Lynch v The Council of the City of Sydney

Catchwords: APPEAL — development application — dwelling house — contentions resolved — appropriate conditions of consent — whether affordable housing contribution should be imposed

Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), ss 4.15, 4.17, 7.11, 7.32, 8.7
Land and Environment Court Act 1979 (NSW), ss 34, 34AA, 39
Environmental Planning and Assessment Regulation 2021 (NSW), ss 23, 27, 38, Sch 7
Sydney Local Environmental Plan 2012, cll 2.3, 4.3, 4.4, 4.6, 6.1, 6.21, 7.4, 7.13
State Environmental Planning Policy (Resilience and Hazards) 2021, s 4.6
State Environmental Planning Policy (Sustainable Buildings) 2022, Sch 1
State Environmental Planning Policy (Housing) 2021, ss 14, 15

Cases Cited: Willoughby City Council v Blanc Black Projects Pty Ltd [2023] NSWLEC 54

Texts Cited: City of Sydney Affordable Housing Program

Category: Principal judgment

Parties: Eve Lynch (Applicant)
The Council of the City of Sydney (Respondent)

Representation: Counsel:
M Harker (Applicant)
A Singh (Solicitor) (Respondent)
Solicitors:
Beswick Lynch Lawyers (Applicant)
The Council of the City of Sydney (Respondent)

File Number(s): 2025/146859

Publication restriction: Nil

JUDGMENT

1. COMMISSIONER: This is an appeal pursuant to the provisions of s 8.7(1) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) against the terms of Development Consent D/2024/407 which provides for the demolition of existing improvements on site, excavation and construction of a new dwelling with basement garage and swimming pool at 12 Ripon Way, Rosebery (the site) granted by the Council of the City of Sydney (the Council). Specifically, the appeal relates to the terms of six (6) conditions of the subject consent: Conditions 2, 12(a), 14, 15, 45(a), (b) and (c) and 46(b).

2. The appeal was subject to conciliation on 17 July 2025, in accordance with the provisions of s 34AA of the Land and Environment Court Act 1979 (NSW) (LEC Act). Resolution of all but one issue was achieved at the conciliation conference however as full agreement was not reached the conciliation conference was terminated and a hearing held forthwith, pursuant to s 34AA(2)(b)(i) of the LEC Act.

3. The singular issue remaining following the termination of the conciliation conference was the imposition of Condition 2 in respect of an affordable housing contribution. The parties were not able to reach agreement in respect of this matter.

4. The parties consented to the admission of evidence given during the conciliation conference in the hearing, pursuant to s 34(12) of the LEC Act.

5. Notwithstanding that consent has been issued by the Council I am required to carry out an assessment under s 4.15 of the EPA Act to determine if it is lawful and appropriate to grant consent.

6. For the reasons that are set out below, I have found that the development application is acceptable. The proposed development is of an acceptable density for the site, is appropriate in its context, and does not have any unacceptable impacts. With respect to conditions, I note that all conditions are now agreed by the parties, having regard to amendments to the application, with the exception of the proposed affordable housing contribution. I have concluded that the affordable housing contribution condition sought by the Council is not reasonable in the circumstances and therefore is not imposed.

Background

7. The Council granted development consent to D/2024/407 on 15 January 2025 subject to conditions of consent. The approved development as described in the consent comprises “demolition of existing improvements on site, excavation and construction of a new dwelling with basement garage and swimming pool.”

8. As further detailed in the Council’s Statement of Facts and Contentions in Reply (Exh 2) the approved development comprises:

(a) Demolition of existing structures (b) Construction of a three-storey dwelling house, comprised of:

(i) Basement level – 1 boat parking space, 2 car parking spaces, storage and plant rooms, locker room, rumpus /gym, bathroom and dwelling entrance (ii) Ground level – playroom, 4 bedrooms, 3 bathrooms, combined living, dining, kitchen and outdoor terrace and swimming pool (iii) Upper level – bedroom with ensuite and a master bedroom suite with sun room, ensuite, study

(c) Associated landscaping, earthworks and civil works, and (d) Removal of two E**rythrina x sykesii (Coral) trees in the rear yard.

9. The site comprises 12 Ripon Way, Rosebery which as agreed by the parties is in a locality comprising predominantly residential development with a mix of single and two storey residential dwellings. The site has a total area of 1186m2 and the approved new dwelling has a gross floor area of 563m2.

The planning framework

10. The site is zoned R2 Low Density Residential, pursuant to the Sydney Local Environmental Plan 2012 (SLEP). The objectives of the zone are as follows:

• To provide for the housing needs of the community within a low density residential environment.

• To enable other land uses that provide facilities or services to meet the day to day needs of residents.

11. The proposed development is permissible in the zone and consistent with the objectives of the zone in accordance with cl 2.3 comprising a dwelling house that will provide for the housing needs of the community within a low density residential environment.

12. Clause 4.3 of SLEP imposes a maximum building height standard for the development of 7.5m. The proposed development breaches the standard having a maximum height of 7.75m. A variation request in accordance with cl 4.6 of SLEP has therefore been submitted seeking to vary the standard. I am satisfied that consent should be granted notwithstanding the contravention of the building height development standard having regard to the circumstances of the case. In particular I am satisfied that:

13. The written request, dated 14 March 2024 prepared Myriad Consulting, lodged pursuant to cl 4.6 of the SLEP adequately establishes sufficient environmental planning grounds that justify the breach in the building height development standard

14. The written request demonstrates that compliance with the standard is unreasonable and unnecessary in the circumstances of the case given that the proposal achieves the objectives of the standard notwithstanding the non-compliance and will not result in any adverse impacts, and

15. Based on the content of the written request, the proposal is in the public interest because it is consistent with the objectives of the zone and of the development standard.

16. The maximum floor space ratio (FSR) that applies to the site, pursuant to cl 4.4 of SLEP is 0.6:1. The proposed development has an FSR of 0.475:1 and is therefore compliant.

17. On the basis of the assessment report prepared by Council I accept that the proposal demonstrates design excellence as required, and having regard to the relevant matters under cl 6.21C of SLEP.

18. The proposal complies with cl 7.4 of SLEP having two car parking spaces where a maximum of 2 spaces are permitted (being on Category C land under the Land Use and Transport Integration map).

19. The site is mapped as having Class 5 Acid Sulfate Soils however the works do not require the preparation of an acid sulfate soils management plan in accordance with cl 7.14 of SLEP.

20. I am satisfied on the basis of Council’s assessment report that the site is not contaminated and that adequate consideration has been given as to whether the site is suitable for the proposed use in accordance with s 4.6 of State Environmental Planning Policy (Resilience and Hazards) 2021 (RH SEPP).

21. The proposal is BASIX affected development in accordance with Sch 7 of the Environmental Planning and Assessment Regulation 2021 (NSW) (EPA Reg) and accordingly the standards set out in Sch 1 of State Environmental Planning Policy (Sustainable Buildings) 2022 apply. An updated BASIX Certificate has been submitted prepared by Mr Iaila Iazkani (Cert No. 1748324S_02 dated 15 July 2025) as required by s 27 of the EPA Reg.

22. The development application is accompanied by owners’ consent in accordance with s 23 of the EPA Reg.

23. The Respondent notified the original development application between 31 May and 17 June 2024. No submissions were received in response to the notification.

24. I am therefore satisfied that the preconditions to the exercise of the Court’s power to grant development consent have been satisfied and that development consent should therefore be granted, subject to appropriate conditions of consent.

The conditions of consent

22. The applicant by way of appeal is seeking to have the following conditions deleted:

23. Condition 2 – Affordable Housing Contribution – Residual Land or Central Sydney – Payment in lieu of Floor Space Contribution prior to Construction Certificate

24. Condition 12(a) – Landscape of the site

25. Condition 15 – Stormwater Quality Assessment

and further to modify the following conditions:

1. Condition 14 – Stormwater Drainage Design

2. Condition 45(a), (b) and (c) – Advance Tree Planting, and

3. Condition 46(b) – Stormwater Completion Deed of Agreement and Positive Covenant.

4. The applicant sought, and leave was granted, to rely on additional information in the course of the hearing (Exh A Tab 1) including:

5. Updated Stormwater Management Plan prepared by Amuna Civil Engineering (19 June 2025)

6. Updated Landscape Plans prepared by Taylor Brammer Landscape Architects (14 July 2025), and

7. Updated BASIX Certificate (Certificate No. 1748324S_02) dated 15 July 2025 prepared by Mr Iaila Lazkani and NatHERS Certificate (HR-NYVBYZ-01) dated 15 July 2025 prepared by Paul Gradwell, House Energy Certified.

8. The additional information, in conjunction with agreed modifications to the relevant conditions of consent, satisfied Council in respect of the contentions outlined in its Statement of Facts and Contentions in Reply (Exh 2) filed 21 May 2025 excluding the proposed deletion of Condition 2 (Affordable Housing Contribution). Exhibit 7 filed by the Respondent therefore forms agreed conditions of consent with the exception of Condition 2.

9. I have considered the additional information provided and the proposed modifications to the consent conditions (other than Condition 2) and agree that the updated information is satisfactory and the proposed modifications appropriate having regard to the prevailing planning controls.

Remaining condition in dispute

26. The remaining issue between the parties then is whether Condition 2 should be imposed as part of the consent. Condition 2, as outlined in the notice of determination dated 15 January 2025 provides as follows:

AFFORDABLE HOUSING CONTRIBUTION – RESIDUAL LAND OR CENTRAL SYDNEY – PAYMENT IN LIEU OF FLOOR SPACE CONTRIBUTION – PRIOR TO CONSTRUCTION CERTIFICATE

(a) In accordance with the City of Sydney Affordable Housing Program and prior to the issue of a Construction Certificate, the applicant must provide evidence that a monetary contribution towards the provision of affordable housing has been paid to the City of Sydney Council.

(b) The contribution is $231,012.51 (indexed at 1 March each year). This is calculated by establishing the sum of the equivalent monetary contribution $11,646.22 multiplied by 3% of the total floor area for residential development (689sqm).

(c) If the contribution is paid after the indexation period in which the consent is granted, being 1 March of each year, the above contribution will be adjusted according to the Sydney LGA median strata dwelling price (‘MDP’) using the following formula.

(d) Contribution payable at Time of Payment = C x MDP2 / MDP1, where:

(i) C is the original total contribution amount payable to the City of Sydney as shown above;

(ii) MDP2 is the Median Strata Dwelling Price in Sydney LGA taken from the most recent NSW Government Rent and Sales Report at the time of indexation of the equivalent monetary contribution rate; and

(iii) MDP1 is the Median Strata Dwelling Price in Sydney LGA taken from the NSW Government Rent and Sales Report used to establish the current equivalent monetary contribution rate, being March of each year.

Contact Council’s Planning Assessment Unit at planningsystemsadmin@cityofsydney.nsw.gov.au for written confirmation of the amount payable, with indexation as necessary, prior to payment.

Reason

To ensure development contributions are paid to contribute to the provision of essential affordable rental housing infrastructure.

27. The Court notes that the numerical value of the disputed affordable housing contribution in Condition 2 has been amended by the parties following the parties’ agreement that the amount had been incorrectly calculated in the consent. The error noted was that the amount of “total floor area” that had been used to calculate the contribution was not in accordance with the definition contained in s 7.13(6) of SLEP. The definition of “total floor area” contained in the clause is as follows:

total floor area means the total of the areas of each floor of a building within the outer face of the external enclosing walls and including balconies, but excluding the following—

(a) columns, fins, sun control devices, awnings and other elements, projections or works outside the general lines of the outer face of the external walls,

(b) that part of a balcony that exceeds the minimum area required by the consent authority in respect of the balcony,

(c) ancillary car parking permitted by the consent authority and associated internal vehicular and pedestrian access to that car parking,

(d) space for the loading and unloading of goods,

(e) the floor area of a building, including balconies, that is—

(i) on land in Zone E4 General Industrial, or

(ii) used to provide affordable housing or public housing, or

(iii) used for the purpose of community facilities.

28. Notably this definition is different from the definition of gross floor area (GFA) and includes area excluded from GFA such as basement storage, plant etc.

29. The parties agree that areas of car parking and void space was incorrectly included in the calculation of total floor area for the purposes of Condition 2 in the consent. Subsequently the planning experts agreed in their joint report at Exh 3 that the “total floor area” in accordance with the definition is 625m2.

30. Accordingly, Condition 2 as drafted in the Council’s filed conditions of consent (Exh 7) has been revised by agreement as follows:

AFFORDABLE HOUSING CONTRIBUTION – RESIDUAL LAND OR CENTRAL SYDNEY – PAYMENT IN LIEU OF FLOOR SPACE CONTRIBUTION – PRIOR TO CONSTRUCTION CERTIFICATE

(a) In accordance with the City of Sydney Affordable Housing Program and prior to the issue of a Construction Certificate, the applicant must provide evidence that a monetary contribution towards the provision of affordable housing has been paid to the City of Sydney Council.

(b) The contribution is $218,377.50 (indexed at 1 March each year). This is calculated by establishing the sum of the equivalent monetary contribution $11,646.80 multiplied by 3% of the total floor area for residential development (625sqm).

(c) If the contribution is paid after the indexation period in which the consent is granted, being 1 March of each year, the above contribution will be adjusted according to the Sydney LGA median strata dwelling price (‘MDP’) using the following formula.

(d) Contribution payable at Time of Payment = C x MDP2 / MDP1, where:

(i) C is the original total contribution amount payable to the City of Sydney as shown above;

(ii) MDP2 is the Median Strata Dwelling Price in Sydney LGA taken from the most recent NSW Government Rent and Sales Report at the time of indexation of the equivalent monetary contribution rate; and

(iii) MDP1 is the Median Strata Dwelling Price in Sydney LGA taken from the NSW Government Rent and Sales Report used to establish the current equivalent monetary contribution rate, being March of each year.

Contact Council’s Planning Assessment Unit at planningsystemsadmin@cityofsydney.nsw.gov.au for written confirmation of the amount payable, with indexation as necessary, prior to payment.

Reason

To ensure development contributions are paid to contribute to the provision of essential affordable rental housing infrastructure.

31. The affordable housing contribution amount has therefore been reduced from $231,012.51 to $218,377.50.

Affordable Housing Contributions Legislative Planning framework

32. The dispute between the parties hinges on whether the affordable housing contribution should or should not be imposed in the circumstances of the case. Accordingly, the relevant legislative framework is outlined below.

33. Section 7.32 of the EPA Act provides the power to impose a condition requiring land or contributions for affordable housing. Specifically, it provides as follows:

7.32 Conditions requiring land or contributions for affordable housing

(1) This section applies in relation to a development application for consent to carry out development within an area if a State environmental planning policy identifies that there is a need for affordable housing within the area.

(2) Subject to subsection (3), the consent authority may grant consent to a development application to which this section applies subject to a condition requiring—

(a) the dedication of part of the land, or other land of the applicant, free of cost to be used for the purpose of providing affordable housing, or

(b) the payment of a monetary contribution to be used for the purpose of providing affordable housing,

or both.

(3) A condition may be imposed under this section only if—

(a) the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and

(b) the condition is authorised to be imposed by an environmental planning instrument, and is in accordance with a scheme for dedications or contributions set out in or adopted by such an instrument, and

(c) the condition requires a reasonable dedication or contribution, having regard to any other dedication or contribution required to be made by the applicant under this section or section 7.11.

(4) A consent authority that proposes to impose a condition in accordance with this section must take into consideration any land or other sum of money that the applicant has previously dedicated free of cost, or previously paid, for the purpose of affordable housing within the area otherwise than as a condition of a consent.

(5) Nothing in this section prevents the imposition on a development consent of other conditions relating to the provision, maintenance or retention of affordable housing. Such conditions may require, but are not restricted to, the imposition of covenants (including positive covenants) or the entering into of contractual or other arrangements.

(6) (Repealed)

34. In respect of s 7.32(1) of the EPA Act, the parties agree that State Environmental Planning Policy (Housing) 2021 (H SEPP) provides at s 14 that there is a need for affordable housing within each area of the State, thereby including the subject area. Further the parties agreed that Clause 7.13 of SLEP authorises the imposition of an affordable housing contribution for development as specified therein including at 7.13(1)(a)(i) in respect of “development on land at Green Square or Ultimo-Pyrmont, or on southern employment land or residual land that involves”….being “the erection of a new building the gross floor area of which is more than 200 square metres”. The parties agree that this includes the proposed development being: (a) on “residual land” as defined on the SLEP Locality and Site Identification Map; and (b) development which has a gross floor area greater than 200m2 (approved GFA of 563m2).

35. In satisfaction of s 7.32(3)(b) of the EPA Act, cl 7.13(2) of SLEP authorises a condition in respect of affordable housing and provides that:

(2) The consent authority may, when granting development consent to development to which this clause applies, impose a condition requiring a contribution not exceeding the applicable affordable housing levy contribution for the development provided for in subclause (2A) or (2C).

….

(2C) The affordable housing levy contribution for development on land at Central Sydney or on residual land is as follows—

….

(b) for development applications lodged on or after 1 July 2022—

(i) 3% of the total floor area of the development that is intended to be used for residential purposes, and

(ii) 1% of the total floor area of the development that is not intended to be used for residential purposes.

(3) A condition imposed under this clause must permit a person to satisfy the affordable housing levy contribution—

(a) by way of a dedication in favour of the Council of land comprising one or more dwellings (each having a total floor area of not less than 35 square metres and not more than 90 square metres) with any remainder being paid as a monetary contribution to the Council, or

(b) if the person so chooses, by way of a monetary contribution to the Council.

(4) The rate at which a monetary contribution is to be taken to be equivalent to floor area for the purposes of this clause is to be calculated in accordance with the City of Sydney Affordable Housing Program adopted by the Council on 26 June 2023.

….

(5) To avoid doubt—

(a) it does not matter whether the floor area, to which a condition under this clause relates, was in existence before, or is created after, the commencement of this clause, or whether or not the floor area concerned replaces a previously existing area, and

(b) the demolition of a building, or a change in the use of land, does not give rise to a claim for a refund of any contribution.

….

36. The parties therefore agree that it is open to the consent authority to apply an affordable housing contribution to the proposed development by virtue of s 7.32 of the EPA Act and cl 7.13 of SLEP (and the City of Sydney Affordable Housing Program (AHP)) however they disagree on whether the contribution applied by the Council in this instance is “reasonable” as required by s 7.32(3)(c) of the EPA Act. Notably s 7.32(3)(c) provides that a condition may only be imposed in accordance with the section if “the condition requires a reasonable dedication or contribution, having regard to any other dedication or contribution required to be made by the applicant under this section or section 7.11”.

37. The parties provided written submissions outlining their respective positions in respect of this matter.

Council’s submissions

38. In summary the Council’s position is that Condition 2 should be imposed as it is authorised by s 4.17(1)(h)(v) and s 7.32 of the EPA Act. Council states that the requirements of s 7.32 are satisfied by the H SEPP, cl 7.13 of SLEP and the AHP such that the discretion to apply a contribution in accordance with the AHP is open to it. It argues that the matters listing at s 7.32(3)(a), which are required to be considered prior to the enlivening of the power under s 7.32(3)(c) and in particular including in the requirements set out at s 15 of the H SEPP, have been satisfied by the AHP.

39. In respect of s 7.32(3)(b) the Council notes that there is no dispute that the proposed condition is authorised by s 7.13 of SLEP however that there was, now agreed, a dispute in respect of the numeric calculation of the total floor area. Further it notes that the applicant disputed the condition on the basis that the wording did not provide an opportunity for the applicant to dedicate land or dwellings. The Council notes that the condition allows payment of the contribution in accordance with the AHP which can be satisfied by dedication of dwellings where possible therefore s 7.32(2) is satisfied.

40. In respect of the substantial dispute, that is, whether the proposed condition is in accordance with s 7.32(3)(c):

"the condition requires a reasonable dedication or contribution, having regard to any other dedication or contribution required to be made by the applicant under this section or section 7.11"

Council refers to the decision of His Honour Justice Robson in Willoughby City Council v Blanc Black Projects Pty Ltd [2023] NSWLEC 54 (“Blanc Black”). At paragraphs [39] – [54] of his judgment Robson J construes the statutory scheme relating to the imposition of affordable housing contributions and in particular makes comments in respect of the reasonableness of any contribution to be applied and what can be considered by a consent authority in this regard. Council however notes that the relevant statutory scheme (specifically s 7.32(3) of the EPA Act) has been amended post the “Blanc Black” decision and therefore advises caution in the application of Robson J’s findings.

41. Council notes that Robson J at [53] and [54] of his judgment considers the concept of reasonableness and notes that this included the mandatory considerations (set out in the previous version of s 7.32(3)(c)(i)-(iii). Council highlights that the only mandatory consideration remaining in the current version of s 7.32(3) is “any other dedication or contribution required to be made by the applicant under s 7.32 or s 7.11”.

42. Council notes that at [53] of his judgment His Honour states:

“Aside from these mandatory considerations, I note in passing that the expression “having regard to” is permissive and leaves it open for a decision -maker to take into account other relevant circumstances.”

43. Council interprets this to mean that the consent authority is required to consider the reasonableness of the proposed condition taking into account any of the other stated contributions and may then consider other circumstances that are relevant to determine whether a contribution is reasonable but does not “open the floodgates to consider anything” to determine reasonableness.

44. The Council further notes that His Honour states at [54]:

“I consider reasonableness is to be determined as a question of fact by the decision-maker on the balance of the evidence adduced by the parties in relation to matters going to the mandatory considerations set out in subs (i) to (iii).”

45. Council considers that [54] is at odds with His Honour’s comment that “in passing” other matters can be considered. In summary Council considers that His Honour allows the consideration of other relevant matters to assist the consent authority in forming an opinion as to the reasonableness of the condition, with the emphasis being on “relevant matters”. In this regard the Council points to the Planner’s joint report (paragraphs 44-62) and the Affidavit of Eve Lynch (Exh C) and concludes that there are no other relevant matters. In respect of the matters indicated by the applicant to be relevant, in summary the Council says:

46. The need for larger accommodation and the affordability of the contribution are not relevant to the interpretation of reasonableness having regard to Robson J’s findings as (a) they do not relate to a mandatory matter and (b) lack of an individual’s affordability in the context of a contribution requirement is not relevant

47. The affordable housing contribution was a known cost of development and that it is unreasonable to say that a developer could stretch their construction budget to the point where they cannot afford a known development cost and then argue that it is therefore unreasonable

48. The applicant’s planning expert’s assertion that the provision would not apply to complying development does not make it arbitrary as argued as the proposal is not complying development but rather a development application to which s 7.32 clearly applies

49. The AHP includes a relevant needs analysis which justifies the imposition of an affordable housing contribution condition

50. Changes to the legislative framework support a trend to broaden the scope of a consent authority’s ability to impose affordable housing conditions on development, and

51. There is no doubt that the imposition of a contribution of any kind imposes a burden upon a developer however this does not make it unreasonable rather a factor to be planned for.

52. Accordingly, Council says that on the balance of the evidence adduced by the parties in relation to the matters going to the mandatory consideration, the imposition of the proposed condition is reasonable and that there is no other relevant evidence that should be considered that causes the proposed condition to offend the reasonableness test in s 7.32(3)(c) particularly given recent amendments to the EPA Act.

53. In coming to this conclusion Council also points to amendments over time to the relevant legislative provisions in respect of affordable housing contributions which it argues indicates a legislative trend to permit the imposition of affordable housing conditions on more developments and which remove the need to consider whether the proposed development contributes to a loss of affordable housing or creates a need for affordable housing.

Applicant’s submissions

48. The applicant does not dispute that s 7.32 of the EPA Act confers a power to require a contribution toward affordable housing but says that the fundamental issue is whether the condition is reasonable and that if it is not reasonable it is beyond the power of the consent authority to impose it by virtue of s 7.32(3)(c). The applicant argues that the proposed affordable housing condition is not reasonable as it:

49. imposes an unreasonable burden on the applicant

50. is disproportionate in quantum

51. does not accord with the broad acceptance of the need to facilitate the construction of dwellings (for all persons) by limiting the quantum of contributions payable

52. appears discriminatory in effect; and

53. is arbitrary.

54. The applicant notes that each of the maters in sub clauses 7.32(3) (a) to (c) are jurisdictional preconditions that must be met before the consent authority has the power to impose a condition requiring a contribution towards affordable housing.

55. In respect of the first precondition 7.32(3)(a), the subclause calls up s 15 of the H SEPP and the applicant says Council failed to consider the matters listed prior to determining to impose the proposed condition. In considering the matter afresh the applicant says that the Court should consider s 15 (a) and (b) in particular, which provide that:

(a) affordable housing must aim to create mixed and balanced communities, and (b) affordable housing must be created and managed so that a socially diverse residential population, representative of all income groups, is developed and maintained in a locality.

51. The applicant considers the proposed condition does not provide for social diversity, that the condition is outside of the reach of families other than the very rich and that the condition puts a sufficiently sized family house further out of the reach in respect of affordability.

52. In respect of the second precondition 7.32(3)(b), the applicant points to the incorrect calculation of Condition 2 (as discussed above) and notes that the previously calculated amount cannot be imposed as it does not accord with the AHP.

53. In relation to the third precondition 7.32(3)(c), the applicant notes that in respect of the requirement of reasonableness His Honour Justice Robson in “Blanc Black” determined at [60] that it:

“requires a decision-maker to form an opinion as to the reasonableness of the quantum of the contribution contemplated by the proposed condition, and therefore to assess whether the condition would impose an unreasonable burden upon the applicant to a development proposal”.

54. The applicant says, contrary to Council’s primary position, that this assessment is not to have regard only to “any other dedications or contribution required to be made by the applicant under this section or section 7.11” but rather that additional matters may be considered having regard to “Blanc Black” [61]. The applicant says that even if that were wrong the broader question of reasonableness is directly relevant to the question of whether or not the Court should exercise its discretion to not impose the condition. It says that the standard of reasonableness is not legal unreasonableness in a public law sense but rather objective unreasonableness according to its ordinary meaning.

55. Further the applicant asserts that the condition is unreasonable for the following reasons:

An unreasonable burden:

1. on the evidence of the owner, application of the contribution will make the development unaffordable having regard to their borrowing capacity, measures already taken to limit the cost of the build, their savings etc.
2. the owners have a large family (5 children) and therefore require a large house to accommodate that family
3. adoption of an approach by Council does not make it reasonable (if this were case s 7.32(3) would not be required to impose an overriding obligation of reasonableness)
4. the contribution calculation does not consider the impact on “mum and dad” developers building their own homes and those seeking a sufficient size home to accommodate a large family
5. Council’s feasibility analysis undertaken for the AHP was confined to mixed use residential and commercial development sites and did not include single family homes, and
6. The ability of other single family homes to pay is not relevant to whether the contribution in this case is an unreasonable burden.

Disproportionate:

1. The effect of the contribution is that the applicant would be required to fund the equivalent of the cost of building an affordable housing unit
2. The applicants are not developers who can absorb the cost with a reduced profit margin
3. An affordable housing contribution for a residential flat building in Zetland of $33,212 and $46,198 per dwelling being 5% of expected cost of development is indicative of the proposed contribution being disproportionate being 5 to 6 times greater at $218,377.50 for one dwelling and being double the percentage of the expected development cost at 10.3%
4. The proposed development will not contribute to an increase in demand for service industry and essential workers, and
5. The impact is a consequence of the decision to apply a blanket rate to all development irrespective of the development’s impact on the demand for affordable housing.

The contribution exceeds the affordability threshold:

1. A contribution of $33,000 to $46,000 per dwelling as outlined above is more aligned with recognised limits for affordability of development contributions, and
2. While not applicable the State recognises that above $20,000 s 7.11 monetary contributions become unaffordable.

The condition appears discriminatory in effect:

1. The applicant argues that the condition appears discriminatory in effect as it discriminates against large families that require a large house to meet their housing needs and also notes that only 4.7% of the dwelling stock in the City of Sydney contains more than 4 bedrooms therefore pushing larger families to build if they want to stay in the area.

The condition is arbitrary:

The applicant argues that the condition is arbitrary as:

1. it imposes a blanket rate once a development exceeds 200m2 irrespective of its impact on the developer and on the development itself

2. it does not apply to complying development

3. other similar scale development that would increase the demand for services and affordable housing (e.g. dual occupancy) could be pursued without requiring an affordable housing contribution condition, and

4. the contribution has the effect of stifling development that is more responsive to context and provides a better outcome.

5. For these reasons that applicant considers that the quantum of the contribution is unreasonable and that accordingly the Court has no power to impose it. Even if the Court did have the power that applicant says that for the reasons set out above the Court should exercise its discretion not to impose the contribution.

Expert Evidence

57. In addition to the written submissions the applicant relied on the expert evidence of Kendal Mackay (planning), Matthew Taylor (landscape) and Stuart Steine-Davis (stormwater engineering).

58. The Council relied on the expert evidence of Gavin Ho (planning), Jayden Ng (landscape) and Pablo Barreto (stormwater engineering).

59. Joint Expert Reports were filed in respect of planning, landscape and stormwater engineering however no oral expert evidence was given at the hearing, the landscape and stormwater matter being resolved by agreement and the planning matters being narrowed to the proposed affordable housing contribution condition only.

60. The planner’s joint expert report outlines the expert’s respective opinions on whether the proposed affordable housing contribution condition is reasonable and should be imposed in the circumstance. The planning experts agree as outlined at [26] to [31] that Condition 2 was previously calculated incorrectly and on the appropriate contribution amount should it be imposed. The planning experts were not required to give oral evidence at the hearing however participated in the conciliation phase of the matter. In summary as outlined in the joint report Mr Ho considers that the condition amount, as amended, is reasonable and should be applied in this instance. Mr Mackay to the contrary considers it to be unreasonable and advised that it should therefore not be applied in this instance.

Findings

61. It is common ground between the parties that in the circumstance of the case s 7.32 of the EPA Act together with cl 7.13 of SLEP and the AHP confer the power for a consent authority to require a contribution towards affordable housing. This power is discretionary. The parties further agree that if applied the relevant contribution in this case would be a contribution totalling $218,377.50 which equates to 10.3% of the build cost.

62. Council has advised, and the applicant has not disputed, that as cl 7.13 of SLEP specifies a contribution rate, not a maximum rate, it is not open for a reduced rate to be applied having regard to the circumstances of the case. Rather the decision maker has the discretion as to whether to apply the condition or not. Section 7.32(3) provides that a condition may be imposed under the section only if:

(a) the condition complies with all relevant requirements made by a State environmental planning policy with respect to the imposition of conditions under this section, and

(b) the condition is authorised to be imposed by an environmental planning instrument, and is in accordance with a scheme for dedications or contributions set out in or adopted by such an instrument, and

(c) the condition requires a reasonable dedication or contribution, having regard to any other dedication or contribution required to be made by the applicant under this section or section 7.11.

63. I find on the balance of the evidence that preconditions (a) and (b) have been satisfied with the AHP satisfying the relevant requirements of the s 15 of the H SEPP and cl 7.13 of the SLEP and the AHP satisfying precondition (b). I note that the parties have now agreed a revised calculation for the proposed contribution and therefore if applied the condition would be “in accordance with a scheme for dedications or contributions set out in or adopted by such an instrument” as required by s 7.32(3)(b).

64. The key issue to be decided then relates to precondition (c), that is, whether the proposed condition requires a reasonable dedication or contribution, having regard to any other dedication or contribution required to be made by the applicant under this section or section 7.11 and what matters are to be considered in deciding what is “reasonable”.

65. The parties have both referred to “Blanc Black” as an authority on this matter in which His Honour Robson J turned his mind specifically to the issue of whether an affordable housing contribution is “reasonable” and what matters are to be considered in determining “reasonableness”. The pertinent paragraphs of the judgment are [53] through [61]. In these paragraphs His Honour interrogates the matters to be considered by a decision-maker in determining whether a proposed condition constitutes a reasonable dedication or contribution under s 7.32(c) and determined that the matters outlined in the clause are mandatory considerations but also notably that the expression “having regard to” is permissive and leaves it open for a decision maker to take into account other relevant circumstances. While the mandatory matters in s 7.32(c) have changed since the version considered by His Honour, I am guided by his determination that it is not only the matters within the clause itself, in this case “any other dedication or contribution required to be made by the applicant under this section or section 7.11” that are to be considered. However somewhat problematically His Honour at [54] also notes that:

“One difficulty that arises in relation to the operation of s 7.32(3)(c) relates to the meaning to be given to the words “reasonable dedication or contribution”. Relying on the common law maxim that general words are to be given their primary and natural significance. I consider that reasonableness is to be determined as a question of fact by the decision-maker on the balance of the evidence adduced by the parties in relation to matters going to the mandatory considerations set out in subs (i) to (iii).”

66. While I note that subclauses (i) to (iii) no longer form part of s 7.32(3) this reference appears to indicate that in deciding the question of reasonableness as a question of fact the parties are to consider the evidence adduced going to the mandatory considerations rather than the mandatory considerations and other relevant circumstances as outlined at [61].

67. The expert planners in their joint report (Exh 3) provided information on contribution rates recently applied to other development in the broader locality. Mr Mackay engaged by the applicant referred to affordable housing contributions in the order of $33,000 and $46,000 per dwelling for multi-unit housing development in Zetland equating to 5.5 and 5.7% of the development cost. Mr Ho employed by the Council on the other hand referred to a number of development applications for single dwelling houses where affordable housing contribution conditions were imposed ranging from around $82,000 to $411,000 equating to generally between 4 and 5% of the total development cost. One outlier was identified by Mr Ho which equated to 7.86% of the development cost. I was not provided any evidence on whether the Council has consistently applied the contribution to all developments or whether it had used its discretion not to apply the contribution in certain circumstances. However, Council did express the view that it is not open to it, or the Court to vary the rate, having regard to cl 7.13 of SLEP.

68. The AHP provides (at s 2.2) circumstances where an exemption from an affordable housing contribution may be considered including developments with a cost of less than $100,000, change of use applications, where social/affordable housing is being provided etc. It also identifies that the contribution amount is to be capped at a maximum of 15% of the agreed construction cost.

69. I note that Council undertook a review of its contribution rates in October 2024 (Exh A Tab 2). The intent of the review as stated was to understand the contribution setting and whether an alternate rate should be considered. The review included a feasibility assessment however I note that the testing was limited to mixed use, residential flat development, medium density and commercial development. In the “Beaconsfield” area, in which the subject site is located, only medium density residential development was tested. Further the review appears to have been targeted at determining the development margin for development involving land use intensification rather than for the redevelopment of existing homes. The review is notably silent on the impact of the flat rate levy on single dwelling houses.

70. As determined by His Honour under the terms of 7.32(3) I am required to form an opinion as to whether the proposed condition “requires a reasonable dedication or contribution”. On the basis of the evidence before me, having regard to the mandatory consideration specified in 7.32(3)(c) that is “any other dedication or contribution required to be made by the applicant under this section or section 7.11”, I have formed the view that the quantum of the proposed contribution is not reasonable and therefore should not be applied in this instance. I have formed this view for the following reasons:

71. No other dedication or contribution is required to be made by the applicant under s 7.32 or s 7.11 of the EPA Act therefore the total of all contributions required to be paid by the applicant, if the condition was imposed, would be $218,377.50.

72. The total contribution of $218,377.50, which represents 10.3% of the total building cost of the proposed new dwelling, is a substantial sum and ultimately represents an unreasonable burden to apply to one family seeking to rebuild (and enlarge) an existing family home. At this rate the proposed contribution is significantly greater that that applied to other forms of dwelling on a per dwelling basis and also significantly above (with one exception) the rate, as a percentage of development cost, applied to other similar examples of single dwelling house development applications (DAs) referred to in evidence.

73. The rate sought to be applied does not differentiate between land uses with the same rate applying to a single dwelling as would apply to a residential flat building or commercial development where the potential exists for the cost burden to be spread across a number of owners.

74. In the alternative, if I consider other relevant circumstances as His Honour Robson J invites me to do in “Blanc Black” I reach the same conclusion, that is, that the proposed contribution is unreasonable for the following reasons:

75. No other dedication or contribution is required to be made by the applicant under s 7.32 or s 7.11 of the EPA Act therefore the total of all contributions required to be paid by the applicant, if the condition was imposed, would be $218,377.50.

76. The total contribution of $218,377.50, which represents 10.3% of the total building cost of the proposed new dwelling, is a substantial sum and ultimately represents an unreasonable burden to apply to one family seeking to rebuild (and enlarge) an existing family home. At this rate the proposed contribution is significantly greater that that applied to other forms of dwelling on a per dwelling basis and also significantly above (with one exception) the rate, as a percentage of development cost, applied to other similar examples of single dwelling house DAs referred to in evidence.

77. The rate sought to be applied does not differentiate between land uses with the same rate applying to a single dwelling as would apply to a residential flat building or commercial development where the potential exists for the cost burden to be spread across a number of end owners.

78. The proposed contribution rate sought to be applied by the Council is a blanket rate that has been determined having regard to feasibility analysis undertaken for more intensive forms of development and does not appear to have regard to the circumstance of the case, being the redevelopment of a single family home.

79. While an affordable housing contribution can readily be considered to be a cost of development that should be factored in to any proposed development, for it to be legally applied it must be reasonable. In this circumstance I have determined that this is not the case.

80. I do not consider that the arguments adduced by the applicant in respect of the financial circumstances of the owners are relevant to my consideration of the reasonableness of the proposed affordable housing contribution.

81. While I have determined that the proposed affordable housing contribution is not reasonable in the circumstance, I consider that a more moderate “reasonable” affordable housing contribution should be imposed on the development however note that the parties agree under the terms of cl 7.13 of SLEP that this is not open to me. Accordingly, no affordable housing contribution is applied.

Orders

74. The orders of the Court are:

75. The Court, exercising under s 39(2) of the Land and Environment Court Act 1979 (NSW) the function of the Council of the City of Sydney as the relevant consent authority under s 38 of the Environmental Planning and Assessment Regulation 2021 (NSW), approves the amendment to Development Application No. D/2024/407 to include:

(a) Stormwater Management Plan prepared by Amuna Civil Engineering dated 19.06.25; (b) Landscape Development Package prepared by Taylor Brammer Landscape Architects dated 14/07/2025; and (c) BASIX certificate number 1748324S_02 dated 15 July 2025

2. The appeal is upheld.
3. Development Consent D/2024/407 for the demolition of existing improvement on site, excavation and construction of a new dwelling with basement garage and swimming pool at 12 Ripon Way, Rosebery (the site) is determined by the grant of consent subject to the conditions of consent contained in Annexure ‘A’.
4. Exhibits A, B, 1, 2 and 3 are retained, and the remaining exhibits are returned.

H Miller

Acting Commissioner of the Court

(Annexure A) (303 KB, pdf)

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