Ritchie v Blacktown City Council

Land and Environment Court (NSW)|2020-08-11

Introduction

On 30 August 2018 Development Application DA 017-001123 was approved by the Council (development consent) on land being Lot 2 Deposited Plan 553399 known as 70 Portico Parade, Toongabbie (site).
The development consent permitted:

the subdivision of the site into two lots (proposed Lots 60 and 61);
the demolition of existing structures and construction of a dual occupancy on each lot (detached dual occupancy on Lot 60 and attached dual occupancy on Lot 61) being a total of four dwellings on the two lots;
the subdivision of each of proposed Lot 60 and proposed Lot 61 so that each dwelling will be on a separate allotment (four lots in total).

One of the sources of power to grant the development consent was State Environmental Planning Policy (Affordable Rental Housing) 2009 (SEPP ARH). The Applicant for development consent proposed then that two of the four dwellings (one in each dual occupancy) be designated for affordable rental housing pursuant to cl 17 of the SEPP ARH. However, when the Council granted the development consent it imposed conditions requiring that all four dwellings be designated for affordable rental housing.

The site

The site is located on the western side of Portico Parade and at the corner of Portico Parade and McCoy Streets Toongabbie. It has an irregular shape with a total area of 1,170 sqm.
The site currently contains a single storey brick dwelling which is proposed to be demolished as part of the development approved under the development consent.
The site is less than 400 m from the bus shelter located at the corner of Carter and McCoy Streets.
The locality is characterised by one and two storey detached dwellings along Portico Parade with some medium density townhouses to the south-eastern side of Portico Parade.
The particular characteristics of the site are not relevant to the present appeal because the design of the buildings is not proposed to be altered in any way.

Blacktown Local Environmental Plan 2015

Whilst the present case turns on the meaning and effect of SEPP ARH, certain provision of Blacktown Local Environmental Plan 2015 (BLEP 2015) need to be noted. Relevantly there is no material difference in the provisions of BLEP 2015 between the time of the grant of development consent and the present time.
The site is almost entirely zoned R2 Low Density Residential. A small part of the site is zoned RE1 (Public Recreation) but for present purposes that small portion is irrelevant.
In the R2 zone development for the purposes of dual occupancies is permitted with development consent.
Subdivision may be carried out with development consent (cl 2.6(1) of BLEP 2015). The minimum lot size for subdivision is 450 sqm pursuant to cl 4.1 and the Lot Size Map of BLEP 2015.
Clause 4.1B BLEP 2015 provides minimum lot sizes for certain types of development in particular zones. In the R2 zone the minimum lot size for attached dual occupancy is 500 sqm and for detached dual occupancy is 600 sqm.
Clause 4.1C of BLEP 2015 addresses the subdivision of dual occupancies. Subdivision of a dual occupancy under BLEP 2015 is only permissible when two requirements are met:

Each of the two dwellings has a frontage to a different road; and
The size of each lot resulting from that subdivision is not less than 300 sqm.

SEPP ARH in brief

The relevant provisions of SEPP ARH are set out later in this judgment, but before describing the approved development, some provisions of SEPP ARH need to be noted.
SEPP ARH makes no provision for the subdivision of land simpliciter. The only provision relating to subdivision is to subdivision of constructed dual occupancies. Subdivision of the land on which a dual occupancy has been carried out is permissible by virtue of cl 18.
There is no minimum lot size for a dual occupancy development, but consent cannot be refused on the grounds of site area if the area is at least 450 sqm (cl 14(1)(b)).

The development consent

Whilst the elements or components of the development consent have been identified in [2] above it is necessary to understand the power which was exercised by the Council when granting each component of the development which was approved.
The first step or component was the subdivision of the site into two lots - Lots 60 and 61. There was no power in SEPP ARH to grant consent to that subdivision. Accordingly, the power exercised by the Council was the power in cl 2.6(1) and cl 4.1 of BLEP 2015. Each of the proposed Lots 60 and 61 met the minimum lot size of 450 sqm in BLEP 2015.
The second element or component was the construction of a detached dual occupancy on Lot 60 and an attached dual occupancy on Lot 61.
The detached dual occupancy on proposed Lot 60 was not permissible under BLEP 2015 because cl 4.1B prescribed a minimum lot size of 600 sqm for construction of a detached dual occupancy whereas proposed Lot 60 has an area of only 549.5 sqm. (There was no objection pursuant to cl 4.6 BLEP 2015 accompanying the development application.)
The attached dual occupancy on proposed Lot 61 was permissible under BLEP 2015 because pursuant to cl 4.1B the minimum lot size for an attached dual occupancy is 500 sqm and proposed Lot 61 has an area of 620.5 sqm.
It follows that the source of power for the consent to construct the detached dual occupancy on proposed Lot 60 could only be found in SEPP ARH. As I identified in [25] above, if the site area for a proposed dual occupancy (attached or detached) is at least 450 sqm then a consent authority must not refuse consent to that development. In this case proposed Lot 60 meets that "minimum" area requirement in SEPP ARH.
Aside from the permissibility of dual occupancies by virtue of the zoning/land use table provisions of BLEP 2015, there were therefore two sources of power for the approval of the attached dual occupancy on proposed Lot 61, BLEP 2015 and SEPP ARH, whereas there was a single source of power for the approval of the detached dual occupancy on proposed Lot 60 being SEPP ARH.
The third component of the development consent is the subdivision of the constructed dual occupancies to create the ultimate four lots. Resulting lots would be: 1. Lot 60 (549.5 sqm) - 1. Lot 1 278.6 sqm 2. Lot 2 270.9 sqm 1. Lot 61 (620.5 sqm) - 1. Lot 3 253.9 sqm 2. Lot 4 366.6 sqm
It should be observed again that cl 4.1C of BLEP 2015 permits the subdivision of dual occupancies only where:

Each of the two dwellings has a frontage to a different road; and
The size of each lot resulting from that subdivision is not less than 300 sqm.

It can be seen that the subdivision of the constructed dual occupancies is not permissible under BLEP 2015 because the size of each lot resulting from the subdivision is not more than 300 sqm. (The proposed subdivision of the attached dual occupancy on proposed Lot 61 would also not be permissible because the two dwellings do not have a frontage to a different road).
The sole source of power then for the subdivision of the constructed dual occupancies was cl 18 of SEPP ARH which does not prescribe any minimum lot size nor any other criterion to be met for such a subdivision.
In summary therefore the components and sources of power for the grant of development consent were (again putting to one side the permissibility by zoning/land use table in BLEP 2015): Subdivision to create Lots 60 and 61 BLEP 2015 cll 2.6(1) and 4.1 Detached dual occupancy on Lot 60 SEPP ARH cl 14(1)(b) Attached dual occupancy on Lot 61 BLEP 2015; SEPP ARH Subdivision of both dual occupancies SEPP ARH

SEPP ARH

SEPP ARH has been described in the following terms: "19 The SEPP is a facultative and beneficial state environmental planning policy that applies to the site by virtue of cl 7 of the SEPP causing the SEPP to apply to the whole of the State. To the extent that there is any inconsistency between the SEPP and a local environmental plan … the provisions of the SEPP prevail (see 8 of the SEPP). 20 The SEPP provides for specific beneficial provisions for the provision of affordable rental housing, with the particular facultative provisions that apply depending on the nature of the affordable rental housing proposed to be developed …" Moore J in 193 Liverpool Road Pty Ltd v Inner West Council [2017] NSWLEC 13 (193 Liverpool Road) at [19]-[20]
The aims of the Policy are in cl 3: (a) to provide a consistent planning regime for the provision of affordable rental housing, (b) to facilitate the effective delivery of new affordable rental housing by providing incentives by way of expanded zoning permissibility, floor space ratio bonuses and non-discretionary development standards, (c) to facilitate the retention and mitigate the loss of existing affordable rental housing, (d) to employ a balanced approach between obligations for retaining and mitigating the loss of existing affordable rental housing, and incentives for the development of new affordable rental housing, (e) to facilitate an expanded role for not-for-profit-providers of affordable rental housing, (f) to support local business centres by providing affordable rental housing for workers close to places of work, (g) to facilitate the development of housing for the homeless and other disadvantaged people who may require support services, including group homes and supportive accommodation.
The phrase affordable rental housing is not defined in SEPP ARH or the EP&A Act. Affordable housing however is defined in the EP&A Act in s 1.4 as follows: affordable housing means housing for very low income households, low income households or moderate income households, being such households as are prescribed by the regulations or as are provided for in an environmental planning instrument.
Clause 6 of SEPP ARH is a provision which provides for such households in the following term: (1) In this Policy, a household is taken to be a very low income household, low income household or moderate income household if the household - (a) has a gross income that is less than 120 per cent of the median household income for the time being for the Greater Sydney (Greater Capital City Statistical Area) (according to the Australian Bureau of Statistics) and pays no more than 30 per cent of that gross income in rent, or (b) is eligible to occupy rental accommodation under the National Rental Affordability Scheme and pays no more rent than that which would be charged if the household were to occupy rental accommodation under that scheme. (2) In this Policy, residential development is taken to be for the purposes of affordable housing if the development is on land owned by the Land and Housing Corporation.
Part 2 SEPP ARH is headed New Affordable Rental Housing and divided into the following divisions: 1. Division 1 In-fill affordable housing 2. Division 2 Secondary dwellings 3. Division 3 Boarding houses 4. Division 4 Supportive accommodation 5. Division 5 Residential flat buildings - social housing providers, public authorities and joint ventures 6. Division 6 Residential development - Land and Housing Corporation 7. Division 7 Group homes 8. Division 8 Complying development on certain land - secondary dwellings and group homes
A feature of each type of development appears to be the provision of rental housing of various types, or social housing, but not the creation of dwellings for sale for owner occupation.
Clause 10 of SEPP ARH provides as follows: (1) This Division applies to development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings if - (a) the development concerned is permitted with consent under another environmental planning instrument, and (b) the development is on land that does not contain a heritage item that is identified in an environmental planning instrument, or an interim heritage order or on the State Heritage Register under the Heritage Act 1977. (2) Despite subclause (1), this Division does not apply to development on land in the Sydney region unless all or part of the development is within an accessible area. (3) Despite subclause (1), this Division does not apply to development on land that is not in the Sydney region unless all or part of the development is within 400 metres walking distance of land within Zone B2 Local Centre or Zone B4 Mixed Use, or within a land use zone that is equivalent to any of those zones.
The site is within an accessible area and so is not excluded from the operation of SEPP ARH by virtue of subcl 10(2).
Clauses 11 and 12 were repealed in 2011. Prior to the repeal the clauses relevantly provided: 11 Development to which Division applies This Division applies to the following development on land to which this Division applies: (a) development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings where at least 50 per cent of the dwellings in the proposed development will be used for affordable housing, but only if: (i) the development does not result in a building on the land with a building height of more than 8.5 metres, and (ii) in the case of development for the purposes of a residential flat building - residential flat buildings are not permissible on the land otherwise than because of this Policy, (b) development for the purposes of residential flat buildings where at least 20 per cent of the dwellings in the building will be used for affordable housing, but only if: (i) residential flat buildings are permissible on the land otherwise than because of this Policy, and (ii) the land does not contain a heritage item that is identified in an environmental planning instrument or an interim heritage order or on the State Heritage Register. 12 Development may be carried out with consent Development to which this Division applies may be carried out with consent.
The Applicant places some reliance on the repeal of cl 11 (and there being no replacement provision) in its case which is referred to below.
Clause 13 is an incentive clause: 13 Floor space ratios (1) This clause applies to development to which this Division applies if the percentage of the gross floor area of the development that is to be used for the purposes of affordable housing is at least 20 per cent. (2) The maximum floor space ratio for the development to which this clause applies is the existing maximum floor space ratio for any form of residential accommodation permitted on the land on which the development is to occur, plus - (a) if the existing maximum floor space ratio is 2.5:1 or less - (i) 0.5:1 - if the percentage of the gross floor area of the development that is used for affordable housing is 50 per cent or higher, or (ii) Y:1 - if the percentage of the gross floor area of the development that is used for affordable housing is less than 50 per cent, where - AH is the percentage of the gross floor area of the development that is used for affordable housing. Y= AH ÷ 100 or (b) if the existing maximum floor space ratio is greater than 2.5:1 - (i) 20 per cent of the existing maximum floor space ratio - if the percentage of the gross floor area of the development that is used for affordable housing is 50 per cent or higher, or (ii) Z per cent of the existing maximum floor space ratio - if the percentage of the gross floor area of the development that is used for affordable housing is less than 50 per cent, where - AH is the percentage of the gross floor area of the development that is used for affordable housing. Z= AH ÷ 2.5 (3) In this clause, gross floor area does not include any car parking (including any area used for car parking). Note - Other areas are also excluded from the gross floor area, see the definition of gross floor area contained in the standard instrument under the Standard Instrument (Local Environmental Plans) Order 2006.
There is no floor space ratio control in BLEP 2015. The Applicant places no reliance on the provisions of cl 13, but it forms part of the context of SEPP ARH in order to construe the other provisions.
Clause 14 identifies standards which cannot be used to refuse consent. They relate to site area, landscaped area, deep soil zones, solar access, parking and dwelling size. Because of the primacy of SEPP ARH over local environmental plans (cl 8 of SEPP ARH) a local plan which prescribes stricter controls on those subject matters does not apply.
Relevantly in this case the Applicant relied on cl 14(1)(b): (1) …. A consent authority must not refuse consent to development to which this Division applies on any of the following grounds - … (b) site area if the site area on which it is proposed to carry out the development is at least 450 square metres … to overcome the minimum lot size required of proposed Lot 60 which under BLEP 2015 requires a minimum site area of 600 sqm.
Clause 17 is the subject of the principal debate in this case: 17 Must be used for affordable housing for 10 years (1) A consent authority must not consent to development to which this Division applies unless conditions are imposed by the consent authority to the effect that - (a) for 10 years from the date of the issue of the occupation certificate - (i) the dwellings proposed to be used for the purposes of affordable housing will be used for the purposes of affordable housing, and (ii) all accommodation that is used for affordable housing will be managed by a registered community housing provider, and (b) a restriction will be registered, before the date of the issue of the occupation certificate, against the title of the property on which development is to be carried out, in accordance with section 88E of the Conveyancing Act 1919, that will ensure that the requirements of paragraph (a) are met. (2) Subclause (1) does not apply to development on land owned by the Land and Housing Corporation or to a development application made by, or on behalf of, a public authority.
Clause 18 provides that: Land on which development has been carried out under this Division may be subdivided with the consent of the consent authority.

Evidence

Dr J Stubbs, who is a highly qualified and experienced social planner, was retained by the Applicant. Dr Stubbs provided a statement of evidence but was not required to give oral evidence.
The Applicant relied upon Dr Stubbs' evidence to deal with the Council's public interest contention and in summary she opined that of the four dwellings proposed to be created:

In accordance with the Applicant's proposal in this modification application one dwelling will be affordable rental housing, rented and managed as required by cl 17 of SEPP ARH by a registered community housing provider;
One other dwelling will be acquired by an investor and available for rental, and be affordable rental housing although not managed by a registered community housing provider;
The other two dwellings will be sold to owner occupiers and will be affordable to moderate income households.

That was the Applicant's evidence countering the Council's contention that it was in the public interest that all four dwellings be designated for affordable rental housing and be managed by a community housing provider. The Council did not lead any evidence from a social planner or otherwise on the question of its public interest contention.

Submissions

The Applicant submitted on the Council's primary position (all dwellings to be designated for affordable rental housing):

The text of cl 17 is plain. There is no ambiguity in the words used requiring any departure from the ordinary and grammatical meaning which in any event supports the evident purpose of the instrument.
The Council's interpretation of cl 17 that all dwellings "must" be designated as affordable is not supported by an ordinary reading of the text in the clause.
Clause 13(1) would have no work to do (the reference to minimum 20% of gross floor area) if in any event all dwellings were required to be dedicated and would lead to an absurd result.

As to the alternate position of Council (one dwelling in each dual occupancy to be designated) the Applicant submitted:

The development the subject of the application comprises two dual occupancies and nothing in SEPP ARH suggests those dual occupancies should be treated separately.
It is up to the developer to decide what number of dwellings to "propose" to be designated as affordable rental housing and managed by a community housing provider in cl 17;
It follows that there is no requirement for any dwelling to be so designated notwithstanding reliance upon SEPP ARH;
The provision of housing with one dwelling designated as affordable rental housing and to be managed by a community housing provider together with the likely outcome of the use of the dwellings in accordance with the evidence of Dr Stubbs is in the public interest.

The Council's primary submission albeit faintly argued, was that cl 17 of SEPP ARH when read with the aims of the SEPP means that all dwellings are to be designated as affordable rental housing and managed by a registered community housing provider.
The Council's alternate argument is that:

The development consent truly comprises two developments being two dual occupancies:
There must be at least one dwelling designated as affordable rental housing and managed by a community housing provider because of the use of the word "the" in cl 17;
The language of cl 17 does not suggest that it is the developer's choice to "propose" or not propose the designation once SEPP ARH is engaged;
One dwelling in each dual occupancy must be designated affordable rental housing.

Construction of delegated legislation

There was no controversy between the parties as to the relevant principles of construction, although the parties put it in slightly different ways.
The Council pointed out that environmental planning instruments are a species of delegated legislation, a statutory instrument (s 3 of the Interpretation Act 1987) and should be interpreted in accordance with the general principles of statutory interpretation: Collector of Customs v Agfa-Gevaert Ltd (1986) 186 CLR 389; [1996] HCA 36 at 398. A construction should be preferred that is consistent with the language and purpose of all the provisions of such instruments: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (Project Blue Sky) at [69] and [78]. The ordinary and grammatical meaning of the provisions to be construed will usually correspond with the legislative intention and will be the meaning adopted in the construction of a statute: Project Blue Sky at [78]. The language is to be read in context having regard to the objective which it was designed to promote, however, the primary focus must remain on the text: Cranbrook School v Woollahra Municipal Council (2006) 66 NSWLR 379; [2006] NSWCA 155 at [36].
The Council further submitted that there is no general principle requiring laxity or flexibility in construing delegated legislation, or statutory instruments generally: 4nature Inc v Centennial Springvale Pty Ltd (2017) 95 NSWLR 361; [2017] NSWCA 191 (4nature Inc) at [107]. Legislative intent is not to be discerned by reference to pre-conceived ideas or vague notions of what might or might not be desirable. Intent is to be objectively determined. It is manifested "by the use of language" in the document to be construed: Matic v Mid-Western Regional Council [2008] NSWLEC 113 at [8] referring to Wilson v Anderson (2002) 213 CLR 401; [2002] HCA 29 at [8].
It was pointed out by the Council that the general principles of construction were applied in the context of SEPP ARH (and Pittwater LEP) in this Court in Lotus Project Management Pty Ltd v Pittwater Council [2015] NSWLEC 166 (Lotus) at [25]-[26] per Pain J: "[25] The first question requires the statutory construction of the relevant provisions of the Affordable Housing SEPP and development controls in Part 4 "Principal development standards" in the PLEP. Well understood principles of statutory construction require that the instrument as a whole must be considered. In Theiss v Collector of Customs [2014] HCA 12 ; (2014) 250 CLR 664 at [22] the High Court, citing Commissioner of Taxation of Commonwealth v Consolidated Media Holdings Ltd [2012] HCA 55 ; 250 CLR 503 at [39], unanimously confirmed that the task of statutory construction must begin and end with a consideration of the statutory text. The statutory text must be considered in its context, which includes legislative history and extrinsic material but this cannot displace the meaning of the statutory text. There is no need to refer to extrinsic material on this occasion. Where words are plain and unambiguous they should be given their ordinary and grammatical meaning, per Gibbs CJ in Cooper Brookes (Wollongong) Pty Ltd v Cmr of Taxation of Commonwealth [1981] HCA 26 ; (1981) 147 CLR 297 at 305. Section 33 of the Interpretation Act 1987 (NSW) requires a construction which promotes the purpose or object of an Act or statutory rule over one which would not and Project Blue Sky Inc v Australian Broadcasting Authority194 CLR 355 ; [1998] HCA 28 McHugh, Gummow, Kirby and Hayne JJ at [69]-[71] held to similar effect. While I note that in the Interpretation Act a distinction appears to be made between a statutory rule and an environmental planning instrument in the definition of instrument in s 3 and in the separate definitions in s 21 a purposive approach to construction is to be preferred to the extent such an approach can assist. [26] A LEP is delegated legislation so that while the principles of statutory construction referred to immediately above must apply the instrument should also be read in a practical manner, as identified in Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 by Leeming JA citing Lord Reid in Gill v Donald Humberstone & Co Ltd [1963] 3 All ER 180 at 183."
The Applicant also referred to Lotus and summarised the principles as follows:

The instrument is to be considered as a whole;
The task of statutory construction must begin and end with a consideration of the statutory text in context, including its legislative history and extrinsic material;
Considerations arising from context cannot however displace the meaning of the statutory text;
Where words are plain and unambiguous, they should be given their ordinary and grammatical meaning;
In the case of ambiguity, a construction which promotes purpose or object of an Act or statutory rule (and instrument) is to be preferred over one which would not;
As a statutory instrument an environmental planning instrument is to be read in a practical manner.

One could also add the principle that constructions which yield improbable or capricious (or absurd) results should be avoided in Cooper Brookes (Wollongong) Pty Ltd v Cmr of Taxation of Commonwealth [1981] HCA 26 ; (1981) 147.
Subject to the qualification below I agree that the parties have currently identified the principles of construction on delegated legislation.
However, care must be taken not to take too broadly the "principle" that delegated legislation such as an environmental planning instrument is to be read in a practical manner. In a more recent decision of the Court of Appeal the decision in Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379, cited by Pain J in Lotus, was considered. In 4nature Inc, Leeming JA at [107] said the following: "94. It is a general proposition that if legal language has been used less than carefully, it may be appropriate to give rather less weight to precise textual considerations. That was the point intended to be conveyed by what I said in Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 at [54]-[55], which commenced with an observation that "the drafter has been less than fastidiously precise in his or her choice of language" and concluded with reference to the "somewhat casually drafted internal definition". There are reasons to think that delegated legislation, or, at least, some classes of delegated legislation, may be less carefully drafted than primary legislation."
There was no submission in this case that the language has been used less than carefully in SEPP ARH with the consequence that less weight is to be given to precise textual considerations in order to achieve a "practical result". It is important, however, to note the qualification to the more general principle in the Applicant's submissions.
The following provisions of the Interpretation Act should also be noted: 3 Definitions (1) In this Act - instrument means an instrument (including a statutory rule or an environmental planning instrument) made under an Act, and includes an instrument made under any such instrument. 33 Regard to be had to purposes or objects of Acts and statutory rules In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object. 35 Headings etc (1) Headings to provisions of an Act or instrument, being headings to - (a) Chapters, Parts, Divisions or Subdivisions into which the Act or instrument is divided, or (b) Schedules to the Act or instrument, shall be taken to be part of the Act or instrument. (2) Except as provided by subsections (3) and (4) - (a) a heading to a provision of an Act or instrument (not being a heading referred to in subsection (1)), (b) matter within a provision of an Act or instrument (being matter in parentheses that merely sets out a heading to or describes the effect of some other provision of the Act or instrument or of some other Act or instrument), or (c) a marginal note, footnote or endnote in an Act or instrument, shall be taken not to be part of the Act or instrument. (3) A heading to a provision of an Act or instrument (not being a heading referred to in subsection (1)) shall be taken to be part of the Act or instrument if, immediately before 1 February 1981 (being the date on which section 3 of the Interpretation (Amendment) Act 1980 commenced), it was part of the Act or instrument. (4) A heading to a provision of an Act or instrument (not being a heading referred to in subsection (1)), or a marginal note, footnote or endnote in an Act or instrument, shall be taken to be part of the Act or instrument if - (a) it is referred to expressly, otherwise than by means of matter within some other provision of the Act or instrument (being matter in parentheses that merely sets out a heading to or describes the effect of the firstmentioned provision) or by means of a symbol, in some other part of the Act or instrument, or (b) not being so referred to, it is a heading, marginal note, footnote or endnote to a table or form in the Act or instrument. (4A) The number of a section, subsection, clause or subclause of an Act or instrument is taken to be part of the Act or instrument even though it appears in a heading to the section, subsection, clause or subclause. (5) This section does not limit the application of section 34 in relation to the use of any heading, marginal note, footnote or endnote in the interpretation of the provision to which the heading, marginal note, footnote or endnote relates.

Consideration

I do not accept the Council's primary contention that each dwelling is required to be designated as affordable rental housing to be managed by a community housing provider.
It is sufficient to refer to cl 13(1) of SEPP ARH to understand why it cannot be correct. As set out at [48] above cl 13(1) refers to it applying if the percentage of the gross floor area of the development that is to be used for the purposes of affordable housing is at least 20%. The bonus provisions for providing that affordable housing then follow in subcl 13(2).
If the Council was right in its construction, then there is simply no work to do by cl 13(1). It would simply not need to be there because every development would be providing 100% of its gross floor area as affordable housing so there would be no need to prescribe a minimum of 20% to obtain the bonus. The bonus provisions would simply apply in accordance with the formula in subcl 13(2).
Reading the instrument as a whole, there are no words or expressed textual indications that all dwellings need to be designated as affordable rental housing. In fact, the textual indications are to the contrary, the principal ones being:

Clause 13 for the reasons above;
Clause 17(1)(a)(i) which requires identification of the dwellings proposed to be designated. The language makes plain that because the dwellings are to be chosen or proposed that not all dwellings are to be so designated. If all were to be so designated the language would be different and the provision would say precisely that.

Whilst the aims of SEPP ARH might be better served by requiring all dwellings to be affordable rental housing managed by a registered community housing provider, the language of Div 1 of Pt 2 New Affordable Rental Housing - In fill Affordable Housing, does not command that outcome.
The Council's public interest contention was also but faintly argued. The public interest here is the proper application of the relevant planning controls, in particular SEPP ARH. If SEPP ARH does not require all dwellings to be designated as affordable rental housing then it is not truly open to the Court to do so "in the public interest". To take such a step would amount to the creation of policy by the Court contrary to the policy made by the State - SEPP ARH. I reject the Council's public interest contention.
Accordingly, the condition requiring all four dwellings in the two dual occupancies to be designated cannot stand. The debate is then whether just one dwelling is required to be so designated (the Applicant's position) or whether two dwellings, one in each dual occupancy, needs to be designated (the Council's alternate position).
There are two questions to be asked and answered:

Does SEPP ARH mandate that at least one dwelling be designated affordable rental housing and managed by a community housing provider when SEPP ARH is engaged?
Should the original application and subsequent development consent be considered as constituting two elements to be treated separately (two dual occupancies) or as one single development unit for the purposes of SEPP ARH?

If either question is answered no then the Applicant's proposal for only one dwelling to be designated is acceptable. Conversely, for the Council's alternate argument to succeed, requiring two dwellings to be designated, both questions need to be answered yes.
The Applicant says that the word "propose" in cl 17 means that it is a choice by the developer and that the developer can choose the number to be zero - no dwellings are to be designated as affordable rental housing. He also submitted that the aims and objectives of SEPP ARH are met because the SEPP is promoting affordable housing, not only affordable rental housing, and dual occupancies in this location are affordable housing.
In its context the Council relies on the language of cl 17, and in particular the use of the definite article "the" in cl 17(1)(a)(i) in the phrase "the dwellings proposed to be used for affordable housing", to submit that there must be a designation of at least one dwelling. The Council points to the absence of words such as "any" or "if any", such words needing to be read into the clause if the Applicant is correct that it the developer to choose no dwellings to be designated.
For that and other reasons I agree.
Whilst the "affordable housing" definition does not refer to rental housing, the heading to Pt 2 in which the relevant provisions sits is headed "New affordable rental housing". The heading to the Part is part of the instrument (Interpretation Act, s 35(1)).
In cl 17 the phrase "affordable housing" refers to such housing where a condition is to be imposed that affordable housing is to be managed by a registered community housing provider. A registered community housing provider manages housing for or rental by persons appropriately qualified. The phrase affordable housing in cl 17 means affordable rental housing.
The aims of the Policy referred to "affordable rental housing" in cl 3 in each of aims (a) to (f). The headings of the Policy embraces affordable rental housing.
It is plain, consistently with the observation of Moore J in 193 Liverpool Road that SEPP ARH, and cl 17 in particular, refers to affordable rental housing.
Subclause 17(1) commences - "a consent authority must not consent to development to which this Division applies unless conditions are imposed …". The "development to which this Division applies" is first identified in cl 10: … development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings if - (a) the development concerned is permitted with consent under another environmental planning instrument … The phrase "development to which this Division applies" is repeated in cll 13, 14, 15 and 16A as well as cl 17. The phrase cannot mean simply any development for the purposes of dual occupancies, multi dwelling housing or residential flat buildings as the Applicant argued. The phrase means those forms of development where the power under SEPP ARH is engaged. It would be absurd for a provision such as cl 17 were to apply to a development application where the proponent did not invoke SEPP ARH at all.

"the dwellings proposed to be used for the purposes of affordable housing will be used" (cl 17(1)(a)(i));
the affordable rental housing "will be managed by a registered community housing provider" (cl 17(1)(a)(ii));
a restriction will be lodged on the title in accordance with s 88E of the Conveyancing Act 1919 providing for the limitations above.

None of the language is anything other than mandatory - there is no suggestion of choice by developer that there are to be no dwellings proposed to be used for the purposes of affordable housing.
The structure of the Division is that there is potential bonus in floor space ratio (cl 13), a relaxation of controls (cl 14) and a power to grant subdivision (cl 18) and the quid pro quo, as it were, is that there must be one or more dwellings designated for affordable rental housing.
In order to benefit from the bonus FSR provisions in cl 13 there is a minimum requirement of 20% of the gross floor area of the development that is to be used for the purposes of affordable housing. Here there is no reliance upon the bonus FSR provisions in cl 13 because BLEP 2015 does not have a maximum FSR control. Plainly if there is no limitation then there is no need for a bonus.
There is otherwise no minimum percentage or any other description specifically prescribed in SEPP ARH for the minimum gross floor area or dwellings to be designated affordable rental housing. But in my opinion the construction of the Division requires at least one dwelling to be so designated for the reasons set out above.
The Applicant also relied upon the repeal of cl 11 which provided a minimum designation of 50% of gross floor area in order to obtain the benefits of SEPP ARH in support of its construction. Whilst it is true that the fact and content of a repealed instrument can form part of the context of the instrument as presently drafted for the purpose of its construction, I do not consider that the repeal of cl 11 (and cl 12) outweighs or ultimately has any bearing upon the exercise of construction I have undertaken above.
It follows that where the power of SEPP ARH is invoked at least one dwelling is required to be the subject of a condition under cl 17 (on the assumption that in the circumstances of a particular case including this one cl 13 has no role to play).
In respect of each dual occupancy SEPP ARH is engaged and relied upon for the grant of the development consent (see [37] above):

The attached dual occupancy to enable its subdivision;
The detached dual occupancy for the approval of the dual occupancy itself and its subdivision.

Accordingly, in respect of each dual occupancy, if they were treated separately, cl 17 would apply because they are each development to which the Division applies because provisions of SEPP ARH have been invoked.
The question is whether the two dual occupancies are to be treated as a single development or as two developments for the purposes of SEPP ARH.
Section 4.12 of the EP&A Act relevantly provides: (1) A person may, subject to the regulations, apply to a consent authority for consent to carry out development. (2) A single application may be made in respect of one or more of the types of development referred to in paragraphs (a)-(f) of the definition of development in section 1.5(1) …
A single development application is not confined to a single form of development or indeed to a single development. A single application may include multiple forms of development and multiple types of development.
There is nothing in the Environmental Planning and Assessment Regulation 2000 which adds to the EP&A Act in this regard.
In the context of permissibility of uses, in Abret Pty Ltd v Wingecarribee Shire Council (2011) 180 LGERA 343; [2011] NSWCA 107, the Court of Appeal looked at the individual elements which formed part of a single development application to consider whether or not the proposed land use was permissible.
The case is but an example, presumably of many, where the individual components within a single development application need to be considered for purposes such as permissibility and from time to time other questions.
The present development application involves the steps identified above at [26]-[33]. The subdivision of the land pursuant to BLEP 2015 was the first step. At that notional point in time, there is no reliance upon SEPP ARH. It is only at the second stage, after the approval of the subdivision that SEPP ARH has a role to play.
It should be noted that whilst as a practical matter the decision to grant development consent in respect of each element of the development the subject of the application happens instantaneously, as a matter of legal theory each element is taken to be approved in sequence.
It is the case then that when SEPP ARH is first invoked the land has been notionally subdivided and there are two proposals - an attached dual occupancy on one lot and a detached dual occupancy on a second lot - to be followed by subdivision of each dual occupancy.
Whilst within one development application, when the power under SEPP ARH comes to be exercised, there are two distinct applications on separate parcels of land, the subdivision having notionally already occurred. The question is then whether SEPP ARH would require cl 17 to operate as if there is simply one development because there being one development application, or two developments because of the two components.
Clause 17 does not in itself refer to a development application. Whilst a development consent is granted in response to application for development, nevertheless the introductory words of cl 17 prohibit granting "consent to development to which this Division applies" rather than a development application, unless the conditions are imposed.

Conclusion

For these reasons I agree with the Council's alternate position that two dwellings need to be designated pursuant to cl 17. This requires a modification of the development consent but in terms other than that sought by the Applicant, who sought modification from the requirement for four dwellings to be designated to only one being designated.
During the course of the hearing, counsel for the Applicant informed the Court that if the Court formed the view that two dwellings were required to be designated then either the Applicant would amend their modification application to require two designated rather than one or accept that the Court has power to modify the consent to provide for two in response to this modification application. Counsel for the Council did not demur from that position.
Having determined that one dwelling from each dual occupancy needs to be designated for affordable rental housing, the Applicant needs to determine which is the second dwelling to be so designated and modified conditions provided.
Accordingly, I make the following directions: 1. The parties are to file agreed modified conditions of development consent in accordance with these reasons within seven days; 2. Liberty to apply on two days' notice.
Subject to any party exercising the liberty to apply, I shall make orders in chambers following the receipt of the above material.

Addendum

On 22 October 2020 the parties filed agreed conditions of consent which properly give effect to my reasons given on 7 October 2020. Accordingly, I make the following orders: 1. The appeal is allowed. 2. Modification Application MOD-19-00311 - to amend conditions 1.4.1, 4.8.1, 13.6.6.1, 13.6.6.3 and 16.4.1 of Development consent No. REV-18-0009 of DA-17-01123 dated 30 August 2018 in respect of Lot 2 DP 553399 known as 70 Portico Parade Toongabbie is granted in accordance with the conditions which are Annexure A hereto. 3. The exhibits other than Exhibits A, B and 2 are returned.

Acting Commissioner of the Court Annexure A (128007, pdf)

Amendments 28 October 2020 - See Addendum at [121]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 October 2020

(2011) 180 LGERA 343

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