Lo Brothers Company Pty Limited v Inner West Council

Key planning controls

1. The site falls within the B2 Local Centre zone under Ashfield Local Environmental Plan 2013 (ALEP). The zone objectives are as follows: • To provide a range of retail, business, entertainment and community uses that serve the needs of people who live in, work in and visit the local area. • To encourage employment opportunities in accessible locations. • To maximise public transport patronage and encourage walking and cycling. • To encourage residential accommodation as part of mixed use development.
2. While the characterisation is contested by Council, the application is made as "shop top housing", a permissible use within the B2 zone.
3. A maximum building height development standard of 10m applies to the site, which the proposal contravenes. The Applicant relies on the facultative powers of cl 4.6 of the ALEP to justify the contravention.
4. The site is located within Summer Hill Central Conservation Area under ALEP. It is also within the vicinity of a number of heritage items. Clause 5.10 of ALEP requires attention.
5. The site falls within a "flood planning area" pursuant to cl 5.21 of ALEP, with flooding effects raised as a contention in this matter by Council.
6. State Environmental Planning Policy No 65 - Design Quality of Residential Apartment Development (SEPP 65) and State Environmental Planning Policy No 55 - Remediation of Land (SEPP 55) also apply and are considered below.
7. Inner West Development Control Plan 2016 (IWDCP) also applies. Relevant provisions are dealt with in the evidence.

Proceedings

1. Proceedings commenced with an on-site inspection but otherwise were conducted virtually, using the Microsoft Teams platform.

Proposal

1. The application before the Court at the commencement of proceedings sought consent for the demolition of existing improvements and the erection of a three storey mixed use development containing ground floor retail premises and twelve shop top housing units. Car parking spaces and a loading bay were provided on site, relying on a one-way traffic movement, ingressing via Lackey Street and egressing via the rear. Removal of a tree located upon 32 Lackey Street, for which owners consent had been provided, was also proposed.
2. Early in proceedings, the Applicant sought to amend the application under cl 55(1) of the Environmental Planning and Assessment Regulation 2000 (EPA Regulation). Some aspects of the proposed amendments might be thought of as regular matters, following up on certain findings of expert reports and the like. However, a quite irregular amendment was also proposed involving an attempt to address a deficiency of the original application. Briefly here, as it came to pass, the originally proposed vehicle egress was found to necessitate works on land for which owners consent was unavailable. The amendment involved the removal of that aspect of the proposal which involved works on this land (ie the originally proposes vehicular egress). Council opposed the application to amend based on a number of essentially legal arguments.
3. The Court, exercising its functions under s 39(2) of the Land and Environment Court Act 1979, also has power under cl 55(1) of the EPA Regulation to agree to an applicant amending a development application. Based on the explanation provided in a procedural finding made by me in Lo Brothers Company Pty Limited v Inner West Council [2022] NSWLEC 1094 ('Lo Brothers 1'), I agreed to the Applicant amending this development application. Subsequently the Court has been advised that the amendment has been lodged on the NSW Planning Portal, completing the requirements of cl 55(1) of the EPA Regulation in regard to the amendment of a development application.
4. It is necessary to provide some further particulars of the "irregular" amendment proposed by the Applicant, as it relevant to other aspects of this judgement. The most efficient approach is through a quote from Lo Brothers 1 (at [7]-[9]), which I provide below. I would also mention that the reference to Court Exhibits in this quote from Lo Brothers 1 aligns with the references otherwise provided in this principal judgement. "7 The application before the Court at the commencement of proceedings involved one-way access into the site from the east via Lackey Street, using an existing driveway between the building on the site and a building to the immediate south (38 Lackey Street).The driveway is shared between the site and 38 Lackey Street under a form of reciprocal rights, with both properties enjoying a right-of-way (ROW). This driveway will be described forthwith as the Reciprocal ROW. Egress was intended to be provided via an existing ROW to the west of the site (benefitting the site and burdening a property described as SP 60881, with street address 91 Smith Street). This ROW presents as a laneway and is also enjoyed by a number of other properties. What I will call the Lane ROW meets the public road system at Smith Street, a little to the south and east of the site. 8 The Lane ROW is used for rear vehicle access to the site at present. The site's existing internal accessway intersects with the Lane ROW more to the north of the site's eastern property boundary. At present there is clear and open access for vehicles between the site and the Lane ROW in this northern location. The proposal would shift the positioning of the access (and its intersection with the Lane ROW) more to the south of the site's eastern property boundary. This new access alignment would be used for site egress, as part of the new one-way traffic movement arrangement. The problem which arose (and which came to the Court only at commencement of proceedings) was that there are some trees near the boundary line, but within the area of Lane ROW, which would block this proposed new access configuration. These trees would need to be removed were the proposed access configuration to be effected. There was no owner's consent available from the owners of SP 60881 to allow removal of the existing vegetation. It followed that to grant approval for site vehicular egress, and necessarily this tree removal, would be outside power. 9 The Applicant sought to amend the application so that consent would not be needed for the removal of the vegetation on land in SP 60881. It followed that the amending plans did not provide for site egress. Exhibit M notes that there will be a need, ultimately, for the vegetation's removal, but that their removal is not sought as part of this application. A deferred commencement condition could provide that the consent not operate until tree removal occurs and site egress is provided."

Issues

1. Revised architectural drawings (Revision E plans tendered into Evidence as Ex F) formed part of the approved amendments. Notably, the changes brought the number of residential units down to eight, and provided for various other design improvements, which according to the urban design and planning experts, had the result of addressing merits issues relating to: design and amenity, desired future character, apartment mix, overshadowing, heritage and inadequate information (relating to the aforementioned topics). Here I refer to the Joint Expert Report by planning and urban design experts, tendered as Ex 7 at p 2.
2. The remaining issues for consideration in this matter (after the application amendments) can be summarised as follows: 1. Legal question as to whether the proposal is characterised as shop top housing and is thus a permissible use or not. 2. Flooding implications. 3. Concerns with proposed parking stacker. 4. Impacts of works not part of the application. 5. Other public submissions.
3. There are also some other matters requiring attention which I deal with later in the judgement.

Permissibility of the development - whether the proposal constitutes shop top housing

1. To be permissible within the applicable B2 Local Centre zone, this proposal would need to satisfy the definition of "shop top housing" under ALEP. Council submits that the eastern-most units (units 1.06 and 1.07) (Ex E) do not satisfy this definition.
2. The Dictionary to ALEP defines shop top housing as: one or more dwellings located above ground floor retail premises or business premises
3. Council submits that Units 1.06 and 1.07 are entirely above the resident parking (Council's written closing submissions emailed to Court on 19 December 2021 (CCS) par 65).
4. Both parties referenced Hrsto v Canterbury City Council (No 2) (2014) 204 LGERA 148; [2014] NSWLEC 121 ('Hrsto'). Sheahan J's conclusions in Hrsto include (at [56]): "To qualify as "shop top housing" the relevant part of the building must be truly "above" the relevant retail or commercial parts. I respectfully adopt the Council's submissions (pars 33 - 36), set out in [34] above."
5. The adopted submissions of the respondent Council referenced by Sheahan J are as follows (see Hrsto [34], as follows): "33. ... a dwelling must be in the same building as the ground floor retail premises or business premises and on a floor of that building that is at a level higher than the top most part of the ground floor retail premises or business premises in order to be characterised as "shop top housing" as defined. 34. Residential development that has a floor level that is lower than the top most part of ground floor retail premises or business premises could not be properly characterised as "shop top housing". 35. The Respondent accepts that dwellings do not need to be directly or immediately above ground floor retail premises or business premises in order to be characterised as "shop top housing". If it was intended that "shop top housing" be limited to dwellings that are directly or immediately above ground floor retail premises or business premises it is expected that those words would have been included in the definition of the term 'shop top housing'. 36. The Respondent contends that dwellings must be in the same building as the ground floor retail premises or business premises for the purposes of the term "shop top housing". However, the Respondent accepts that a broad interpretation of the word "above" in the definition should be given which would suggest that the dwellings need only be at a floor level that is higher than the top of the ground floor retail or business premises and do not need to be contained in an envelope on the higher floor level that would be intersected by a line drawn vertically from within the envelope of the ground floor retail or business premises."
6. In addition, Sheahan J (Hrsto at [54]) indicates he adopted the Macquarie (Dictionary) definition of "above", referencing as follows (at [33]): "Council refers (par 31 on p8, not p10) to the definition of "above" in the Macquarie Dictionary (4th ed., 2005), namely "in or to a higher place; overhead", and submits (pars 32f on p8, not p10) that the "housing" indicated by the term "shop top housing" must be "at a place or level that is higher" than "the top most part of the ground floor retail premises or business premises ..."
7. Council, in this case, picks up the Macquarie Dictionary reference to "overhead", when defining "above", and argues that (Council's Outline of Closing Submission provided by email on 19 December 2022 (CCS) par 66): "A tension exists within his Honour's adoption of the Macquarie definition of above, including "overhead", his use of the adjective "truly" (see Hrsto [56]), and his adoption of the council's submissions."
8. Council argued the tension was resolved in Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113 ('Arco Iris') where at [21], Moore J found in regard Sheahan J's decision in Hrsto: "… His honour held that it was necessary for the purpose of the definition of shop top housing for the lowest point of any dwelling that was proposed to be regarded as shop top housing to be entirely above ground floor retail premises or business premises, that is there have (sic) to be a vertical surmounting of the shop top housing from the underlying qualifying premises. However, importantly for these proceedings, his honour also made it clear that it was possible for there to be a lateral displacement in such circumstances, in that there did not need to be a true directly vertical correlation between the shop top housing and the qualifying premises at the lower level."
9. Council interpreted then Senior Commissioner Moore's findings as follows: "Moore J's use of the need for a vertical surmounting of the shop top housing from the underlying qualifying premises makes clear that apart from the vertical relationship between the dwelling and the retail or commercial premises, there also needs to be a lateral relationship."
10. I prefer the Applicant's arguments in regard to this question. Units 1.06 and 1.07 are located at a level higher than the top most part of the ground floor retail premises and within the same building. This seems to me to be clearly sufficient as shop top housing, based on the findings of Hrsto, where in my interpretation, Sheahan J found no need for dwellings to be directly or immediately above ground floor retail premises if they were to be characterised as "shop top housing". The need for the examination of Arco Iris is not clear to me, but to the extent that I have, it merely confirms the above. When Moore J indicates that "it was possible for there to be a lateral displacement" (Arco Iris at [21]) in regard to the relationship, to me merely says that there is no need for the housing to be vertically above the relevant qualifying premises.

Flooding

1. There was no dispute that the site falls within a "flood planning area" pursuant to cl 5.21 of ALEP. Council contended that the development has not been satisfactorily designed to mitigate potential flooding impacts and the Court could not be satisfied in regard to the matters set out at cl 5.21(2) of ALEP (CCS par 71). Below I reproduce subcll 5.21(2) and (3): (2) Development consent must not be granted to development on land the consent authority considers to be within the flood planning area unless the consent authority is satisfied the development - (a) is compatible with the flood function and behaviour on the land, and (b) will not adversely affect flood behaviour in a way that results in detrimental increases in the potential flood affectation of other development or properties, and (c) will not adversely affect the safe occupation and efficient evacuation of people or exceed the capacity of existing evacuation routes for the surrounding area in the event of a flood, and (d) incorporates appropriate measures to manage risk to life in the event of a flood, and (e) will not adversely affect the environment or cause avoidable erosion, siltation, destruction of riparian vegetation or a reduction in the stability of river banks or watercourses. (3) In deciding whether to grant development consent on land to which this clause applies, the consent authority must consider the following matters - (a) the impact of the development on projected changes to flood behaviour as a result of climate change, (b) the intended design and scale of buildings resulting from the development, (c) whether the development incorporates measures to minimise the risk to life and ensure the safe evacuation of people in the event of a flood, (d) the potential to modify, relocate or remove buildings resulting from development if the surrounding area is impacted by flooding or coastal erosion.
2. Subsequent to completion of the joint report of the flooding experts (Ex 5), the Applicant provided a more detailed flood modelling relating to the application, which was tendered into evidence as Ex L (forming part of the amended application). Mr Bacha (expert for the Applicant) submitted that the flood modelling indicated that "external site increases in flood levels in a 1% (1 in 100) AEP event … falls within the range of 0.01 - 0.035m" (Ex 5 p 3). He argued this was "typically considered to be relatively minor" (ibid). Mr Bertacco (Expert for Council) opined that "best practice is to limit off site impacts to 0.01m" (ibid). Mr Bacha demonstrated in his oral evidence, through use of graphics, and an estimate of volumetric requirements (15-20m3 of storage within a future subsurface holding tank), that there was ample capacity for the required additional flood storage on site to achieve this requirement. A deferred commencement condition was drafted, to the satisfaction of Mr Bertacco of itself, stipulating the need to achieve the 0.01m maximum external flood level increase, and requiring demonstration of suitable detailed measures (Annexure A, deferred commencement condition C).
3. In this instance, I have given consideration to the matters requiring consideration under cl 5.21(3) of ALEP, and the matters which I would need to be satisfied with if consent were to be granted under cl 5.21(2). I believe there has been an appropriate consideration of the flooding function of the land in the development conception. The adoption of what Mr Bertacco suggests as a "best practice" approach, in limiting external impacts to 0.01m flood affectation, satisfies me that the development would not result in detrimental increases in the potential flood affectation of other development or properties. This is embodied in a deferred commencement condition, which is suitable in this instance given Mr Basha's evidence that a practical resolution was available, and it was more a matter of detailed methodology. Because of proposed conditions of consent (eg Conditions 36 and 37 in Annexure A), I am also satisfied in regard to the matters related to safe occupation, evacuation, and minimisation to risk of life and environmental harm. I conclude that I am satisfied in regard to each of the matters listed in cl 5.21(2), which means the flood-related concerns raised in cl 5.21(2) do not prevent the approval of this application. It is reasonable to conclude that the proposal with the conditions as proposed is not unreasonable on flooding grounds.

Parking stacker

1. Council is not supportive of the stacker parking system, with reliability being the biggest problem from its point of view, in my understanding. Part of the Applicant's argument, in support of the stacker parking arrangement proposed here, is that basement parking (ie as an alternative) would bring a considerably greater flood affectation. Be that as it may, in this instance, I am satisfied in regard to the proposed parking arrangement. Here I am cognisant of the relatively simple stacker system proposed here (four independent units moving only vertically) and a number of agreed conditions of consent which are likely to be of assistance with regard to the question of reliability (a back-up power system should a short term power failure occur (Condition 6) and a proposed positive covenant related to ongoing maintenance of the stacker, and provision of high standards of 24 hour support (Conditions 66 and 70A)).

Impacts of works which are likely to impact on the environment, but are not the subject of the application

1. Section 4.15(1)(b) of the EPA Act requires a consent authority, when determining an application, to take into consideration: the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality
2. I am mindful of the Court's obligation to consider likely impacts of works which are likely to impact on the environment, but are not the subject of the application, a matter considered by Preston CJ in Ballina Shire Council v Palm Lake Works Pty Ltd [2020] NSWLEC 41 ('Palm Lake'), (citing from [18]): "… the fact that works, which are likely to impact on the environment, are not the subject of the development application is not dispositive of the question of whether the likely impacts of the works need to be considered in the determination of the development application. The likely impacts of the works can be considered to be likely impacts of the development the subject of the development application where there is a real and sufficient connection between the works and their impacts and the proposed development."
3. In this instance, and despite its exclusion from the amended proposal, there is a real and sufficient connection between the proposed future vehicular egress and associated proposed future removal of trees in the Lane ROW, and the actual application before the Court, to require consideration of the impacts of the relevant works.
4. In this instance, I am satisfied that there has been appropriate consideration of likely impacts of such works. Notwithstanding the fact that the ultimately proposed egress is removed from the application before the Court (with the agreed amendment), there has been consideration of vehicular egress implications of the application. A traffic impact assessment accompanied the Class 1 Application (Traffic Impact Assessment prepared by PDC Consultants Ex B p 27), finding no unreasonable impacts. It is also noteworthy that traffic issues were not raised as a contention by Council. A point did arise during proceedings as to the traffic implications of the proposal for 38 Lackey St which was considered by the experts, and an agreed position was adopted (see [39]).
5. I also note the arboricultural assessment tendered into evidence (Ex D) in regard to intended future vegetation removal on the Lane ROW. It found three trees located near the eastern boundary of the site (T1, T2 and T3). According to Ex D, each of these trees are "poorly formed or are weed species providing minimal contribution to the amenity of the immediate area". Each of the three trees were given a "low" significance value and "low" tree retention value. The Applicant had indicated two of these three trees were intended for removal (Ex 1 p 9). I also was able to observe the trees on site, observing their location some distance along this rear laneway. It did seem to me that, given their location, the trees were not playing any landscape function of significant public value. My own observations and analysis would find no fault with Ex D's findings in regard to significance or retention value.

Public submissions

1. Three issues of relevance were raised in objecting submissions (Ex 2 Tab 9). The first is concerned with use of the Reciprocal ROW and the shared access to Lackey Street between the site and the property to the immediate south (38 Lackey Street). At present there is no directional restriction on use of the Reciprocal ROW by vehicles from either the site or 38 Lackey Street (ie in regard to ingress or egress). The proposal indicates it would use the Reciprocal ROW for one way vehicular traffic movement into the site from Lackey Street with the intention that there would ultimately be an exit path via the Lane ROW. The objecting submission sought that a ROW be granted to 38 Lackey Street over the site, to allow rear access across the site into the Lane ROW. I asked the traffic experts whether the proposal (in particular the proposed one-way traffic movement) would have an unreasonable effect on the existing use of the Reciprocal ROW for vehicle egress from 38 Lackey Street. The agreed opinion was that traffic volumes were low, to the extent that there would not be problems in that regard, and that it was reasonable to assume no change was required in regard to the existing legal access available to 38 Lackey Street.
2. There was a concern raised from the property to the immediate north in regard to structural integrity of a shared party wall. It is appropriate for conditions of consent to require the preparation of dilapidation reports in regard to at-risk properties. Agreed conditions are indicated at Conditions 21 and 22 (Annexure A).
3. A general concern was raised in regard to the use of the Lane ROW with this proposal. Setting aside the fact of the amended application (see [14]), the parties were in agreement that the site enjoys lawful use of the Lane ROW for the purposes ultimately proposed. The use of the Lane ROW was not raised in Council's contentions and there is no traffic evidence to suggest that the proposal brings an unreasonable effect in regard to its ultimate use.

SEPP 65

1. I note that SEPP 65 applies to the site (cl 5) and to the proposal (cl 4(1)). Notwithstanding the agreement of the relevant experts in regard to the design adequacies of the proposal as amended, there are jurisdictional factors that require findings of the Court before a determination is made.
2. Of relevance here, in its closing submission (CCS par 79), Council questioned the content of the design verification statement (DVS) prepared pursuant to cl 50(1AB) of the EPA Regulation, and tendered into evidence by the Applicant (Ex N). The Applicant was concerned about the raising of this issue at this time, (ie after the conclusion of the hearing) and filed an amended DVS on 10 January 2022, seeking the Court's approval of the amendment of the application to also incorporate the revised DVS. Council did not oppose this. I agreed to the amendment of the application in that respect in Lo Brothers 1.
3. The Applicant's DVS filed 10 January 2022 meets the requirements of cl 50(1AB) of the EPA Regulation. Having regard to cl 28 of SEPP 65, I have considered the design quality of the development when evaluated in accordance with the design quality principles, and the Apartment Design Guide and, in agreement with the parties, I believe that adequate regard has been had to them.

SEPP 55

1. In regard to SEPP 55 and in particular cl 7, I have considered whether the land is contaminated and accept the advice contained in the Class 1 Application (Ex B, Statement of Environmental Effects prepared by ABC Planning p 23-24), that the historical use of the land does not suggest contamination and that the requirements of cl 7 are satisfied.

Height control development standard contravention

1. Clause 4.3 of the ALEP applies a maximum building height of 10m to the site. There is no dispute that the building exceeds the height control by some 300m as a consequence of proposed "pop-up" clerestory windows along the roof plane. The Applicant relies on a written request prepared by ABC Planning dated December 2021, to engage the facultative powers of cl 4.6 of the ALEP to justify the contravention of the height control. I note that the planning and urban design experts agree that, in this instance, it is appropriate to find favourably in regard to the written request. Notwithstanding this, there are a number of prerequisites which require consideration by me prior to the engagement of these facultative powers. I consider these matters below.
2. The written request demonstrates that compliance with the building height development standard is unreasonable and unnecessary in the circumstances of the case (cl 4.6(3)(a) of ALEP). It does so, mindful of Preston CJ's finding in Wehbe v Pittwater Council (2007) 156 LGERA 446; [2007] NSWLEC 827 ('Wehbe'). The written request adopts the first "Wehbe way", successfully showing how, otherwise, the development achieves the objectives of the building height development standard. I am satisfied that the written request has demonstrated:

• the first height control objective is achieved because the proposal achieves a high quality built form as displayed in the elevations and photo montages, particularly noting that the clerestory elements would not compromise this quality given their recessed design character, and the fact that they provide an appropriate design response in regard to solar access.
• the second height control objective is achieved because of the minor nature of the breach and because the clerestory features will have no impact upon sky exposure or daylight to surrounding areas at all.
• The third height control objective is achieved because it is demonstrated through reference to cross section diagrams and a photomontage that there would be a satisfactory building transition.
• The fourth height control objective is achieved because shadow diagrams demonstrate that no unreasonable additional shadow impacts would occur.

1. The written request also demonstrates there are sufficient environmental planning grounds to justify contravening the development standard. It does this by arguments including that: (1) the clerestory feature results in a considerably better design outcome for occupants, (2) the contravening element is not generally visible and not from public places and (3) floor levels needed to be raised, associated with local flooding.
2. There is also a requirement for the Court to be directly satisfied that the proposal is in the public interest because it is consistent with the objectives of the contravened development standard and, in this case, the applicable B2 Local Centre zone. I am so satisfied. In regard to whether the proposed development will be in the public interest because it is consistent the objectives of the contravened development standard, my reasoning aligns with that outlined in the written request and documented above. I am also satisfied that the proposed development will be in the public interest because it is consistent with the objectives of the B2 Local Centre zone, because by its nature the proposal provides for retail business uses that will serve the needs of local people and visitors and encourage employment opportunities in this highly accessible location. In addition, the proposal can assist in maximising public transport patronage, and encouraging walking and cycling given its direct accessibility to transport infrastructure and other well located services. Further, the proposal directly provides for residential accommodation as part of a mixed-use development.
3. The states of satisfaction required by cl 4.6 of ALEP have been reached and there is, therefore, power to grant development consent to the proposed development notwithstanding the breach of the building height standard.

Heritage conservation

1. Under cl 5.10 (4) a consent authority must, before granting consent under this clause in respect of development within a heritage conservation area, consider the effect of the proposed development on the heritage significance of the area concerned. I have given consideration to the fact that the site falls within Summer Hill Central Conservation Area under ALEP. I note the oral advice of the experts that the proposal, as amended, would provide an improvement in heritage conservation terms when compared to the existing building on-site.

Conclusion

1. On the basis of the above reasoning, the application warrants support subject to essentially agreed conditions which were filed (without prejudice on Council's part).
2. The Court orders: 1. The request pursuant to clause 4.6 of Ashfield Local Environmental Plan 2013 to vary the development standard for Height of Buildings contained in clause 4.3 thereof, prepared by ABC Planning Pty Ltd dated December 2021 is upheld. 2. The appeal is upheld. 3. Development Application No. DA20210182, as amended, to demolish the existing improvements and erect a three-storey mixed use development containing a ground floor retail tenancy, car parking spaces and loading bay and 8 residential units above is approved subject to the conditions in Annexure A.

Commissioner of the Court Annexure A (380404, pdf) 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: 07 March 2022