an occupation certificate. The Fourth Respondent is relevantly such an owner. It is intended to be burdened by the plan's requirements. A schedule prepared by ArchitectureProjects dated October 2017 was submitted and approved by the Council and is discussed in the Joint Report of the heritage experts ("JHR") filed on 11 December 2019. 5. Condition 11 required the creation of a positive covenant pursuant to s 88B of the Conveyancing Act burdening the Fourth Respondent's land, being the development site, and the land of the other owners' corporation respondents, requiring compliance with the Cyclical Maintenance Plan for, relevantly, the villa Telford Lodge prepared pursuant to Condition 10.

The planning agreement

1. Because the applicant says it is prevented from complying with Condition 9, it proposes, what it describes as "a creative approach of seeking to fund the works - the remaining works to Telford Lodge - that are the subject of condition 9 " through a condition of consent for a planning agreement between the applicant and the Council.
2. The first version of the planning agreement had a monetary limitation to $150,000 but at the hearing this limitation was removed and the latest version of the planning agreement dated May 2020 (Exhibit C) has no monetary limitation. Although, senior counsel for the applicant, Mr Lazarus submitted that the offer was far from "carte blanche for payment of any amount of money" and subject to the terms outlined in the draft agreement. Put simply, the applicant asks the Court to impose a condition of consent requiring the Council enter into a planning agreement with the applicant, pursuant to s 7.4 of the EPA Act, to provide funds for a public purpose - being the completion of the conservation works to Telford Lodge (not limited in value) and supported by a bank guarantee in the sum of $350,000.
3. The terms of the draft planning agreement at p5 define the conservation works, as referable to the 8 August 2015 document the subject of Condition 8 of the existing consent. And, while at p4 there is reference to the definition of additional works (for example a change to the veranda not the subject of the conservation works schedule but additional works identified by Ms Hill and formalised by a s 4.55 modification to the consent - said to be agreed by the Third and Fourth Respondents) - the proposal is to otherwise stick to terms of Condition 8 in terms of the conservation works.
4. And, in the event of a disagreement about the works - which is a primary concern of the Fourth Respondent - accepting that the mechanism for the funding of the works is in clause 5 which involves at clause 5.2 the sourcing of proposals for the carrying out of the relevant works to be agreed by an independent quantity surveyor and heritage consultant (clause 5.3A), the applicant submits that clause 5.4 makes it clear that the funding obligation only relates to the August 2015 schedule, rather than the additional works. Then there is clause 8.2 that provides for a bank guarantee in the sum of $350,000 payable to the Council to ensure that the developer's obligations - that is, to fund the works - are complied with.

The applicant's undertaking to the Court should the Council decline to enter into the proposed planning agreement after the grant of consent

1. Assuming, the Court grants development consent on the applicant's terms and the Council maintains its current position not to enter into the planning agreement in the terms offered in the draft dated 7 May 2020, the applicant proposes an undertaking to the Court to comply with the Council's obligations under the draft planning agreement as if the draft planning agreement were a binding contract entered into with the Council (Tcpt, 11 May 2020, pp 44-46 (45-10)).
2. The effect of the undertaking is to do unilaterally what the Council and other respondents contend cannot be done bilaterally.
3. To be plain, the undertaking is said to counter the argument advanced by the respondents that s 7.73 of the EPA Act might provide an available source of power to compel a developer to comply with a planning agreement, but it cannot compel the Council to do so. In explaining the undertaking the applicant did not resolve the issue of access to the Third Respondents' villa if prevented - which is a concern because the Council and Fourth Respondent has no control of access absent an agreement with the relevant owner or an order from the Court.
4. It is against that background that I now turn to address the contentions the parties have asked me to address.

Contentions

1. The five contentions justifying refusal of DA/952 are said to be: 1. Inconsistency with the objects of the EPA Act, which raise two preliminary questions: 1. Is this a properly made development application under the EPA Act? 2. Is this an application for "use" under the EPA Act? 1. Floor Space Ratio, 2. Public Interest, 3. Heritage; and 4. Voluntary Planning Agreement ("VPA").
2. These contentions are particularised in the Council's SOFAC dated 12 November 2019 and addressed in the Council's written submissions dated 1 May 2020.
3. The Second and Third Respondents have provided a Statement of Facts and Contentions dated 10 December 2019 and written submissions dated 4 May 2020. Except as summarised below, they embrace the Council's contentions and submit that any consent granted should be subject to conditions in the same terms as Conditions 8-11 of DA 1890 as modified.
4. The Fourth Respondent, being joined pursuant to orders dated 18 December 2019, provided a Statement of Facts and Contentions dated 30 March 2020 and written submissions dated 4 May 2020. It opposes the occupation and use of the five remaining Units without first satisfying the outstanding conditions and embraces the other respondents' evidence and contentions.
5. For clarity, when I make reference to the Council's submissions, it should be as read referencing all respondents.
6. The applicant's submissions dated 22 April 2020 and written submissions in reply dated 7 May 2020 address the contentions.
7. I have also had the benefit of reading that transcript of the proceedings.

Expert evidence and lay submissions

1. To assist the Court, the parties retained the following experts: Heritage Town Planning Applicant Ms Jennifer Hill Mr James Harrison First Respondent Mr Tony Smith Mr Matthew Girvan Second and third Respondent Mr Robert Moore Fourth Respondent Ms Kate Paterson

1. In addition to providing statements of evidence and joint reports, the experts (apart from Ms Paterson) accompanied the parties and the Court on a view of the site at the beginning of the hearing. The view included an interior inspection of the Telford Lodge, and an view of the outside of the Calidad Building and the two Terraces and the area between referred to as carpark area. Later, in Court, the experts including Ms Paterson gave concurrent evidence - via AVL, about the state of completeness of the conservation works to Telford Lodge and the likely costs of the outstanding works.

How complete is the work and what is the likely outstanding cost?

1. Clearly, the extent of the completed conservation works has implications for both the cost of completing those works, and on the extent and cost of the maintenance regime which falls to the Fourth Respondent. Mindful, that under Condition 11, the positive covenant to burden the strata owners' corporation is to relate only to the cyclical maintenance of the competed work. It is not intended to impose a burden on the strata owners' corporation to bear the cost of completing the originally required works - which is the outcome Mr Girvan, the Fourth Respondent's planner anticipates if the developer does not complete the requirements of the consent during the development of the project (Joint Planning Report ("JPR") filed on 12 December 2019 at par 42).
2. As it presently stands Condition 9 of the consent requires all the works to be completed, and to the satisfaction of the Council. Ms Hill stands alone in her assessment that 90 % of the works, as identified in the scope of work dated 8 August 2015, are complete. And, her initial evidence that the extent of outstanding work has a cost of approximately $88,000. How this figure was derived is not clearly set out, and final cost remains uncertain. In any event, it is relevant to note that Ms Hill 's support for the application is predicated upon the imposition of the VPA to fund the outstanding works.
3. Mr Moore and Ms Paterson have an entirely different opinion to that of Ms Hill. They have assessed the conservation works as "significantly incomplete" (JHR1 pp 9 and 13). With Mr Smith expressing the view that some of the completed work are unacceptable and require rectification (JHR at 13.4.1) Mr Moore also believes that some parts of the interiors were completed in an inappropriate manner (JHR p 16).
4. It is fair to say that the final heritage evidence about what has been done and why or the extent of the works endorsed by the approved maintenance regime is far from settled. Fortunately, for the purposes of determining this appeal and the conditions at issue, the parties are generally agreed that there is not a great deal to be gained by descending into that detail of how much has been done- of what was required to be done, and how well that has been done. The relevant matter is that the heritage experts agree that there is conservation work outstanding on the Telford Lodge land and the relevant condition of DA /1890 has not yet been satisfied. The "significant development" proposed to Telford Lodge which enabled the area of that Lot to be included within the site remains outstanding.

The commercial dispute sitting behind this appeal

1. The parties are agreed that it is inappropriate to delve into the detail of the commercial dispute sitting behind this appeal. This matter is simply irrelevant to my assessment of this DA save to acknowledge that the developer was able to achieve a greater development yield on its land by using the floor space from the adjoining landowners' land - (GFA of 601m2) - the consequence being that the balance of the conditions means that these adjoining landowners cannot now use that GFA because that would be double dipping and contrary to cl4.5 of the LEP. In those circumstances, the heritage experts' evidence about opportunities for adaptive reuse of the heritage buildings does not change the background fact that the GFA has been fully utilised and to avoid the commercial dispute, the applicant now seeks to amend this consent to change the planning outcome. Enough said.

Lay submissions

1. In assessing and determining a development application under ss 4.15 and 4.16 of the EPA Act, I am required to consider the matters of relevance to "the development the subject of the development application" in s 4.15(1): Baron Corporation Pty Limited v The Council of the City of Sydney [2019] NSWLEC 61 (Baron) at [5].
2. The development the subject of this DA is the occupation and use of the five residential apartments (Units 305-309) within an existing residential flat building.
3. According to the agreed facts, a company associated with the applicant - that owns Units 305-309, has entered into agreements to sell the Units with completion of the sale dependent upon the issue of an occupation certificate. These purchasers naturally are frustrated at the delay in the settlement of their contracts for sale generated by the commercial dispute. Some of them have lodged submissions with the Council voicing their concerns. These submissions have been admitted into evidence in the Council's case as part of the public interest (Exhibits R1.8 and R1.9). A further submission from a purchaser, Mr Gelberg was received by the Court after the conclusion of the hearing, and before this judgment. It was provided to the parties at a Court mention. Relevantly, the submissions arising from the commercial dispute whilst relevant as part of the public interest must be considered and weighted with all the evidence against the relevant matters under the EPA Act.
4. For completeness, I note the Court has also received the detailed submissions opposing the DA from the Owners Corporation SP 16624 and the adjoining landowners lodged at the notification stage, now parties to the proceedings.

EPA Act

1. The objects of the EPA Act are identified at s 1.3. They include "to promote the orderly and economic use and development of land" (s 1.3(c)).
2. "Development" is defined in s 1.5(1)(a) to include "the use of land".
3. "Land" is defined in s 1.4(1) and includes "a building erected on the land".
4. "Building" is defined to include "part of a building".
5. The matters for consideration in the determination of a development application are set out in s 4.15. 4.15 Evaluation (cf previous s 79C) (1) Matters for consideration - general In determining a development application, a consent authority is to take into consideration such of the following matters as are of relevance to the development the subject of the development application - (a) the provisions of - (i) any environmental planning instrument, and (ii) any proposed instrument that is or has been the subject of public consultation under this Act and that has been notified to the consent authority (unless the Planning Secretary has notified the consent authority that the making of the proposed instrument has been deferred indefinitely or has not been approved), and (iii) any development control plan, and (iiia) any planning agreement that has been entered into under section 7.4, or any draft planning agreement that a developer has offered to enter into under section 7.4, and (iv) the regulations (to the extent that they prescribe matters for the purposes of this paragraph), (v) (Repealed) that apply to the land to which the development application relates, (b) the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality, (c) the suitability of the site for the development, (d) any submissions made in accordance with this Act or the regulations, (e) the public interest. (2) Compliance with non-discretionary development standards - development other than complying development If an environmental planning instrument or a regulation contains non-discretionary development standards and development, not being complying development, the subject of a development application complies with those standards, the consent authority - (a) is not entitled to take those standards into further consideration in determining the development application, and (b) must not refuse the application on the ground that the development does not comply with those standards, and (c) must not impose a condition of consent that has the same, or substantially the same, effect as those standards but is more onerous than those standards, and the discretion of the consent authority under this section and section 4.16 is limited accordingly. (3) If an environmental planning instrument or a regulation contains non-discretionary development standards and development the subject of a development application does not comply with those standards - (a) subsection (2) does not apply and the discretion of the consent authority under this section and section 4.16 is not limited as referred to in that subsection, and (b) a provision of an environmental planning instrument that allows flexibility in the application of a development standard may be applied to the non-discretionary development standard. Note - The application of non-discretionary development standards to complying development is dealt with in section 4.28(3) and (4). (3A) Development control plans If a development control plan contains provisions that relate to the development that is the subject of a development application, the consent authority - (a) if those provisions set standards with respect to an aspect of the development and the development application complies with those standards - is not to require more onerous standards with respect to that aspect of the development, and (b) if those provisions set standards with respect to an aspect of the development and the development application does not comply with those standards - is to be flexible in applying those provisions and allow reasonable alternative solutions that achieve the objects of those standards for dealing with that aspect of the development, and (c) may consider those provisions only in connection with the assessment of that development application. In this subsection, standards include performance criteria. (4) Consent where an accreditation is in force A consent authority must not refuse to grant consent to development on the ground that any building product or system relating to the development does not comply with a requirement of the Building Code of Australia if the building product or system is accredited in respect of that requirement in accordance with the regulations. (5) A consent authority and an employee of a consent authority do not incur any liability as a consequence of acting in accordance with subsection (4). (6) Definitions In this section - (a) reference to development extends to include a reference to the building, work, use or land proposed to be erected, carried out, undertaken or subdivided, respectively, pursuant to the grant of consent to a development application, and (b) non-discretionary development standards means development standards that are identified in an environmental planning instrument or a regulation as non-discretionary development standards.

Contentions

1. Before anything else I need to address, the two preliminary questions: 1. Is this a properly made development application under the EPA Act? 2. Is this an application for "use" under the EPA Act?
2. Next, I will deal with the Second and Third Respondents' contention about cl 4.6, then Contention 5 and finally Contentions 1 and 3.

Position of the Council

1. The Council's written submissions dated 1 May 2020 acknowledge that this application is a consequence of a commercial dispute between the applicant and the adjoining landowners, which has prevented the applicant from satisfying the conditions attached to the original consent. It also acknowledges that the applicant has been seeking to resolve this commercial problem through various applications to Council to modify the consent. Despite this, the Council submits that the applicant has been aware of the obligations under the conditions since consent was granted. Moreover, it proceeded with construction of the apartments with knowledge that the conditions would need to be satisfied prior to the issue of occupation certificates. It acknowledged, when seeking interim occupation certificates for 25 of the apartments, the importance of the five remaining apartments continuing to be subject to the conditions in order to provide security and incentive for their completion.
2. The Council rejects the applicant's submission that the conditions can be enforced against the adjoining landowners and the Fourth Respondent and, as a consequence, the Council need not be concerned about non-compliance (AWS at pars 14(a), (c), 45-46 and 50-51). Such an outcome in circumstances where the last modification to DA/1890 proceeded on the basis of the applicant's offer of the five units as security for completion makes it all the more inappropriate.
3. The Council contends that DA/952 does not promote the orderly and economic use and development of the land which is an object in s 1.3 of the EPA Act.
4. In addressing this issue, the Council invites me to consider first whether this application is a properly made development application under the EPA Act.

Is this a properly made DA?

1. In accepting that it is possible for multiple development consents to apply to the same parcel of land (AWS at par 17) the Council submits that "it is significant that the applicant already has consent for the proposed use. The issue is not one of inconsistency with DA 1890; it is whether the "occupation and use" of the 5 apartments can be the proper subject of a development application".
2. The Council refers me to s 1.5(1) of the EPA Act which defines "development" for the purposes of the EPA Act. It submits, that in order to be a "development application", the proposed activity must be "development" within the meaning of that sub-section. The development is described in DA 952 as "occupation" and "use".

Is "occupation" a form of development?

1. Of the categories enumerated in s 1.5(1), the Council submits that the only one which might be apt to capture "occupation" would be s 1.5(a), which identifies "the use of land" as a form of development.
2. "Use" under s 1.5(1)(a) is not defined in the EPA Act. However, the EPA Act distinguishes between "use" and "occupation" (as, it appears, does the applicant in using "occupation and use" in DA/952).
3. The issue of occupation certificates is now governed by Pt 6 of the EPA Act, which commenced in September 2019. Those amendments removed the availability of interim occupation certificates. The provisions of the EPA Act which dealt with occupation certificates prior to these amendments utilised the same distinction between "occupation" and "use". As it now stands, s 6.10(1) (formerly s 109H) states that: An occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent or complying development certificate, or any requirements of a planning agreement referred to in section 93F that, by its terms, are required to be complied with before such a certificate is issued, have been met.

Finding - development consent is not required for occupation

1. The applicant accepts that the scheme of the EPA Act does not contemplate a development application being made for the grant of occupation certificates.
2. For the reasons submitted by the Council as summarised above, I accept that the process of obtaining occupation certificates is distinct from that of obtaining development consent, and compliance with the conditions of, relevantly, an applicable development consent, is a necessary precondition to obtaining occupation certificates. Consequently, "occupation" is not a form of "use" as the word is used in the EPA Act, and therefore does not fall within the meaning of "development" under the EPA Act.

Is this an application for "use"?

1. The Council and the other respondents submit that this application raises the question of whether, separate to the occupation of the apartments, there is a "use" which would bring the application within the meaning of s 1.5(1)(a).
2. Relevantly, s 4.2(1) of the EPA Act provides: 4.2 Development that needs consent (1) General If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless - (a) such a consent has been obtained and is in force, and (b) the development is carried out in accordance with the consent and the instrument. Maximum penalty - Tier 1 monetary penalty.
3. The Council submits the development within Zone B4 land under the LEP does not fall within one of the uses permitted without consent, so development consent is required under s 4.2.
4. However, where consent to develop the apartments for residential use has already been obtained and is in force within the meaning of s 4.2(1)(a) (s 4.19), there is no need for development consent in order to use these apartments for residential occupation. (Accepting that they cannot be occupied until occupation certificates are issued). This is not a case where the applicant is proposing a change of use.
5. On that basis, the Council submits that this application is not for a form of "development" for the purposes the EPA Act.
6. The adjoining landowners make the following supplementary submissions (Second and Third Respondent's supplementary submissions ("2RWS") at pars 4-16).
7. Division 4.1 of the EPA Act includes s 4.19 which provides; A development consent that authorises the erection of a building (but not the use of the building once erected) is sufficient to authorise the use of the building when erected for the purpose for which it was erected if that purpose was specified in the application for development. This section does not authorise the occupation of such a building if Part 6 requires an occupation certificate to be issued.
8. On any approach to the consents obtained by the applicant, the five units at issue are able to be used for residential purposes either because of the existing consent or because of the operation of s 4.19. In that circumstance, there is no need to authorise the residential use of the five units.

The applicant's response

1. The applicant submits that the application for the "use" of the five apartments is a form of development pursuant to ss 1.5(1) and 1.4(1); 1. "development" is identified in s 1.5(1)(a) to include "the use of land"; 2. "land" is defined in s 1.4(1)(d) to include "a building erected on the land"; and 3. "building" in s 1.4(1) is defined to include "part of a building".
2. The existence of a development consent does not affect the power to grant a fresh consent and a fresh consent may be inconsistent with the conditions of the first consent: Wingecarribee Shire Council v Pancho Properties Pty Ltd (2001) 117 LGERA 104; [2001] NSWCA 271 at [42]-[47].
3. In this instance the first consent DA/1890 authorised the use subject to conditions including preconditions. The present application seeks a consent to authorise that use without any conditions save for a condition requiring the applicant and Council to enter into the planning agreement.
4. The form of the development - the use of land applied is on different terms. It is unrelated to the GFA of the building and, if carried out will only involve the use of part of the existing building on different terms.
5. The applicant submits that the adjoining landowners and the Fourth Respondent's 'submission that there is no power to grant consent because it is already authorised under the DA/1890 or by operation of s 4.19 fails to acknowledge the opportunity for multiple consents. The cases they rely upon do not in fact support the case they advance. Instead, they deal with circumstances where consent was purported to be granted to development, the carrying out of which was prohibited or permissible without consent under the relevant LEP. The decision of Ocean Shores was referring to development that did not need consent when Preston CJ stated at [14] "A consent authority has no power to grant development consent to development that does not need consent …". Similarly, the relevant passage from Pearlman CJ in Precision Rubber - relied upon by Preston CJ was as follows: "If no consent is required to a development pursuant to the provisions of the relevant environmental planning instrument, then a person will not be in breach of the Act if that person carries out that develop. If no consent is required, then the Council has no function in relation to that development. It is not empowered to grant development consent where no development consent is required. If it purports to do so, as happened in the circumstances of this case, its grant of consent is superfluous and has no legal effect. It is not development under div of PT iv to carry out development."

Finding - this a development application for "the use of land" under the EPA Act

1. The development the subject of the development application is clearly a form of development for the purposes of the EPA Act being "the use of land" pursuant to ss 1.5(1) and 1.4(1).
2. Whether there is an existing consent for the residential use expressly or by operation of s 4.19 in my view is irrelevant because the EPA Act provides opportunity for multiple and inconsistent consents for the same land.
3. Furthermore, the authorities acknowledge that there is no relevant prohibition, express or implied, which impinges upon the application making process. The EPA Act provides an opportunity to make an application for development - irrespective of the fact that there is no opportunity after assessment to grant consent or an earlier consent has been granted.
4. In the decision of Currey v Sutherland Shire Council and Russell (2003) 129 LGERA 223; [2003] NSWCA 300, Spigelman CJ clearly addressed this issue at [35]: "35 I see very little, if any, scope in this legislative scheme for the concept of a "valid" application. Citizens are entitled to apply to authorities for whatever they like. The relevant prohibition in the legislative scheme is found in s 76A, which prohibits development without consent, where an environmental planning instrument provides that development may not be carried out except with consent. There is no relevant prohibition, express or implied, which impinges upon the application making process."
5. In this instance, the building has a consent for use subject to preconditions. The present application is for residential use of the erected building on different terms.
6. The grant of development consent on different terms may be achieved by an application for development consent under the EPA Act. It is open to the applicant to make an application whether that application after assessment is approved or capable of being approved is another matter. The decision of Currey at [35] addresses this point.

The need for a cl 4.6 written request to vary cl 4.4 of the LEP

1. The adjoining landowners submit that the application needs to be accompanied by a cl 4.6 written request as the development contravenes the development standard in cl 4.4. As there is presently no cl 4.6 written request in respect to the variation of the FSR they submit that I have no jurisdiction to grant consent.
2. The adjoining landowners submits that cl 4.4 is triggered because the application is made for use of part of a building (2RWS at pars 21-33) and that cl 4.4 is not limited to the "mere erection of a building" and that this is obvious from the operative provision in cl 4.4(2) and the objective of the clause.
3. The applicant points out that the development standard in cl 4.4(2) can only be contravened if the development, if carried out, would lead to or result in a building infringing the standard: Baron at [9] and [88]. In Baron, the development at issue was for alterations and additions to an approved building which increased the GFA. The proposed development has nothing to do with GFA of a building, and if carried out it would only involve the use of a part of an existing building.

Finding - no need for a cl 4.6 written request to vary cl 4.4 of the LEP

1. I do not accept the adjoining landowners' submissions that cl 4.6 is engaged by the present application for use of part of an existing building.
2. The relevant provisions are subcll 4.6(3) and (4) of the LEP which prohibits the granting of consent for development that contravenes a development standard: unless a written request seeking to, in general terms, justify the contravention has been made and approved. It is the 'development' that must contravene the standard in order to engage cl 4.6 and this application for use of the five units simply does not do that: Baron at [9] and [88].
3. I accept the applicant's submissions on this point as summarised. The concept of "floor space ratio" operates by reference to the "gross floor area" of buildings. The terms "gross floor area" is defined in the LEP by reference to the sum of "the floor area of each floor of a building".
4. This application has nothing to do with GFA of a building - if carried out, the development the subject of the application can only involve the use of part of a building.

Contention 5: Voluntary Planning Agreement

1. The applicant submits that, as they are unable to complete the works itself due to the adjoining landowners' refusal to allow access to Telford Lodge, the proposed VPA could fund the completion of the outstanding works at no cost to the adjoining landowners or the Council or anyone else undertaking the works (AWSR at par 57). The draft planning proposal is the May 2020 version.
2. The applicant submits that the VPA is properly characterised as for a 'public purpose' according to s 7.4(1) because, with reliance on the joint heritage report, conservation of buildings of heritage significance like Telford Lodge is plainly in the public interest. The applicant draws attention to the Second and Third Respondents' acceptance that the restoration of a heritage item is for a 'public purpose'.
3. The applicant contends that the offer of the VPA is a mandatory consideration in the application's assessment pursuant to subs 4.15(1)(a)(iiia), and one that clearly supports the consent being granted.
4. In response to the Council's submissions, the applicant submits that the Council (and this Court) may require entry into the VPA as a condition of consent under s 39(2) of the Land and Environment Court Act 1979 ("LEC Act").
5. The applicant contends that although the Council's Planning Agreement Guidelines are not binding, the VPA is nonetheless consistent with it.
6. The applicant proposes that consent to the present application be granted subject to the following condition: "Prior to the issue of any Occupation Certificate in relation to Units 305-309, the Applicant and the Council are to enter into a planning agreement in the terms annexed hereto."
7. The Applicant, citing s 39(2) of the LEC Act and Sydney City Council v Ipoh Pty Ltd (2006) 68 NSWLR 411; [2006] NSWCA 300 at [34(h)], submits that this Court, standing in the shoes of the Council, does have power to require a planning agreement to be entered into as a condition of consent in connection to the development application which is the matter the subject of the appeal. Additionally, the applicant submits that a planning agreement under s 7.4 is not limited to a voluntary planning agreement pursuant to subss 7.7(3) and (4) and that such a condition can be enforced pursuant to s 9.45 of the EPA Act.

The Respondent's position

1. The Respondents' collectively contend that I do not have power to impose a condition for the proposed VPA.
2. They submit that the Court, standing in the shoes of the consent authority, has no power to impose a condition on a development consent requiring entry into a planning agreement, or accepting a monetary contribution, which would not otherwise be authorised under the EPA Act. In this respect, a s7.4 planning agreement is, as set out in s 7.4(1), a voluntary agreement or other arrangement entered into between a planning authority (or authorities) and a developer.
3. In this case, the Council is not willing to enter into a VPA as it does not consider a VPA to be appropriate. In that circumstance, there is no power under s 7.4 to order the parties to enter into a VPA. To do so would be to deprive the VPA of its voluntary nature.
4. The essentially voluntary character of a planning agreement receives further textual support from: 1. The fact that a provision of an environmental planning instrument that expressly requires a planning agreement before a development application or application for a complying development certificate can be made, considered or determined, or that prevents a development consent from being granted or having effect unless or until a planning agreement is entered into, has no effect. (s 7.7(1)) 2. The fact that a consent authority cannot refuse to grant development consent on the ground that a planning agreement has not been entered into or that the developer has not offered to enter into such an agreement. (s 7.7(2)) 3. The fact that a consent authority can require a planning agreement to be entered into as a condition of a development consent only if it requires a planning agreement that is in terms of an offer made by the developer. (s 7.7(3)) 4. The fact that a person cannot appeal to the Court against the failure of a planning authority to enter into a planning agreement or against the terms of a planning agreement. (s 7.8(1))
5. Additionally, as Mr Smith at par 13.7.1 of JHR2 observes there is no mechanism through which the agreement can be enforced, as is required by s 7.4(3)(g) of the EPA Act. The matters identified in s 7.4(3)(g) are mandatory. The VPA as contemplated - requiring as it does the provision of money for works on the villa - could not be enforced because there is no legal mechanism through which the owners of the villa could be compelled to provide access or undertake the works in the absence of them entering into a separate agreement with the Council.

Finding - planning agreement

1. Put simply, the proposed offer of a planning agreement cannot be relied upon to support the grant of consent. The agreement is not voluntary; and the Council does not accept it. The evidence is that the agreement is unlikely to achieve the necessary outcome as the adjoining owners do not accept it, and both the scope and cost of the works remains in dispute. Furthermore, the works the subject of the planning agreement are clearly for private not public purposes.
2. I agree with the Council's statutory interpretation of s 7.4 as summarised and reject the applicant's interpretation for the following reasons.
3. The Council's emphasis on the "voluntary character" of a planning agreement is not misplaced (AWSR at par 44). I do not accept by operation of the extended definition of planning agreement in s 7.7(4) that a condition under s 7.7(3) is not limited to requiring entry into a planning agreement referred to in s 7.4 which is voluntary, and which is required to provide for specified matters in s 7.4(3). The power does extend, as the applicant submits, to impose a condition to require entry into an agreement containing similar provisions to s 7.4 which is not expressed to be voluntary (AWSR at par 45).
4. A planning agreement or other arrangement under s 7.4 of the EPA Act entered into between a planning authority (or authorities) must be voluntary and for a public purpose. The text of the section is clear. The Council is not willing to enter into the proposed VPA, and in that circumstance there is no power under s 7.4 to order the parties to enter a VPA or impose entry into the proposed VPA as a condition of consent under s 7.7(3) of the EPA Act.
5. Additionally, the proposed VPA cannot be characterised for a public purpose under s 7.4(2) of the EPA Act. It does not address the principles that guide the Council in entering a planning agreement nor the Acceptability Test under the City's Planning Agreement.
6. The meaning of "public purpose" within s 7.4 (1) is one of statutory construction. As the Council points out "although "public purpose" is defined inclusively in s 7.4(2), the purposes enumerated in s 7.4(2) all share two key characteristics. The first is that they have a dimension of public utility through the provision of a service or infrastructure which can be used by the public or a portion of the public. The second is that they pertain to matters over which the Council can exercise control".

Contention 1 and 3 - Promotion of the orderly and economic development of land and the Public interest

1. The Council submits that the residential use of the five units has been approved and an occupation certificate will be issued once the conditions of consent are satisfied. That sequence of events is in the public interest as it ensures the orderly and economic development of land.
2. The development, including the construction of Units 305-309, has been approved on the basis that the conditions imposed prevent "double dipping" -consistent with cl 4.5 of the LEP, and the objects of the EPA Act. The suite of Conditions 8, 9 and 11 operate as an incentive to ensure that the conditions are complied with. In that circumstance the five apartments should not be considered in isolation from the rest of the development. They should not be assessed on a basis that ignores the fact that there is an existing consent, and that conditions were imposed under that consent to protect heritage, the environmental amenity of the area and the public interest.
3. The Council refers me to the opportunity under s 4.55 of the EPA Act that allows for the modification of consents and the fact that the applicant has previously attempted to modify the consent to remove Condition 8 and that application was refused. It submits that the orderly use of land is not promoted by an approach which circumvents the process in s 4.55 and allows the applicant to, in effect, achieve modification of DA/1890 without the consent of all the landowners across the site. This is particularly so when the last modification was granted in circumstances where the applicant identified the five units as surety for the completion of the conditions.
4. The Council is concerned that approval of this application will set a precedent which would allow developers to knowingly use the GFA of adjoining sites without consent or compensation to complete a development otherwise inconsistent with the FSR controls, and then use the lack of consent and compensation to avoid having to comply with those controls.
5. It also submits that the transfer of the risk from the applicant to the adjoining landowners and the other site owners is not consistent with the orderly development of land. The applicant has benefited from utilising the GFA of the adjoining landowners' land. The applicant now seeks to abrogate responsibility for fulfilling the condition and shift those obligations elsewhere.

The applicant's response

1. The applicant rejects the submission that they are considering the five units in isolation and in ignorance of conditions of the first consent.
2. The Council's contention that the works at Telford Lodge must be completed entirely fails to give due consideration to whether that is necessary or appropriate in the present circumstances. The applicant submits that this Court must consider the matters afresh on the merits by reference to the relevant criteria under the EPA Act.
3. This fresh consent is a valid alternative pathway for the modification of consent: Baron. In that regard, the applicant submits that the development satisfies the matters for consideration specified in subs 4.15(1)(a)-(c) of the EPA Act namely: 1. It complies with all relevant provisions of the applicable planning instruments; 2. It will have no adverse environmental, social or economic impact but will enable the Units to be actually used for their approved purpose. 3. It is located in a suitable location (JPR at pars 8-14).
4. The applicant submits that the respondents' underlying contentions that the application should be refused unless there is full compliance with the preconditions should be rejected because the consequences of the limited non-compliance with the preconditions are not material. They submit that substantial compliance has been achieved. 1. The specified conservation works for Telford Lodge the subject of Condition 9 are substantially complete, but some work remains outstanding; 2. All that remains to be done in respect of Conditions 8 and 11 is the registration of the specified covenants on the titles of the adjoining landowners' land - the covenants are in place in respect of the development land and the cyclical maintenance plan has been prepared and approved by the Council).
5. The applicant submits that these identified and limited non-compliances with the preconditions do not outweigh the considerations which support the grant of consent, compliance with the criteria in subs 4.15(1)(a)-(c), and the fact that the GFA is effectively redundant in respect of the future development of the adjoining landowners' land and the failure to register the GFA covenant on the adjoining landowners' land as required by Condition 8 is not necessary.
6. In that regard the applicant submits that given the heritage status of the land (Telford Lodge and the two Terraces land) the approval of an increased GFA is very unlikely in any event. Moreover, the absence of the GFA covenant does not foreclose the consideration of the history of the land including its role in the GFA for consent DA/1890 in any future development for that site. Condition 7 already limits the floor area on the site to 1.5:1; and the issue an occupation certificate for Telford Lodge remains subject to the requirement for the creation of the covenant which can be enforced at any time.

Finding - Contentions 1 and 3: Promotion of the orderly and economic development of land and the public interest

1. Having determined that the VPA cannot lawfully be imposed as a condition of consent I conclude for the reasons advanced by the respondents, as summarised above, that the grant of consent without the conditions does not promote orderly and economic development of land and is not in the public interest.
2. For the purposes of my assessment to the public interest under s 4.15(1)(e), I am mindful that the expression when used in the statute "classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only 'in so far as the subject matter and the scope and purpose of the statutory enactments may enable": O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 at 216 cited in Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc (2014) 86 NSWLR 527; [2014] NSWCA 105 at [299]. In short, "the range of matters relevant to the public interest is very wide": Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36; (2012) 246 CLR 379 (French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ) at [42].
3. As submitted by the applicant the assessment of this 'fresh' application against the criteria of s 4.15 of the EPA Act cannot be in isolation from the existing consent and the preconditions.
4. The evidence is that the existing residential flat building, including the construction of Units 305-309, has been approved on the basis that the pre-conditions were imposed to avoid double dipping and to promote the objects of the EPA Act. The suite of Conditions 8, 9 and 11 operate as an incentive to ensure compliance.
5. Based on the evidence before me I have decided that the object in s 1.3(c) of the EPA Act and the public interest are best served by the works being completed prior to the issue of the occupation certificates and a restrictive covenant being registered on the title to prevent double dipping. In the absent of the conditions there is no assurance that the conservation works will be funded and completed and there is no satisfactory mechanism in place to avoid double dipping: cl 4.5 of the LEP.
6. If, contrary to my finding I did have power to impose a condition of consent requiring the imposition of the planning agreement in the terms proposed, I would not grant consent to the development application. My reasons for so determining may be succinctly stated.

Orders

1. The Court orders that: 1. The appeal is dismissed. 2. The exhibits are returned except for R2.1 and R4.2.

Senior Commissioner of the Court DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 November 2020