The Hills Shire Council v Sales Search Pty Ltd

Land and Environment Court (NSW)|2013-07-11|Before: Biscoe J

Judgment 1To be or not to be a boarding house. That is the question. 2This is an appeal under s 56A of the Land and Environment Court Act 1979 against a decision of a Commissioner of the Court granting Sales Search Pty Ltd (Sales) development consent to demolish existing structures and construct a two storey boarding house containing 33 rooms at 93-95 Baker Street, Carlingford and allowing Sales' appeal against Hills Shire Council's refusal of the development application: Sales Search Pty Ltd v The Hills Shire Council [2013] NSWLEC 1052. A boarding house is an innominate permissible development in the applicable 2(a3) residential zone under the Baulkham Hills Local Environmental Plan 2005 (LEP). Council submitted unsuccessfully before the Commissioner, and submits on this appeal, that the proposed use is not a boarding house but an "apartment building" or "commercial premises", both of which are prohibited in that zone under the LEP. The LEP defines those expressions but does not define "boarding house". 3The grounds of appeal are as follows: (1)The Commissioner erred in finding that the proposed rooms in the subject development were to be occupied in the nature of a short-term occupancy. (2)The Commissioner erred in failing to properly characterise the proposed development as an "apartment building" as defined in the LEP in consequence of Ground 1. (3)The Commissioner erred in failing to properly characterise the proposed development as an "apartment building" as defined in the LEP. (4)In the alternative, the Commissioner erred in failing to properly characterise the proposed development as "commercial premises" as defined in the LEP. (5)In consequence of grounds 1 and 2, or 3, or 4 hereof, the Commissioner erred in not finding that the proposed development was prohibited under the LEP. 4In addition to contesting the grounds of appeal, by a notice of contention Sales contends that the decision of the Commissioner should be affirmed on a ground other than that relied on by the Commissioner, namely: The decision of the Commissioner that the development approved by the Court was permissible with consent was correct on the basis that, contrary to the findings of the Commissioner on this point, the proposed development was permissible with consent pursuant to Division 3 of State Environmental Planning Policy (Affordable Rental Housing) 2009 (SEPP). 5An appeal under s 56A of the Land and Environment Court Act is limited to questions of law. It is common ground that the grounds of appeal and the notice of contention raise questions of law. The proper characterisation of a proposed use, which is the focus of the appeal, is a jurisdictional fact and therefore raises a question of law: Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422, (2004) 61 NSWLR 707; Dooralong Residents Action Group Pty Ltd v Wyong Shire Council [2011] NSWLEC 251, (2011) 185 LGERA 274 at [94] - [98] (Pain J). 6The three issues are: (1)Did the Commissioner err in failing to characterise the proposed development as an "apartment building" as defined in the LEP? (2)Did the Commissioner err in failing to characterise the proposed development as "commercial premises" as defined in the LEP? (3)Under the notice of contention, is the proposed development permissible with consent under the SEPP, contrary to the Commissioner's findings on the point? It is unnecessary to consider this issue unless I find that the Commissioner erred in the characterisation of the proposed development.

THE PROPOSED DEVELOPMENT 7The development application proposes a building containing 33 individual rooms for occupation by "boarders". Each room would have a bathroom; an area for beds, wardrobe, table, chairs and a desk; and a benchtop 1.2 metres long (longer in some rooms) incorporating a benchspace, a sink (with hot and cold running water), a small bar fridge below the benchspace and cupboards above. There are no kitchen or cooking facilities in any of the rooms: Commissioner's judgment at [7] and [56]. Many rooms have access to a private balcony or ground level open space. 8Each floor of the proposed building would have a combined living/dining area, kitchen and toilet. The kitchen on each floor would have cupboards, a fridge, two cooktops, two ovens and two microwaves. The ground floor common room opens onto a communal living space and the upper floor common room opens onto a communal balcony: at [8]. 9The Commissioner made the following findings of fact, at [56]: It is common ground that the development now before the Court has been deliberately designed so as to ensure the rooms do not contain full kitchens. The only facilities that would normally be associated with a kitchen are the benchspace, the sink and a small bar fridge located below the bench. No cooking facilities in the form of hotplates, oven or microwave oven have been incorporated into the design. The draft occupancy agreement proposed by the applicant provides for prior approval before boarders can use any form of cooking appliances within the room. Such equipment, if approved would be limited to 'plug-in' appliances.

ISSUE 1: DID THE COMMISSIONER ERR IN NOT CHARACTERISING THE PROPOSED DEVELOPMENT AS AN "APARTMENT BUILDING" 10Resolution of issue 1 turns on identification of precisely what development is proposed and whether it comes within the LEP definition of "apartment building" rather than the concept of a "boarding house". 11The LEP includes the following definitions: apartment building means a building containing 3 or more dwellings where each dwelling does not necessarily have direct access to private open space at natural ground level. dwelling 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. 12Council submitted that each individual room is a "dwelling" as defined because it is "capable of being occupied or used as a separate domicile"; therefore, the proposed building is an "apartment building" not a boarding house. The particular reasoning of the Commissioner which Council challenges is at [62]: Having regard to the authorities, I am satisfied that, with the absence of kitchen facilities and the short-term nature of occupancy, the rooms within the proposed boarding house are not dwellings. Such a decision is not inconsistent with that of Lloyd AJ in Wollondilly and follows his conclusion in Abdo. In this case, the rooms will not be occupied on a permanent basis whereas the structure in the former case had been occupied for 20 years. I follow the line of authority that determines rooms without kitchens are not dwellings. Accordingly, the boarding house is not an apartment building. I accept the council's submission that, if consent is granted to the application, it is appropriate to limit the nature of facilities that can be installed within each room so that the full range of kitchen facilities is not installed. I am satisfied, from the plans of the development and the area available within each room, that this condition can be met. 13The conditions of consent adopted by the Commissioner did not in fact "limit the nature of the facilities that can be installed within each room so that the full range of kitchen facilities is not installed". Condition 73 requires: "The operator of the boarding house will ensure that there is in place at all times a New Generation Boarding House Operational Plan of Management..." and cl 4.12 of that document requires each room to contain (inter alia) a "microwave oven" and "plug in hotplate, electric frying pan or equivalent". This Plan of Management should be, but is not, attached to the conditions of the consent (it was attached to the development application). 14Council submitted that two aspects of the reasoning that misinformed the Commissioner's conclusion as to characterisation were the "absence of kitchen facilities" and the "short-term nature of the occupancy". 15There is a line of authority, as the Commissioner noted, that rooms without kitchens are not "dwellings": Hornsby Shire Council v Monk [2001] NSWLEC 248 at [39] - [43]; Townsend v Lake Macquarie City Council [2004] NSWLEC 38 at [16]; Wollongong City Council v Vic Vellar Nominees Pty Ltd [2010] NSWLEC 266, (2010) 178 LGERA 445 at [31]; Warlam Pty Ltd v Marrickville Council [2009] NSWLEC 23, (2009) 165 LGERA 184 at [35] - [36]. The absence of a stove has been held to deprive an area of the character of a kitchen regardless of whether it has a sink, fridge and even a microwave oven: Monk at [39] - [43]; Warlam at [39]. The Commissioner referred to these decisions at [58] and [59]. In Warlam, I wrote: 35. The proposed development provides each residential room with an ensuite bathroom and toilet, a kitchenette and a laundry facility. Each room would be capable of being occupied as a separate domicile. The notion of a separate domicile is critical to the definition of a "dwelling" in a "residential flat building" as defined in the LEP: see [27] above. That accords, I think, with the general concept of a residential flat building. "Domicile" carries with it the notion of a significant degree of permanence of habitation or occupancy: North Sydney Municipal Council v Sydney Serviced Apartments Pty Ltd at 538; 437 (CA). In the context of planning controls which regulate the purposes for which land may be used, it is appropriate to think in terms of the meaning of "domicile" as a place of residence or home in a separate and more or less self-contained domestic establishment: cf Wyong Shire Council v Ardi Pty Ltd (2000) 112 LGERA 85 at [16]-[17] (Pearlman J). The fact that some residential flat buildings have a communal laundry does not detract from that proposition. 36. In my opinion, rooms in a boarding house cannot be changed to separate domiciles without changing the use to a residential flat building. Rooms with ensuite bathrooms and toilets but without kitchens do not constitute a separate domicile. Nor, at least in the circumstances of this case, do rooms with kitchens but without ensuite bathrooms and toilets. Rooms with both ensuite bathrooms and toilets and kitchens constitute separate domiciles. The development proposed by the applicant goes too far, in my opinion, because its rooms have both ensuite bathrooms and toilets and kitchens. 37. This conclusion based on domicile is not affected by the features of the proposed development which the applicant contends characterise the premises as a boarding house: see [11] above. 38. The council's proposed condition 4 draws a line between a boarding house and a residential flat building and, in my opinion, keeps the proposed development on the boarding house side of the line by excluding kitchens. 39. There are plug in electrical cooking appliances, such as frying pans and vertical grillers, which residents in the proposed development could use in their rooms because they are not precluded by council's proposed condition 4. They do not constitute a kitchen and cater for a different class of resident. Neither party suggests that the use of such appliances would push the proposed development over the line into characterisation as a residential flat building. 16In contrast to the position of the parties in the last quoted sentence from Warlam, Council did suggest before me that the use of such appliances pushed the proposed development over the line into characterisation as an apartment building. 17In Warlam at [14] and [41] I wrote: 14. The controversy between the parties on the prohibited development issue boils down to the council's proposed conditions 4 and 5: 4. No stove, oven, cooktop or dishwasher to be installed within any of the rooms of the boarding house excluding the common kitchen. 5. One bar fridge with a maximum capacity of 130L may be installed in each room. Such restriction does not apply to the common kitchens. ... 41. Council's proposed condition 5 permits each residential room to have only a bar refrigerator. I think that limitation is legally unnecessary. However, I agree with the parties that there should be a size limitation of some sort. The applicant's suggestion of a refrigerator with a maximum volume of 430 litres is, I think, reasonable. Condition 5 will be amended accordingly. 18The parties ultimately agreed during the hearing before me that Council would abandon the apartment building ground on the basis that I should now impose additional conditions of the consent to the effect of those referred to in Warlam at [14] as amended at [41]. This, Council agrees, would suffice to establish that the development is not an "apartment building" as defined in the LEP. I propose to vary the conditions imposed below in accordance with the parties' agreement. The principal change is a new condition 72A, as follows. 72A. Cooking Facilities No stove, oven, microwave oven, cooktop or dishwasher shall be installed within any of the boarding rooms of the boarding house excluding within the two common kitchens, and no plug in stove, oven, cook top or microwave oven shall be used in any boarding room excluding the two common kitchens. 19Power to vary the conditions imposed below is found in s 56A(2)(b) of the Land and Environment Court Act, which provides that on the hearing of an appeal under subsection (1) the Court may either remit the matter for determination by the Commissioner in accordance with the decision of the Court or "make such other order in relation to the appeal as seems fit". 20Council also sought a condition that there be no sinks and taps in the main area of each boarding room. I think that is unreasonable and unnecessary and I decline to impose it.

ISSUE 2: DID THE COMMISSIONER ERR IN NOT CHARACTERISING THE PROPOSED DEVELOPMENT AS "COMMERCIAL PREMISES"? 21The LEP defines "commercial premises" as follows: commercial premises means a building or place used as an office or for other business or commercial purposes but, in the Table to clause 13, does not include a building or place elsewhere specifically defined in this clause or a building or place used for a land use elsewhere specifically defined in this clause. 22The Commissioner addressed the commercial premises issue at [22] and [63] - [73] of her judgment and decided that the development is not "commercial premises" as defined. In summary, the Commissioner: (a)considered the LEP definition of "commercial premises" and dictionary definitions of "office", "business" and "commercial": at [22], [63] - [68]; (b)cited the principle that: "In planning law, use must be for a purpose...[t]he purpose is the end to which land is seen to serve. It describes the character which is imparted to the land at which the use is pursued": Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114 (2007) 151 LGERA 400 per Preston CJ of LEC: at [69]; (c)did "not find that the boarding house is a building used or intended to be used for business purposes. No person will be carrying out their occupation, profession or trade within the building": at [71]; (d)distinguished the decision J in Mackenzie v Warringah Council [2002] NSWLEC 246, (2003) 124 LGERA 208 on the facts, in particular because cleaning services were to be provided in that case but not in the present case: at [72]; (e)concluded that the boarding house is not commercial premises and therefore is an innominate use that is permitted with consent under the LEP: at [73]. 23Council submits that: (a)the proposal is for the prohibited purpose of "commercial premises" as defined in the LEP: Mackenzie at [25] - [33]; and (b)therefore, it is irrelevant that the use could also be categorised under the permissible category of "boarding house": Hawkesbury City Council v Sammut [2002] NSWCA 18, (2002) 119 LGERA 171. 24In Mackenzie Cowdroy J held at [34] that a proposed building comprising over 20 bedrooms with a communal kitchen and dining room and supervisory control over the conduct of occupants was "business premises", the business being the provision of rooms and services - apparently a reference to cleaning services (see [19]) - or "short term accommodation" both of which were defined and permissible under the local environmental plan. The Dictionary to the local environmental plan defined "business premises" to mean "a building or place in which an occupation, profession, light industry or trade or banking activities is or are carried on providing a service directly and regularly to the public but does not include a building or place elsewhere defined in this Dictionary". There is a conflict in Mackenzie. At [33] it was held that the development was not "short-term accommodation" but at [34] it was concluded that it was "short term accommodation" (or "business premises"). Assuming that the "Business Premises" decision in Mackenzie was correct, in my view it is distinguishable having regard to the different definition of "commercial premises" in the present case. 25In Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355 at 378-9 Mason J said: Unfortunately there is an element of ambiguity in the expressions "business deal" and "operation of business" as there is in the adjectives "business", "commercial" and "trading" which have about them a chameleon-like hue, readily adapting themselves to their surroundings, different though they may be. 26In my opinion, in the LEP definition the word "used" means used by occupiers of the building or place, not by the landlord to derive rent. Obviously boarders in a boarding house do not use the building as "an office or for other business or commercial purposes". Secondly, if I am in error and "used" in the definition includes used by the landlord to derive rent, this is qualified by the specified purposes of the use "as an office or for other business or commercial purposes". They do not encompass all letting purposes. Clearly, "office" does not include a boarding house or other residential accommodation. In my view, the adjectives "business or commercial" take their hue from the word "office" and also do not include a boarding house or other residential accommodation. 27For these reasons, I conclude that the development is not "commercial premises" and is not a prohibited use. Rather, it is a boarding house, which is a permissible use. Accordingly, the appeal must be dismissed.

ISSUE 3: PERMISSIBILITY UNDER THE SEPP 28It is unnecessary to consider this contention by Sales because Council's appeal has been unsuccessful.

COSTS 29Sales seeks an order that Council pay its costs. Council proposes that there be no order as to costs. In my view, there should be no costs order in relation to the apartment building issue and the notice of contention issue because it became unnecessary to decide them and, as to the former, either party could have proposed the Warlam type conditions which ultimately led to the resolution of that issue. Council lost the commercial premises issue. Although relatively minor, that issue is roughly apportionable at 20 per cent. Accordingly, I consider it appropriate to order Council to pay 20 per cent of Sales' costs and that otherwise there should be no order as to costs.

ORDERS 30The orders of the Court are as follows: (1)The conditions of the development consent are varied in accordance with the conditions annexed hereto. (2)Save as aforesaid, the appeal is dismissed. (3)The appellant Council is to pay 20 per cent of the respondent's costs of this appeal. (4)The exhibits may be returned. ANNEXURE A

Amendments 18 July 2013 - typographical error in [22(d) - change "clearing" to "cleaning" Amended paragraphs: 22(d) 22 July 2013 - "residential accommodation" deleted, "apartment building" substituted Amended paragraphs: 18 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: 22 July 2013

(2011) 185 LGERA 274

(2002) 119 LGERA 171

(2003) 124 LGERA 208

(2009) 165 LGERA 184

(2010) 178 LGERA 445

(2007) 151 LGERA 400

At a glance

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Cases Cited (19)

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