Reset & Sweat Pty Ltd v Northern Beaches Council

The site and its context

1. The premises, 2/384 Pittwater Road North Manly (Lot 2 in SP 8179, Ex 7), comprises an industrial strata unit. The premises is on the ground floor of the building on the site.
2. The premises includes a mezzanine level accessed via an open stair from the gym floor to the mezzanine.

Planning framework

1. The Court's power on hearing an appeal against a development control order, pursuant to s 8.18(4) of the EPA Act, is as follows: (4) On hearing an appeal, the Court may - (a) revoke the development control order, or (b) modify the development control order, or (c) substitute for the development control order any other order that the relevant enforcement authority who gave the order could have given, or (d) find that the development control order is sufficiently complied with, or (e) make such order with respect to compliance with the development control order as the Court thinks fit, or (f) make such other order with respect to the development control order as the Court thinks fit.
2. The site is zoned IN2 Light Industrial under LEP 2011. A recreational facility (indoor) is prohibited in the IN2 zone.
3. Recreation facility (indoor) is defined in the dictionary of LEP 2011 as follows: recreation facility (indoor) means a building or place used predominantly for indoor recreation, whether or not operated for the purposes of gain, including a squash court, indoor swimming pool, gymnasium, table tennis centre, health studio, bowling alley, ice rink or any other building or place of a like character used for indoor recreation, but does not include an entertainment facility, a recreation facility (major) or a registered club.

The Council's Compliance and Enforcement Guidelines and Policy

1. The Council's Compliance and Enforcement Guidelines (September 2018) relevantly include the following (Ex 6, tab 7): Purpose It is important to acknowledge that individual circumstances of a matter may justify a departure from the Guidelines or the exercise of more than one compliance option, where the full circumstances and facts are considered and a decision made on merit. Unauthorised building works and uses on private land (b) Non-approved use of buildings and premises Notice/Order Unauthorised land use where the owner has agreed to cease the use and follow a development application process to seek approval, although due to the unauthorised configuration of the building the potential for unauthorised use remains available e.g. a separate occupancy within an existing dwelling.
2. The Council's Compliance and Enforcement Policy (October 2021) relevantly includes the following (Ex 6, tab 6): 1. Introduction Northern Beaches Council is an enforcement authority and its officers are required to make decisions and use discretion about appropriate enforcement action when non-compliant issues are identified. 5. Compliance and enforcement principles Principle - Proportional Action: * ensuring the level of enforcement action is proportionate to the level of risk and seriousness of the breach * making cost-effective decisions about enforcement action * taking action to address harm and deter future unlawful activity. 8.2 Relevant factors guiding decisions as to whether to investigate: When deciding whether to investigate, Council will consider a range of factors including: * does the activity have or is likely to have a significant detrimental effect on the environment or constitute a risk to public safety… * has a pattern of conduct or evidence of a possible wide spread problem occurred 10. Options for dealing with confirmed cases of unlawful activity Council will adopt a graduated approach to deal with unlawful activity wherever possible unless there is little likelihood of compliance with such options. Council staff will use discretion to determine the most appropriate response to confirmed cases of unlawful activity and may take more than one approach. Any enforcement action taken by Council will depend on the full circumstances and facts of each case, with any decision being made on the merits of the matter. 10.1 The nature and seriousness of the unlawful activity In assessing the level of risk, Council staff will have regard to the matters for consideration specified in this Policy including but not limited to the impact the unlawful activity is causing on amenity or harm to the environment. If action is required, Council will consider what is reasonable in the circumstances and ensure the action is not disproportionate to the level of harm or damage arising from the unlawful activity. 10.2 Relevant factors Where unlawful activity is identified, the seriousness of the unlawful activity will guide the appropriate enforcement response. The following factors are relevant to determining the significance of the unlawful activity. Severity or seriousness of the unlawful activity, which includes: * the degree of harm or potential harm resulting from the unlawful activity, including whether it seriously endangers human health or safety, the environment, or the economic or social fabric of the community * whether any environmental harm caused by the unlawful activity is temporary or long lasting * the magnitude or degree of non-compliance and whether the non-compliance is trivial or not

Planning reforms

1. Evidence was adduced by both parties relating to two planning reforms currently underway that are likely to culminate in an amendment to LEP 2011 and a principal Local Environmental Plan (LEP) for the Northern Beaches local government area.

The employment zones reform

1. The first planning reform is the "Employment zones reform". In summary, the Department of Planning and Environment (the Department) proposes to consolidate the current industrial zones IN1 and IN2 in the Standard Instrument LEP into one employment zone, E4 General Industrial (Ex 6, tab 8).
2. In the draft Standard Instrument LEP Amendment (Land Use Zones) Order 2021 (Ex 6, tab 10), recreation facilities (indoor) are not mandated as a permissible use in the E4 zone, so it will be a matter for individual councils to elect whether recreation facilities (indoor) are included as a permissible use in the E4 zone.
3. The Department's Land Use Matrix dated November 2021 does not include recreation facilities (indoor) as a permitted use in the E4 zone (Ex 6, tab 12, f 149).
4. The Council's submission to the Department on the employment zones reform, dated June 2021 (the submission) (Ex 6, tab 16), which was presented to the elected Council (Ex 6, tab 16, ff 197-198), cites the Northern Beaches draft Employment Study as evidence that the Council faces a shortfall of industrial floor space to 2036 of 55,000m2 (Ex 6, tab 16, f 208) and recommends in the attachment "Employment zones reform translation" for LEP 2011 (identified as a "preliminary translation") that recreation facilities (indoor) be a prohibited use in the E4 zone (Ex 6, tab 16, ff 258, 260). The submission includes the following observation regarding the future E4 zone (Ex 6, tab 16, f 212): In the Northern Beaches, the IN1 zone is used in the Warringah LEP (Brookvale and Cromer) and the IN2 zone is used in the Warringah and Pittwater LEPs. Council's LEP Discussion Paper outlines a future zone framework for industrial zones in the Northern Beaches LEP in which the IN1 provides greater focus on core industrial activities with the IN2 zone to apply only to smaller neighbourhood precincts with higher residential encroachment.
5. All LEPs in New South Wales are intended to be updated by, variously, mid-2022 (Ex 6, tab 10, p 116), November 2022 (Ex J, tab 28, f 146), or December 2022 (Ex 6, tab 16, f 198).
6. The Council resolved (undated, Ex 6, tab 17, f 312) to note its opposition to the employment zones reform, particularly the proposal to combine the IN1 and IN2 industrial zones across the Northern Beaches Local Government Area; and to note the recommended translations for employment zones for the Manly, Pittwater and Warringah LEPs.

The Northern Beaches LEP

1. The second planning reform is the harmonisation of the three LEPs of the former Manly, Pittwater and Warringah Councils into a principal LEP.
2. Mr Milliken estimated, in an email response sent on 3 May 2021 to the Council's Senior Compliance Officer regarding this matter (Ex 4, tab 24, f 87), that the draft LEP "should be ready around mid 2022", and "the absolute earliest for the LEP to be in force is mid 2023 at this stage, it is likely to be after that and could run into 2024". In the same email, responding to an inquiry as to whether the Council had adopted a position on the permitted land uses in the IN2 zone, "it is currently recommended that the rec facility indoor use be prohibited in the future industrial zones because we want to preserve the land for industrial uses and rec facilities indoor will be able to be done in most, if not all, of the business zones (B1 to B7)".
3. In the Northern Beaches "LEP/DCP Discussion Paper" publication, dated June 2021 (the Discussion Paper) (Ex J, tab 35), the Council is "seeking feedback on whether we should continue to permit recreation facilities (indoor) in IN1 and IN2 zones" (Ex J, tab 35, ff 177-178). The Pittwater Local Environmental Plan 2014 (Pittwater LEP 2014) permits recreation facilities (indoor) with consent in the IN2 zone. The discussion paper relevantly includes the following observations and alternative options regarding the future IN2 zones (Ex J, tab 35, ff 179-180): Light industrial precincts are attractive to gyms and other indoor recreation uses. Certain uses - such as rock climbing or trampolining centres - require diverse floor space and built form which can also locate in more appropriate zones including the B5 Business Development zone, B6 Enterprise Corridor and B7 Business Park zones. Across the Norther Beaches' IN1 and IN2 zones, there are plenty of indoor recreation facilities that will retain existing use rights to serve the community. We are considering two options regarding the future IN2 zone: * combine the permitted uses in Warringah LEP IN2 and the Pittwater LEP IN2 into a single IN2 zone that applies to all current IN2 zones, or * use the limited range of permitted uses under the Warringah IN2 zone in the new IN2 zone and apply to all areas currently zoned IN2 other than Mona Vale and Warriewood IN2 areas, which would be rezoned to IN1.
4. The draft LEP/DCP statutory exhibition is intended to be early 2023 (Ex J, tab 34, f 229).

Lay evidence

1. The Applicant relied on affidavits sworn by the director of the Applicant and his wife (Exs C and D). The lease for the premises is annexed to Ex C.

The lease for the premises

1. The lease for the premises terminates on 10 September 2023 (Ex C, Annexure D, f 73). The Lessee is a company. The deponent stated that as a condition of the lease he provided a personal guarantee (Ex C).
2. The lease includes the following clauses: 14.3.1 It is the Lessee's responsibility to obtain the approval of all relevant authorities for its use of the Premises. Requirements of Authorities 19.1 The Lessee will, at the Lessee's cost, comply with the requirements of any Authorities in respect of the Complex and the Premises unless, and to the extent that, the requirements relate to matters which would otherwise be the responsibility of the Lessor under this Lease. 19.2 If the requirements of any Authority involve any works to the Premises or to the Complex, the Lessee will not carry out the works except with: 19.2.1 the consent of the Lessor (other than in the case of an emergency) which consent will not be unreasonably withheld, and 19.2.2 the consent of the relevant Authorities and in accordance with the terms of any consent.
3. The director of the Lessor gave consent for the installation of adjustable bollards on the common property outside the premises (Ex N), which is a fire safety measure agreed by the fire safety experts.

Expert evidence

1. The Council relied on the expert evidence of Daniel Milliken (planning) and Troy Sullivan (fire safety). The Applicant relied on the expert evidence of Nicholas Najar (planning) and Graham Scheffers (fire safety).

Planning

1. The experts agreed that the use of the premises "fits the definition of an 'Indoor Recreational Facility'" and that the use is prohibited under LEP 2011. The experts agreed that there is no development consent, nor does the use have the benefit of an existing use right.
2. According to Mr Milliken, the gym would require 14 onsite car parking spaces under the relevant controls of the Warringah Development Control Plan 2011. According to Mr Najar, there are 3 spaces dedicated to the premises on the roof. He acknowledged that the Applicant has not carried out a traffic or parking assessment.
3. According to Mr Najar, there is no flood evacuation plan for the premises, despite the location being identified as flood prone.

Fire safety

1. The experts agreed on the following: "Any Modified Order does not prejudice Council's entitlement to serve Development Control (Fire Safety) Orders on the entire premises 384 Pittwater Road, North Manly in accordance with the Environmental Planning and Assessment Regulation 2021. We acknowledge that such a Development Control Order would require a full assessment of the building to Parts C, D and E of the Building Code of Australia and would need to address but not be limited to such matters as protection of openings in external walls".
2. The experts agreed on the fire safety measures required to be implemented, and those measures are included in the terms of the Applicant's version of the modified Order (Ex M). According to Mr Sullivan, those measures, when completed, will make the premises safer in terms of fire safety, however, those measures cannot be added to the Council's Fire Safety Measures Register for the building without a Final Fire Safety Certificate which is issued with an Occupation Certificate or a Fire Safety Order.

Applicant

1. The Applicant submitted that it is accepted that the use is unlawful and prohibited in the IN2 zone under LEP 2011.
2. The Applicant submitted that it would be consistent with the interest of justice and the public interest, in the circumstances, to allow an extended period of 1 year and 7 months in which the use may over the period, cease and relocate, or at least have the opportunity of being made good (lawful). The Applicant emphasised that the Council allowed the Applicant to continue trading for 12 months from the date the Order was made.
3. The extended period sought is referrable to:

• The lease between the owner and the Applicant which terminates on 10 September 2023.
• The planning reforms, either of which may make it available to the Applicant to make a development application for the use of the premises as a gym.

1. It is not the Applicant's position that it be allowed to continue its use of the premises in perpetuity and unconstrained, but rather, because of the following circumstances, it be granted a reasonable period, given:

• The Applicant has been in occupation and use of the premises since July 2013, being 8 years and 9 months or 3201 days.
• There is no evidence of any impact upon amenity by the use of the premises over that period, nor evidence of any complaint.
• The Respondent and the State government are well into a process which may result in the current use of the premises being permissible in the zone and in that regard the reduction in the number of zones by inference must result in an increase in the number of permissible uses in those zones.
• The Applicant's use did only come to the Council's attention from a single complainant, and the complaints did not include amenity concerns.
• There are no impacts on amenity, or the environment, caused by the Applicant's use of the premises.
• The use causes no safety concerns not addressed by the Applicant's proposed modified Order.
• The Applicant proposes suitable conditions (or terms) including the implementation of a plan of management.
• The Applicant would suffer financial and personal prejudice, whilst there is no discernible prejudice to the Respondent or the local community at all by an abeyance of the Order for a period.

1. In the application of the Respondent's Enforcement Policy, the Court would give weight to the principle of proportionality in making the Order. In the application of the Respondent's Enforcement Guidelines, the Court would give weight to the principle of making any decision in respect to the order on its merit.
2. In the Court's exercise of its discretion, it would not consider against the Applicant that it derives an income from the use, but rather take that evidence into account against causing cessation of the use, without a reasonable time being afforded to the Applicant.
3. The Court would consider as a relevant and weighty factor, the prejudice caused by the making of an order upon this Applicant, its employees and those deriving a physical/health benefit from the use.
4. The Court would give primacy to the fact that despite the Respondent asserting the use is out of character with surrounding uses, the use has been in operation for an extraordinary long period without any complaints or problems, and it must be telling that:

• The Order made no reference to any amenity concerns.
• The Order made by the Respondent included a period of 12 months without any ameliorative or remedial terms at all.
• The Respondent's pleadings (Ex 1) seek that the Order be "endorsed", presumably for the remainder of the period, without any ameliorative or remedial terms at all.
• The Respondent's pleadings did not raise one issue in respect to amenity or impacts.

1. The Order issued by the Respondent was unfair, it failed to have any regard to the subjective circumstances of the Applicant or the discretionary factors available to it.
2. There is no building, structures or work that are sought to be regularised by the exercise of discretion here.
3. The Applicant submitted that the Council did not issue an Emergency Order, which can be issued without prior notice, where life safety is a concern relating to the use, such as a commercial premises being operated with an excessive number of patrons which may have adverse safety implications for occupants (see Ex 6, tab 7, p 5).
4. The Owners' Corporation consents to works on common property (Ex 7).
5. If the Applicant cannot comply with the terms of the Order, then the modified Order does not apply and reverts to the Order as issued (Ex 6, tab 5).

Respondent

1. The Council submitted that the Applicant has been given a generous time period to comply with the Order. The generous time period was given as a result of the Council exercising its discretion, following representations made to the Council by the Applicant.
2. The Council submitted that it would not be appropriate to exercise discretion to extend the time period to comply with the Order on the basis of the planning reforms, because there is no indication on record that the Council has any intention of making the use permissible in the zone, or of changing the zoning of the land.
3. According to the Council, the Order was issued on the basis the use is prohibited in the zone. Section 8.18(4) of the EPA Act does not permit a merit assessment of the proposal (Imaroo Flyer Pty Ltd v Berrigan Shire Council [2010] NSWLEC 1251 at [22]). The Applicant bears the evidentiary onus to persuade the Court in determining the appeal to exercise the discretion under s 8.18(4) of the EPA Act for the extension of the period of time sought to comply with the Order. The Applicant criticises the Council for not carrying out an assessment of the merits of the matter and this is the wrong approach. The Applicant's planning expert has not undertaken a full assessment of the use. The evidence raises a serious fire safety issue. This weighs against the exercise of discretion to extend the period of time to comply with the Order. Premises are open to the public.
4. The modified Order sought by the Applicant raises a jurisdictional issue, because the relevant provisions do not confer any power for works to be undertaken. This bypasses the development assessment process. There is no owners consent for works that may impact upon common property, nor is the owner of the property a party to the proceedings.
5. The Council referred to Kirby J's judgment in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 at [339]-[341] regarding the exercise of the Court's discretion, because the Applicant is asking the Court to exercise discretion regarding the period of time for compliance with the Order and the terms of the Order. The discretion should be exercised to enforce the public interest in equal compliance with the law, because there is a legislative purpose in upholding the integrated and co-ordinated nature of planning law. The Applicant asks the Court to disregard the public duty of the orderly and economic development of land, and instead to let the Applicant continue the prohibited use until there is no financial burden. There are other unlawful uses in the IN2 zone, and those responsible for the unlawful uses, on the basis of the equal justice principle, would have a reasonable expectation of being given a long period of time to comply with any order given if this Applicant is given a long period of time to comply with the Order.
6. The Applicant has not adduced evidence to demonstrate that the landlord would not agree to terminate the lease, or that steps have been taken to sub-lease the property, or that attempts have been made to relocate.

Consideration

1. The parties' agreed on the following facts:

• The site is zoned IN2 pursuant to LEP 2011 and the use of the premises for the purpose a recreation facility (indoor) is prohibited in the IN2 zone.
• The gym is properly characterised as a recreation facility (indoor) and so the use is unlawful.
• There is no development consent, nor is the current use an existing use within the meaning of s 4.65 of the EPA Act. Development consent cannot be granted for a prohibited use.

1. An appeal under s 8.18(1) of the EPA Act is a de novo hearing of the Council's decision to issue an order, and so the Court is empowered to exercise the same functions as exercised by the Council in making the original decision. The Court's power does not extend to a merit assessment of the prohibited use (Imaroo Flyer Pty Ltd v Berrigan Shire Council [2010] NSWLEC 1251 at [20] and [22]). The validity of the Order would be a matter for judicial review.
2. There is no evidence before me that the Order issued by the Council was unfair, that it failed to have regard to the subjective circumstances of the Applicant, or the discretionary factors available to the decision-maker, or that the Council failed to take into consideration relevant matters in issuing the Order. In the letter to the Applicant accompanying the Order, the Council stated that the period of time for compliance with the Order was extended from 6 to 12 months after reviewing and considering the Applicant's representations (Ex 6, tab 5, f 33). The Applicant acknowledged and based its case on the assumption that the time period given to the Applicant by the Council to comply with the Order is generous. The appeal has provided the Applicant with an opportunity to fully present the circumstances and facts relevant to the matter so that they may be considered, and a decision made on merit.
3. I accept the Applicant's submission that there is a possibility that recreation facilities (indoor) become a permissible use in the zone, or in the future E4 zone, as a result of the planning reforms. The Council has indicated on the record in the Discussion Paper that two options regarding the future IN2 zone are being considered; the first being to combine the permitted uses in Warringah LEP IN2 zone and the Pittwater LEP IN2 zone into a single IN2 zone that applies to all current IN2 zones. If the Council adopts the first option, recreation facilities (indoor) will be permissible in the IN2 zone because they are permissible in the IN2 zone under the Pittwater LEP 2014, and the Applicant can choose to apply for development consent for the use of the premises as a gym.
4. I accept the Applicant's submission that the Council would not have given the Applicant such a generous period of time to comply with the Order had the Council been concerned that the gym represented a public safety risk or that it unreasonably impacted on the existing uses in the industrial zone, or that it resulted in unacceptable amenity impacts on the surrounding residential community. If the evidence raises a serious fire safety issue, a relevant enforcement authority is able to issue a fire safety order to the owner of the premises under s 9.34(1)(b) and Pt 2 of Sch 5 of the EPA Act, regardless of the outcome of this appeal.
5. I accept the Council's submission that it is in the interests of the orderly and economic use of land and the public interest that the industrial zone be available for the industrial purposes for which it is intended. An extension of the period of time to comply with the Order merely postpones the availability of the premises for a permissible use until a later date. The Council overlooked the prohibited use of the premises for over 7 years until the Council was notified by an anonymous caller that the premises was occupied by a gym (Ex J, tab 2, f 5). An extension of the period of time to comply with the Order covers the period of time that the future permissible uses in the IN2/E4 zone are uncertain while the Council and the Department carry out the planning reforms. The Council's identification of a shortage of land zoned for industrial uses is a long-term prediction and the postponement of the availability of the premises for a permissible use has no impact on the long-term availability of land zoned for industrial uses.
6. As requested to do so by the Council, I have considered Kirby J's nine guidelines for the exercise of discretion (articulated in reviewing a decision of the then Chief Judge of the Land and Environment Court to refuse an injunction to restrain a breach of the EPA Act by the long-term use of a shed as a shop on land, where the use was prohibited under the applicable environmental planning instrument and the owner of the land could not meet the evidentiary burden of establishing an existing use) (Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 at 339-341). In summary, the discretionary power (under the then s 124, now s 9.46 of the EPA Act) should be exercised to balance the public interest in equal compliance with the law on the one hand, and the degree of irremediability occasioned by the breach and the expense or inconvenience which would follow the law's enforcement on the other.
7. Having considered all the evidence before me, I am satisfied that is it reasonable that the Applicant be allowed to continue its use of the premises for an extended period of time on the bases of the circumstances and facts set out by the Applicant at [39]. I consider the Applicant's nominated date for the extension of the period of time to comply with the Order until 1 December 2023 to be arbitrary. The extended period of time to comply with the Order should coincide with the termination of the lease of the premises. This represents a very generous extension of time for the Applicant, it eliminates the possibility of a financial impact on the Applicant as a result of terminating the lease early, and it is likely that it will be known by the latter part of 2023 whether the recreation facility (indoor) purpose is, or is likely to become, permissible in the zone.
8. I do not accept the Council's submission that extending the period of time to comply with the Order, subject to the terms, bypasses the development application process. Pursuant to Pt 1 of Sch 5 to the EPA Act, the Order is a Stop Use Order. A modified Order with an extended period of time to comply with the Order, subject to terms, remains a Stop Use Order. The terms agreed by the Fire Safety experts are to make the premises safe in the interim, prior to the use ceasing. Implied in the power to issue an order is a power to issue it on terms that govern the operation of a prohibited use in the interim period between the making of an order and the ceasing of the use.
9. I do not accept the Council's submission that an extension of the time period to comply with the Order in this matter will necessarily set a precedent for other unlawful uses in the IN2 zone. The extension of the time period to comply with the Order, subject to the terms of the modified Order, is based on the unique circumstances and facts of this matter. The Council's Compliance and Enforcement Guidelines and Policy envisage various outcomes in considering whether to issue orders based on the nature and seriousness of the unlawful activity and other relevant factors.
10. I do not accept the Council's submission that there is no jurisdiction to impose the terms of the modified Order because they impact upon common property under the strata scheme. Other than the installation of bollards outside the premises, for which owner's consent has been given (Ex 7), the works proposed are within the premises. The issue highlighted by the Council is fixings placed into common property to install lighting, exit signs and smoke alarms. The Lease envisages, at cl 19.2, that works to the premises may be necessary to comply with the requirements of an authority and that the consent of the Lessor for those works will not be unreasonably withheld. The majority of the works agreed upon by the fire safety experts do not involve works to the common property. Furthermore, as already noted, a relevant enforcement authority is able to issue a fire safety order to the owner of the premises under s 9.34(1)(b) and Pt 2 of Sch 5 of the EPA Act.

Conclusion

1. I am satisfied, on the basis of all of the evidence before me, that is appropriate to extend the period of time to comply with the Order until the end of the current lease, 10 September 2023, subject to the terms agreed upon by the fire safety experts.

Orders

1. The orders of the Court are: 1. The appeal is upheld. 2. Development Control Order Ref No. EPA2021/0045 to "Stop using the premises known as 2/384 Pittwater Road North Manly for the purposes of a 'recreation facility (indoor)' as defined by the Warringah Local Environmental Plan 2011" is modified pursuant to s 8.18(4)(b) of the Environmental Planning and Assessment Act 1979 to extend the period of time to comply with the Order until 10 September 2023, subject to the terms set out in the modified Order at Annexure A. 3. The exhibits, other than Exhibits 1, A, F and M, are returned.

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Susan O'Neill Commissioner of the Court Annexure A (174052, pdf)

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