Southern Cross Group v City of Sydney

CASES CITED: Tenacity Consulting v Warringah [2004] NSWLEC 140

APPLICANT Mr M Craig QC with Mr C McEwen SC SOLICITORS Mallesons Stephen Jaques LEGAL REPRESENTATIVES:

RESPONDENT Mr A Galasso, barrister SOLICITORS Maddocks

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Roseth SC with Brown C

10902 of 2005 Southern Cross Group (International) Pty Limited v Council of the City of Sydney

JUDGMENT 1 COMMISSIONERS: This is an appeal against the deemed refusal by the Council of the City of Sydney (the council) of Application No. D/2005/662 for the refurbishment of an existing heritage-listed house at 102 Elizabeth Bay Road, Elizabeth Bay, the erection of an apartment building and the readjustment of boundaries at 11 The Esplanade, Elizabeth Bay (the site). 2 We inspected the site on the morning of the first day of the hearing. Several local residents gave evidence at this time. The site and surrounding area 3 The site consists of two separate lots in a wedge shape. Lot A is 11 The Esplanade and has an area of 720 square metres with a frontage of 46.5 metres to The Esplanade and a right of way on the adjoining property. This lot contains the remains of earlier structures, including a 1920s cottage, stone retaining walls and garden steps.

4 Lot B contains a listed heritage item, a two-storey house known as "Ashton", which is in a state of disrepair. This lot has an area of 1,372 square metres with a 12.4 metre frontage to Elizabeth Bay Road. Lots A and B have a combined area of 2,092 square metres. The site falls from Elizabeth Bay Road to The Esplanade. Ashton is located on the upper level of the site and has views of Beare Park located on the foreshore and Elizabeth Bay. The fall of the site increases sharply within Lot A as it drops from a cliff line to The Esplanade.

5 The site is surrounded by residential flat buildings on all sides with the exception of the northwest. Ashleigh is located to the north at 104 Elizabeth Bay Road, International Lodge and Ling Apartments to the south at 100 Elizabeth Bay Road, Ashdown further to the south at 96-98 Elizabeth Bay Road and Karingal to the west and on the opposite side of the right of way at 5-7 The Esplanade.

The proposal 6 The application seeks consent for: + the refurbishment of the heritage item, Ashton, and its use as a dwelling house, + the erection of an apartment building that is 4 storeys at its northern end and 8 storeys at its southern end. The building will comprise 16 apartments made up of 12 x 2 bedroom apartments and 4 x 3 bedroom apartments. Car parking is provided in three basement levels for 18 cars with access from The Esplanade, + the repositioning of the boundary between Lot A and Lot B. The new Lot B contains the heritage item and will have an area of 1,078 square metres (existing Lot B is 1372 square metres), and new Lot A contains the apartment building and will have an area of 1,014 square metres (existing Lot A is 720 square metres). Relevant planning controls 7 The site is within Zone 2(b) Residential (Medium Density) under South Sydney Local Environmental Plan 1998 (LEP 1998). The proposed use is permissible with consent. Clause 10 provides that consent must not be granted unless the development is consistent with the objectives of the zone.

8 The site is located within Conservation Area CA 19 - Elizabeth Bay identified in Schedule 2A of LEP 1998 and Ashton is a heritage item identified in Schedule 1 of LEP 1998. Clauses 22, 23, 23A and 24 provide requirements for heritage items and conservation areas.

9 South Sydney Development Control Plan (Heritage Conservation) 1998 (DCP 1998) provides more detailed requirements for heritage items and conservation areas.

10 South Sydney Development Control Plan (Urban Design) 1997 (DCP 1997) also applies. Part E Section 2 relevantly provides requirements floor space ratio (FSR), floor height and scale and setbacks. Part E Section 3 provides further requirements for heritage and conservation.

11 State Environmental Planning Policy No 65 - Design Quality of Residential Flat Development (SEPP 65) applies to the proposal by way of cl 4(1)(a) as the proposal is defined as "the erection of a new residential flat building". Part 2 provides design quality principles for residential flat development. These design quality principles seek to provide a guide to achieving good design and a means of evaluating the merit of proposed solutions. 12 Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005 (REP 2005) applies having come into effect on 28 September 2005. Clause 2 provides aims, objectives etc of the plan. Clause 11(2) provides that any development application lodged before commencement of this plan, but not finally determined before its commencement, is to be determined as if this plan has been exhibited pursuant to section 47 of the Act but had not been made. The transitional provisions apply as the development application was lodged on 5 May 2005.

13 Sydney Regional Environmental Plan No 23 -Sydney and Middle Harbours (REP 23) applied at the time of lodgement of the development application but was repealed by REP 2005. Clause 2 provides aims of the plan. The issues 14 The council filed an Amended Statement of Issues containing 6 issues and a number of sub issues. The visual impact of the access point to the car park (Issue 3) was satisfactorily addressed at the hearing and the public interest (Issue 5) is addressed as part of the remaining issues, which can be conveniently grouped into the following: 1. whether the proposed building will have an unacceptable amenity impact on adjoining properties, specifically loss of views and overshadowing (Issue 4), 2. whether the proposed building will have an unacceptable heritage impact on Ashton and Conservation Area CA 19 (Issues 2 and 6), 3. whether the proposed building will have an unacceptable impact when viewed from Sydney harbour, Beare Park and the immediate area (Issue 2), 4. whether the proposed stone retaining wall falls within the adjoining right of way and consequently, whether owner's consent is required (Issue 1).

The objectors' concerns 15 The Court heard the evidence of six objectors. Mr S Chan, a property manager, spoke on behalf of the owners and residents of the Ling Apartments. His concern was that many of the existing views would be lost, northern windows would be overshadowed, while balconies would look at a blank wall, built on the boundary and without landscaping. Mr D Ruddick, who lives in unit 30 of the Ashleigh building, said that his concern was the loss of views. He considered the proposal to be an overdevelopment.

16 Mr A Betros spoke on behalf of the residents of Ashdown. In his opinion, the proposal does not comply with the planning controls. His concern was with loss of sunlight, loss of views, loss of privacy and impact on the street. Ms M Eccles, who lives in unit 4 in the Karingal building, said that the proposed balconies would look straight into the dwellings in Karingal. Ms l McDonald, who lives at 2 Elizabeth Bay Road and is not directly affected by the proposal, commented from a more general perspective, saying that Elizabeth Bay is already overcrowded. Mr N Gravanos spoke on behalf of the residents of International House, saying that that building would be affected up to level 3 by loss of views and sunlight.

17 The Court was also provided with copies of the submissions received by the council when the application was advertised. The expert evidence 18 Ms Sue Mc Mahon addressed the town planning and urban design issues, while Professor James Weirick and Mr Peter Phillips addressed the heritage issues in the council's case.

19 Mr Harvey Sanders addressed the town planning issues, Professor Richard Mackay addressed the heritage issues and Professor Peter Webber the urban design issues for the applicant.

Amenity impacts on adjoining properties 20 Clause 2.2, Part E of DCP 1997 provides for a FSR of 1.5:1. It was common ground that this requirement is satisfied when the FSR is calculated on the sum of the floor areas of the proposed apartment building and of Ashton over the total area of Lot A and Lot B. There was also agreement that the FSR of the proposed apartments, if calculated on the area of new Lot A would exceed 1.5:1, although the exact FSR was not provided to the Court. Our estimate is that it would be around 2.5:1.

21 Clause 2, Part E of DCP 1997 provides for a height of 8 metres above natural ground level. Height means a vertical distance between a point on the ceiling of the topmost habitable floor and the natural ground level immediately below that point. Natural ground level means whatever the council determines to be the natural ground level. The determination of the natural ground level was a matter of discussion between the applicant and the council in the early stages of the determination of the development application. Based on the council's determination of natural ground level, the proposed development satisfies the 8-metre height limit.

22 We inspected the residential flat buildings Ashdown, International Lodge, Ling Apartments and Karingal on the site view. All but Karingal take advantage of the vacant part of the site to obtain views to the harbour. We visited several units in each residential flat building, though not all those that would be impacted by view loss or overshadowing. The council helpfully provided computer-generated photomontages of potential view loss from a number of units in each building, showing the impact of each floor of the proposed apartment building. The experts agreed that the photomontages were accurate. 23 Tenacity Consulting v Warringah [2004] NSWLEC 140 sets out the principles to be considered when there is an issue concerning view sharing. These are: + The first step is the assessment of views to be affected. + The second step is to consider from what part of the property the views are obtained. + The third step is to assess the extent of the impact. + The fourth step is to assess the reasonableness of the proposal that is causing the impact. 24 The experts agreed that the most adversely affected property was the Ling Apartment building. The apartments in this building step down the site over 5 levels and while orientated away from views to the harbour, the top 4 apartments on the north side of the building have a window and a balcony with harbour views. It is likely that the designer contemplated little if any development on the lower portion of the subject site, ie Lot A. Views to the harbour will be lost in all top 4 levels.

25 The view loss from International Lodge is restricted to the lower two levels of the seven-storey residential building. A significant portion of the view will be lost, although a segment of view will still be available between the proposed apartment building and Ashton on the first and second levels.

26 The International Lodge building already impacts on the views from Ashdown at the lower levels. The proposed apartment building will further limit views to the harbour.

27 Applying the principles in Tenacity Consulting one may conclude that the views to Beare Park and Elizabeth Bay are significant and likely to be highly valued. There is a total loss of views from the units in the northern portion of the Ling Apartments and a significant loss of views from the lower level units in International Lodge and Ashdown. The loss has additional significance as it affects the whole of the units and not just certain locations within them.

28 We turned to the council's view montages with levels to determine the reduction in impact if the proposal's height were reduced to six storeys. There would be little improvement for the Ling Apartments. There would be a reduction of view loss for the affected apartments in International Lodge on and above the second floor. There would be a major reduction for all the affected apartments in Ashdown for which the montages provide information. 29 The disagreement between Mr Sanders and Ms McMahon was not on the extent and degree of impact (on which they agreed), but whether the loss was reasonable in the circumstances. Importantly, this relates to the fourth test in Tenacity Consulting.

30 Ms McMahon considers that the loss of highly valued views from adjoining apartment buildings, including views of the interface of Beare Park and Elizabeth Bay, is unreasonable. In her opinion, the setback from the southern boundary and the height of the proposed apartment buildings are inappropriate in relation to the size of the allotment. While accepting that Lot A could the developed, she maintains that development should be restricted to a height just below the escarpment line. This would allow only a four-storey building.

31 Mr Sanders describes the design as a skilful response to a complex and interrelated series of design constraints and parameters. He notes that the impacts affect only relatively few units, despite the fact that the proposal is in one of the most densely developed areas in Australia. Moreover, the proposal conforms to the controls for height, setback and FSR, being controls that are generally accepted as having amongst their objectives the minimisation of view impacts.

32 Overshadowing would affect the same apartments in the Ling Apartments as the view impact. Even a modest development of Lot A would have this impact. For this reason, it would be appropriate for the proposal to set back from the common boundary with the Ling Apartments to allow some landscaping.

Findings 33 On balance, we prefer the conclusions of Ms McMahon to those of Mr Sanders, although we do not accept all of her evidence. Our reasons are as follows:

34 The development site is highly constrained by its topography, the existence of Ashton (which is in the location that would otherwise be the ideal position for a new building), the dense surrounding development, the numerous apartments near it with views to the harbour, as well as the council's planning controls. We do not think that it is appropriate to aim for the maximum permissible density and height, calculated in a way that is most favourable to the applicant, on such a constrained site.

35 While the experts accept that the proposal satisfies the requirements for height and FSR, we are not convinced that this is based on a reasonable application of the planning controls, particularly in the case of the FSR. To say that the proposal satisfies the FSR requirement is only partly true. The development site is in two parcels now, and it will be in two parcels when the proposal is completed. One will contain Ashton, the other the proposed apartment building. What, then, is the justification for treating the two allotments as one for calculating the FSR? The proposed apartment building is wholly on new Lot A, and it will be perceived to be on that lot, since there is a clearly visible cliff between Lots A and B. The FSR of the new building, when related to the area of its own allotment, clearly exceeds the 1.5:1 FSR requirement. As mentioned above, in our assessment it is around 2.5:1. 36 However, even if we accept, as the council does, that the properly calculated FSR is 1.5:1, we do not accept that the maximum FSR is achievable on every site and in every circumstance. DCP 1998 supports this conclusion in that the FSR control (Part E, cl 2.2) has the following objective: To control the floor space of new development to ensure its intensity respects and reflects the overall built form and does not detrimentally affect the amenity of the area. 37 The Performance Criteria for the standard states: The maximum FSR a site can achieve is determined by the environmental constraints of the site, in particular: + overshadowing and privacy + streetscape + parking and landscape requirements
+ visual impact and views + capacity of the community infrastructure and the road network to support the development 38 If Ashton did not exist, the two lots would be amalgamated and the bulk of development would be on Lot B. The view impact is likely to be much less. It is the need to locate most of the floor space on Lot A, and very little on Lot B, that is the reason for the proposal's serious view impact. It seems to us as if the burden of the constraints posed by Ashton has been transferred to the residents of those dwellings whose views would be obliterated. That burden should instead be borne by the applicant.

39 In agreeing with Ms McMahon's conclusion that the proposed development is too high, we do not accept that development of Lot A must be restricted to a height below the escarpment. Even the most modest form of development on Lot A would impact on the views from the northern units in the Ling Apartments. A boundary fence would have the same effect. However, a reduction of two floors in the height of the apartment building would maintain the existing views from International Lodge and Ashdown from a greater number of levels. The views from the lower levels would still be affected; to save them would require an unreasonable reduction of development potential of the subject site.

40 Pursuant to cl 10, the proposed development is inconsistent with zone objectives (a) and (c), and therefore consent cannot be granted. Heritage impact 41 The Court must not grant consent unless: + the proposed development is consistent with the aims and objectives of cl 22, + it has taken into consideration the extent to which the carrying out of the development would affect the heritage significance of the item (cl 23(2)). + it has made an assessment of several design features (cl 23A(2)), + it has taken into consideration of the effect of the proposed development on the significance, curtilage and setting of heritage items and on the heritage significance of buildings within the heritage conservation area (cl 24). 42 As Ashton is listed on the State Heritage Register, approval by the Heritage Council is required pursuant to the Heritage Act 1977. The Heritage Council has granted approval for the proposed development, including the endorsement of the Conservation Management Plan for Ashton.

43 The experts agree on the significance of Ashton. They disagree, however, on the extent to which the proposed development would affect this significance. Professor Mackay does not consider the topography of Lot A to be "natural" and maintains that the proposal would conserve the heritage qualities of the site. Ashton is now only visible from a few places in Elizabeth Bay and only barely from other harbour locations. It is within a dense urban context. In Professor Mackay's opinion, the development will have no substantive effect on the visual qualities of Sydney harbour. The proposal takes advantage of, reflects and reinforces the site's topography.

44 Mr Phillips takes a different view. He thinks that the designer has given insufficient consideration to the natural landform and topographical setting of Lot A, as well as to the views from the foreshore to Ashton. In his opinion, the existing views to Ashton make a material contribution to the visual qualities of the harbour. Incremental change, such as the one proposed in this application, will lead to the progressive loss of the historic quality of the harbour foreshore. Moreover, the height and scale of the proposal reinforce the high-rise context of the site rather than the heritage values of Ashton. They therefore detract from its heritage significance.

45 Professor Weirick agrees with Mr Phillips. He states that Lot A contains a sequence of walks and terraces, proceeding from the house to the waterfront. This has some importance as a picturesque backdrop to Beare Park, containing original rock outcrops. The lower terraces contribute to the "Italianate landscape", which was reinterpreted in the 20th-century with a distinctly Italian influenced garden. Overall, Professor Weirick states that the integrity of Ashton depends on the retention of its setting, and the proposal would greatly change this setting. 46 Having the benefit of the site view, we agree with the conclusions of Professor Mackay. Clearly the significance of Ashton is best maintained through optimising the view corridor from the harbour and Beare Park between the apartment buildings Karingal and Ashleigh. In an ideal world Lot A would remain undeveloped thereby allowing the maximum view corridor. However, Ashton is in a derelict state and some development on Lot A is probably necessary for its preservation (although not necessarily as much as is proposed in this application). In our opinion, even the reduced view corridor arising out of the proposal will be sufficient for people to appreciate the beauty and significance of Ashton.

47 Professor Mackay was the author of the Conservation Management Plan for Ashton. The document provides a comprehensive assessment of views to and from Ashton and adopts a strategy for the conservation of key views. The proposed development is consistent with the strategy. We accept that this provides a reasonable balance between the need to maintain views to and from the harbour and foreshore to Ashton while allowing development of Lot A. We have given major weight to the fact that the Heritage Council, which is the body that placed Ashton on the Heritage Register, has approved the proposal and endorsed the Conservation Management Plan.

48 In our opinion, the proposed development satisfies the relevant requirements in cll 22, 23, 23A and 24 of LEP 1998. The proposal's impact on the heritage significance of Ashton is not a reason for refusal. Impact on views from Sydney harbour, Beare Park and the immediate area 49 Clause 2 of REP 23 provides aims and objectives, the relevant ones of which protect and enhance the landscape and special scenic qualities of the harbour. Clause 13(f) of REP 2005 has a similar requirement. Clause 28 of LEP 1998 contains relevant requirements for built environment design principles and specifically the requirement to preserve predominant view lines and vistas enjoyed from parks, reserves, roadways, footpaths and other areas of the public domain.

50 With benefit of the site view, we find that the proposed development will have only a minor impact on the character of the area when viewed from the harbour, Beare Park or locations in the immediate vicinity. The immediate area comprises tall and densely built blocks of flats that have been constructed over many years. In comparison, the proposal is of better design and less dominant. It would sit comfortably in its context and create no unacceptable visual impacts when viewed from any location. Consequently none of the Principles of SEPP 65 are offended. Whether the proposed stone retaining wall falls within the adjoining right of way. 51 This issue arose from a conflict between different plans. The applicant submitted that there was no intention to construct the proposed stone retaining wall on the adjoining right of way. We note that the architectural plans do not propose any work on the adjoining property.

Conclusions 52 The two major issues in this case are the proposal's effect on the views of neighbouring dwellings and on the heritage significance of Ashton. On balance, and given current disrepair of Ashton, we find the heritage impact to be acceptable. However, the impact on views is significant and a direct consequence of too much floor space being placed on the lower allotment, Lot A. The site is a highly constrained one, for which it is not appropriate to achieve the maximum permissible floor space. In our opinion, the site's constraints imply a burden on the applicant, namely that it cannot achieve maximum development potential. The proposal attempts to shift this burden to the owners and residents of the apartments that would lose their much-valued views of the harbour.

53 We do not agree with the council's position that lot A can only accommodate a four-storey building. However, if the eight-storey portion of the proposed building were reduced to six, fewer of the neighbouring apartments would be adversely affected.

2. Development application for the refurbishment of an existing heritage-listed house at 102 Elizabeth Bay Road, Elizabeth Bay, the erection of an apartment building and the readjustment of boundaries at 11 The Esplanade, Elizabeth Bay is determined by refusal.

      Dr John Roseth G T Brown
      Senior Commissioner Commissioner

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