Meldeep No 5 Pty Ltd v Manly Council

CASES CITED: Zhang v Canterbury Council [2001] NSWCA 167; Stockland Development Pty Ltd v Manly Council [2004] NSWLEC 472

APPLICANT Mrs M Taylor, solicitor Norman Waterhouse Lawyers

RESPONDENT Mr J Cole, solicitor Abbott Tout Lawyers

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT 1 COMMISSIONER: This is an appeal against the refusal by Manly Council (the council) of a development application (No. 278/03) under the Environmental Planning and Assessment Act 1979 (the Act) to demolish two existing buildings and construct a residential flat building with basement car parking at 27 - 29 Victoria Parade, Manly (the site). The site and surrounding area 2 The site consists of two lots being Lot 8 DP 77172 (Eversham House, 27 Victoria Parade) and Lot 1 DP 65862 (Carlton Hotel, 29 Victoria Parade). Each lot is approximately 13.5m wide and 47.5m long with a combined site area of 1281.44 sqm. The site is relatively flat and contains no significant vegetation. It contains two buildings which are examples of boarding houses constructed in the late 19th and early 20th centuries. Eversham House has been significantly altered and is to be demolished as part of the proposal. The front section of the Carlton Hotel is to be retained and the rear section demolished as part of the proposal. 3 Adjoining the site to the east is Newstead Flats (31 Victoria Parade), a three storey residential flat building with an additional storey set back from the street behind a parapet. Also to the east, with a frontage to South Steyne is the Far West Childrens Facility. To the west is 25 Victoria Parade, a three-storey residential flat building with a hipped roof. Further to the west is Manly Public School. To the rear, at 22 Wentworth Street is Drummond House. The opposite side of the Victoria Parade contains a range of three to five storey residential flat buildings. The proposal 4 The proposal provides for the retention of the front section of the Carlton Hotel, demolition of the rest of the existing buildings and construction of a five level residential flat building containing 24 apartments and a two level basement car park with parking for 56 cars accessed from the Victoria Parade. Planning framework 5 The site is within Zone No. 2 - Residential under Manly Local Environmental Plan 1988 (LEP 1988). The proposed use is permissible with consent within this zone. Clause 10(3) provides that consent shall not be granted unless the development is consistent with the objectives of the zone. Clause 19 provides requirements for development in the vicinity of an item of the environmental heritage. 11 and 13 Victoria Parade; 22 Wentworth Street; 14 and 15 South Steyne and the pine trees are heritage items in the vicinity of the site. 6 The Carlton Hotel is currently not listed as a heritage item under LEP 1988 but has been included as an item in a draft LEP. 31 Victoria Parade is also listed as an item in the draft LEP. The Draft LEP has not been made by the Department of Planning on the basis that it does not support the making of spot LEPs for heritage items. As such it is not imminent or certain. 7 Clause 25 of LEP 1988 permits the floor space of a heritage item to be excluded from FSR calculations, if the conservation of the item is depends upon the exclusion. There is no FSR control in LEP 1988 for the site. The Carlton hotel is not an item so the provisions of this clause do not apply. Mrs Taylor's submission, on behalf of the applicant, was that the FSR of the item should not be included as it was being conserved as part of the development and was therefore consistent with the objectives of the clause. 8 Development Control Plan for the Residential Zone 2001 (DCP 2001) also applies. The site falls within Density Sub - zone 1. DCP 2001 provides a range of numerical controls for development. The relevant controls include height, FSR and setback which are discussed later in the judgement. 9 Manly Town Centre Urban Design Guidelines 2002 (Design Guidelines) have been publicly exhibited and adopted and are of relevance in light of the decision of McClellan CJ in Stockland Development Pty Ltd v Manly Council [2004] NSWLEC 472. 10 State Environmental Planning Policy No. 65 - Design Quality of Residential Flat Development (SEPP 65) applies to the proposed development. Clause 30 requires consideration to be given to the design quality principles in Part 2 (cl 30(2)(b)) and the publication Residential Flat Design Code (cl 30(2)(c)). 11 State Environmental Planning Policy No.10 - Retention of Low Cost Rental Accommodation (SEPP 10) applies to the proposed development. SEPP 10 aims to provide a mechanism for the retention of low cost rental accommodation. 12 SEPP 10 refers to guidelines (the Guidelines) which provide greater detail to assist in the interpretation and implementation of the provisions in SEPP 10. The evidence 13 The Court heard evidence from the following experts: 14 For the council · Mr E Armstrong, town planner · Mr B McDonald, heritage architect 15 For the applicant · Mr A Darroch, consultant planner · Mr R Staas, heritage architect · Mr B Newbold, architect and urban designer 16 Mr G Vickas, the Court Appointed Expert, provided a Statement of Evidence which addressed the financial viability of the retention of the boarding house under SEPP 10. He was not required for cross examination. The issues 17 The council filed an amended Statement of Issues containing nine separate issues and a number of sub issues. The inadequacies and inaccuracies of the plans (Issue 8) was not pressed by the council following the submissions of further details. The matters raised by residents (Issue 9) are addressed in the consideration of the remaining issues. These can be grouped into following main areas: i) whether the proposed development will result in a significant reduction in low cost rental accommodation (Issues 1 and 2), ii) whether the proposed development will have an unacceptable heritage impact on Carlton Hotel and heritage items in the vicinity of the site (Issue 3), iii) whether the proposed development is an appropriate design for the site considering its FSR, height, setbacks and impact on streetscape and amenity (Issues 4, 5, 6 and 7). SEPP 10- Reduction in low cost housing 18 Eversham House and the Carlton Hotel have operated as a boarding house for a number of years providing over 80 rooms. The properties are now vacant but the parties agreed that the provisions of SEPP 10 apply. 19 Clause 7 of SEPP 10 requires that a proposal to demolish a boarding house requires development consent and the concurrence of the Director General of the then Department of Infrastructure, Planning and Natural Resources (DIPNR). 20 Relevantly Clause 7 of SEPP 10 provides that: ….. (4) In determining a development application required by this clause, the council is, in accordance with the guidelines, to consider the following in each case: (a) whether there is likely to be a major reduction in the number of households or units of low-rental accommodation on the land to which the application relates, (b) whether there is available sufficient comparable accommodation in the locality to satisfy the demand for such accommodation in that locality, (c) whether the development, if carried out, is likely to cause adverse social and economic effects on the general community, (d) whether adequate arrangements have been made to assist the residents (if any) of the building likely to be displaced to find alternative comparable accommodation in the locality, (e) whether the cumulative impact of the loss of low-rental residential accommodation in the council's area will result in a significant reduction in the stock of that accommodation, (f) the structural soundness of the building, the extent to which the building complies with any relevant fire safety requirements and the estimated cost of carrying out work necessary to ensure the structural soundness of the building and the compliance of the building with the fire safety requirements.

(7) In deciding whether to grant concurrence under this clause, the Director-General must take into consideration: (a) in each case, the matters specified in subclause (4), and (b) in addition, in the case of a boarding-house, the financial viability of the continued use of the boarding-house, as determined by the Director-General in accordance with the guidelines. (8) The Director-General must refuse to grant concurrence under this clause if the Director-General is of the opinion that the cumulative impact of the continued loss of low-rental residential accommodation in the council's area will result in a significant reduction in the stock of that accommodation. (9) Despite subclause (8), the Director-General may grant concurrence under this clause if the Director-General is of the opinion that the building cannot continue to be used for low-cost rental accommodation because: (a) the building, on advice furnished by the council, is structurally unsound, or (b) in the case of a boarding-house, its continued use as a boarding-house is not financially viable. 21 As I understand the evidence the independent assessment undertaken for the DIPNR by Mr D McNamara, SEPP 10 consultant, concluded that:

There is a reasonable argument that, because there would be a major reduction in low-rental boarding house accommodation on the site (under Clause 7(4)(a) of the policy), and because there would be a significant reduction in low-rental boarding house accommodation in the Manly LGA (under Clause 7(4)(e)) if the redevelopment were to proceed, that the requirements of SEPP 10 are not satisfied sufficient for the Director General to grant concurrence for development consent. In addition, there are grounds for proposing that the premises could be financially viable as a boarding house, and thus the provisions of clause 7(9)(b) requiring that its continued use as a boarding house is not financially viable, is not satisfied. On this basis, the proposed development falls short of fulfilling the requirements of SEPP 10, and this is sufficient grounds for refusing concurrence. 22 That the proposal did not meet the tests in cl 7(4) was confirmed by the report to the Director General by Mr D Evans, Executive Director, Metropolitan Strategy dated 5 May 2004. However, the report reached different conclusions under cl 7(9)(b). It found that:

The property is not financially viable using the model that considers upgrades of existing premises. This is primarily due to the significant upgrading costs related to the extensive works required the BCA and fire safety compliance. The poor physical condition of the building is considered the primary factor in determining the ongoing financial viability…..It is therefore recommended that the DA be granted concurrence in accordance with the proposed mitigation measures to offset the loss of low-cost boarding house accommodation and to ensure the existing tenants are assisted with relocation. 23 The mitigation measures included a proposed "donation" by the applicant of $500.000 to a Community Housing Organisation and $29,000 to assist in the relocation of tenants. These mitigation measures did not form part of the assessment undertaken by Mr McNamara. The Director General granted unconditional concurrence on 7 May 2004, but it noted the offer of mitigation measures. 24 Despite the concurrence of the Director General, council raised the issue that the proposal would result in a significant loss of low cost rental accommodation in Manly. As such it did not meet the objective in clause 4(a)(vii) of LEP 1988 "to maintain and increase the number of boarding house and lodging houses in view of the long term needs of aged pensioners and invalid pensioners;" Council also considered that the proposal does not satisfy the requirements of cl 7(4) of SEPP 10 and raised issues with the concurrence granted by the Director General. 25 Mr Cole, for the council, submitted that under cl 7(8) concurrence must be refused as the cumulative impact of the continued loss of low-rental residential accommodation in the council's area will result in a significant reduction in the stock of that accommodation. He further submitted that it had not been demonstrated under cl 7(9)(b) that the buildings continued use as a boarding house was not financially viable for the following reasons. · The SEPP 10 Guidelines provide a test for financial viability based on a formula. A property is considered to be financially viable if the formula determines a net rental yield greater than 6%. The figures used by DIPNR were stated in the report. However the calculation in accordance with the formula was not stated. If this calculation is undertaken using the DIPNR figures it would result in a yield of 6.6%. · The capital upgrade costs include work that is required because the property has been financially "harvested", that is substantially neglected in terms of proper maintenance and essential repairs to the extent that the property has become effectively derelict. · The "donation" is not a relevant criteria in the SEPP 10 Guidelines to offset the loss of low rental accommodation. · Other development options exist to assist in the on going financial viability of the boarding house. 26 Mrs Taylor submitted that the Director General had assessed the proposal against the requirements of SEPP 10 and concluded that the boarding house was not financial viable and granted concurrence. The "donation" would adequately offset any loss of low rental accommodation and was contemplated under s93F of the Act. 27 Mr Vickas examined the financial viability of the proposal. His brief did not include an assessment of the criteria in cl 7(4) of SEPP 10 or the applicability of the proposed "donation" as factor in determining financial viability or mitigating adverse impacts. 28 Mr Vickas examined two scenarios being: · The primary financial viability scenario - retaining and upgrading both the Eversham and the Carlton Hotel as a boarding house; and · The alternative financial viability scenario - retaining the Carlton Hotel as a smaller, upgraded boarding house and selling Eversham as a development site to essentially cross subsidise the continuation of the smaller boarding house. 29 In applying the formula in the Guidelines Mr Vickas stated:

However, actually applying the formula in a rigorous and fair manner can be fraught with difficulties and complications for two major reason: (i) Firstly, establishing exact and reliable figures for the numerous variables in the formula can be subject to considerable differences of interpretation. At times, conflicting interpretation can make the difference between perceived viability and non viability. Typically, there can be major differences between the parties in these cases over such variables as, for example, the projected gross income generating capabilities of a boarding house, what its real outgoings are likely to be in the future, what its current property value is and, most controversially perhaps, what the costs of unavoidable capital upgrading needs might be for it to continue. In this regard the SEPP 10 Guidelines describe how to determine the variables in the financial viability formula to some reasonable extent, although not without obvious limitations and shortcomings. (ii) Secondly, applying the financial viability formula can also be complicated because the boarding house may be poorly managed or underdeveloped. In such cases improvement or upgrading of the boarding house through some form of property improvements, such as limited additions and alterations to increase accommodation capacity and efficiency, can substantially improve the facility's financial viability well above the 6% yield threshold, and thereby justify its continuation. This approach is a longstanding aspect of how SEPP 10 has been interpreted by consent authorities for over 15 years, although it is not without some justified criticism and limits. The extent to which boarding house proprietors can be reasonably expected to reinvest back into their properties to maintain financial viability continues to be one particularly problematic aspect of how SEPP 10 should be interpreted. 30 In the primary financial viability scenario, Mr Vickas reviewed the information provided by the parties and the reports from DIPNR. He stated that there was considerable difference in the interpretation of the variables in the formula and consequently different results as to financial viability. The key difference between the parties is the estimate of unavoidable property upgrading and the extent of capital upgrading and deferred maintenance. Council's position being that a large proportion of the unavoidable upgrading works were deferred maintenance that has arisen from financial harvesting of the property. 31 Mr Vickas did not accept the extent of upgrading works to be unreasonable or constituted deferred maintenance. Having reviewed the information and the different positions of the parties Mr Vickas applied what he considered to be reasonable amounts into the financial viability formula and concluded that "the net rental return on the property will be in the vicinity of 5.2%". He recognised that there is the possibility of variation in the variables but concluded that:

It is certainly true that certain adjustments to the figures (such as increasing the average achievable rentals, decreasing the vacancy rate and discounting the allowable capital upgrading costs) could notionally pushed the return rates above 6% per annum. However, on balance, and considering the tenuous nature of such assumptions, I do not believe that getting the rental return above 6% is a plausible scenario. Therefore I must conclude that the primary option of retaining and reactivating the entire boarding house is far more likely to be financially unviable when assessed against the SEPP 10 benchmark. 32 In the alternative financial viability scenario, Mr Vickas estimated that "conceptually" the return would be between 7.8% and 9.9%. However he identified two major "quirks" with this scenario. Firstly, whether the scenario is realistic and likely to be taken up by the market given it involves the development of a site which would adjoin a boarding house. Secondly, once renovated the notional property value of the smaller boarding house would increase and the rental yields would be between 4.4% and 5.5%. 33 Mr Cole submitted that;

the second "quirk" completely misunderstands the test. It is based on the proposition that at some stage after the whole development has been completed and the upgraded Carlton operating, someone again wishes to remove the completed upgraded and occupied boarding house. It is not the test to be considered by the Court at present which is the alternative scenario placed before the Court for determination or consideration by the Court now. Vickas then assumes a presumed notional property value of the historical cost of investment plus capital upgrading cost. This is "double dipping" on capital cost as the cost of upgrade has already been taken into account to get the boarding house upgraded into the position for his later consideration. He appropriately describes this as a "quirk" because it is in fact irrelevant to the determination by the Court. 34 I do not accept Mr Cole's submission that Mr Vickas misunderstood the test and his conclusions are irrelevant. Rather Mr Vickas recognised the inconsistency in the approach he used but considered his assessment to be consistent with the Guidelines. He stated that:

while the SEPP 10 Guidelines speak about such notional "trade off" approaches by which the financial viability can be lifted through smarter exploitation of property assets that coincidentally protect the boarding house accommodation, neither SEPP 10 nor its guidelines reasonably anticipated such complex alternative scenarios…..

the alternative scenario is a potentially inspired and intelligent way to give the give the property owner some ability to exploit the perceived better and higher uses of the property while at the same time protecting and upgrading a major proportion of low rental accommodation it has provided. However, the fundamental question that arises from this alternative scenario is whether it represents a fair and reasonable interpretation of SEPP 10. Findings 35 The DIPNR reports conclude that the demolition of the boarding house does not satisfy the criteria in cl 7(4)(a), (b), (c) and (e) of SEPP 10. The removal of over 80 rooms will result in a major reduction in the number of units of low rental accommodation which will contribute to the cumulative loss of boarding house accommodation. There is not sufficient available comparable accommodation in the area as such the proposal is likely to cause adverse social and economic impacts. The proposal therefore does not satisfy cl 7(8) and concurrence must not be granted except if, under cl 7(9)(b), the continued use of the boarding house is not financially viable. 36 DIPNR concluded that due to the extent of upgrading works the retention of both buildings as boarding house was not financially viable and granted concurrence, although it would appear, not in accordance with the formula in the Guidelines. DIPNR noted the "donation" offered by the applicant as an offset against the loss of the boarding house, although this mechanism is not mentioned in the Guidelines and was not included as a condition of its concurrence. 37 The main disagreement between the parties was whether the continued use of the boarding house was financially viable. Mr Vickas report assisted the Court in this assessment. 38 The parties did not require Mr Vickas for cross examination. Despite this, Mr Cole's submission raised issues with Mr Vickas methodology and conclusions. I note Mr Vickas based his assessment on information provided by the parties, including the DIPNR reports and a joint conference with the parties. He states:

I have given both the parties to the case every reasonable opportunity to hear and consider my preliminary opinions on the case, and from this challenge my preliminary findings if and where they considered necessary. I therefore believe my findings and opinions represent the culmination of a process of active involvement by the parties. 39 Mr Vickas opinions were not challenged either before or during the hearing and he was not given the opportunity to respond to the issues raised by Mr Cole in submissions. While these issues may be of some veracity there is nothing to indicate that they were not considered by Mr Vickas in his assessment. If Mr Vickas conclusions are to be challenged he should have been given the opportunity to defend his position. I therefore give weight to Mr Vickas report and his conclusions. 40 The evidence illustrates that Mr Vickas precautionary comments that different interpretation of the variables produce different results in financial viability. Mr Vickas assessment concluded that retention of the whole boarding house does not meet the test for financial viability in the guidelines if it is accepted that financial harvesting of the property has not occurred. I note that the figures used for capital upgrading by DIPNR, its consultant and Mr Vickas are not dissimilar and resulted from an assessment of the work required and Mr Vickas specifically addressed the issue of financial harvesting. Although these different reports produced different conclusions as to financial viability it can be concluded that retention of the whole building is at best marginal. 41 The evidence on whether the alternative scenario is financially viable is inconclusive and raises more questions than it answers. However, as the application fails on other issues which I discuss below, it is not necessary for me to reach a definitive conclusion on this matter. In the event that a future application is lodged, the alternative scenario should be addressed in the concurrence of the Director General. Conceptually this alternative scenario meets the test of financial viability but raises "quirks" identified by Mr Vickas as to whether it is a realistic development option and whether such complex alternative scenarios are reasonably anticipated by SEPP 10 and its guidelines. If so, the correct method to calculate financial viability given the anomaly in relation to notional property value should be addressed. 42 The role Planning agreements under s93F of the Act play within the framework of SEPP 10 and its guidelines is also unclear. They may assist to mitigate the impacts of the loss of low rental accommodation if the continued use of a boarding house is found not to be financially viable. A planning agreement would need to comply with the relevant requirements, including those in s93G that it be publicly notified. I note that the proposed agreement in these proceedings was not notified.

Heritage 43 The heritage assessment undertaken by Mr McDonald states:

No 29 Victoria Parade, "Carlton Hotel" is worthy of retention as heritage item. It is representative of the early development of Manly in the late nineteenth century as a recreational and holiday destination, continuing into the twentieth century. The "Carlton" has an association with William Humble Ward, Earl of Dudley, the fourth Governor General of Australia, and with his wife, of who were listed in Sands Directory in 1911 and 1912 as patrons of the establishment.

The front section of the building has considerable architectural merit, in particular the verandas (presently infilled), brickwork and stone detailing, distinctive joinery details in the central entrance hall, ceilings, fireplaces, lead light glass and the timber stair. The whole building is substantially intact although exhibiting an evolution of additions and internal changes. Most of the changes that detract from understanding the building's significance can be reversed and the removal of joinery details from the Ground Floor Dining Room could be remedied by reconstruction. 44 Mr Staas agreed that the Carlton Hotel had some heritage significance although he did not rate it as highly as Mr McDonald. 45 Mr McDonald and Mr Staas agree that the retention of the front section of the Carlton Hotel would contribute to the streetscape of Victoria Parade. Mr McDonald stated that:

The Carlton makes an important contribution to the historic streetscape character of Victoria Parade, particularly as one of a group of an aesthetically appealing buildings at the South Steyne end. 46 The experts agreed that the amended plans proposed appropriate internal alterations and conservation of the exterior of the building. However, they disagreed on the significance of the rear section of the building and whether it should be retained. They also disagreed on the impact of the proposed new work on the streetscape presentation of the Carlton Hotel. 47 Mr Staas considered that the rear section was of little significance and should not be retained. Mr McDonald held the contrary view that:

its historic and associated values could be retained with a low cost small unit housing use or tourist accommodation but that it is not suitable for adaptation for apartments larger than single bedroom. 48 In relation to the impact of the new additions, these comprise three components: the new building on 27 Victoria Parade; the addition behind the Carlton Hotel and the connecting element. 49 Mr Staas held the opinion that the new building "is appropriately separated from the retained section of the Carlton and acts as a sympathetic contemporary infill in the streetscape". Whereas Mr McDonald believes "its architectural style mimics and competes with the retained section of the Carlton and is too assertive in the streetscape" 50 Mr Staas considered that the additions to the Carlton Hotel would have a similar impact to the addition that already existed behind the parapet and its visibility would be limited. Mr McDonald held the contrary opinion that the existing addition was visible from the street and detracted from the appearance of the Carlton Hotel. The addition was higher and wider and would therefore have a greater impact. He was particularly concerned about extending the parapet and linking the two buildings. Despite the recess Mr McDonald considered that this would introduce a strong horizontal emphasis and would appear bulky. 51 Both experts agreed that Eversham had been so altered that the limited surviving original or early fabric is insufficient to warrant its retention.

Findings 52 The Carlton Hotel is not listed as heritage item but the experts agree it is of heritage significance. It is listed as an item on the draft LEP that has been exhibited but is not imminent or certain. 53 Section 3.11 of DCP 2001 refers to protection of heritage items and conservation areas. The objectives relevantly provide:

a) to retain and conserve items of environmental heritage and/or conservation areas, together with properties of potential heritage significance. b) to ensure any modification to heritage items, potential heritage items or buildings within conservation areas is undertaken with proper knowledge of the significance of the item or the area. 54 The Performance Criteria at cl 3.11.2 (d) provides:

Alterations and/or additions to heritage items, potential heritage items or buildings within conservation areas should not detract from their heritage significance of the item or place. 55 Clause 3.11.2(i)(b) of DCP 2001 specifies that alterations and additions "must not overwhelm or dominate the existing building" and cl 3.11.2(i)(c) provides that "alterations to roofs must be sympathetic to the style" of the building. 56 A potential heritage item is not defined in DCP 2001. The experts agreed that the Carlton Hotel was of some heritage significance and it has been included as an item in the draft LEP. As such it can be considered as a potential heritage item under DCP 2001 and consistent with the decision in Zhang v Canterbury Council [2001] NSWCA 167, the heritage provisions in the DCP must be the focal point for consideration of the proposal. 57 The proposal involves the demolition of the rear section of the Carlton Hotel, this is acceptable on heritage grounds given its level of significance and its unsuitability to be adaptively reused for residential apartments. Although it could be retained for low cost accommodation. I note that the dining room has been recently stripped of its original features. Based on the photographs, this room has a degree of significance. It is unfortunate that the feasibility of its retention as part of redevelopment of the site was not investigated. Given that the building is not identified as a heritage item in an LEP, I accept Mrs Taylor's submission that the retention of the rear and the dining room is not a reason for refusal of the application. 58 The adaptive reuse and conservation works to the part of the building to be retained have an acceptable impact on its significance and the streetscape. However, the additions to the Carlton Hotel have an unacceptable impact on its significance. Regardless of whether a building is a heritage item or not, the appropriateness of an addition and its impact on the streetscape must be considered. The existing building makes a positive contribution to the streetscape. If conserved in a sympathetic way this contribution will be enhanced. The existing addition is visible from the street from a number of vantage points and detracts from the building. I accept Mr McDonald's evidence that an addition which is higher and wider will further detract from the building. The impact of the addition, which extends over both the Carlton Hotel and the new development at 27 Victoria Parade and effectively links these two buildings is unacceptable. The proposed recess, particularly at the upper level, is not sufficient to ensure that the addition does not overwhelm or dominate the existing building and detract from its heritage significance. 59 I accept Mr McDonalds evidence that the new building at 27 Victoria Parade "mimics" the Carlton Hotel. This further accentuates the proposal reading as one building and detracts from the heritage significance of the Carlton Hotel. 60 The addition is also unacceptable because of the proposals non-compliance with the FSR and height controls in DCP 2001. I acknowledge that some variation to these controls, particularly the FSR control, is warranted given the existing FSR of the building and its retention for heritage reasons, provided the objectives of the controls are achieved. The FSR incentive clause in LEP 1988 (cl 25) does not apply and I do not accept that the conservation of the item would depend on the FSR being excluded if the building is incorporated as part of the redevelopment of the site. I note that even if this clause applied and the FSR of that part of the building to be retained were excluded, the proposed FSR would still exceed the DCP control. 61 The key consideration in relation to heritage and FSR is whether the additional FSR has an acceptable impact on the significance of the item. For the reasons outlined above, the addition above the heritage item is unacceptable and therefore there is no justification to exclude FSR on the basis of retention of a heritage item particularly as the conservation of the item is not dependent on such an exclusion and the additional floor space adversely impacts on the building. 62 There are a number of heritage items in the vicinity of the site. However, they are sufficient distance that the proposal will not impact on their significance. The proposal will be visible from Drummond House, but the change in outlook to what is proposed when compared to what exists does not further impact on its significance sufficient to warrant refusal of the application. Impact on streetscape and amenity 63 The bulk of the building is largely determined by its floor space, height and setback. 64 The experts agree that the proposal meets the density but not the FSR control in cl 3.3.2, which specifies a maximum FSR of 1.5:1. The proposal has an FSR of 2.17:1. If the retained building is excluded, the FSR would be 1.94:1. 65 Mr Newbold considered that "floor space ratio is a very poor indication of streetscape compatibility, appropriate building form or satisfactory residential amenity". He advocates a flexible approach to the application of numeric measures according to the existing context and constraints of the site. He stated that his focus is on whether the objectives of the controls are met. In his opinion the additional FSR was acceptable as it was contained within a building envelope that was compatible in the streetscape which did not unreasonably impact on adjoining properties. Mr Darroch agreed. 66 Mr Armstrong and Mr McDonald considered the excess floor space resulted in a building of greater bulk and amenity impacts than anticipated by the planning controls which was not compatible in its locality. The main concerns being the wall height, "gap" between the buildings, the set back from 25 Victoria Parade and rear setback. 67 Clause 3.4.2(i)(c) of DCP 2001 specifies a maximum external wall height of 12m. Clause 3.4.2(ii)(a) permits roof structures to extend 3m above the wall height and overall height of 15m. Habitable rooms, which meet certain criteria are permitted within the roof. 68 The experts agreed that the proposal can comply with the overall height but disagreed on the interpretation of the wall height control in DCP 2001 and consequently the extent of non compliance of the proposal. 69 Mr Darroch stated that the "external wall height applies to those parts of the external wall which directly meet the ground below but not to those parts which are stepped back". He referred to diagrams in DCP 2001 which illustrate the intention of the controls. In his opinion the controls permit vertical walls within an envelop set by a 12m external wall and 35 degree pitch roof up to a maximum height of 15m. Under this interpretation the proposal generally complies with the control. 70 Mr Armstrong and Mr McDonald held the contrary opinion that a vertical wall, even if set back from the wall below, is included in the wall height measurement as it would read as an extra storey. Mr Armstrong stated that the purpose of the wall height control was to establish a dominant building height and that habitable rooms above the wall height are only permitted within a roof structure. In his opinion the vertical wall, although setback, and the large dormer windows were part of the external wall and contributed to the proposal reading as a four to five levels. 71 Both Mr Darroch and Mr Newbold considered that the proposal was consistent with the height of other buildings in the area. Mr Newbold considered that the additional wall height and rooms in the roof did not contribute to the height and bulk of the building as they would be "barely noticeable from street level" and that the rooms in the attic storey resulted in no "appreciable external impacts beyond that of a pitched roof. 72 Mr McDonald considered that the locality of the site was the group of buildings between 25 to 31 Victoria Parade and 15 South Steyne which he described as an "island". These buildings were separated from other development in the street and formed a group with distinctive character, being two to three storeys at the street frontage, masonry and generally setback from their side boundaries. He considered that the proposed parapet and bedrooms behind did not comply with the wall height control, were not rooms in the roof and would be visible from across the street. Within this locality the proposal was too big and too high. 73 Mr McDonald considered that the lack of space between the buildings contributed to their overall bulk. The site now has two buildings with a gap. This reflects the pattern of development in Victoria Parade of side boundary setbacks between individual buildings. 31 Victoria Parade is built boundary to boundary but in Mr McDonald's opinion this is not the character of the "island" or the street. The lack of side setback was more consistent with a CBD walled character, not the character described in the Design Guidelines which state at cl 1.1.4:

The spaces between and through buildings, and the view corridors along the streets help create an important sense of place. Future development needs to ensure the village like sense of place in Manly Town Centre be maintained and enhanced. 74 Mr McDonald acknowledged that the recess would assist in breaking up the frontage of the building but he did not consider it was sufficient to read as two separate buildings. Mr Newbold did not consider that the buildings needed to be physically separated and that the recess with the amendment to the parapet was sufficient. Mr Darroch stated that joining the site enabled greater setbacks from the side boundaries than currently existed which would greatly improve the amenity of the units. 75 The owner of 25 Victoria Parade had made a submission indicating an intention to redevelop the site. The experts agreed that the proposed nil setback to this boundary would mean that 25 Victoria Parade would also require a nil setback or a blank wall if set back. The width of 25 Victoria Parade would be insufficient to provide sufficient setback and adequate amenity. Mr McDonald considered this placed unreasonable constraints on the redevelopment and a further lack of setback in the street would be unfortunate. Mr Newbold considered that both sites being built to the boundary to be reasonable. 76 Mr Armstrong was very concerned about the impact on solar access to the two top east flats at 25 Victoria Parade. The experts agreed that the rooms would receive no winter sun and that this resulted from the dormer windows and the western wall height. Mr Armstrong considered the impact to be unacceptable as it resulted in breaches in the controls and the living areas faced south so the loss of solar access to the bedrooms would be significant. Mr Newbold and Mr Darroch considered the impact to be acceptable as the rooms were bedrooms and other units in the building would enjoy improved solar access. The area is also an urban environment where loss of solar access is to be expected. 77 The experts agree that the rear setbacks are 5.5m to the face of the balcony and 8m to the exterior wall. Mr Newbold acknowledges the numeric non compliance with the 8m control in cl 3.5.2 of DCP 2001 but considers that the objectives of the control are met as there is sufficient space for adequate planting. 78 Mr Armstrong considers that the reduced setback contributes to the length and bulk of the building and that the space is insufficient for the proposed trees required to screen the building from Drummond House and the Far West Home. The landscaping in the narrow space conflicts with solar access to the units. Both he and Mr Newbold agreed that greater solar access could be achieved by a building form which stepped back in greater conformity with the DCP. Findings 79 While Mr Darroch's interpretation of the wall height control has some merit if it were to result in a building with not greater height, bulk and impact than a building which conformed to the street wall and pitched roof envisaged by the control. The height control could also be more clearly drafted and illustrated to provide for easier understanding. However, in reading the control it would appear that the clear intent is as explained by Mr Armstrong being that the dominant height of the building is the street wall with a roof structure above in which habitable may be located. 80 I do not accept Mr Newbold's approach to the numerical controls. The numerical controls of height, FSR and setback are a reasonable indicator of bulk and they have a role to play in the DCP. I acknowledge that they are only an indicator and that the physical form, expression and impacts of these measures also needs to be considered. I agree that the main consideration is whether the numerical measures achieve the objectives of the control. For both FSR and height the main objectives are to achieve a degree of consistency with the existing context and to minimise disruption to views, privacy and sunlight to residential development. 81 I do not accept the proposition that the wall height and rooms in the roof will barely be visible. The photomontage provided to support the applicant's case clearly indicates that the parapet, extra floor and roof structure will be visible and add to the height and bulk of the building. The roof with its attic rooms and dormer windows will also be visible from other properties and vantage points in the area. This upper level contains floor space, which exceeds both the wall height and FSR control in DCP 2001. The question is whether this is acceptable within the context. The proposal is higher and wider than other buildings in its immediate context. While there are bigger buildings these are not part of the Victoria Parade context, except as a background elements. 82 Measures such as the recess between the buildings, the setback of the upper level and the rooms in the roof assist in reducing the bulk of the building. However, it remains bulkier than other buildings in its immediate context and beyond that envisaged by the planning controls. 83 I acknowledge that there are benefits in amalgamating the sites into a single building and thereby increasing the side setbacks to improve the amenity of the units. However, a deeper recess, removal of the parapet and the upper level straddling the two sites or the upper level being setback much further would assist in reducing the bulk and impact of height as well as retaining the identity and integrity of the Carlton Hotel. I note that the wall height of 27 Victoria Parade is below the control. It would seem more appropriate that extra height be placed on this part of the site and that there be no increase in height over the retained part of the Carlton Hotel to maintain its streetscape appearance as a separate building. 84 The nil setback of the south west corner of the building to 25 Victoria Parade and to the street is inappropriate. It is likely to dictate that any redevelopment of 25 Victoria Parade also be built to the common boundary which would result in a continuous street wall which is not characteristic of the area and is inconsistent with cl 1.1.4 of the Design Guidelines. 85 Compliance with the rear setback would clearly provide better amenity to the units and reduce the conflict between the provision of landscaping and solar access as well as provide greater separation between the adjoining heritage item, Drummond House. 86 The loss of solar access to the units to 25 Victoria Parade, will impact on the amenity of these units. Even though the rooms are bedrooms it is the only solar access the units receive and its loss is unreasonable as it results from non complying elements of the proposal. 87 A development which better conformed to the planning controls, particularly height and FSR would eliminate these concerns. Orders 88 For the above reasons the Orders of the Court are:

2. The development application (No. 278/03) to demolish the two existing buildings and construct a residential flat building with basement car parking at 27 - 29 Victoria Parade, Manly, is refused.

          Annelise Tuor
          Commissioner of the Court

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