Randwick City Council v Jomaring Pty Limited & Anor

Environmental Planning and Assessment Act 1979 Liquor Act 1912 LEGISLATION CITED: Liquor Act 1982 Environmental Planning and Assessment Regulation 2000 Randwick Planning Scheme Ordinance Randwick Local Environmental Plan 1998

ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67 at 77 Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 Coogee Palace Pty Ltd v Randwick City Council (Unreported, Land & Environment Court, Assessor Bull, 18 July 1997) Council of the City of Sydney v Pink Star Entertainment Pty Ltd [2008] NSWLEC 176; (2008) 160 LGERA 251 Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 CASES CITED: Grace v Thomas Street Café Pty Ltd and Others [2007] NSWCA 359; (2007) 159 LGERA 57 House of Peace v Bankstown City Council (2000) 48 NSWLR 498 Jomaring Pty Ltd v Randwick City Council [2007] NSWLEC 829 Pallas Newco v Voltraint No 1066 Pty Ltd (2003) 129 LGERA 234 Royal Agricultural Society of NSW v Sydney City Council (1987) 61 LGRA 305 Shire of Perth v O'Keefe (1964) 110 CLR 529 Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335

APPLICANT Ms S Duggan SOLICITORS Shaw Reynolds Bowen & Gerathy LEGAL REPRESENTATIVES: RESPONDENTS Mr P McEwen, SC SOLICITORS DLA Phillips Fox

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

40250 of 2009 RANDWICK CITY COUNCIL v JOMARING PTY LIMITED & ARDILO PTY LTD ATF BEACH PALACE UNIT TRUST

JUDGMENT Introduction 1 His Honour: These proceedings concern the operation of the Beach Palace Hotel and affiliated premises in a complex at 169-181 Dolphin Street and 132-4 Beach Street, Coogee. In particular they concern the operation of the "top floor", now known as "the Aquarium Bistro and Bar". 2 The complex which includes the hotel comprises three above-ground levels, and has a history as an entertainment venue on the Coogee beachfront since Christmas 1887 - described in the evidence as a "landmark building" and "Sydney icon" of local heritage significance. The various levels of the complex have different designations throughout the evidence, but I will refer in these reasons to the three above-ground levels as the "ground", "first" and "top" floors, and to the operation located on the top floor as "the Aquarium". 3 The first respondent has owned the subject site since 1992, and the second respondent (substituted for Coogee Palace Pty Ltd on 17 July 2009) occupies the top floor pursuant to a lease granted 1 December 2006. 4 From 1988 to 1999 the whole of the top floor operated as the "China Bowl" restaurant, despite its area (1000m2). A small ("miniscule"? - see T p67, L10) part of that area was used for a stage and dance floor. When that operation ceased, the respondents refurbished the top floor at a cost of some $800,000 (Exhibit C2, tab 45). A restaurant was then conducted on the top floor for several years by the then operator of a café on the ground floor. In 2003-04 it operated independently again as a Thai restaurant. The current operation commenced in 2005-2006 - as Mr McEwen SC says in his submissions (at par 25), "the Respondents took over …". 5 The Council says that the top floor is being used as part of the Beach Palace Hotel, and the respondents claim that it is being used as a restaurant located within the hotel part of the complex, but separate from the hotel use. The onus is on the applicant Council to establish that the use of the top floor is not a restaurant, and then on the respondents to establish that the use enjoys development consent. 6 Down through the last 25 years there have been many dealings between Council and the proprietors of the day, and many relevant Council decisions have been made, regarding the Beach Palace and/or the Aquarium (see, e.g, Exhibit C1, tab 3). 7 However, there is no dispute that the Aquarium currently enjoys consent as a "restaurant", and not as a "hotel". A change of its use to "hotel" would require development consent, even though the Liquor Administration Board ('LAB') has already included the Aquarium (on 12 June 2000 - Exhibit C2, tab 43) in the "hotel premises" to which the liquor licence (Exhibit C2, tabs 83 and 94), dating back to at least 1954, now applies. 8 The proceedings were not commenced until 22 April 2009, but the dispute regarding the Aquarium dates back many years. It is a long and interesting history, traced through voluminous documentation (Exhibit C1, and two volumes of documents in Exhibit C2), but some relevant files and particular documents cannot be found and are not before the court. 9 The Council seeks the following primary relief: "1. A declaration the Respondents' use of the top floor of the building located on land … known as 169-181 Dolphin Street, Coogee described as the "Beach Palace Hotel" as a hotel as defined in the Randwick Local Environmental Plan 1998 ('the LEP') is contrary to s76A of the Environmental Planning and Assessment Act 1979 ['the EPA Act'] as development consent for that use has not been obtained. 2. An order restraining the Respondents, their servants or agents from using the top floor of building on the Land as a hotel as defined under the LEP unless and until development consent is obtained for that use. …" The Planning Regime 10 The relevant planning instruments are the Randwick Planning Scheme Ordinance gazetted 28 April 1978 (Exhibit C1, tab 6 - 'the PSO'), and later the LEP referred to in the pleading above (Exhibit C1, tab 13 - 'the LEP'), which was made on 20 June 1998. Also relevant is Randwick Council's Development Control Plan for Exempt and Complying Development ('the DCP'), which was adopted on 25 September 2007, to take effect on 15 January 2008. 11 Under the PSO the site was zoned "3(b2) Business Special", and "commercial premises", "hotels", and "restaurants" were permissible with consent. Clause 4(1) contains the following relevant definitions: " 'commercial premises' means a building or place used as an office or for other business or commercial purposes, but does not include a building or place elsewhere specifically defined in this clause or a building used for a purpose elsewhere specifically defined in this clause or for a roadside stall; … 'hotel' means any premises specified in a publican's licence issued under the Liquor Act 1912; … 'refreshment room' means a restaurant, café, tea room, eating house or the like ." 12 The PSO did not separately define the individual uses included in the definition "refreshment room". Various dictionary extracts were provided to the court. "Refreshment" connotes the use of food, drink, rest, or cooling, especially a light meal. The Oxford (2nd ed) defined "restaurant" as "an establishment where refreshments or meals may be obtained", and the Macquarie (Revised 3rd ed) defined it as "an establishment where meals, especially main meals, are served to customers". 13 Under the LEP the site is now zoned "3A General Business" (see zoning map at Exhibit C2, tab 34). The uses "business premises", "hotel" and "restaurant" are permissible with consent, and are relevantly defined (in cl 49) as follows: " business premises means a building or place in which there is carried on an occupation, profession or trade which may or may not provide a service or goods directly and regularly to the public, but (in Part 2) does not include a building or place elsewhere defined in this clause. … hotel means a building or place specified in a hotelier's licence granted under the Liquor Act 1982. … restaurant means a building or place used for the provision of food or drink or both, whether or not for consumption on the premises or takeaway ." 14 The DCP regulates "change of use" as an "exempt" development, but in the 3A zone the exemption is not available to "restaurants, cafes, takeaway food shops, other premises used for the storage or sale of food or, licensed premises." Accordingly, development consent is required to make any change from hotel to restaurant or vice versa. Some Relevant History 15 After serious storm damage in 1984, the then owner made a Development Application ("DA" No 73/85 - Exhibit C2, tab 4) on 28 February 1985 for "extensive alterations and additions". The Council file cannot be found (Exhibit C2, tab 28, fol 73). An assessment report was prepared by the Council's then Chief Town Planner who described the proposal for the top floor in these terms (Exhibit C1, tab 4, p4): "A supper club/restaurant is proposed at this level, the remaining area of the roof deck is planned as an open to the sky dining, entertainment and barbeque area ." 16 The Council granted consent (Exhibit C1, tab 5) to DA No 73/85 on 29 May 1985, permitting the proponent to "make alterations and additions and restore the existing Coogee Palace Aquarium building and use for commercial purposes on property No. 169-181 Dolphin Street, Coogee…". Condition 6 provided: " All tenancies to be the subject of a separate development application prior to occupation; and where food premises are proposed, such premises are to comply with the requirements of the Council's Food Premises Code ." (emphasis added) 17 On 16 April 1986, Coogee Palace Pty Ltd submitted to Council DA No 238/1569 for "erection of three-storey building" to be used for "commercial shops restaurants etc." Council advised on 10 September 1986 that it approved variation of the 29 May 1985 approval in accordance with plans dated 28 August 1986, subject to compliance with the original conditions of consent. (Only the cover page of the DA is in evidence - Exhibit C2, tab 7 - along with the Council letter - tab 8). 18 This approval was followed by a series of applications and decisions, many of which are before the court, but will not be described in detail in these reasons, except where they are relevant to the top floor. (The evidence chronicles many other events - see, e.g, Exhibit C2, tabs 27, 28 and 29). 19 In August 1988 a Building Application (Exhibit C1, tab 8 - "BA" No 987/88 was made to the Council. A handwritten Council file note (in tab 8) described the proposal in the following terms: " The plans submitted detail a proposal to equip the 3 rd level (top floor) with the necessary fixtures + fittings to establish a restaurant. The restaurant was shown on the original DA + BA plans and the [town planner] has advised that development consent is not required for this purpose." 20 The Council approved the BA on 6 September 1988, on conditions, and the approved plans identified (Exhibit C1, tab 9) particular areas for "restaurant", "kitchen", "bar", "terrace", "stage" and "parquetry [dance] floor". Much of the floor area is shown as open space, but some of the original improvements appear to have remained generally in their 1988 locations. 21 In combination these approvals in the period 1985-88 underpin the concession/agreement between the parties that the top floor has a valid consent for use as a restaurant. 22 On 4 December 1996, Council officers reported to the Acting General Manager on a compliance audit (Exhibit C2, tab 28). A table of applicable consents notes (at fol 74) in regard to the China Bowl Restaurant on the top floor - "unable to find consent", and: " This use was established soon after the refurbishment of the building. Due to some uncertainty as to whether consent has been granted the matter should be formally raised with the owner and lessee ." 23 During the early months of 1997 there were class 1 and 2 proceedings before this court regarding the operation generally of the Beach Palace (see Assessor Bull's unreported judgment dated 18 July 1997, and her orders in Exhibit C2, tabs 31, 32 and 35). 24 Council wrote to the China Bowl on 20 June 1997 (Exhibit C1, tab 10 and Exhibit C2, tab 30), expressing some concerns about the condition of the restaurant as food premises, and the exhibit includes inspection reports dated 20 August 1997 and 19 March 1998. The China Bowl appears to have closed down sometime between then and mid 1999 (c.f. tab 45, fol 175), after its reputation was damaged by a health scare. Following the closure, as noted above ([4]), the respondents spent in the order of $800,000 refurbishing the top floor again. 25 DA No 785/98 was lodged on 8 September 1998, for the erection of a 2.4 metre high glass "windbreak" and the replacement of existing windows with glazed bi-fold doors, for the restaurant on the top floor. Consent was granted on 29 January 1999 and later modified (see Exhibit C1, tabs 11 and 12, and Exhibit C2, tabs 36-38, and 40-42). 26 In 1999 the former second respondent, Coogee Palace Pty Ltd, was the registered holder of the business name "Aquarium Restaurant" (Exhibit C2, tab 59, fol 207). 27 Following a complaint to the Council around 2000-01 regarding "offensive noise" emanating from the Beach Palace complex, Council developed concerns about the operation of the top floor as a "hotel". (See Exhibit C2, tabs 44 and 45, but a key letter from Council dated 5 February 2001 is not before the court). 28 Mr David Kingston's letter to Council dated 8 February 2001 (tab 45) addressed matters relating to the operation of the top floor, including issues relating to its characterisation, and pointed out that a "Beach Palace licence" had been obtained, effective 12 January 2000, eliminating the need for separate licences for the various parts of the complex. Importantly, the letter noted "that the change of licence involved no change to the operation of the Aquarium" and that "even though the Aquarium operates under the Beach Palace licence, its restaurant character remains." 29 On 8 March 2001 (Exhibit C2, tab 47), Council replied to a letter from the solicitors acting for an anonymous complainant, indicating that the Council was in the process of a "thorough and independent" investigation as to "whether or not the usage is in breach of the existing consent…". 30 Following an inspection of the Beach Palace premises by Council officers on 11 March 2001, an internal memo was prepared on 12 March 2001 by Allan Graham (Exhibit C2, tab 48), Council's Planning & Environment Compliance Officer, addressed to the Manager Environmental Health & Building Services. The memo noted the prior restaurant use, and the consent to so use the top floor. However, the memo noted that "there are also no records… regarding a change of use of the premises from a restaurant to hotel usage." Drawing on observations during the 11 March 2001 inspection, Mr Graham concluded (fol 186) that: "… the use of the aquarium level at the subject premises did not display the characteristics that would normally be associated with the operations of a restaurant. The use of the premises is more akin to that of a bar/lounge. In addition, the fact that this area of the hotel operates under a hotelier's licence and the provision of live band and DJ type entertainment would also support the premises being defined as a 'place of public entertainment' [' POPE' ]. A search of Council records has disclosed that no approval for a 'place of public entertainment' exists for this area of the hotel ." 31 The memo recommended (fol 187) that: " 1. Correspondence be prepared, advising the owner and licensee of the premises of the Council's position in regard to: (a) defining the use of the aquarium level of the hotel complex under the provisions of Randwick LEP 1998, and (b) that as a result of evidence gathered by Council, the use of the aquarium level of the premises is not consistent with that of a restaurant. 2. A Notice of Intention to Serve an Order be served on the owner of the premises to cease the unauthorised use of the aquarium level of the subject premises as a bar/lounge and entertainment area, pursuant to Order No.1 located in section 121B of the Environmental Planning and Assessment Act 1979, and 3. That on-going monitoring of the premises continue, and Penalty Infringement Notices be issued as required, for the carrying out of development without the prior consent of Council, pursuant to the provisions of the Environmental Planning and Assessment Regulation 2000. " 32 Following a meeting with Council on 23 March 2001 (Exhibit C2, tab 49), Council's Roman Wereszczynski reported to the Mayor, General Manager and another officer: " Just an up date on the Coogee Palace matter: Following our research and inspection of the premises, we are of the opinion that the 2 nd floor level is being used (at times) more so as a hotel bar/lounge and entertainment area, rather than as approved as a restaurant. We invited the owner (David Kingston) and the Licensee (Andrew Joliffe) to council today to explain our reasons for this opinion and advised that we will send a notice of intention to serve an order, which requires them to make representations as to why we should not serve a formal order directing them to cease the alleged unauthorised use. I advised them, that should they wish to propose such use, they should lodge a DA as soon as possible for consideration and to advise council accordingly in their representations. Alternatively, council (based on its current evidence) may serve an order upon them, which they may appeal to the L&EC (but is likely to create more disharmony and conflict in the community). They will probably be seeking advice from their consultants or solicitors before deciding on their course of action. The meeting was very amicable and they understand our procedures, although they do not actually agree as such". 33 Mr Kingston wrote a letter the same day (Exhibit C2, tab 50), which included the following: "It is common ground that the Aquarium premises have Council DA approval as a licensed restaurant and Liquor Administration Approval Board approval to serve drinks in accordance (sic) the building's hotel licence. It is also common ground that the Aquarium has no pokies, no TAB, no pool tables or amusement machines which are normally associated with a hotel. On leaving your offices, I have had the opportunity to review the Randwick Council's LEP definition of 'restaurant' (as approved by Council DA) - 'means a building or place used for the provision of food or drink (or both), whether or not for consumption on the premises or for takeaway' On any assessment, the Aquarium complies totally with the Randwick LEP's definition". 34 Also on the same day Council wrote to Mr Kingston (tab 51) confirming its view that a DA would be required if it were proposed to use the top floor "as a hotel bar/lounge and entertainment area". Mr Kingston amplified his argument in a long letter of 26 March 2001 (tab 52), which included the following: " Randwick Council's LEP's definition of restaurant is '… place used for the provision of food or drink or (both) …'. The provision of food and drink are the only two services provided in the Aquarium. The definition is clearcut in that food or drink can be separately provided. The Aquarium fully complies with this LEP definition. Accordingly any proposed issue of a notice of intent by Council appears wholly incorrect. … In our meeting on Friday, Mr Wereszczynski indeed acknowledged that the issue of whether the Aquarium is correctly trading in accordance with its dine or consume restaurant DA is a 'grey' area. Mr Graham also acknowledged that the issue was complicated because there were conflicting definitions that may be applicable. It was also acknowledged that the vast 1800 [sic?] square metre approved size of the Aquarium meant that it would never be a conventional café or intimate fine dining restaurant but rather it was more akin to a themed or entertainment style restaurant. The Aquarium has made no change to its style of operation since January 2000 i.e. 14 months ago when the Liquor Administration Board approved the incorporation of the Aquarium into the Hotel licence." 35 A Notice of Intention to Give an Order under s 121B was sent to Mr Kingston by the Council on 26 March 2001 (Exhibit C2, tab 53). The Notice stated that the use of the "Aquarium level located on the 2nd floor of the subject premises is being used for the purpose of a hotel" in contravention of ss 76A and 125 of the EPA Act. 36 Mr Kingston obtained a letter of legal advice and forwarded it to the Mayor, as a submission regarding the proposed order, on 10 May 2001, under cover of a letter (Exhibit C2, tabs 61 and 62) asserting: " The Aquarium (and indeed its predecessor the China Bowl) is not a conventional intimate restaurants (sic) or café by necessity because of its huge size - circa 1,000 square metres. Indeed China Bowl usually had cabaret style bands on Friday and Saturday evenings and had a special purpose dance floor in the S-E corner of the premises ." 37 In a letter dated 27 September 2001 (Exhibit C2, tab 65/66), the Council stated it would "not be proceeding with the subsequent issuing of an Order in regard to the use of the Aquarium level as a hotel/bar, at this time." However, the Council invited the respondent to apply for POPE approval for the top floor "if it is proposed to continue to have live bands or DJ entertainment". 38 On or about 19 November 2001, Coogee Palace Pty Ltd and Jomaring Pty Ltd lodged a DA (D/0929/2001) to extend the trading hours of the ground and first floors of the Beach Palace Hotel for a trial period of 3 months. Council's assessment report went to its committee on 4 December 2001 (tab 67), noting (fol 242) that "the top level will continue to close at midnight", and (fol 243) that: " the Aquarium Restaurant has been the subject of a recent investigation in regard to Council's contention that the operation of the premises is an unauthorised use. This matter has primarily been resolved ." (emphasis added) 39 The assessment report also commented (at fol 245): "Needless to say, that current matters relating to the use of the Aquarium level of the premises are distinct and discrete to the proposed temporary extension of trading hours for the premises and the operations in this area of the hotel complex do not form part of the development application for the extended trading hours ." 40 The POPE for the top floor was recommended for approval on 24 December 2001 (tab 68) and approved for 820 people (tab 70) on 28 December 2001, the same day as Council gave consent for the trial extension of the hotel trading hours on Friday and Saturday nights (tab 69). 41 The POPE licence granted on 28 December 2001 was re-issued by the Council on 12 June 2003 with the same limit on patrons (Exhibit C2, tab 72). That approval was issued to Ardilo Pty Ltd at Mr Kingston's Vaucluse address. 42 At some time in or around June 2004 a complaint was made to the LAB under s 104 of the Liquor Act 1982 regarding excessive noise. In the Council's submissions to the LAB concerning the complaint, there was no reference to any contention that the top floor of the premises was operating without consent (see Exhibit C2, tab 78). The complaint was finalised by the LAB on 29 April 2005, subject to the continuation of previously imposed conditions (tab 82). In the course of its consideration, another in a series of acoustic assessments was obtained from Steven Cooper (tab 77). The main noise issue from time to time in respect of the actual operation of the complex (compared with street behaviour in the vicinity), appears to have been noise from the Aquarium on Sunday nights (see tab 81). 43 A Mayoral minute was presented on 15 November 2005 (tab 85) suggesting a strategy for cutting back on late trading in Council's area, and involving the preparation of social impact assessments. A particular focus of attention were three local licensed establishments - the Beach Palace, the Coogee Bay Hotel, and Randwick Rugby Club (see tab 86). 44 The respondents made an application (LA/852/2006) to the Council for a 5 year extensions of the POPE licence on 28 June 2006 for the first floor and top floor (Exhibit C2, tabs 88/89). Council requests for further information concerning the applications prolonged the process into 2007. On 4 April 2007 Chris Warhurst, as Group General Manager of the Palace Group of Hotels, wrote to Council (Exhibit C2, tab 95) noting that the respondents had "incurred major expenses in formatting and marketing the entire Palace property" when the POPE licence was granted for the top floor in 2001, at which time Council officers carried out "extensive reviews" and found "that all approvals for level 2 were in order" (tab 91, fol 367). There had been no structural changes to the top floor (other than fire upgrades) since the previous POPE (tab 93). 45 A Notice of Intention to Give an Order was issued to the respondents on 14 May 2007 (Exhibit C2, tabs 97 and 98). The notice stated that: "… level 2 of the premises known as the Aquarium Bar is being used for the purpose of a hotel in conjunction with the ground floor and level 1 tavern without the prior development consent of Council ." 46 On 4 May 2007 Council refused the POPE application. The reason given for the refusal, in a short letter from the Council to the respondent on 17 May 2007 (Exhibit C2, tab 99), was: " that level 2 (Aquarium) of the premises is operating as an extension of, and integral to the ground floor bar and bistro and the level 1 (mid level) tavern beyond the approved restaurant use of level 2. Therefore, the current use of Level 2 is unauthorised ." 47 Again, in May 2007, the Mayor took action with a view to achieving a general reduction in hotel operating hours in Council's area (mentioned in Exhibit C2, tab 104, fols 404-6). 48 A further Notice of Intention to Give an Order regarding the use of the top floor as a hotel was given on 13 June 2007 to various possible stakeholders (Exhibit C2, tab 103). The respondents' solicitors made comprehensive submissions on 27 June 2007 (Exhibit C2, tab 104), further to earlier submissions they had made to Council on 29 May (tab 102). Those submissions set out a lengthy history regarding legal and planning issues concerning the Aquarium. 49 An order under s 121B was never issued to the respondents following that June 2007 submission. 50 On 28 November 2007, Bly C upheld an appeal concerning the hotel, but not involving the top floor directly (his judgment [2007] NSWLEC 829 is at Exhibit C2, tab 105). 51 The Statement of Claim initiating these proceedings was not filed until 22 April 2009. Evidence as to current use 52 The Council relies on affidavits from the following to establish the alleged unauthorised use: Karl Anthony Gray (sworn 7 April 2009); Richard Harvey (sworn 7 April 2009); Shane Borg (sworn 7 April 2009); John Raprager (sworn 14 April 2009); and Mark Dixon (sworn 31 July 2009). 53 Messrs Gray, Harvey and Borg are employed by Council as Planning and Environmental Compliance Officers, and Messrs Raprager and Dixon are licensed private inquiry agents. All attended the top floor of the Beach Palace Hotel complex at various times. 54 On Friday 4 July 2008, Messrs Gray and Borg arrived at 8.30pm. The following observations were made concerning the top floor: 122 patrons at 8.35pm (29 consuming food, 4 in the designated dining area) 87 patrons at 9.30pm (12 consuming food, none in the designated dining area) 91 patrons at 10.30pm (no patrons consuming food) Noise level was high at 10.30pm when a disc jockey was playing music 55 On Sunday 20 July 2008, Messrs Gray and Harvey attended at 6.45pm. The following observations were made concerning the top floor: 80 patrons on arrival (9 consuming food) the kitchen closed at 8.00pm 65 patrons at 8.30pm (no patrons consuming food) 35 people at 9.15pm (no patrons consuming food) the whole floor closed at 10.00pm 56 Mr Gray noted that, on each occasion, the predominant use of the top floor was for the consumption of alcohol as opposed to the consumption of meals. He annexed to his affidavit (as 'B') a floor plan showing a fairly small "designated dining" area. He also noted that the top floor operated with the kitchen closed in the late evening, so that patrons were unable to purchase food without leaving the top floor. 57 Messrs Raprager and Dixon attended the premises on three separate occasions in October 2008 - Friday 24, Saturday 25 and Sunday 26. 58 During their 24 October visit, the following observations were made concerning the top floor: 22 - 27 patrons (5 eating) at approximately 6.30pm 46 - 52 patrons (6 eating) at 7.00pm 6 patrons eating at 7.30pm (excluding those in private function areas) 15 patrons collecting meals from the servery counter between 7.00pm and 8.00pm 92 patrons at 8.00pm (excluding those in private functions areas) 24 patrons collecting meals between 8.00pm and 9.00pm 115 patrons at 9.00pm the servery closed at 9.00pm 110 patrons at 10.00pm (excluding those in private functions areas), with a queue of patrons 2-3 people deep at the bar between 10.00pm and 11.00pm, 3 private functions concluded with the floor area formerly dedicated to them now being opened to the general public 145 patrons at 11.00pm bar ceased trading at 12.00am with 60 patrons still on top floor 59 On 25 October, the following observations were made concerning the top floor: 200 - 202 patrons, with 6 eating at 5.00pm and 10 eating at 5.15pm 31 patrons collecting meals between 5.00pm and 6.00pm 205 patrons at 6.00pm 22 patrons collecting meals between 6.00pm and 7.00pm 200 patrons at 7.00pm (excluding those in private functions areas) trade at the bar busy, with queues of patrons in rows 2-3 people deep 14 patrons collecting meals between 7.00pm and 8.00pm 190 patrons at 8.00pm (excluding those in private functions areas), with late afternoon patrons (wearing casual shorts and t-shirts) steadily departing and being replaced by new patrons (wearing " evening clothing" - Raprager affidavit par 26) 30 patrons collecting meals between 8.00pm and 9.00pm 260 patrons at 9.00pm (excluding those in private functions areas) the servery closed at 9.00pm 248 patrons at 10.00pm with approximately 100 patrons within private functions no patrons eating at 10.00pm 175 patrons at 11.00pm with two private functions concluding bar ceased trading at 12.00am with 150 patrons still remaining 60 On 26 October, the following observations were made concerning the top floor: 195 patrons between 6.00pm and 6.15pm with 10 eating 32 patrons collecting meals between 6.00pm and 7.00pm 280 patrons at 7.00pm 20 patrons collecting meals between 7.00pm and 8.00pm 310 patrons at 8.00pm 18 - 38 patrons collecting meals between 8.00pm and 9.00pm 345 patrons at 9.00pm 320 patrons at 10.00pm, with none consuming food at 10.00pm, the line across the bar was 2-3 people deep 280 patrons at 11.00pm 61 The following would summarise this evidence of Messrs Raprager and Dixon: 1. On the evening of Friday 24 October 2008, 39 patrons collected meals between 7.00pm and 9.00pm - a period in which there were 46-52 patrons at 7.00pm rising to 115 at 9.00pm when the kitchen closed. 2. On the afternoon and evening of Saturday 25 October 2008, 97 patrons collected meals between 5.00pm and 9.00pm - a period in which there was a minimum of 190 patrons rising to 260 at 9.00pm when the kitchen closed. 3. On the evening of Sunday 26 October 2008, 70-90 patrons collected meals between 6.00pm and 9.00pm - a period in which there was a minimum of 280 patrons rising to 345 at 9.00pm when the kitchen closed. 62 Mr Dixon also deposed (par 3) to observing on the top floor, on 24 October, three pool tables and a large-screen television. Mr Raprager deposed to observing a quite intoxicated and boisterous pool competition and patrons dancing on the deck. He attached to his affidavit (as tab 3) a copy of the menu displayed in the Aquarium. It would appear to the court that the menu was more typical of a "bar food" menu than an "a la carte" restaurant menu, but it certainly offers "main meals" (see [12] above).

63 The observations of these Council witnesses are not challenged. However, the respondents submitted that their observations present only a limited "snapshot" of use at the times they were present. 64 The Council also relied on an affidavit from Jean-Claude Niederer, dated 4 August 2009. He is, and has been since 5 November 2001, the General Manager of the "Coogee Sands" Hotel/Apartments next door to the Beach Palace. He deposed to various entries made in the Sands' Duty Incident Log regarding customer complaints relevant to the Beach Palace. Attention was drawn to ten complaints during the financial year 2008-09. Some related to music, but most appear to the court to relate to street noise from patrons departing at early-am closing time. 65 The respondents rely upon the affidavit evidence of Mr Donald Alan Singer, the Group Manager of the Palace Leisure Group, sworn 19 August 2009, in reply to Council's seven witnesses. 66 Mr Singer gave comprehensive evidence about the operation of the Beach Palace Hotel and the Aquarium. The Aquarium opens usually from 5pm till 10pm-12 midnight, and generally only on Fridays, Saturdays and Sundays (except for booked lunchtime functions, and operating 6 or 7 days p.w. during the months November-March). The kitchen closes at 9pm. The Aquarium's accounts are totally separate from the hotel's. He explained why the "takings" of the Aquarium which show a much higher spend on drinks than on food (3 to 1), albeit that the ratio has come down from 5 to 1 (pars 19-22) - it has been his "experience of over 13 years in the hospitality industry restaurant operators seek to maximise where possible, profits from higher margin beverage sales such as wine." Mr Singer also deposed that the Aquarium, which has a large long-established kitchen, supplies meals to the Coogee Sands. He explained various Group policies and regrets that some were clearly breached during the Council inspections (par 14). There are no sanctioned pool competitions in the Aquarium - the tables are there to "break up the large expanse of floor area" (par 24). 67 Mr Singer also explained (par 10) that having a single liquor licence for the whole of the Beach Palace Hotel (including the top floor) has: " significant advantages over maintaining three separate liquor licences. The main advantages of having one as opposed to three separate liquor licences is in having consistency of conditions for the whole building so far as those conditions relate to operations and regulating patron behaviour ." The Relevant Principles 68 The court must construe any consent applicable to the top floor and compare its terms with the use of the area, properly characterised. 69 This Court and the Court of Appeal have frequently canvassed such issues and sought to lay down principles for the construction of consents and characterisation of uses, but each case is dependent on its own facts and circumstances - see Grace v Thomas Street Café Pty Ltd and Others ("Thomas Street") [2007] NSWCA 359; (2007) 159 LGERA 57, per Beazley JA especially at pars [87]ff, and McLellan CJ at CL at [141]ff.

70 In Royal Agricultural Society of NSW v Sydney City Council (1987) 61 LGRA 305 at 310, McHugh JA said: "… a test has been devised which requires the purpose of the use of land to be described only at that level of generality which is necessary and sufficient to cover the individual activities, transactions or processes carried on at the relevant date. Thus the test is not so narrow that it requires characterisation of purpose in terms of the detailed activities, transactions or processes which have taken place. But it is not so general that the characterisation can embrace activities, transactions or processes which differ in kind from the use which the activities etc as a class have made of the land ." (emphasis added) 71 When construing a historical consent, a distinction must be made between the "the precise manner of use for that purpose" and the "use generally for that purpose". The task therefore is "asking what, according to ordinary terminology, is the appropriate designation of the purpose being served by the use of the premises at the material date" (Shire of Perth v O'Keefe (1964) 110 CLR 529, per Kitto J at 535). 72 In House of Peace v Bankstown City Council (2000) 48 NSWLR 498 at [37], Mason P, referring to Kirby P's judgment in ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67 at 77, said that the construction task requires an examination of "what, objectively determined, it might be said the Council meant by the permission which it gave to the ... predecessor [in title]." However, his Honour added, "the search is not for what the Council actually intended or what, if it had been interrogated about various possibilities, it would have said it intended."

73 Seeking a dominant purpose in a particular use is not usually required. In Foodbarn Pty Ltd v Solicitor-General ("Foodbarn") (1975) 32 LGRA 157, Glass JA observed at 161: " Where the whole of the premises is used for two or more purposes none of which subserves the other, it is in my opinion, irrelevant to inquire which of the multiple purposes is dominant. If any one purpose operating in a way which is independent and not merely incidental to other purposes is prohibited, it is immaterial that it may be overshadowed by the others whether in terms of income generated, space occupied or ratio of staff engaged. The ordinance is nonetheless being disobeyed ." 74 Despite Foodbarn, Meagher JA said in Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404, at 409-10: " Notwithstanding the principles laid down in Foodbarn it does not follow that a use which can be said to be ancillary to another use is thereby automatically precluded from being any independent use of the land. It is question of fact and degree in all the circumstances of the case whether such a result ensues or not. When a resident uses his land to park his motor car at his house, he is no doubt not conducting an independent use of car parking; when an employer installs at his factory a canteen for his workers, no doubt he is not conducting an independent use of running a restaurant; when the Clarks grew vegetables for their table they were not conducting an independent use of vegetable growing. But when one use of the land is by reason of its nature and extent capable of being an independent use it is not deprived of that quality because it is 'ancillary to', or related to, or interdependent with, another use. If a book publisher opens a sales room at his publishing house to sell his products, the selling of books is an independent use although ancillary to the use of publishing. The series of cases dealing with dual uses … illustrate the point: they show that a 'convenience store' and a petrol station are two independent uses, although the former is clearly ancillary to the latter. This is a fortiori the case where the 'ancillary' use has pre-dated the use to which it is said to become ancillary and when it has done so in circumstances where it was initially not 'ancillary' to any other use ." 75 In Council of the City of Sydney v Pink Star Entertainment Pty Ltd [2008] NSWLEC 176; (2008) 160 LGERA 251, I said, at [87]: " Over time a use might evolve into something 'different"' but the courts might hold that there has been no "change of use". Essentially, such is the issue in this matter - the Council says that 'nightclub' is not a 'restaurant' use, so it is not permitted by a restaurant consent. On the other hand, Counsel for the Respondent argues that just as 'restaurant' may be characterised as a species of the genus 'refreshment room', so should "nightclub" be characterised as a late-night food, liquor and entertainment species of the genus 'restaurant'." Consideration 76 The respondents say that the Aquarium continues to be used as a "restaurant", pursuant to its May 1985 consent. Their counsel, Mr P McEwen SC, invited the court to analyse the "actual manner of user" of the top floor (T p54), and the court has done so. 77 He submitted: 1. There has been a " consistent manner of user " both before and after March 2001, " with some minor variations " (T p53, LL43-8); and

2. " It doesn't matter now that 'hotel' may better describe the use; the question … is whether … what was contemplated [in 1986] as a manner of user as 'restaurant' is now conformed with " (T p59, LL10-13). 78 Ms Duggan submitted (T p68) on Council's behalf: " This is a place where people go to drink and if they happen to feel hungry while they're there they may choose to take a meal but that is the opposite of a restaurant where people go to consume food and as part of that process may choose to consume alcohol. The emphasis has changed, the use is different, it is no longer a restaurant and we're entitled to the relief that we seek." 79 When Council granted that consent the permissible use was "refreshment room". In terms of the genus/species protocol for characterisation and construction "restaurant", was one species of the genus "refreshment room", and Council was most particular, it would appear, to specify "restaurant", rather than "refreshment room" or anything else, as the approved use, regardless of the proponent's stated concept that the top floor would be used as a "supper club/restaurant". 80 Clearly, in the 1980s, the Council's concept of an approved "restaurant" would accord with the community's common understanding of a facility which served meals, especially "main meals", as the Macquarie Dictionary stipulates (see [12] above). 81 It is also clear to the court, from the plans for the top floor, that Council gave consent to a "restaurant" use, where the dominant aspect would be the service of food, and the subordinate aspects the provision of entertainment and drink. 82 The fact that the top floor is now embraced by the hotel's liquor licence is not conclusive of its use as a hotel rather than as a restaurant, but, equally, neither an approval by the LAB nor Council's approval of a POPE constitutes a development consent, which the planning instruments clearly require. Both "restaurant" and "hotel" are permissible uses - neither is prohibited - but a specific consent is needed for each. The size of the area was not deleterious to the use of the top floor for many years as a successful restaurant (T p67, LL6ff). 83 Looking at its "activities, transactions, and processes", as directed by McHugh JA ([70] above), the provision of meals/food is clearly not the "dominant" use of the top floor, but clearly a use "ancillary" to the provision of drinks (mainly alcoholic) and entertainment. As Talbot J noted at first instance in Pallas Newco v Voltraint No 1066 Pty Ltd (2003) 129 LGERA 234, at [29]-[31], the various aspects of an actual use can be seen as one assisting another, or one depending upon another. 84 The observations of Messrs Raprager and Dixon were thorough, and they made detailed counts of meal collections and patron numbers. A change in dress from afternoon to evening was observed on Saturday 24 October 2008, such that the Council wants the court to infer that patrons arrive in the late evening with no intention of eating a meal at the Aquarium. Such an inference is also available from the fact that the number of patrons swells significantly towards the late evening, despite the kitchen being closed, and that some neighbourhood noise complaints are directed at the operation of the top floor. Main meals are clearly not the primary focus of Aquarium's operation. A 'restaurant' that caters for more patrons at a point after its kitchen is closed is vastly different from what is commonly understood to be a "restaurant"'. 85 In his written submissions (par 30), Mr McEwen says: " The present operation of the Aquarium restaurant - with a separate bar, entertainment (the four piece orchestra replaced with low key music and recorded music), indoor and outdoor dining and drinking; and without the usual features of a hotel - 'there are no pool tables, no loud music, no disco, no venue bands, no amusement machines, no pokies, no TAB etc …' (Tab 45 at p.176), and there being no TV sports broadcasts, no pub raffles, no trivia nights - all point to the manner and style of operation remaining as a restaurant use rather than a hotel use". 86 The quote he included to describe "the present operation" is taken from a letter Mr Kingston wrote to Council's Mr Wereszczynski on 8 February 2001. So far as the actual present situation is concerned the statement is contradicted by the evidence. The point is that the Aquarium has changed since 2001, and especially since 2005-06. That movement in use is quite fairly described in Mr Singer's affidavit. While the items described in [86] are some of the usual attributes of a hotel operation, and most unusual for a restaurant operation, some (not all) have in recent years found their way into the Aquarium. 87 I have concluded that the Aquarium is now more "hotel" than "restaurant". The primary service provided to its patrons is the sale of drinks, including alcohol, supported by the provision of food services and entertainment. As Ms Duggan noted, it is significant that the service of meals concludes at approximately 9 pm, and yet the "restaurant" premises continue to admit patrons, and to trade, until usually midnight. After a restaurant's kitchen closes, no new customers are usually admitted, and the establishment stays open only to allow customers already inside to conclude dinner. 88 The Council is clearly entitled to the declaration it seeks. Relief 89 Having determined to declare that the use of the premises is contrary to the consent, and in breach of s 76A of the EP&A Act, the court must now consider whether it is appropriate to grant the other relief sought by the Council.

90 The respondents, in their Amended Points of Defence (par 12), ask the court to exercise its discretion to refuse the restraining order sought in prayer 2 of the Statement of Claim, due to "the circumstances of the historical use of the premises and Council's knowledge of and involvement in that use." 91 The principles in relation to the exercise of discretion in such circumstances are well understood, as espoused by Kirby P in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 (at 339-341). The principles emphasise, inter alia, the wide nature of the discretion and the importance of upholding public laws. 92 The Council's tardiness in bringing proceedings in relation to the central argument about the legality of the Aquarium's operation is a relevant issue on the question of discretion. That argument crystallised first in 2001, but was "resolved" ([38]), and subsided for some years, until it flared again when Council refused to grant a further POPE in May 2007 ([44]-[45]), by which time it was satisfied, after continuous observation, investigation and negotiation, that the emphasis in the use had changed. 93 However, delay (or laches) it is not the only issue on discretion. 94 As identified by McClellan CJ at CL in Thomas Street at [155]-[156]: " The operator of the premises will have had the benefit of trading, presumably at a profit, when the use was illegal. This is a benefit which can in some cases be quite substantial. However, it may also be that, in the belief that there would be no difficulties, the operator has invested significant capital in the premises the benefit of which may be wholly or partly lost if ordered to close ." 95 In this case, the operator of the premises expended a significant amount of money (some $800,000) to refurbish the Aquarium after the dispute between the parties "resolved" in 2001 and Council required the operator to obtain only a POPE (see [37] above). Clearly there has been some acquiescence on Council's part in the continued operation of the Aquarium, even as it gradually changed over the years, and the respondents claim their business has been damaged as a result (Exhibit C2, tab 102, par 17, and tab 104, fol 404, par 21). 96 Now a specific development consent will be required if the current use of the Aquarium is to operate in future as something other than a "restaurant" properly so-called. The substance of any DA forthcoming from the operator may not necessarily reflect the present operation, and all questions of environmental impact from any submitted proposal will require fresh assessment. So far as the evidence before me goes, I am satisfied there is some public complaint about music from the top floor and noise from human activity on the terrace, but much of the amenity problem is likely to be the usual complication of hotels, namely street noise caused by departing patrons, not necessarily only patrons of the Beach Palace, let alone of the Aquarium (see [42] and [64]). Conclusion 97 In summary, my findings are: 1. that the offending " hotel " use of the top floor has only gradually evolved over relatively recent times, and 2. that the respondents have always had, and were perfectly entitled to argue, before Council and the Court, their case on the characterisation issue. 98 That case having failed, it is appropriate that I make both the declaration and the order sought by the Council, but, in the exercise of my discretion, stay the order for a reasonable period to enable the parties to resolve the way forward. 99 The Council has basically succeeded in its proceedings, but the question of costs, especially in the circumstances of my decision to make the stay order, has not yet been argued. Costs of at least one interlocutory stage were reserved, and I think it appropriate now that all questions of costs arising in these proceedings be formally reserved. The parties are then free to negotiate that issue as well. Orders 100 The orders of the court will, therefore be: 1. I declare that the Respondents' use of the top floor of the building located on land contained in folio identifier 1 in Deposited Plan 792311 ('the Land'), also known as 169-181 Dolphin Street, Coogee and described as the " Beach Palace Hotel" , as a hotel as defined in the Randwick Local Environmental Plan 1998, is contrary to s76A of the Environmental Planning and Assessment Act 1979, as development consent for that use has not been obtained. 2. The Respondents, their servants or agents, are restrained from using the top floor of the building on the Land as a hotel, as defined under the LEP, unless and until development consent is obtained for that use. 3. Order 2 is stayed until 30 December 2010. 4. Costs reserved. 5. The exhibits may be returned.

01/07/2010 - cover page amended to include "Pty" in title - Paragraph(s) cover page

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