SHMH Properties Australia Pty Ltd v City of Sydney Council

The legislative framework for BASIX affected development

1. The EPA Act requires a development application for consent to carry out BASIX affected development to be accompanied by a BASIX certificate. A development application is to be made in accordance with the regulations: s 4.12(1) of the EPA Act. The regulations may specify the information, documents or other things that are required to be submitted with a development application: s 4.12(9) of the EPA Act. The Environmental Planning and Assessment Regulation 2000 ('EPA Regulation') specifies that the development application must contain the information, and be accompanied by the documents, specified in Pt 1 of Sch 1 of the EPA Regulation: cl 50(1)(a).
2. Amongst the documents required to accompany a development application for a BASIX affected development is a BASIX certificate. Clause 2A of Sch 1 of the EPA Regulation provides: "(1) In addition to the documents required by clause 2, a development application for any BASIX affected development must also be accompanied by a BASIX certificate or BASIX certificates for the development, being a BASIX certificate or BASIX certificates that has or have been issued no earlier than 3 months before the date on which the application is made. (2) If the proposed development involves the alteration, enlargement or extension of a BASIX affected building that contains more than one dwelling, a separate BASIX certificate is required for each dwelling concerned."
3. A BASIX certificate is "a certificate issued by the Secretary under cl 164A" of the EPA Regulation: cl 3 of the EPA Regulation. A BASIX certificate is issued in relation to the sustainability of any proposed BASIX affected development: cl 164A(1) of the EPA Regulation. The "sustainability" of a proposed development is defined in cl 164A(5) of the EPA Regulation to mean: "the capacity of the development: (a) to reduce consumption of mains-supplied potable water, and (b) to reduce emissions of greenhouse gases, and (c) to perform in a thermally efficient manner."
4. A BASIX certificate is required by cl 164A(4) of the EPA Regulation to contain: "(a) a description of the proposed development, corresponding in all relevant respects with the description contained in: (i) the relevant application, and (ii) any relevant accompanying documents, (b) a detailed list of the commitments that the applicant has made as to the manner in which the development will be carried out (being commitments as to the measures, such as design and fit-out, that the applicant proposes to implement in order to promote the sustainability of the development), (c) a statement to the effect that the proposed development will meet the Government's requirements for sustainability if the applicant's commitments are fulfilled."
5. "BASIX affected development" is defined in cl 3(1) of the EPA Regulation to mean: "any of the following development that is not BASIX excluded development: (a) development that involves the erection (but not the relocation) of a BASIX affected building, (b) development that involves a change of building use by which a building becomes a BASIX affected building, (c) development that involves the alteration, enlargement or extension of a BASIX affected building, where the estimated construction cost of the development is: (i) $100,000 or more - in the case of development for which a development application or an application for a complying development certificate is made on or after 1 October 2006 and before 1 July 2007, or (ii) $50,000 or more - in the case of development for which a development application or an application for a complying development certificate is made on or after 1 July 2007, (d) development for the purpose of a swimming pool or spa, or combination of swimming pools and spas, that services or service only one dwelling and that has a capacity, or combined capacity, of 40,000 litres or more."
6. The term "BASIX affected building", referred to in this definition, means: "any building that contains one or more dwellings, but does not include a hotel or motel."
7. A "dwelling" is defined to mean: "in relation to a BASIX affected building, means a room or suite of rooms occupied or used, or so constructed or adapted as to be capable of being occupied or used, as a separate domicile."
8. For completeness, the term "BASIX excluded development" means: "any of the following development: (a) development for the purpose of a garage, storeroom, car port, gazebo, verandah or awning, (b) alterations, enlargements or extensions to a building listed on the State Heritage Register under the Heritage Act 1977, (c) alterations, enlargements or extensions that result in a space that cannot be fully enclosed (for example, a verandah that is open or enclosed by screens, mesh or other materials that permit the free and uncontrolled flow of air), other than a space can be fully enclosed but for a vent needed for the safe operation of a gas appliance, (d) alterations, enlargements or extensions that the Secretary has declared, by order published in the Gazette, to be BASIX excluded development."
9. A development application for BASIX affected development also needs to be accompanied by such other documents as any BASIX certificate for the development requires to accompany the application (cl 2(1)(l)) of Sch 1 of the EPA Regulation) and the sketch of the development, which must accompany the development application, must indicate such other matters as any BASIX certificate for the development requires to be included on the sketch (cl 2(3)(h)) of Sch 1 of the EPA Regulation).
10. The requirement for a development application for BASIX affected development to be accompanied by a BASIX certificate, and any documents or information that any BASIX certificate requires, is mandatory. The absence or inadequacy of documents required by Sch 1, cll 2 and 2A of the EPA Regulation to accompany a development application does not necessarily make the application invalid, but it does make the development application incomplete and, in a particular case, the absence or inadequacy of the documents may be of such significance as to prevent the consent authority from performing its statutory duty under the EPA Act when determining the application (see Currey v Sutherland Shire Council (2003) 129 LGERA 223; [2003] NSWCA 300 at [35]; Cranky Rock Road Action Group Inc v Cowra Shire Council (2006) 150 LGERA 81; [2006] NSWCA 339 at [73]-[78], [88] and McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504; [2008] NSWCA 209 at [198]-[200]).
11. A consent authority may determine a development application for development by granting consent, either unconditionally or subject to conditions, or refusing consent to the application: s 4.16(1) of the EPA Act. A development consent may be granted subject to a condition that the consent is not to operate until the applicant satisfies the consent authority as to any matter specified in the condition: s 4.16(3) of the EPA Act. In this case, the Council imposed deferred commencement conditions requiring the applicant, SHMH, to lodge with the Council the relevant BASIX certificate for the development, which was required to have accompanied the development application if the development was BASIX affected development, before the consent could operate.
12. A development consent is subject to such conditions as may be prescribed by the regulations: s 4.17(11) EPA Act. One of the prescribed conditions of a development consent for BASIX affected development is fulfilment of the commitments listed in each BASIX certificate for the BASIX affected development: cl 97A(1) and (2) of the EPA Regulation.

The approved development

1. The approved development involves substantial, mainly internal, alterations and additions to the existing building previously used by the Country Women's Association ('CWA') as club accommodation to create 52 units in a boarding house and one manager/caretaker room. Of the 52 units, 47 will be single lodger units and five units will be dual lodger units, giving a capacity of 57 lodgers on site. The estimated construction cost of the development was $4,745,184.
2. On the ground floor, there will be internal changes to convert the existing auditorium to a resident common area lounge/dining, internal changes to convert the existing kitchen to a common preparation area and common kitchen, internal changes to five existing units to convert them to a new yoga area, gym and common area quiet lounge, and internal changes to convert one existing unit to a common laundry.
3. The size of and facilities provided in the ground floor common kitchen and common preparation area (containing three sinks, three stovetops/cookers and six fridges and freezers) is based on the number of boarding units in the building that will not have kitchenette facilities (13 units) with 16 lodgers, and not also for the 39 units with kitchenettes (with another 41 lodgers). The evident intention is that the lodgers in the 39 boarding units and the manager/caretaker in the manager's room would primarily rely on the kitchenette facilities provided in the units, not on the communal kitchen facilities on the ground floor, for food and meal preparation.
4. On level 1, there will be internal alterations to convert the existing lounge room, dining room, kitchen and laundry to eight new boarding units, internal alterations to convert the existing manager's apartment to a new boarding unit, internal alternations to convert 14 existing small units into seven new boarding units, and internal alternations to convert the existing amenities room and an existing unit into a two room "manager's room". The manager's room has a separate bedroom as well as a bathroom and a kitchen in the main room.
5. On level 2, there will be internal alterations to convert the existing boardroom and two storerooms into six new boarding units and internal alterations to 10 existing units.
6. On levels 3 and 4, there will be internal alterations to 10 existing units on each floor.
7. Of the 52 boarding units, 39 boarding units and the manager's room will contain kitchenettes and bathrooms. The kitchenettes will contain a bench with a sink, microwave, fridge and freezer. The manager's room will have, in addition, a larger bench with a fixed stove/cooktop. Each unit will have its own keyed entry door.

The development consent

1. The Council considered that this development was BASIX affected development. If so, the development application needed to be accompanied by the relevant BASIX certificate. SHMH's development application was not, however, accompanied by any BASIX certificate. Without the relevant BASIX certificates, the prescribed conditions of any development consent of fulfilment of the BASIX commitments in the BASIX certificate, could not operate. The Council therefore granted consent subject to deferred commencement conditions requiring the submission of the relevant BASIX certificate for the development before the consent could operate: "(A) PART A - DEFERRED COMMENCEMENT CONDITIONS (CONDITIONS TO BE SATISFIED PRIOR TO CONSENT OPERATING) The consent is not to operate until the following condition is satisfied, within 24 months of the date of this determination: (1) BASIX CERTICIATE (a) A BASIX Certificate must be submitted to the Area Planning Manager. (b) Any modifications to the development, which are required to secure the provision of the BASIX certificate and/or comply with BASIX targets must be submitted to and approved by the Area Planning Manager. (2) Evidence that will sufficiently enable Council to be satisfied as to those matters identified in deferred commencement conditions, as indicated above, must be submitted to Council within 24 months of the date of determination of this deferred commencement consent failing which, this deferred development consent will lapse pursuant to section 95(6) of the Environmental Planning and Assessment Act 1979. (3) The consent will not operate until such time that the Council notifies the Applicant in writing that deferred commencement conditions, as indicated above, have been satisfied. (4) Upon Council giving written notification to the Applicant that the deferred commencement conditions have been satisfied, the consent will become operative from the date of that written notification, subject to the conditions of consent, as detailed in Part B Conditions of Consent (Once the Consent is Operation) of the subject report."

The competing arguments

1. The Council maintains on the appeal that the development the subject of the consent is "BASIX affected development" in two ways. First, the Council submits that the development involves a change of building use within paragraph (b) of the definition of "BASIX affected development".
2. The Council noted that the expression "change of building use" is not defined in the EPA Regulation, but it is in the EPA Act. Section s 1.4(1) of the EPA Act defines "change of building use" to mean "a change of use of a building from a use that the Building Code of Australia recognises as appropriate to one class of building to a use that the Building Code of Australia recognises as appropriate to a different class of building."
3. The Council accepted that, ordinarily, words in a regulation have the same meaning as they have in the Act under which the regulation is made (s 11 of the Interpretation Act 1987) and that definitions that occur in the Act or regulation apply to the construction of the Act or the regulation made under the Act (s 6 of the Interpretation Act). However, these ordinary approaches to interpretation apply "except in so far as the context or subject-matter otherwise indicates or requires" (s 6 of the Interpretation Act).
4. The Council submits that the context and subject-matter of the expression "change of building use" in the EPA Regulation do justify adopting the common meaning of the expression "change of building use" (ie a change in use of a building) rather than the defined meaning in the EPA Act.
5. First, if the statutory definition is applied, the Council submits that there will be a substantial lacuna in the coverage of the BASIX certification scheme. The BASIX certification scheme would apply to the erection of a new building with at least one dwelling (paragraph (a) of the definition of BASIX affected development), a change of use of a building with at least one dwelling from one Building Code of Australia ('BCA') class to another BCA class (paragraph (b) of the definition of BASIX affected development) and the alteration, enlargement or extension of a building with at least one dwelling (paragraph (c) of the definition of BASIX affected development), but not to a change of use of a building within any particular class of the BCA. For example, a substantial redevelopment involving the conversion of a building from use for backpacker's accommodation to use for seniors living (both uses being recognised by the BCA as being appropriate to a Class 3 building) would be exempt from any BASIX requirements (because Class 3 buildings are not subject to BASIX).
6. The Council submits that this consequence of application of the statutory definition, of reducing the coverage of the BASIX scheme, would be inconsistent with the stated purpose of the amendments in 2005 to the EPA Regulation, which was "to extend the BASIX certification scheme under that Regulation to all forms of residential development (other than hotels and motels)". The amendments expanded the kinds of residential development classified as a BASIX affected building from being a dwelling house, dual occupancy building or small-scale guest house, boarding house, lodging house or hostel (with a gross floor area of less than 300sqm) to include "any building that contains one or more dwellings, but does not include a hotel or motel". Application of the statutory definition of "change of building use" would restrict the kinds of residential development to which the BASIX certification scheme applies.
7. The Council submits that application of the statutory definition would also not be consistent with how the expression is used in the State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004 ('BASIX SEPP'). The BASIX SEPP was amended at the same time as the amendment of the EPA Regulation. The Council submits that a construction of the expression "change of building use" that would adopt the common meaning (ie a development that involves the change in use of a building) would be consistent with the use of language in the BASIX SEPP, which is the companion instrument to the EPA Regulation: see the references in cll 8(2)(c) and 9(2)(c) of the BASIX SEPP to "the change of use of a building" (as distinct from the defined term "change of building use").
8. The Council submits that, if the expression does bear its common meaning, the development will involve a change in the use of the building from club accommodation to boarding house. The development would therefore involve a change of building use within paragraph (b) of the definition of "BASIX affected development".
9. However, even if the statutory definition is applied, the Council submits that the development does involve a change of building use as defined. The Council submits that there will be a change in the use of parts of the building from a use that the BCA recognises as appropriate to one class to a use that the BCA recognises as appropriate to a different class. The Council notes that "building" is defined in the EPA Act to include "part of a building". The principles of classification of buildings under the BCA focus on the purpose for which a building or a part of a building is designed, constructed or adapted to be used (cl A3.1 of the BCA). It is, therefore, appropriate to focus on the change of use of parts of the building, and not the building as a whole. The focus of the definition of "change of building use" is on the "use" of the building or part of the building and not on the "building" itself. The definition refers to a change of use from a "use" that the BCA recognises as appropriate to one class to a "use" that the BCA recognises as appropriate to a different class.
10. The Council relies on the evidence of Mr Rajbhandary, the Council's Senior Building Surveyor, who identified changes in use of three parts of the building. On the ground floor, the auditorium (classified as Class 9b) changed to resident common area (classified as Class 3) and three parking spaces (classified as Class 7a) changed to common lounge area (classified as Class 3). On Level 2, storage (classified as Class 7b) changed to boarding rooms (classified as Class 3). The Council rejected the contrary evidence of Mr Halstead, a building surveyor and certifier called by SHMH, for three principal reasons. First, Mr Halstead's classifications incorrectly considered the uses in the building as a whole, rather than uses of part of the building. Second, Mr Halstead incorrectly classified the private communal and recreation facilities, which are able to be used only by the residents of the building and not the public, as being "a building of a public nature" in Class 9. Third, Mr Halstead continued to classify parts of the building as being Class 7b (for storage), even though the size of the areas of storage in the development is significantly reduced and is less than 10% of the floor area of the storey in which the storage is located. This was inappropriate under cl A3.3(a) of the BCA, which provides that "if not more than 10% of the floor area of a storey, being the minor use, is used for a purpose which is a different classification, the classification applying to the major use may apply to the whole storey".
11. The Council submits that in this way, therefore, the development involves a change of building use within paragraph (b) of the definition of "BASIX affected development".
12. Second, the Council submits that the development involves alterations of the existing building within paragraph (c) of the definition of "BASIX affected development". The development involves substantial demolition and alteration works to the building to convert it from club accommodation to a boarding house. The estimated construction costs are in excess of $4.7 million.
13. The Council submits that, in both of these ways, the building, whose use is changed or which is altered, is a "BASIX affected building". The building will contain "one or more dwellings" and is not a hotel or motel. The Council submits that the building will contain 40 dwellings (being the 39 boarding units with kitchenettes and the manager's room) or, at the least, one dwelling (being the manager's room).
14. The Council noted that the definition of "dwelling" has two limbs. The first limb is concerned with the actual occupation or use of a room or rooms as a separate domicile. The second limb is concerned with whether a room or rooms are "so constructed or adapted as to be capable of being occupied or used" as a separate domicile: Wollongong City Council v Vic Vellar Nominees Pty Ltd (2010) 178 LGERA 445; [2010] NSWLEC 266 at [28]. The second limb captures the notion that the room or rooms, in the state of construction and adaptation that will result from the carrying out of the development, are physically capable of being used for human habitation as a separate domicile: Wollongong City Council v Vic Vellar Nominees Pty Ltd at [54].
15. The concept of "domicile" carries with it the notion of a significant degree of permanence of habitation or occupancy. A "domicile" is "a place of residence or home in a separate and more or less self-contained domestic establishment": Warlam Pty Ltd v Marrickville Council (2009) 165 LGERA 184; [2009] NSWLEC 23 at [35].
16. The Council submits that the essential components of a separate domicile (and hence a dwelling) include accommodation for sleeping and living, bathroom facilities (including a lavatory) and kitchen facilities: Wollongong City Council v Vic Vellar Nominees Pty Ltd at [31]. Private laundry facilities can be, but do not need to be, provided in the room or rooms and instead a communal laundry can be provided within the building, in order for the room or rooms to be a separate domicile and dwelling: Warlam Pty Ltd v Marrickville Council at [35].
17. The development will result in 39 boarding units and the manager's room having sleeping facilities, bathroom facilities (with a toilet), and a kitchenette. The facilities provided in the kitchenette of a bench, sink, microwave, and fridge and freezer are sufficient for lodgers to be self-contained in food and meal preparation. The existence of electrical sockets enables use of a variety of electrical cooking and food preparation devices. The fact that an oven and cooktop is not provided does not prevent the areas being used as a kitchen: Blacktown City Council v Haddad (2012) 192 LGERA 264; [2012] NSWLEC 224 at [53(c)]. This conclusion that a self-contained kitchen is provided is more readily reached for the manager's room that has greater kitchen facilities of a larger bench and a fixed stove/cooktop.
18. Individually, each of these 39 boarding units and the manager's room is so constructed as to be capable of being occupied or used as a separate domicile and hence is a dwelling.
19. The existence of a common kitchen and preparation area and common laundry on the ground floor does not detract from this conclusion. The inclusion of communal areas in the building does not preclude each of the 39 units and the manager's room from being considered a separate domicile and dwelling. Moreover, the size of the communal kitchen is based on the number of boarding units without kitchenettes (13 units), suggesting that the 39 boarding units and the manager's room with kitchenettes are intended to be self-contained and capable of being used as a separate domicile.
20. SHMH disputes that the development involves "BASIX affected development" in either of the ways submitted by the Council. First, SHMH submits that the development does not involve a change of building use within paragraph (b) of the definition of "BASIX affected development". SHMH submits that the expression "change of building use" in the definition of "BASIX affected development" in the EPA Regulation has the defined meaning used in the EPA Act. On the evidence of Mr Halstead, the development does not involve a change of use of the building (as a whole) from a use that the BCA recognises as appropriate to one class of building to a use that the BCA recognises as appropriate to a different class of building. The same classifications of building use (being Class 3, 5, 7a, 7b and 9b) pertain to the use of the existing CWA building and the proposed use as a boarding house under the development.
21. Second, SHMH submits that the development does not involve the alteration of a BASIX affected building within paragraph (c) of the definition of "BASIX affected development". SHMH disputes that the building contains either one dwelling or multiple dwellings (whether 40 or otherwise) so as to be a "BASIX affected building". SHMH contends that none of the boarding units are so constructed or adapted as to be capable of being occupied or used as a separate domicile.
22. In relation to each of the 39 boarding units with kitchenettes, SHMH argues that the kitchenette facilities provided in the rooms lack some of the basic features of a normal kitchen, such as a stove, cooktop or oven. This deficiency disqualifies the rooms as dwellings.
23. SHMH submits that a unit without a kitchen cannot constitute a separate domicile: Warlam v Marrickville Council at [36]. The kitchen facilities provided in the 39 units with kitchenettes fall short of what is necessary to be described as a kitchen. The cooking appliances provided (microwave) or permitted (plug-in electrical cooking appliances such as frying pans or vertical grillers) do not constitute a kitchen: Warlam v Marrickville Council at [39]. The units do not have a fixed stove/cooktop and an oven, which would constitute a kitchen. The refrigerator provided is only a bar fridge with freezer, rather than a full size fridge and freezer, which also keeps the units from being a separate domicile and hence a dwelling: Warlam v Marrickville Council at [41].
24. SHMH concedes that the manager's room might be in a different category. It does have a fixed stove/cooktop. If this cooking appliance causes the manager's room to have a kitchen, SHMH accepted that the Court could impose a condition on any approval of the modification application requiring the deletion of the fixed stove/cooktop so that there is no longer a kitchen.
25. SHMH also argues that the definition of "BASIX affected building" needs to be construed so as to include only those buildings to which BASIX applies. This can be done by adding the words "to which BASIX applies" after the word "building" in the definition. SHMH submits that BASIX does not apply to buildings of certain classes under the BCA. SHMH referred to Note 1 to the NSW Section J Energy Efficiency of the BCA, which observes that NSW Subsection J(A) contains the energy efficiency requirements for Class 2 buildings and Class 4 parts of buildings and NSW Subsection J(B) contains the energy efficiency requirements for Class 3 and Class 5 to 9 buildings. The latter subsection contains more comprehensive energy efficiency requirements than the former subsection. The Note provides: "The need for separating these requirements from the requirements for Class 3 buildings arises because, in NSW, Class 2 buildings and class 4 parts of buildings are subject to BASIX (the building sustainability index), however Class 3 buildings are not."
26. SHMH contends that the building is a Class 3 building and hence would not be subject to BASIX. SHMH submits that it is not possible to obtain BASIX certification of Class 3 buildings.
27. SHMH argues that: "In light of that context the reference to BASIX affected buildings in the Regulation must be read as being only such a building to which the BASIX provisions of the BCA apply. To do otherwise is to create an obligation which is unable to be fulfilled as there are no relevant provisions to enable BASIX certification to be undertaken. This cannot have been the intention of the legislation."
28. SHMH submits that this construction of the definition is consistent with the objectives of BASIX certification in the BASIX SEPP and the amendments to the EPA Regulation establishing the BASIX certification scheme. Clause 3(1) of the BASIX SEPP refers to the BASIX certification scheme applying to "certain kinds of residential development", not all kinds of residential development. Hence, reading the definition of "BASIX affected building" as not including residential buildings of Class 3 is not inconsistent with the BASIX certification scheme applying only to "certain kinds of residential development".
29. If the definition of "BASIX affected building" is construed in this way, the building would not be a BASIX affected building, even if it did contain one or more dwellings, because, as a Class 3 building, it is not a building to which BASIX applies.
30. The Council responded to SHMH's argument that the reference to "BASIX affected building" in the EPA Regulation must be construed as being only such a building to which the BASIX provisions of the BCA apply. The Council submits that construction should be rejected for seven reasons. First, the definition of "BASIX affected building", and the other definitions in the EPA Regulation, have been carefully drafted, are free of ambiguity and can and should be given effect according to their terms.
31. Second, SHMH's construction would involve the wholesale re-writing of the provision, without any support in the language used, contrary to the conventional tenets of statutory construction. This is not one of those "rare occasions" where a court may be justified in treating a provision as containing additional words. The additional words suggested by SHMH cannot be said, with any confidence, to "give effect to the legislative purpose". The three conditions formulated by Lord Diplock in Jones v Wrotham Park Settled Estates [1980] AC 74 at 105 (and reformulated by Lord Nicholls in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586 at 592) that must be met before a court can read words into legislation, are not satisfied: see also Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113; [1997] HCA 53. The Court is not justified in reading a statutory provision as if it contained additional words if that construction "fills 'gaps disclosed in legislation' or makes an insertion which is 'too big, or too much at variance with, the language in fact used by the legislature'": Taylor v The Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 at [38]. The Court cannot, in construing statutory text, "divine unexpressed legislative intention or…remedy perceived legislative inattention. Construction is not speculation, and it is not repair": Taylor v The Owners - Strata Plan No 11564 at [65].
32. Third, in order to establish that s 6 of the Interpretation Act should apply so as to displace the clear words of the statute (as SHMH contends), it is necessary to show that the application of the definition of "BASIX affected building" to a section of the EPA Act or clause of the EPA Regulation results in the operation of the section or clause in a way which clearly the legislature did not intend: Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 at 108-109; Chief Commissioner of State Revenue v Qantas Airways Ltd (2009) 74 NSWLR 181; [2009] NSWCA 163 at [32]. The Council submits that there is no need to supply additional words in order to make the definition of "BASIX affected building" work. A BASIX certificate can still be prepared and issued, despite the BCA purporting not to apply to a Class 3 building, contrary to SHMH's submission. The classification of a building under the BCA is not required for and does not affect the issuing of a BASIX certificate.
33. Fourth, the legislative history shows that the intention was for BASIX to extend to all "residential" development by dint of the amendment of the dentition of "BASIX affected building" to mean "any building that contains one or more dwelling": 1. when it originally commenced on 1 July 2004, the new BASIX regime in the EPA Regulation expressly defined the types of buildings to which the regime was intended to apply ("BASIX affected building"), which included a boarding house of less than 300 sq m (Environmental Planning and Assessment Amendment (Building Sustainability Index: BASIX) Regulation 2004)); 2. amendments made in 2005 changed the definition of "BASIX affected building" to how it currently appears, but without giving any indication that boarding houses were now to be excluded (Environmental Planning and Assessment Further Amendment (Building Sustainability Index: BASIX) Regulation 2005)). To the contrary, according to Minister Sartor, the purpose of the amendments was to "extend the BASIX certification scheme under that Regulation to all forms of residential development (other than hotels and motels)"; and 3. further amendments were made in 2006 to provide the current form of "BASIX affected development" (Environmental Planning and Assessment Further Amendment (Building Sustainability Index: BASIX) Regulation 2006)).
34. Fifth, the regimes under the BCA and BASIX operate separately and independently of each other: 1. Section J of the National Construction Code commenced in NSW on 1 May 2005, relevantly for Class 2, 3 and 4 buildings, whereas BASIX had commenced on 1 July 2004; 2. BASIX requirements go further than those of the BCA. Section J of the BCA deals with energy efficiency whereas BASIX deal with energy, carbon, water and thermal comfort. BASIX is a local variation that sets NSW apart from the minimum requirements of the BCA, which applies nationally; 3. BASIX is required at the DA stage: see EPA Regulation, Sch 1, cl 2A. BASIX commitments must be shown on the development application ('DA') plans, whereas compliance with the BCA is required only at construction certificate ('CC') stage: see EPA Regulation cll 98(3), 145(1)(a) and (b). At the time the consent is granted it is not known which version of the BCA will apply, as a CC may be issued at any time provided the development consent has been commenced to prevent it lapsing. A CC is not usually required to commence a development consent. A consent authority does not assess a proposed development against the BCA for this reason; and 4. as the BCA does not apply at the DA stage (unlike BASIX), there is no conflict with a requirement under the EPA Regulation that development applications for buildings comprising more than one dwelling be accompanied by a BASIX certificate.
35. Sixth, there is no basis for overriding the clear words of the EPA Regulation by reference to statements made in the BCA, which does not have the same status in the legislative hierarchy.
36. Seventh, SHMH's construction would lead to the absurdity that a development, such as self-contained seniors living (known as independent living units) would clearly contain dwellings (as they would contain bathrooms, full kitchens and laundries) but would also be a Class 3 building under the BCA.

The development is BASIX affected development

1. I find that the development the subject of the development consent is "BASIX affected development" as defined. At the least, the development involves the alteration of a BASIX affected building, where the estimated construction costs of the development is more than $50,000, within paragraph (c) of the definition of "BASIX affected development". As I have summarised above, the development involves substantial alterations and additions to the existing building at a cost of far more than $50,000.
2. I find that the building, which is being altered, is a "BASIX affected building". As I find below, the existing CWA building was a BASIX affected building as it contained one or more dwellings. The development will result in a building that contains one or more dwellings. Each of the 39 boarding units and the manager's room meet the definition of "dwelling". They will be so constructed or adapted as to be capable of being occupied or used as a separate domicile. They contain the essential components of a domicile and a dwelling of sleeping, bathroom and kitchen facilities. The facilities provided in the kitchenette in the 39 boarding units include a bench, sink, microwave, fridge and freezer. There will also be electrical sockets that can accommodate a variety of electrical cooking and food preparation devices. Plug-in electrical cooking appliances, such as frying pans and grillers, could be used by occupants in the kitchenettes because they are not precluded by any condition of consent: see Warlam Pty Ltd v Marrickville Council at [39]. The fact that an oven and cooktop are not provided in these boarding units will not prevent the kitchenettes from being used as a kitchen: see Blacktown City Council v Haddad at [53(c)].
3. It is not appropriate to adopt a technologically constrained and dated view of what constitutes a kitchen. Whilst historically a fixed stove/cooktop and an oven might have been installed and used in residential kitchens, such appliances are not viewed as essential in all kitchens today. The way residents prepare food and meals in their dwellings evolves with the times. The facilities and equipment once considered to be essential in every kitchen may no longer be provided or used by residents today.
4. The kitchen facilities that will be provided in the boarding units, and other kitchen facilities that are not prohibited from being used in the boarding units, support the conclusion that the boarding units are intended to be self-contained and capable of being occupied or being used as a separate domicile.
5. The fact that the size of the communal kitchen on the ground floor is based on the number of boarding units which do not have kitchenettes (13 units), rather than all 52 boarding units, supports the conclusion that the 39 boarding units with kitchenettes are intended to be self-contained and will not depend on the communal kitchen.
6. The manager's room is even more clearly a dwelling. The manager's room contains a separate bedroom, bathroom and a better equipped kitchen. The kitchen facilities include not only a sink, microwave, fridge and freezer, as in the 39 boarding units, but also a fixed stove/cooktop within a larger kitchen bench area. There is no suggestion that the manager will depend on the communal kitchen on the ground floor, rather than using the self-contained kitchen facilities in the manager's room. Even on SHMH's argument, the kitchen facilities provided in the manager's room constitute a kitchen. This means that the manager's room is a dwelling.
7. The building, therefore, will contain 40 dwellings, being the 39 boarding units and one manager's room. It is sufficient, in order to satisfy the definition of a BASIX affected building, that the building contain "one or more dwellings". Hence, even if the manager's room were to be the only dwelling in the building, the building would still meet the definition of a BASIX affected building. I find, however, that the 39 boarding units with kitchenettes also will be dwellings.
8. SHMH's argument concerning the building being a Class 3 building to which BASIX does not apply does not displace the above conclusion that the building is a BASIX affected building. SHMH's argument involves syllogistic reasoning: buildings classified as Class 3 buildings under the BCA are not subject to BASIX; this building is a Class 3 building; therefore BASIX does not apply to this building. But the argument is fallacious.
9. First, it asks the wrong question and applies the wrong test. The correct and only inquiry is that specified in the EPA Act and EPA Regulation. A "BASIX affected development" and a "BASIX affected building" are respectively a development and a building that satisfy the definitions of those terms in the EPA Regulation. If a development and a building each satisfies those definitions, it will be a BASIX affected development and a BASIX affected building. The development and building cannot cease to be a BASIX affected development and a BASIX affected building because of the classification of the building under the BCA or, more particularly, the way in which NSW Section J of the BCA applies to buildings of different classes. The fact that, under the BCA, Class 3 buildings are said not to be subject to BASIX cannot alter whether a building (which could be classified as a Class 3 building under the BCA) satisfies the definitions in the EPA Regulation of a "BASIX affected development" or a "BASIX affected building".
10. SHMH sought to overcome this problem by urging a construction of the definition of "BASIX affected building" that would add the words "to which BASIX applies" after the word "building". Such a construction is not justified, for the reasons given by the Council and summarised above. The definition of "BASIX affected building" is clear and unambiguous and can be given effect according to its terms. There is no justification, arising from the language or context of the definition or to make the definition work, to read the definition to mean anything different to what it says. The conditions in which a court is justified in reading additional words into a statutory provision are not satisfied in this case.
11. Next, the minor premise in SHMH's syllogism, that the building is a Class 3 building, is not self-evidently correct. Under A3.2 of the BCA, a building is classified as a Class 3 building only if it is not a building of Class 1 or 2. A Class 3 building is: "a residential building, other than a building of Class 1 or 2, which is a common place of long term or transient living for a number of unrelated persons, including - (a) a boarding-house, guest house, hostel, lodging-house or backpackers accommodation; or (b) a residential part of an hotel or motel; or (c) a residential part of a school; or (d) accommodation for the aged, children, or people with disabilities; or (e) a residential part of a health-care building which accommodates members of staff; or (f) a residential part of a detention centre."
12. A Class 1 building includes certain types of single dwellings (Class 1a) and certain smaller sized boarding houses, guest houses, hostels or the like (with a total floor area not exceeding 300m2 and in which not more than 12 persons would ordinarily be resident) (Class 1b). SHMH's building does not meet these criteria and is not a Class 1 building.
13. A Class 2 building is "a building containing 2 or more sole-occupancy units each being a separate dwelling." A sole-occupancy unit is defined to mean: "a room or other part of a building for occupation by one or joint owner, lessee, tenant, or other occupier to the exclusion of any other owner, lessee, tenant, or other occupier and includes - (a) a dwelling; or (b) a room or suite of rooms in a Class 3 building, which includes sleeping facilities; or (c) a room or suite of associated rooms in a Class 5, 6, 7, 8 or 9 building; or (d) a room or suite of associated rooms in a Class 9c building, which includes sleeping facilities and any area for the exclusive use of a resident."
14. In the case of SHMH's building, I have found that the 39 boarding units with kitchenettes and the manager's room are dwellings. Under paragraph (a) of the definition of "sole-occupancy unit" each of these dwellings would be a sole-occupancy unit. SHMH's building, therefore, will contain "2 or more sole-occupancy units each being a separate dwelling". This would make the building (or at least the part of the building in which these dwellings are located) of Class 2 (under A3.3 each part of a building must be classified separately, so it is possible that certain parts of the building could be classified differently). If the building or any part of the building is classified as being Class 2, the building or part of the building cannot be of Class 3, which is a residential building other than a building of Class 1 or 2.
15. If the building or any part of the building is of Class 2, no difficulty in assessing the energy efficiency arises. Class 2 buildings are subject to BASIX. The provisions of NSW Subsection J(A), which contain energy efficiency requirements for Class 2 buildings and Class 4 parts of buildings, are designed to complement requirements that arise under BASIX and which are implemented via the development consent (see Note 1 to NSW Section J of the BCA).
16. The Council also suggested that the development fell within paragraph (b) of the definition of "BASIX affected development" because the development involves a change of building use. I do not consider that the development does fall within paragraph (b) of the definition of "BASIX affected development". This is not because the development will not involve a change of building use, but rather because the building does not become a BASIX affected building by the development that involves a change of building use.
17. The development involves a change of building use in either of two ways, depending on how the expression "change of building use" is construed. The expression "change of building use" is not defined in the EPA Regulation. The expression is, however, defined in the EPA Act as "a change of use of a building from a use that the Building Code of Australia recognises as appropriate to one class of building to a use that the Building Code of Australia recognises as appropriate to a different class of building". Ordinarily, an expression in a regulation will bear the same meaning as it has in the Act under which the regulation was made: s 11 of the Interpretation Act. However, the context or subject matter in which the expression is used in the regulation may indicate that the expression has a different meaning: s 6 of the Interpretation Act.
18. The Council submitted that the context and subject matter of the expression in the EPA Regulation may make it inappropriate to apply the definition of the expression in the EPA Act. The application of the definition in the EPA Act to the EPA Regulation does not sit well with the stated purpose of the amendments to the EPA Regulation to extend the BASIX certification scheme to all forms of residential development and may lead to a lacuna in the coverage of the BASIX scheme. The Council submitted that the preferable meaning of the expression in the EPA Regulation may simply be the common meaning of a change of use of the building. This construction of the expression in the EPA Regulation as involving a change in use of a building would be consistent with the use of language in the BASIX SEPP, which is a companion instrument to the EPA Regulation (see the reference to cl 8(2)(c) and 9(2)(c) to "the change of use of a building" rather than the defined term "change of building use").
19. It is not necessary to decide whether the Council's suggested construction of the expression in the EPA Regulation is correct. On either meaning of the expression, on the facts, there would be a change in building use. If the expression bears its common meaning, there would be a change in use of the building from club accommodation to boarding house. However, even if the definition of the expression in the EPA Act is applied, there still would be a change of building use. Mr Rajbhandary, the Council's Senior Building Surveyor, gave evidence that the use of some parts of the building will change from the previous use, resulting in a change of BCA classification for parts of the building. I accept Mr Rajbhandary's evidence rather than Mr Halstead's evidence on this point, for the reasons given by the Council.
20. However, paragraph (b) of the definition of "BASIX affected development" requires the development to involve not only a change of building use but one "by which a building becomes a BASIX affected development". This presupposes that the building before the change of building use was not a BASIX affected building but becomes one by the change of building use. The approved plans of the existing CWA building establish that the building contained one or more dwellings. The manager's apartment, and many of the units, have the essential components of a dwelling of sleeping, bathroom and kitchen facilities. The building could, therefore, be classified as a "BASIX affected building" within the definition. If it was already a BASIX affected building, the development involving the change of building use, however that expression is understood, would not cause the building to become a BASIX affected building. The development would therefore not be a BASIX affected development under paragraph (c) of the definition.

The modification application is refused

1. I have found that the development approved by the development consent is BASIX affected development. The development application for the development needed to be accompanied by a BASIX certificate but was not. The Council addressed this failure by imposing the deferred commencement conditions to require the lodgment of the relevant BASIX certificate. Apart from remedying the failure to comply with the procedural requirements for development applications in the EPA Act and EPA Regulation, the lodgment of the relevant BASIX certificate will enable operation of the prescribed condition of consent of fulfilment of any commitments listed in the BASIX certificate.
2. The proposed modification of the consent by the removal of the deferred development conditions would nullify these remedial benefits of the deferred commencement conditions. The modification should be refused.
3. The Court orders: 1. The appeal is dismissed. 2. Modification application no. D/2016/1667/A is refused.

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: 02 May 2018