Samcourt Pty Ltd v Inner West Council

The site and its locality

1. The hearing commenced with an inspection of the site and its locality. The site is currently a strata titled brick factory building known as 2C Gladstone Street, Newtown, and comprises five strata lots with a total area of 1320m2. It is irregular in shape and has frontage to Gladstone Street to the north, Phillip Lane to the west and Gladstone Lane to the south. The land has a slight fall of around 0.7m from south to north along the Phillip Lane frontage, and of around 0.6m from east to west across the Gladstone Street frontage.
2. The existing building is built to the Phillip Lane and Gladstone Lane frontages with a nil setback, and adjoins a four-storey residential development to the east similarly with a nil setback. The building presents an unrelieved 4-5m high masonry wall to each of these frontages, but the units are setback from Gladstone Street with at grade parking and loading facilities fronting Gladstone Street.
3. The western side of Phillip Lane is characterised by semi-detached or single residential dwellings ranging from single storey to double storey. The dwellings are orientated west to the Phillip Street frontage with the rear private open space fronting Phillip Lane, separated from Phillip Lane by fence and/or a vehicular access, which fence-line dominates the lane on its western side.
4. The development in the surrounding area is of mixed typology with a range of lot sizes, and includes dwellings, units, mixed use development and industrial uses. It is an area in a state of transition as former industrial sites have been re-developed, such as the adaptive re-use of the heritage site home to the Flour Mill on the opposite side of Gladstone Street, and as others are in the process of redevelopment.
5. To the south-east of the site, at 2-2A Gladstone Street, development consent has been granted for the construction of a four storey mixed use development. 2-2A Gladstone Street is a corner site occupying the south-eastern corner of the same block as the subject site. It has two street frontages and a corner frontage. The building the subject of the consent is designed to address the frontages with block edge alignment, with a through-site link between two built forms.
6. To the west of the site, at 39 Phillip Street on the corner of the next block, development consent has similarly been granted for a four storey mixed use development with block edge alignment to address the street frontages and create legibility for the corner.

Evidence

1. Expert opinion evidence was given by Mr Andrew Darroch and Mr Jason Perica concerning the town planning issues. They engaged in a joint conference and produced a joint report and a supplementary report following the amended plans and Amended Statement of Facts and Contentions, and gave evidence at the hearing.
2. Mr Gavin Duane, market analyst and Mr Peter Lyshon, retail analyst, also gave expert opinion evidence in a joint report and at the hearing.
3. Mr Higgins and Mr Bertacco, traffic engineers, gave expert opinion in a joint report, the result of which was that the issues concerning car parking were resolved.
4. A number of residents objected to the proposal, one of whom, Mr Denham, gave evidence at the commencement of the site inspection. He resides in Phillip Street, with the private open space of his premises facing Phillip Lane. His evidence was that the height and scale of the proposal will have a detrimental effect on his property and the neighbouring properties along Phillip Lane as a result of increased overshadowing and the loss of visual and acoustic privacy. He also expressed concern about increased traffic along Phillip Lane, and the detrimental effect that the development will have on Phillip Lane as a location of artistic expression.

The planning context

1. The site interfaces with a number of other sites with different zoning and/or development standards. It is zoned B7 Business Park pursuant to the MLEP 2011, but is located entirely within land zoned B5 Business Development. It also adjoins land zoned R4 High Density Residential, where the four-storey residential development is currently located. The land to the west, on the opposite side of Phillip Lane, is zoned R2 Low Density Residential.
2. The height development control applicable to the site is 14m, but the height control for the area to the west is 9.5m and for the area to the south across Gladstone Lane is 17m.
3. The site has a floor space ratio ("FSR") development standard of 1.5:1, whereas the adjacent site to the east and the area to the west both have a FSR standard of 0.6:1. The proposal breaches the FSR standard, with a FSR of around 1.9:1.
4. The development consents for the construction of 4 storey mixed used developments at 2-2A Gladstone Street and 39 Phillip Street (described above at [10]-[11]) relate to land similarly in the B7 zone with a FSR development standard of 1.5:1. Those developments have a FSR of 1.64:1 and 1.745:1 respectively (Ex C p.21; Ex B p.101).
5. Clause 2.3(2) of the MLEP 2011 requires the Court to "have regard to the objectives for development in a zone when determining a development application in respect of land within the zone". The objectives are: "• To provide a range of office and light industrial uses. • To encourage employment opportunities. • To enable other land uses that provide facilities or services to meet the day to day needs of workers in the area. • To provide for limited residential development in conjunction with permissible active ground floor uses. • To provide business and office premises for the purposes of certain art, technology, production and design sectors. • To enable a purpose-built dwelling house to be used in certain circumstances as a dwelling house."
6. Pursuant to s 4.15 of the EPA Act, the Marrickville Development Control Plan 2011 ("MDCP 2011") is also required to be considered in determining the development application.
7. At Part 2.6 of the MDCP 2011, the privacy provisions include the objective O1 to "ensure new development and alterations and additions to existing buildings provide adequate visual and acoustic privacy for the residents and users of surrounding buildings." A number of controls are set out in C3.
8. Part 5.1.3 of the MDCP 2011 concerns the building form, and Part 5.1.3.1 concerns ensuring that the maximum permitted FSR for any development is "consistent with the FSR standards prescribed within MLEP 2011 and any applicable precinct-specific planning controls." A note following the controls makes it clear that the FSR standards are not 'as of right' and that not all development may be able to achieve the FSR due to particular site characteristics.
9. The controls with respect to massing and setbacks are at Part 5.1.3.3. The objectives of those controls are as follows: "O5 To preserve the prevailing building frontage edge of the streetscape. O6 To ensure the massing of any permitted fourth and fifth storeys are setback to be subservient to the street building frontage. O7 To ensure the massing of any roof top level is not visually dominant. O8 To reinforce the local topography of Marrickville LGA's commercial centres as ridge roads, visible at their highest points in the neighbourhoods. O9 To ensure the rear massing of developments does not cause significant visual bulk or amenity impacts on neighbouring properties to the rear."
10. The relevant controls are as follows: "C7 For new infill developments, where the HOB standard is set as 14 metres or greater, the street front portion of the building mass in the front 6 metres must have a maximum height (measured from the footpath level up to the highest point on the front portion of the building) of 12 metres and contain a maximum of three storeys. C8 The street front portion of the building mass generally must be built to the predominant front building line, which will usually require alignment with the street front boundary (zero front setback) to reinforce a continuous street fronting building edge to the streetscape. C9 Side setbacks are generally not permitted in the front portion of the building where zero side setbacks are the typical pattern of the streetscape … C11 Upper levels above the street front portion of the building mass must be setback a minimum 6 metres from the street front of the building (required to both frontages when the site is located on the corner of two major streets), except for 0.9 metres roof projection of the topmost dwelling occupancy level. C12 On corner properties where the secondary frontage is to a minor street or laneway, the upper levels above the street front portion of the building mass facing the secondary frontage must be setback a minimum 3 metres from the secondary street frontage of the building, except for 0.9 metres roof projection of the topmost dwelling occupancy level. Rear massing C13 Where the rear boundary adjoins a lane: i. The rear building envelope must be contained within the combination of the rear boundary plane and a 45 degree sloping plane from a point 7.5 metres vertically above the lane ground level, measured at the rear boundary, and contain a maximum of two storeys on the rear most building plane; ii. Notwithstanding point i., building envelopes may exceed the above building envelope control where it can be demonstrated that any rear massing that penetrates above the envelope control will not cause significant visual bulk or amenity impacts on neighbouring properties to the rear; iii. The rear building envelope must contribute positively to the visual amenity of the laneway, and encourage rear laneway activation through measures such as providing appropriate lighting and opportunities for passive surveillance."
11. As such, the MDCP 2011 allows a building envelope with zero setback to the street frontage for up to 12m in height, and a 6m setback above the 12m, and a zero setback to the rear laneway for up to 7.5m and two storeys, with setbacks above that contained within the rear boundary plane and a 45 degree sloping plane from the point that is 7.5m above the lane ground level. This is demonstrated in the following diagram, which is figure 7A in the MDCP 2011:
12. Part 5.1.3.6 of the MDCP 2011 concerns corner sites, with two of the objectives as follows: "O17 To retain and maintain existing buildings and design features that reinforce corner, landmark or gateway locations … O19 Where appropriate for the site and context, to encourage the building form and detail of new development to emphasise corner, landmark or gateway locations, considering the desired future character."
13. The relevant controls concerning infill development on corner sites include C24 and C26, which are: "C24 Infill development on street corner sites must be built to both the street front boundaries and address both street frontages. … C26 Infill development on street corner sites must not incorporate large chamfers or cutaway corners, unless it is appropriate to relate to an important public space."
14. The MDCP 2011 therefore encourages block edge development for corner sites.
15. The site falls within the Enmore North and Newtown Central precinct, which has the following desired future character (MDCP 2011 Part 9.8.2): "1. To protect, preserve and enhance the identified period buildings within the precinct. 2. To protect the identified Heritage Items within the precinct. 3. To protect, preserve and enhance other significant public domain elements within the precinct including landscaping, fencing, open space, kerb and guttering, views and vistas and prevailing subdivision patterns. 4. To maintain distinctly single storey streetscapes within the precinct. 5. To protect, preserve and enhance the existing character of the streetscapes where only compatible development is permitted. 6. To facilitate urban renewal in appropriate locations. 7. To maintain non-retail employment as part of any mixed use redevelopment of former industrial land and reflect the existing industrial streetscape character in the design. 8. To ensure orderly development on the masterplan site in accordance with the principles of the masterplan vision and achieve an efficient and high quality built outcome. 9. To support excellence in contemporary design. 10. To ensure that higher density development demonstrates good urban design and environmental sustainability and provides suitable amenity for occupants of those developments. 11. To ensure that the design of higher density development provides adequate amenity for the intended occupants of the building and protects the residential amenity of adjoining and surrounding properties. 12. To promote sustainable transport (public transport, walking and cycling) by restricting the provision of off-street car parking, increasing provision of bicycle parking and car-sharing (off-street and on-street) and carefully managing general on-street car parking. 13. To ensure the provision and design of any parking and access for vehicles is appropriate for the location, efficient, minimises impact to streetscape appearance and maintains pedestrian safety and amenity."

Permissibility of the proposed use

1. Clause 3 of the zoning table for the B7 zone sets out the following nominated permissible uses: "3 Permitted with consent Centre-based child care facilities; Dwelling houses; Garden centres; Hardware and building supplies; Intensive plant agriculture; Kiosks; Landscaping and material supplies; Light industries; Markets; Neighbourhood shops; Office premises; Passenger transport facilities; Plant nurseries; Residential flat buildings; Respite day care centres; Roads; Take away food and drink premises; Vehicle sales or hire premises; Warehouse or distribution centres; Any other development not specified in item 2 or 4"
2. Clause 4 of the zoning table nominates "Residential accommodation" as one of the prohibited uses, amongst other uses. Within the definition of "Residential accommodation" is "shop-top housing", and shop-top housing is defined as "one or more dwellings located above ground floor retail premises or business premises".
3. Whilst residential flat buildings are permissible with consent, cl 6.13 of the MLEP 2011 provides that in the B7 zone, development consent must not be granted to development for the purpose of a residential flat building unless it is part of a mixed use development that includes a permissible non-residential use, that the non-residential use is not less than 60% of the total gross floor area, and that no part of the ground floor street frontage is for residential purposes. Specifically, it states at (3) as follows: "(3) Development consent must not be granted to development for the purpose of a dwelling or a residential flat building on land to which this clause applies unless the consent authority is satisfied that: (a) the development is part of a mixed use development that includes a non-residential use permitted in Zone B7 Business Park, and (b) no part of the ground floor of the building that fronts a street will be used for residential purposes (excluding access, car parking and waste storage), and (c) not less than 60% of the total gross floor area of the building will be used for non-residential purposes, and (d) in the case of development for the purpose of a dwelling - the dwelling will be on the same lot of land as a non-residential use (including in the case of a lot in a strata plan or community title scheme)."
4. Clause 6.12 provides that for development in the B7 zone, with respect to use for the purpose of business premises or office premises: "(3) Development consent must not be granted to development for the purpose of business premises or office premises on land to which this clause applies unless the consent authority is satisfied that the development will be used for a creative purpose such as media, advertising, fine arts and craft, design, film and television, music, publishing, performing arts, cultural heritage institutions or other related purposes."

The Council's position that the proposed use is prohibited

1. The proposal includes business and office premises at the ground floor, with dwellings above those ground floor uses. Council submits that this is properly characterised as shop top housing, and that therefore the development is prohibited.

Samcourt submits that the proposed use is permissible

1. Samcourt submits that whilst 'residential accommodation', as a class (a class that includes shop-top housing), is prohibited, certain types of residential accommodation are expressly permitted. This includes dwelling-houses and residential flat buildings. Therefore, these forms of residential accommodation are permissible because they are expressly identified, despite the prohibition of the general class.
2. Samcourt submits that similarly, shop top housing is defined by reference to a certain arrangement of dwellings above ground floor retail premises or business premises. Whilst "retail premises" as a class are similarly prohibited, certain types of retail premises are expressly permissible with consent. This includes garden centres, hardware and building supplies, kiosks, landscaping and material supplies, markets, neighbourhood shops, plant nurseries, take away food and drink premises, and vehicle sales or hire premises. Samcourt submits that it is clear that these types of retail premises are permissible, and that therefore development comprising a type of retail premises that is expressly permissible is not prohibited, despite the prohibition on retail premises as a class.
3. Samcourt submits that this conclusion is supported by conventional principles of statutory interpretation, pursuant to which specific provisions prevail over general provisions, and submits that a purposive interpretation can be taken given the stated objectives of the B7 zone. Samcourt also submits that this interpretation is supported by cl 2.3(3)(b) of the MLEP 2011, which provides that with respect to the land use table, "a reference to a type of building or other thing does not include (despite any definition in this Plan) a reference to a type of building or other thing referred to separately in the Land Use Table in relation to the same zone." Samcourt therefore says that where a type of residential accommodation or a type of retail premises is expressly mentioned in the land use table, it is not included in the definition of the class of residential accommodation or retail premises. Samcourt submits that this extends to shop top housing, such that if the shop top housing includes uses that are of a type that are specifically identified as permissible, then a combination of those uses are not included in the definition of shop top housing when referred to in the same zone.
4. Samcourt therefore submits that in circumstances where there is a combination of a residential flat building and either ground floor office premises (which are a nominated permissible use in the zone) or expressly permitted ground floor retail premises in the same building, it is not shop top housing for the purposes of the land use table. That is, Samcourt submits that the prohibition of shop top housing by item 4, when properly construed in light of the expressly permitted uses in item 3 and the zone objectives, does not extend to all forms of development that might otherwise come within the shop top housing class.
5. Samcourt further submits that, given that no consent is sought for any particular type of use of the commercial premises, the Court cannot be satisfied that the proposal meets the definition of shop top housing, given that the definition relies on the ground floor being "retail premises or business premises".
6. Further, Samcourt submits that despite the prohibition on shop top housing, business premises are permissible by virtue of cl 6.12 of the MLEP 2011, which applies to the B7 and IN2 zones only and provides that development consent "must not be granted to development for the purpose of business premises or office premises… unless the consent authority is satisfied that..". Samcourt submits that this special provision makes development for the purpose of business premises permissible with consent subject to a state of satisfaction. Samcourt says that this is supported by the zone objectives, which include the objective to "provide business and office premises for the purposes of certain art, technology, production and design sectors". Samcourt submits that cl 2.3(4) of the MLEP 2011 allows the specific provision of cl 6.12 to apply despite the provisions in the land use table.

The proposed use is permissible

1. I accept, for the reasons set out by Samcourt, that use for the purpose of office premises, nominated permissible types of retail premises, business premises (excluding those nominated as prohibited) and residential flat buildings are all permissible in the B7 zone.
2. I accept, therefore, that a mixed use development containing these permissible uses is permissible with consent, notwithstanding that it could also be characterised as falling within the general class of shop top housing. I accept the submission that the effect of cl 2.3(3)(b) and (4) of the MLEP 2011 is that the specific provisions nominating these permissible uses prevail over general provisions prohibiting residential accommodation as a class, and shop top housing as a sub-class within residential accommodation.
3. This is supported by the provisions of the MLEP 2011 at cl 6.13, which states that with respect to a residential flat building, consent cannot be granted unless the consent authority is satisfied that it is part of a mixed use development that includes a non-residential permissible use ((3)(a)), no part of the ground floor that fronts a street will be used for residential purposes ((3)(b)), and 60% of the gross floor area of the building will be used for non-residential purposes ((3)(c)). The "non-residential uses" must be uses that are permissible with consent. The proposed use for the purpose of office or business premises as the non-residential component of the proposed development are uses that are permissible with consent, as the office use is a nominated permissible use and the business use is permissible by virtue of cl 6.12. As such, and consistent with cl 6.13, the development is characterised as a mixed use development containing a residential flat building and office or business premises, which is permissible in the zone.

Whether the business or office premises will be used for a creative purpose

1. With respect to the use for the purpose of business or office premises, cl 6.12(3) provides that development consent must not be granted "unless the consent authority is satisfied that the development will be used for a creative purpose such as media, advertising, fine arts and craft, design, film and television, music, publishing, performing arts, cultural heritage institutions or other related purposes." Mr Gavin Duane, market analyst and Mr Peter Lyshon, retail analyst, gave expert opinion evidence to assist the Court in determining whether the requisite state of satisfaction can be reached that the "development will be used for a creative purpose".

The evidence

1. Mr Duane and Mr Leyshon agree that:

• There is a wide variety of uses that could fall within the "creative purpose" use.
• There is demand for space for uses that fall within the "creative purpose" category.
• The space requirements for the variety of identified uses within the creative industries would vary substantially depending on the particular use, and the "space required for architects, software designers, media/advertising and the like are very different to those required for more cultural based creative industries such as music, drama, performers and the like" (Ex 4, p.7).
• The land around the subject site is an appropriate location for creative purpose uses given its accessibility by train station, access to surrounding cafes and restaurants, proximity to Sydney University and higher education facilities, and the presence of existing facilities in the vicinity including the converted Flourmill site.
• With respect to the business and office premises that had previously been marked as residential units, these span three levels. They may not be appropriate to all creative users and are not likely to attract a traditional office user, but it is envisaged that they could be used as architect offices, which exist in Surry Hills in various types/forms from terrace houses through to large warehouses. They could also be used for studio/workspaces to be separate from office components of a business, or for co-location of different businesses.

1. Mr Leyshon is additionally of the opinion that the office space spread across three levels will limit its attractiveness to all users, including creative users. His opinion is that they will be difficult to sub-let given that bathroom facilities will only be located on one or two levels, so access would interfere with other users of the space. He was also of the view that the separation of floor space across the levels may result in a lack of 'atmosphere' found in some other buildings and spaces occupied by creative industries, which tend to have multiple people working in a large, open space. Mr Leyshon also expressed a concern about whether the rents of such large spaces would be affordable for those in the creative industry.
2. Mr Duane's contrary opinion was that although spaces across multiple levels are not typical, they can still be used for the purpose of a range of uses that fall within the creative industry.

Submissions

1. The Council submits that there is insufficient evidence to demonstrate how the commercial premises will be used for a creative purpose. The Council says that, following the change to the MLEP 2011, Samcourt amended the plans by nominating certain units which had been designated as residential to be commercial. The Council says that the mere change in designation is inadequate, and that there is insufficient evidence to show how the proposal will cater to creative purposes and fulfil the purpose of cl 6.12.
2. Samcourt submits that the requisite state of satisfaction required of the consent authority in cl 6.12(2) has been met through the evidence of the experts. Samcourt also says that if the Court considered it necessary to resolve all possible doubt, a condition that the commercial tenancies be used for a creative purpose could be imposed.
3. The Council submits that if the requisite state of satisfaction is reached by the Court, a condition should be imposed requiring a covenant to be placed on the title of the strata units restricting their use to creative purposes. The Council submits that such a covenant will serve to warn future purchasers of this restriction on the use of the commercial tenancies.

The requisite state of satisfaction has been reached

1. I am of the view that to reach the requisite state of satisfaction, the Court, in exercising the functions of the consent authority, must first be satisfied that the office and/or business premises are capable of being used for a creative purpose as specified in cl 6.12(2). If satisfied that they are so capable, the Court, in exercising the functions of the consent authority, can be certain that they will be used for that purpose by imposing a condition restricting the use to that purpose, or by granting development consent for a specific use within the creative purpose category. In some circumstances, particularly when the application includes strata subdivision, when there is no specific use sought, and the future use of the individual units will require further development consent, such as in the present application, it can be appropriate for a condition of consent requiring a covenant to be placed on each relevant strata lot to ensure that future purchasers are aware of the restriction on the use of the unit.
2. Based on the evidence of Mr Leyshon and Mr Duane, I am satisfied that the office or business units are capable of being used for a creative purpose. Firstly, I accept that the category of "creative purpose" uses, as set out in cl 6.12(2) and expanded therein, is a broad category with a wide range of needs with respect to workspace. I accept that those needs vary depending on the type of creative purpose, with the needs for architects different to the needs of say, a performance or dance studio. Secondly, there is nothing about the design of the commercial units that restricts their use in such a way to prevent their use for a creative purpose. Although the multi-level units might make the workspace unsuitable for some creative purposes, I accept the evidence of Mr Duane that there are nonetheless uses that fall within the "creative purpose" category that could still occur in those units. Examples of such uses include industries that require separate workspaces and studios, co-working spaces, and architect offices. The mere fact that those spaces are different to other premises, such as the large open spaces provided by the Flour Mill, does not mean that they cannot be used for a use that falls within the broad category of a creative purpose. Thirdly, there is sufficient variety in the types of business or office premises provided by the development to cater for the variety of workspace needs of a creative user. Finally, I do not consider that it is relevant that rent may be more expensive for larger units, as this concerns marketability and does not assist in determining whether the premises will be used for a creative purpose.
3. Having been satisfied that they are capable of being used for a creative purpose, I can be certain that they will be so used by imposing a condition restricting the use to that purpose. In the event that development consent is granted, that condition is agreed between the parties.
4. A question then arises as to whether a condition should be imposed that requires a positive covenant to be placed on the title of any strata lot created for the business/office component that restricts their use to creative purposes such as those specified in cl 6.12(2) of the MLEP 2011. As I set out above, it may be appropriate to do so in circumstances where consent remains to be sought for the business and office uses and where the application seeks strata subdivision. Samcourt submits that such a condition is not appropriate or necessary. Various authorities have been provided to me by each of the parties on the question of whether such a condition should be imposed. Given that I have determined, for the reasons that follow, to refuse to grant development consent, I need not resolve the question of whether such a condition is appropriate in the present application.

Bulk, density and whether the cl 4.6 request should be granted

1. As set out above, the proposal breaches the FSR development standard, with a FSR of around 1.9:1. This equates to around 520m2 of additional floorspace above what is permitted by the FSR development standard. As such, consent cannot be granted except in accordance with cl 4.6(2) of the MLEP 2011. For there to be power to grant development consent for a development that contravenes a development standard, cl 4.6(4)(a) requires that the Court, in exercising the functions of the consent authority, be satisfied that:

• The proposed development will be consistent with the objectives of the zone (cl 4.6(4)(a)(ii)),
• The proposed development will be consistent with the objectives of the standard in question (cl 4.6(4)(a)(ii)),
• The written request adequately demonstrates that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case (cl 4.6(3)(a) and cl 4.6(4)(a)(i)), and
• The written request adequately demonstrates that there are sufficient environmental planning grounds to justify contravening the development standard (cl 4.6(3)(b) and cl 4.6(4)(a)(i)).

1. In considering the third and fourth points above, in Randwick City Council v Micaul Holdings Pty Ltd [2016] NSWLEC 7, Preston CJ made it clear that the Court need not be directly satisfied that compliance is unreasonable or unnecessary and sufficient environmental planning grounds exist, but rather "only indirectly by being satisfied that the applicant's written request has adequately addressed" those matters (at [39]).
2. Clause 4.6(4)(a)(ii) presumes that if the proposed development is consistent with the objectives of the zone and of the standard, then it is in the public interest. These matters need not be established by the written request. The objectives of the FSR development standard are: "(a) to establish the maximum floor space ratio, (b) to control building density and bulk in relation to the site area in order to achieve the desired future character for different areas, (c) to minimise adverse environmental impacts on adjoining properties and the public domain."

The written request

1. The cl 4.6 request concerning the breach of the FSR development standard, which is comprised in the Statement of Environmental Effects of January 2018, sets out the reasons as to why consent should be granted notwithstanding the breach, which can be summarised as follows:

• The site is unique in that it has three street frontages, and the development follows the form described in the MDCP 2011 for block edge development, activating the ground level rear lane, minimum building depth, and the requirements for the building envelope and massing including reduced massing at the rear laneway.
• The development uses the MDCP 2011 as the starting point for the form and siting of the building, and specifically addresses the interface and massing issues specific to the context.
• The development adopts a terrace form of development, which provides an appropriate transition between the B7 business park and the R1 zone.
• The proposal protects visual and acoustic privacy by orienting the upper levels to the north away from the rear of the dwellings on Phillip Street, and minimises overlooking by having small and recessed window openings and screened balconies.
• The proposal complies with the height development standard, and achieves compliance with the envelope for a development with a 14m height development standard, which allows for a height of 7.5m to the rear boundary and then the setback of the upper levels within an envelope of 45 degrees from 7.5m on the boundary. The proposal is only 6.7m high on the rear boundary, and then sets back within the 45 degrees for the third and fourth storey, such that the third storey is set back 3.4-4.5m and the fourth storey 5-7m.
• The proposal follows a minimum building depth of 10m on both street frontages, and complies with the MDCP 2011 requirement for corner sites to have the development address both streets.
• The solar diagrams demonstrate that the solar access maintained to the dwellings on Phillip Lane meets the requirements of the MDCP 2011 (which is that the solar access to principal living areas and principal areas of open space must not be reduced to less than 2 hours between 9am to 3pm at mid-winter, see C2 of Part 2.7.1).
• The FSR of the site is as a result of its economic development in accordance with the detailed requirements of the MDCP 2011.
• The proposal comfortably achieves the FSR of 1.895:1 by compliance with the bulk and scale of the desired future character expressed in the controls and it is therefore unreasonable and unnecessary to apply the FSR development standard.
• A compliant building would be uncharacteristic of the area, result in an inappropriate building form, and result in an uneconomic use of the land.
• The activation of the laneways through the ground floor commercial tenancies is considered to provide a public benefit and a better planning outcome.
• The contravention of the control does not give rise to any environmental effect of sufficient significance to cause concern.
• The proposal is consistent with the objectives of the zone and the objectives of the FSR development standard.

1. Samcourt also submits that the Court can consider the evidence given in court concerning the reasons why consent should be granted notwithstanding the breach. In support of the cl 4.6 request, Mr Darroch gave the following evidence:

• There are three sites zoned B7, including this one. They all have the same controls and interface with land zoned R3. On the two other sites, development consent has been granted for block edge development with similar transitions to the R3 zone to that proposed in the current development. The proposal is therefore consistent with the desired future character of the B7 zone in this locality.
• With respect to the development consent for 2-2A Gladstone Street, one of the other sites zoned B7, the FSR is more correctly 1.8:1 once the circulation space is added in.
• From Phillip Lane, the development will read only as 6.5m in height as the floors above that have additional setback. Removing one storey will make little difference to the way the development is perceived from Phillip Lane.
• The proposed built form to Phillip Lane is 1.6m lower than what one could put in that location under the height development standard.
• There is sufficient separation between the rear private open space of the Phillip Lane dwellings and the proposed development, and the separation complies with the requirements of the MDCP 2011.

Mr Perica's evidence

1. Conversely, Mr Perica's evidence is that whilst the scale of the proposal to Gladstone Street is acceptable, the proposed scale of the proposal to the rear of the site is not acceptable in its context. His opinion is that the rear of the site has a sensitive interface with neighbours and a change in planning controls, and that the transition in scale to the rear is important. His opinion is that the proposal is an overdevelopment of the site with too much floorspace and an excessive scale to the rear, which results in visual and amenity impacts to the rear of the site that are directly linked to the proposed bulk and FSR. His evidence with respect to the request to vary the FSR development standard and concerning consistency with the objectives of the zone and the FSR standard can be summarised as follows:

• Whilst block-edge development is encouraged, this does not mean that every edge must be built to. In the diagram in the MDCP 2011 setting out the building envelope, it shows built form that is not built to the edge where there is a laneway and zone interface.
• The setting of 39 Phillip Street, is completely different, with street widths around that site of around 15m and with development on opposite sides of the street facing that street. This is distinct from the present development site, which has the narrow laneway (6m) and the rear of the residential dwellings along the laneway, which is where the private open space of those dwellings is located. Further, the approved development at 39 Phillip Street appears to transition to lower heights where it adjoins other development on Phillip Street and Gladstone Street.
• The proposal does not respond with an appropriate scale and transition to the interface with the R2 zone across Phillip Lane. This land has a lower FSR and height limit, with narrow lots. Consistent with the planning principle in Seaside Property Developments Pty Ltd v Wyong Shire Council [2004] NSWLEC 117, the development proposal "needs to recognise and take into account the form of existing development and/or development likely to occur in an adjoining different zone."
• Whilst the proposal does include vertical separation of dwellings similar to a terrace form, the scale to the rear is not respectful and compatible with terrace housing forms, particularly opposite rear yards of the Phillip Street terraces.
• Consistent with the planning principle in PDE Investments No 8 Pty Ltd v Manly Council [2004] NSWLEC 355, the FSR and height controls should work together and compliance with the height control does not justify non-compliance with the FSR development standard.
• Consistent with the planning principle in Veloshin v Randwick Council [2007] NSWLEC 428, the proposal involves non-complying FSR and the impacts of the proposal could be reasonably reduced in an area of the site where there is a sensitive interface with surrounding and adjoining land.
• The height of windows and the scale of the proposal to the rear causes adverse privacy impacts to the rear of properties across Phillip Lane.
• A compliant building would not be uncharacteristic of the area either in terms of bulk or uses within. Less bulk towards the rear would be more sympathetic to the character of the area, and desired character of the area.
• Economic considerations are not quantified by the request and do not justify a breach of the FSR standard.
• The bulk and scale is excessive to the rear. It is approximately 1m higher than the building to the east, yet has a significantly closer relationship with the rear lane and adjoining residences across Phillip Lane. Whilst the upper two levels are within a 45 degree angle back from the lane, this does not adequately mitigate the scale, due to the narrowness of the lane, the prominence of the site and the lack of footpath areas. The setback to the eastern corner will improve sight lines but will not mitigate the scale to Phillip Lane.
• The proposal is not consistent with objective (c) of the standard, as the proposed bulk has negative environmental impacts by causing adverse visual impacts on the public domain and streetscape or lanescape, adverse visual impacts to the rear of properties across Phillip Lane, adverse privacy impacts to the rear of properties across Phillip Lane; and overshadowing impacts to the rear of properties across Phillip Lane.
• While the adjoining development to the south-east at No. 2B has some similarities in height, it is visually more removed from Phillip Lane.
• The proposed building will "loom large and be visually dominating" from the rear of the properties along Phillip Lane and the public domain along the laneway. There is "a lack of landscaping or visual relief from a footpath or street planting to ameliorate the proposed massing" (Ex 2, p.40).
• With respect to overshadowing, "it is difficult to be definitive about compliance with the overshadowing controls within the DCP in terms of the open space areas, as some rear structures do not appear to be shown. This particularly relates to where rear open space may receive less than two hours sunlight and this is being further reduced. What is reasonably clear is that at 11am there is additional overshadowing created to the rear yards of Nos. 21-35 Phillip Street, and this results from the top rear storey. This impact adds further concern regarding the non-compliant FSR and FSR distribution" (Ex 2 p.40)
• The additional floorspace results in inadequate internal building separation, which does not comply with the Apartment Design Guide and creates internal amenity issues with compromised privacy.
• The design of the proposal is not consistent with the desire future character of the area as it is inconsistent with elements 9, 10 and 11 (quoted above at [30]) as the scale is excessive and does not achieve an appropriate transition in form to the dwellings to the south, aspects of the design are overly 'busy' and there is compromised internal amenity "from both the site shape and trying to accommodate too much floorspace on the site", and the visual impacts and overshadowing caused to adjoining properties across Phillip Lane.

1. Further, in evidence, Mr Perica offered an alternative design that featured involved creating two buildings, with the centre section backing Phillip lane removed so that there was no longer development to the boundary fronting Phillip Lane.
2. Mr Darroch's view is that the planning principles referred to by Mr Perica have no work to do in circumstances where there are detailed development controls with respect to the building envelope contained in the MDCP 2011, which he says incorporate the way to respond appropriately to a zone interface. Further, Mr Darroch argued that the alternative design offered by Mr Perica was contrary to the controls in the MDCP 2011, which encouraged block edge development with alignment with the street front boundary (zero front setback) to reinforce a continuous building edge to the street. Mr Darroch also presented shadow diagrams from a proposal that removed the fourth storey from the Phillip Lane frontage, in order to establish that there was negligible difference in overshadowing between the two proposals.

The parties' submissions with respect to the written request and consistency with objectives

1. Samcourt submits that Mr Perica's emphasis on the narrow width of Phillip Lane overlooks that the MDCP 2011 specifically controls building separation and the building envelope. Samcourt submits that Mr Perica's position about excessive bulk fails to use the relevant DCP provisions as the focal point of evaluation, and instead uses an "unidentified yardstick" for what constitutes too large or prominent. Given that the proposed built form complies with the controls in the MDCP 2011, Samcourt submits that the presentation to Phillip Lane is compliant and reasonable terms of height, bulk and scale, massing and separation. Samcourt also says that compliance with the MDCP 2011 with respect to overshadowing is achieved, and that Mr Perica was not able to identify a specific overlooking relationship. Samcourt therefore submits that the Court can be satisfied that there are no amenity impacts to the residential uses along Phillip Lane. Samcourt thus submits that the proposal achieves consistency with the zone objectives and the objectives of the FSR development standard. Samcourt also submits that the request establishes that compliance with the FSR standard is unnecessary because of compliance with the MDCP 2011 controls, and that therefore the impacts caused by the present non-compliant proposal are precisely those contemplated by the controls. Similarly, Samcourt submits that the compliance with the MDCP 2011 provides sufficient environmental planning grounds to justify a contravention of the FSR standard.
2. The Council submits that the consent granted for 39 Phillip Street is irrelevant given that the Court is not aware of the circumstances in which the exceedence of the FSR was permitted. The Council submits that there is no evidence that a compliant development would be uncharacteristic of the area and result in an uneconomic use of the land, and further submits that compliance with the MDCP 2011 controls does not justify a contravention of the FSR development standard. In light of this, the Council submits that the written request does not adequately establish sufficient environmental planning grounds or that compliance with the standard is unreasonable or unnecessary. Further, the Council submits that the Court should accept the evidence that there is an amenity impact caused to the residents of dwellings along Phillip Lane, including overshadowing. The Council points to the fact that the shadow diagrams used to show that there was minimal difference in overshadowing, firstly demonstrated a difference that couldn't be described as minimal and secondly were still of a proposal that would not be compliant with the FSR. The Council submits that where there is a breach of the FSR development standard, compliance with the MDCP 2011 provisions by retaining 2 hours of sunlight is not sufficient to minimise the adverse impacts of the excessive bulk. The Council also relies on the evidence of the objectors, who are concerned about overshadowing and want the building to be reduced in height on the Phillip Lane frontage.
3. Further, the Council submits that the cl 4.6 request, in referring to the benefits of the proposal to "significantly improve" the site and activate the laneway, is not providing any reason to vary the standard that is specific to the particular circumstances of the case, and does not address how the breach in the FSR standard achieves a better outcome than a compliant development.

The state of satisfaction required by cl 4.6(4)(a) is not reached

1. It is common ground that the proposal is consistent with the zone objectives. However, having considered the evidence and submissions, for the reasons below I have determined that the proposed development is not consistent with the objectives of the FSR development standard, and that the request does not establish that compliance with the development standard is unreasonable or unnecessary. As such, the state of satisfaction required by cl 4.6(4)(a) is not reached and there is no power to grant development consent.
2. In reaching this decision, I am not assisted by the alternate scheme suggested by Mr Perica. I accept the evidence of Mr Darroch that the alternate scheme stands in direct contrast to the controls of the MDCP 2011. Further, there is insufficient detail to satisfy me that if pursued, it is a development that would comply with the FSR development standard and the objectives of the MDCP 2011 concerning block edge development around corner sites. Similarly, contrary to the submission of the Council it is irrelevant to consider whether the proposed development is a "better outcome" than a compliant development, as that is not one of the matters of which I must be satisfied in accordance with cl 4.6(4)(a).
3. Nevertheless, I am not satisfied that the proposed development is consistent with the objectives of the FSR development standard for the following reasons. Firstly, the additional floor space creates bulk at the Phillip Lane frontage that does not provide an appropriate scale and transition to the lane given its narrowness and interface with R2 Low Density Residential zone on the other side of Phillip Lane. I accept the evidence of Mr Perica that the bulk at the rear causes adverse visual impacts on the public domain and streetscape (or lanescape) of Phillip Lane, and that the proposal with therefore be visually dominating in that streetscape. I accept his evidence that the setback of the upper two levels within a 45 degree angle back from the lane does not mitigate the scale, due to the narrowness of the lane and the lack of footpath areas. I also accept that, given that Part 5.1.3.3 of the MDCP 2011 does not address massing at a zone interface, the planning principle in Seaside Property Developments Pty Ltd v Wyong Shire Council provides some guidance that the development proposal needs to recognise and respond to the interface with the R2 Low Density Residential zone. As such I accept Mr Perica's evidence that it is not appropriate to build to the edges of the building envelope in circumstances where there is a sensitive interface. As a result of not providing an appropriate scale and transition to Phillip Lane, the proposed development is inconsistent with objective (c) as it does not minimise the environmental impact on the public domain. Similarly, it means that the proposed development does not achieve good urban design, which is one of the elements of the desired future character described in the MDCP 2011 at 9.8.2 and sought to be achieved by objective (b) of cl 4.4 of the MLEP 2011.
4. Secondly, the additional floorspace creates bulk at the Phillip Lane frontage that causes adverse visual amenity for the private open space of the dwellings along Phillip Lane. I am satisfied that there are no privacy impacts due to the design of the windows, the difference in land uses, the building separation distances and the screening of the balconies. However, the narrowness of Phillip Lane and the lack of amelioration of the massing will mean that the full scale of the proposed development will be perceived from the private open space of dwellings along Phillip Lane. In that respect, I accept the evidence of Mr Perica that the proposed development will be visually dominating from those private open spaces. As such, the proposed development is inconsistent with objective (c) as it does not minimise the environmental impact on the residential properties along Phillip Lane. Similarly, it is contrary to the desired future character element in Part 9.8.2 of the MDCP 2011 (element 11) that requires the protection of residential amenity of adjoining and surrounding properties. As such, it is inconsistent with objective (b) of cl 4.4 of the MLEP 2011 as it does not control the bulk to achieve this desired future character.
5. Thirdly, the 'view from the sun' diagrams and the shadow diagrams demonstrate that the bulk at the Phillip Lane frontage causes morning overshadowing of the private open space of the dwellings along Phillip Lane. They show that the rear private oven spaces of dwellings at 17-31 Phillip Street are completely overshadowed by the proposal at 10am and partially overshadowed at 11am. I do not accept that compliance with the MDCP 2011 controls for the retention of 2 hours of sunlight is sufficient to minimise an impact in circumstances where there is a breach of the FSR standard, and where that breach results in excess bulk that causes overshadowing. Whilst I accept that some overshadowing additional to that currently experienced may occur with a proposed development, I accept the evidence of Mr Perica that the FSR of 1.5:1 allows a proposal that positions the bulk away from sensitive interfaces and is designed to minimise the additional overshadowing. There is nothing about the design of the proposed development that seeks to do this, as the design instead seeks to maximise the four storey controls of the MDCP 2011 around the edges of the site. Whilst I accept that the 'view from the sun' diagrams that depict a proposal with only three storeys to Phillip Lane demonstrate there is negligible difference in overshadowing, that proposal was agreed by Mr Perica and Mr Darroch to be nonetheless not compliant with the FSR development standard, and therefore would similarly demonstrate that the additional floorspace creates bulk at the Phillip Lane frontage that causes overshadowing that has not been minimised through an appropriate design. This supports my finding above that the proposed development is inconsistent with objective (c) as it does not minimise the environmental impact on the residential properties, and is inconsistent with objective (b) of cl 4.4 of the MLEP 2011 as it does not control the bulk to achieve element 11 of the desired future character.
6. I do not accept the submission of Samcourt that compliance with the MDCP 2011 building envelope controls means that any impact of the development on residential properties or the public domain is as envisaged by the controls, and therefore acceptable. The combination of the FSR of 1.5:1, the building envelope controls, and the height development standard, gives latitude for the development to be designed to respond to its context and to have the bulk and height positioned away from sensitive interfaces. The building envelope controls in the MDCP 2011 do not outweigh the objective of minimising adverse environmental impacts through controlling FSR, and compliance with the building envelope controls does not excuse impacts caused by a breach of the FSR.
7. Further, I accept the evidence of Mr Perica that the development consents for 2-2A Gladstone Street and 39 Phillip Street can be distinguished from the present development application. I accept his evidence that their frontages are on wider streets, and that the narrowness of Phillip Lane and the orientation of the dwellings with their private open space along Phillip Lane render the site distinct from those other B7 zoned sites. I also note that, as observed by Mr Perica, the development at 39 Phillip Street appears to be designed to provide some relief to the bulk by stepping down towards the residential zones. Similarly, for the development at 2-2A Gladstone Street relief to the bulk appears to be provided by a design with two buildings and a through-site break.
8. I turn then to the written request. I accept that the request does establish environmental planning grounds that could justify some departure from the development standard. Those grounds are the two combined factors of a site with three street frontages and the controls of the MDCP 2011, which encourage block edge development with zero setback at the ground level and a minimum building depth of 10m. However, these grounds do not adequately justify the departure sought in the present design of the proposed development. I accept the evidence of Mr Perica that block edge development could still be achieved without the building filling the full MDCP 2011 envelope along Phillip Lane.
9. Further, the request does not establish that compliance with the FSR standard is unreasonable or unnecessary in the circumstances of the case. Firstly, there is nothing in the request to support the assertion that a compliant building would be uncharacteristic of the area, result in an inappropriate building form, and result in an uneconomic use of the land. Secondly, I do not accept the assertion made by the request that compliance with the height development standard and with the MDCP 2011 building envelope controls renders compliance with the FSR standard unreasonable or unnecessary. Rather, a proposed development should have regard to all the applicable controls and standards. Thirdly, the request does not establish that compliance is unreasonable or unnecessary by demonstrating that the objectives of the standard are met despite the non-compliance. As set out above, those objectives are not met, and the adverse environmental impacts are caused by the bulk of the proposal along Phillip Lane which is a direct result of the excess floorspace.
10. For these reasons, I am not satisfied of the matters required by cl 4.6(4)(a) of the MLEP 2011, specifically, that the proposed development is consistent with the objectives of the FSR development standard and that the request adequately establishes that compliance with the standard is unreasonable or unnecessary. Satisfaction of these matters is a pre-condition to the power to grant consent in circumstances where there is a breach of a development standard. As such, development consent cannot be granted to the proposed development and the application must be refused.
11. The Court orders that: 1. The appeal is dismissed. 2. The development application (DA 201600628) for a four-storey mixed use development containing 22 business or office tenancies, 10 residential apartments and 32 basement car parking spaces at 2C Gladstone Street, Newtown, is refused. 3. The exhibits are returned, except for Exhibits A, B and D.

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Commissioner Gray

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