KJD York Management Services Pty Limited v City of Sydney Council

Injunctions and Declarations: - declaratory judgments and orders - discretionary power to grant - no proper contradictor - relevant principles

Australian Securities and Investments Commission v Rich & Ors (2004) 50 ACSR 500; [2004] NSWSC 836; BMI Ltd & Ors v Federated Clerks Union of Australia & Ors (1983) 51 ALR 401; Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47; Edwards v Sutherland Shire Council [2006] NSWLEC 128; CASES CITED: Metzger v Department of Health and Social Security [1977] 3 All ER 444; North Sydney Municipal Council v Sydney Serviced Apartments (the Blues Point Tower case) (1990) 21 NSWLR 532; 71 LGRA 432 (1990) ; Sutherland Shire Council v Foster [2003] NSWLEC 2; Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (1993) 78 LGERA 404; Wallersteiner v Moir [1974] 3 All ER 217; Williams v Powell [1894] WN 141

APPLICANT: P J McEwen SC SOLICITORS: Kemp Strang LEGAL REPRESENTATIVES:

RESPONDENT: S Kondilios (solicitor) SOLICITORS: Maddocks

JUDGMENT:

• 10 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

KJD YORK MANAGEMENT SERVICES PTY LIMITED v CITY OF SYDNEY COUNCIL [2006] NSWLEC 218

JUDGMENT 1 HIS HONOUR: This case is about the construction of the terms of a development consent granted by the respondent, Sydney City Council, on 26 February 1979 for the erection of a multi-storey building at No. 5 York Street, Sydney, now known as "York Apartments" or "The York", for a total of 123 flats. The development consent was subsequently amended on 26 July 1979 and further amended on 2 July 1980 to increase the number of flats to 150. The applicant in the present proceedings, KJD York Management Services Pty Limited, can be described as the general strata manager of the building and it is also engaged in the business of letting serviced apartments under contractual arrangements with the apartment owners. The applicant in these proceedings seeks a declaration that the development consent as originally granted and subsequently modified permits both short term and long term residential occupation and serviced apartments.

The relevant facts 2 The council granted the original development consent pursuant to the provision of the City of Sydney Planning Scheme Ordinance made on 15 December 1958 and subject to a number of conditions, none of which expressly restricted the use of the building to permanent residential occupancy or which permitted the use of the building for the purpose of serviced apartments. It is common ground that at the relevant time the City of Sydney planning controls provided for permissibility of a residential flat building in the relevant zoning. "Residential flat building" was defined in the standard or model provisions incorporated pursuant to s 342U(3) of the Local Government Act 1919 by way of a schedule to the Act gazetted on 2 November 1962 as follows: "Residential flat building" means a building containing two or more flats, but does not include a row or two or more dwellings attached to each other, such as are commonly known as semi-detached or terrace buildings and "Flat" means a room or suite of rooms occupied or used or so constructed, designed or adapted as to be capable of being occupied or used as a separate domicile. 3 The term of "serviced apartment" was first introduced in the City of Sydney Local Environmental Plan 1996 (the CSLEP 1996") and is as follows: Serviced apartments means a building containing two or more self-contained dwellings:

(a) which are used to provide short term accommodation, but not subject to residential tenancy agreements within the meaning of the Residential Tenancies Act 1987 , and

(b) which are serviced or cleaned by the owner of manager of the apartments or the owner's or manager's agents. 4 On or about 18 February 2004, the applicant sought from the respondent confirmation that it was entitled to continue the business of serviced apartments at The York. On 3 March 2004 the respondent replied to applicant by expressing the opinion that "… the operation of serviced apartments within the building would be unauthorised" and that the applicant would be required to lodge a development application seeking approval for use as serviced apartments. 5 On or about 23 July 2004, the applicant sought approval for a change of use of the building as to allow both residential units and serviced apartments, which application was refused under delegated authority on 3 December 2004. The applicant commenced an appeal in this Court against that refusal but subsequently discontinued it by consent on the basis of the respondent's solicitors' confirmation that the council accepts that (i) the letting of apartments includes short-term serviced type letting; (ii) the original development consent includes a mixed use of residential and service type letting; and (iii) and no further development consent is required to carry out the current use. 6 The prospective purchaser of the applicant's business, however, was not satisfied with the respondent's solicitors' response and the applicant commenced a fresh appeal, seeking a declaration as set out in par [1] above. On or about 16 January 2006 the respondent indicated that it would not oppose a declaration being made to the effect that The York "enjoys consent pursuant to consent granted 23 July 1979 for use as both serviced and residential apartments". The applicant's submissions 7 Mr P J McEwen SC, appearing for the applicant relies upon the following submissions:

(1) It is relevant to take into consideration all the facts and the circumstances which give rise to the use in the present case. While the original development consent referred to the use as " flats ", the prospective use as managed or serviced apartments was then well known by the respondent and prospective purchasers. The developer of the building, Mirvac Pty Limited, commenced selling units "off plan" from about 1980. The various advertising material published during the marketing programme suggests that the development was promoted as a deluxe alternative to the first class hotels in Sydney and as providing a comprehensive range of housekeeping and cleaning services.

(2) On the commencement of occupation of the building, the majority of the flats at The York, 142 or about out of a total of 150, were operated as serviced apartments, managed by the present applicant in accordance with its contractual obligations under an agreement entered into on 3 February 1982. That has continued up until the present.

(3) The respondent not only had little doubt from early on of the anticipated style and operation of The York, but it is also relevant that the respondent now agrees that the extant user is lawful.

(4) Prior to the LEP 1996 there was no definition of " serviced apartment " or any other definition which would specifically cover the type of use which commenced at The York in 1982. The whole concept was then in its infancy in Australia.

(5) The facts considered in North Sydney Municipal Council v Sydney Serviced Apartments (1990) 21 NSWLR 532; 71 LGRA 432 (1990) (the Blues Point Tower case ) are distinguishable. In that case the provision of short-term occupancies did not commence until some 24 or 25 years after the approved residential use commenced. Conclusion 8 While I feel great sympathy for the applicant who now finds itself in need to defend the lawfulness of its business, I am unable to adopt the construction for which it contends. The description of a flat as a "dwelling" or "domicile" carries with it the notion of a degree of permanency of habitation or occupancy: North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd (1990) 21 NSWLR 532; 71 LGRA 432. The requirement for the building to be used for the purposes of "flats" or "domicile" implicates a degree of permanence in the residence and therefore suggests something more than serviced apartments: North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd (1990) 21 NSWLR 532; 71 LGRA 432; Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (1993) 78 LGERA 404.

9 Mr McEwen SC relies upon the concluding words of the relevant definition which I have set out in par [2] above, namely, " … a room or suite of rooms occupied or used or so constructed, designed or adapted as to be capable of being occupied or used as a separate domicile". He submits that there is no reference by the Court of Appeal in North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd to the definition that the room or suite or rooms be "capable" of use as a separate domicile. 10 It seems to me, however, that there are three answers to this submission. 11 Firstly, although the consent was in terms limited to the erection of the building, the consent must also extend to its use as a residential flat building: Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Councilat 408. 12 Secondly, the ordinarily meaning of "domicile" is one which implies a degree of permanence. This is confirmed by the dictionary meaning of the word. The Macquarie Dictionary defines the terms thus: 1 . a place of residence; an abode; a house or home. 2 . Law. a permanent legal residence. 13 The Oxford English Dictionary definition is: 1 . A place of residence or ordinary habitation; a dwelling-place, abode; a house or home. 2 . Law. The place where one has his home or permanent residence, to which, if absent, he has the intention of returning." 14 None of the dictionary definitions support the concept of a temporary place of residence such as a serviced apartment. 15 Thirdly, as Biscoe J pointed out in Edwards v Sutherland Shire Council [2006] NSWLEC 128 at [44]: … in Derisi v Vaughan [1983] 3 NSWLR 17 at 26, the Court of Appeal agreed with the view expressed by Moffitt P in Swane v Marsh (unreported, NSWCA 18 October 1978, No CA 297 of 1977) that " judges of first instance should not decline to apply the law as deliberately stated by a majority of a court to which an appeal from such first instance judges lies, on the view that some matter has been overlooked ". The Court of Appeal in Derisi then said: The Court of Appeal having expressed a considered view and that having stood for a number of years before the question again came before a superior court, it would seem more useful and efficient for the purposes of all those concerned with the Act to abide by the Court of Appeal's decision until such time as it was persuaded to reconsider the matter. 16 The critical issue appears to be a question of degree: use for residential units demands "a significant degree of permanency of habitation or occupancy", while use for serviced apartments indicates a significantly lesser degree of permanency of habitation or occupancy. A residential unit is one which the owner may occupy and live in; or one which, if so desired by the owner, may be leased out to a tenant for terms which may vary and are subject to the Residential Tenancies Act 1987. A serviced apartment, as I understand it, is a unit which is ordinarily hired out in a similar fashion to a hotel for short terms and which is serviced regularly by a manager. 17 The decision of the Court of Appeal in North Sydney Municipal Council v Sydney Serviced Apartment Pty Ltd is a unanimous decision of that Court which has stood for more than 15 years. It has since been followed and applied in this Court: for example by Pain J in Sutherland Shire Council v Foster [2003] NSWLEC 2. It is a decision which is binding upon me. As noted in par [15] above, it is not open to me to depart from it. 18 There are some factual differences between the present case and the Blues Point Tower case, but the same unequivocal and consistent basic approach should apply to the construction of development consents. 19 Finally, I note that the respondent council neither opposes nor consents to the applicant's claim for a declaration. That does not confer a right to a declaration. Courts do not make declarations by consent. Neither do courts make declarations merely because it is not opposed. The position neatly explained by the authors of Meagher, Gummow and Lehane's Equity Doctrines and Remedies (Butterworths Lexis Nexis, 4th ed) at 642: As consent does not confer jurisdiction, it is to be noted that parties have no automatic right to declaratory relief by consent. As Sir Robert Megarry VC said, with uncharacteristic brevity, in Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451: "The Court does not make declarations just because the parties to litigation have chosen to admit something. The Court declares what it has found to be the law after proper argument, not merely after admissions by the parties. There are no declarations without argument: that is quite plain." 20 Australian authorities appear to make a distinction between matters involving private rights and matters involving public rights. BMI Ltd & Ors v Federated Clerks Union of Australia & Ors (1983) 51 ALR 401 was a case in which the applicants presented a full argument in support of an application for a declaration, but the respondents presented no argument and were content to indicate that they raised no objection to the making of a declaration in the terms sought. In that sense the position was no different to the present case. The Full Court of the Federal Court declined to entertain the application. Keely and Beaumont JJ said (at 412- 413): It is well established that a declaration is a judicial act and ought not to be made merely on admissions of counsel or by consent, but only if the court is satisfied by evidence (see P W Young: Declaratory Orders (1975) at pp 84-5).

In Wallersteiner v Moir [1974] 1 WLR 991, Buckley LJ said (at 1029): "It has always been my experience, and I believe it to be a practice of very long standing, that the court does not make declarations of right either on admissions or in default of pleading. A statement on this subject of respectable antiquity is to be found in Williams v Powell [1894] WN 141 …" 21 Keely and Beaumont JJ then drew the distinction between a private right and public rights (at 413-414): If the matter were merely one of private right between particular parties, for example, a question as to the respective rights of parties under a contract, it may well be appropriate for a court to make a declaration as to those rights by consent. In such a case, the public and other parties cannot be affected, let alone bound, by such a declaration: see Hanson v Radcliffe Urban District Council [1922] 2 Ch 490 at 507 Halsbury's Laws of England 4th ed, vol 1 at pp 174-6.

But different considerations apply in a case such as the present. If a declaration were made, even in the terms sought, its practical operation may well extend beyond the activities of the first applicant. The claim has been fully argued by the applicants and, if we were to make the declarations sought, we have little doubt that the grant of such relief would be perceived by others as the expression by the court of its views on the matter, notwithstanding that the court has not had the benefit of any contrary argument. We acknowledge that, if it were demonstrated in a particular case that it were necessary that the question be resolved judicially, it may be appropriate for the court to appoint an amicus curiae to put the contrary view, if any, on the facts and on the questions of law which arise. 22 Williams v Powell, Wallersteiner v Moir, Metzger v Department of Health and Social Security and BMI Ltd v Federated Clerks Union of Australia continue to represent the principles for which they stand and were expressly followed recently by White J in Australian Securities and Investments Commission v Rich & Ors (2004) 50 ACSR 500; [2004] NSWSC 836 at [10]: As a general principle a court does not make declarations on matters relating to public rights, or rights analogous thereto, by consent or on admissions, but only if it is satisfied by evidence: Williams v Powell [1894] WN (Eng) 141; Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 at 225-7; Termijtelen v Van Arkel [1974] 1 NSWLR 525; Wallersteiner v Moir [1974] 3 All ER 217; Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451 at 451; BMI Ltd v Federated Clerks Union of Australia (NSW) Branch (1983) 51 ALR 401; P W Young, Declaratory Orders , 2nd ed, Butterworths, Sydney, 1984, para 601. 23 These principles have been applied in this Court. In Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47, Bignold J referred (at [50]), to "the long established practice of Courts of Equity not to make declarations by consent, or without there being any proper contradictor…". 24 Bignold J continued (at [51]): Similarly, this Court will not ordinarily make declarations by consent, or without there being a proper contradictor, or at least where as in the present case, the Respondent has filed a submitting appearance, …. Bignold J went on to note that this is especially the case where the Court's orders would probably have the effect of a judgment in rem .

25 I am thus not persuaded that the declaratory relief sought by the applicant should be granted in any event. In the present case, as was the case in BMI Ltd v Federated Clerks Union of Australia, the respondent presented no argument and it neither opposes nor consents to the applicant's claim for a declaration. The present case involves the consideration of public rights and the application of public law. Any declaration or judgment would probably operate in rem. These considerations suggest that, in the absence of a contradictor, the established practice of courts of equity should be applied. In other words, even if I had not come to the conclusion that the application claim fails, I would have declined to grant the declaratory relief which is sought. 26 The applicant's notice of motion for declaratory relief is, therefore, dismissed. The question of costs is reserved. The exhibits, except for Exhibit "A", may be returned. I hereby certify that the preceding 26 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

10/11/2006 - Incorrect citation at [11]: should read Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (1993) 78 LGERA 404 at 408. - Paragraph(s) [5] and [11]

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