Thiessen Architects v Sutherland Shire Council

Land and Environment Court (NSW)|2004-08-27

CITATION : Thiessen Architects v Sutherland Shire Council [2004] NSWLEC 480 Applicant: Thiessen Architects Pty Ltd PARTIES : Respondent: Sutherland Shire Council FILE NUMBER(S) : 10507 of 2004 CORAM: Roseth SC KEY ISSUES: Development Application :- Non-compliance with site amalgamation provisions Non-compliance with FSR and height controls LEGISLATION CITED: Breakers v Sutherland Shire Council, Appeal No 10845 of 2001; CASES CITED: Melissa Grech v Auburn Council [2004] NSWLEC 40; Cornerstone Property Group v Warringah Shire Council [2004] NSW 189; Karavellas v Sutherland Shire Council [2004] NSWLEC 251 DATES OF HEARING: 23/08/2004 to 25/08/2004 DATE OF JUDGMENT: 08/27/2004

Mr G Newport, barrister instructed by Mr S Patterson of Wilshire Webb LEGAL REPRESENTATIVES: Ms S Duggan, barrister instructed by Mr C Matheson, council solicitor

10507 of 2004 Thiessen Architect Pty Ltd v Sutherland Shire Council

JUDGMENT 1 SENIOR COMMISSIONER: This is an appeal against the deemed refusal of a development application to erect a mixed-use building containing commercial and residential use lot Pt 21 DP 4759, known as 19-21 Gerrale Street, Cronulla.

The site 2 The site is an amalgamation of Nos 19 and 21 Gerrale Street. It has a total area of 1,710m2 and frontage to Gerrale Street to the east, and to Surf Lane to the west. Adjoining to the south is an eight-storey apartment building, No 23 Gerrale Street. Adjoining to the north are three allotments: No 17 Gerrale Street (at the corner of Ocean Grove Avenue), No 2 Ocean Grove Avenue, and an electricity substation at 4 Ocean Grove Avenue at its intersection with Surf Lane.

The proposal 3 The applicant proposes to amalgamate 19 and 21 Gerrale Street, demolish the existing building and erect a 7-storey mixed use building containing a hotel on the ground floor, offices on the first floor and apartments above. Vehicular access to a three-storey basement carpark is from Gerrale Street.

Relevant planning instruments 4 Local Environmental Plan 2000 (LEP 2000) zones the site 9a Mixed Residential/Business, a zone in which the proposal is permissible with consent. Local Environmental Plan 2000 Amendment No 27 proposes, among other things, to change the definition of gross floor area. The Department of Infrastructure, Planning and Natural Resources has indicated that the amendment will be made in the 2004 comprehensive plan (see below). Draft Local Environmental Plan 2004 does not propose to change LEP 2000 in any significant way that is relevant to this application (other than the definition of gross floor area). 5 The Cronulla Centre Development Control Plan (the DCP) introduces detailed controls for development. It is common ground that the proposal does not meet controls for site amalgamation, height, Floor Space Ratio (FSR), and setbacks. 6 State Environmental Planning Policy 65 - Design of Residential Flat Development (SEPP 65) establishes principles for the design of apartment buildings.

The issues 7 The council submitted a Statement of Issues containing five issues, which were discussed and refined during the hearing. The following issues emerged as salient: · Is the amalgamation of only two allotments (19 and 21 Gerrale Street) acceptable in view of the DCP's requirement for amalgamating five allotments (also 17 Gerrale Street and 2 and 4 Ocean Grove Avenue)? · Are the variations from the DCP's controls on height, FSR and setback and its quantitative requirements justified? · Are the principles of SEPP 65 met? · Is the use of the ground floor as licensed premises acceptable?

Amalgamation 8 Clause 2.17 of the DCP requires sites to be amalgamated in accordance with the amalgamation pattern in Plan No 13. That pattern requires the site (which amalgamates 19 and 21 Gerrale Street) to be amalgamated with three allotments to the north, ie 2 and 4 Ocean Grove Avenue and 17 Gerrale Street. No 2 Ocean Grove Avenue is a commercial building with an approximate FSR of 2:1. No 4 Ocean Grove Avenue is an electricity substation. No 17 Gerrale Street is a commercial building with an approximate FSR of 1.5:1. The applicant contends that, despite its best efforts, it is unable to purchase two of the latter three sites. 9 Several earlier judgments of the Court are relevant to this issue. On 9 September 2002 Hoffman C refused an application (Breakers v Sutherland Shire Council, Appeal No 10845 of 2001) to develop 19 Gerrale Street without amalgamation with any of the four other allotments. His principal reason was that the development of a single site out of a proposed amalgamation of five was inconsistent with the aims of the DCP. The application now before the Court distinguishes itself from Breakers in two important aspects: · It is for two sites comprising the majority area of the required amalgamation of five allotments. The previous application was for one site only. Thus the amalgamation indicated in the DCP is capable of being achieved in two groups, rather than in three. · The proposal before the Court includes a "break-through" panel in the basement to allow vehicular access to a possible future development on an amalgamated site consisting of 17 Gerrale Street and 2 and 4 Ocean Grove Avenue. This enables the achievement of one of the major benefits of site amalgamation, namely a single vehicular entry and egress point for the five sites. 10 Accordingly, in my opinion, the application is significantly different from the one before Hoffman C. 11 In Mellisa Grech v Auburn Council [2004] NSWLEC 40, Brown C established several principles in relation to site amalgamation, where there was a danger that the development of a site may render difficult the future development of another. In Cornerstone Property Group v Warringah Shire Council [2004] NSWLEC 189 and Karavellas v Sutherland Shire Council [2004] NSWLEC 251 Tuor C extended the Brown principles to include consideration of sites that may be "isolated". None of the above cases present exactly the same issues of amalgamation as the subject application; however they have sufficient similarity to be taken into account. 12 The relevance to this application of the principles established by the above judgments is twofold. First, an applicant must make genuine efforts to acquire sites where amalgamation would achieve a better planning result or where they are indicated in an amalgamation plan. Second, where an amalgamation plan is not achieved, the Court must consider whether the leftover sites are capable of being developed in accordance with the planning controls. 13 The Court received the evidence of Mr F Egan, a Court-appointed expert on valuation. Mr Egan valued the three properties, 2 and 4 Ocean Grove Avenue and 17 Gerrale Street, both as stand-alone properties (ie in their current use) and as development properties (ie as additional land for a redevelopment project). During the hearing the council provided further material to Mr Egan, which led to his revising the original valuations. Finally, Mr Egan provided the Court with a valuation that included a bonus for induced sales. The most striking aspect of Mr Egan's valuation was that the stand-alone value of the properties was significantly higher than the development value. For example, the stand-alone value of 2 Ocean Grove Avenue was $1,73 million. With statutory charges and 10% allowance for additional expenses, an offer that would be reasonable for the property's owner to accept would be around $2 million. Mr Egan estimated the development value of 2 Ocean Street as $967,000, ie less than half the sum that may induce the owner to sell. 14 In my opinion, the above evidence is of the utmost significance. It indicates that at the present time the highest economic use of the properties is their current use. The amalgamation plan is unlikely to be realised until the stand-alone value falls and the development value rises to the point where it exceeds the stand-alone value. Given the enormous difference between the two values, this is not likely to be soon. 15 In reaching a conclusion on whether non-compliance with the requirements of cl 2.17 of the DCP is a reason for refusal, I must ask two questions: · Has the applicant made genuine and reasonable efforts to amalgamate the five allotments indicated on the Site Amalgamation Plan? · Are the leftover sites capable of being developed consistently with the DCP? 16 I turn to the first question. I leave aside, for the moment, 4 Ocean Grove Avenue, the site of the substation. The applicant has made offers to the owners of the properties in line with Mr Egan's first valuations, ie before he modified them in response to further data provided by the council. As it turns out in view of the evidence, these offers were clearly not sufficient to induce the owners to sell. However, this does not mean that the applicant has not made genuine and reasonable efforts. If the applicant made an offer that would induce the owners to sell, it would pay twice as much for the land as it is worth as development land. I do not think that the Court can require the applicant to commit an act of economic lunacy in order to be satisfied that its efforts to amalgamate are genuine. 17 I note that the evidence indicated that the applicant has made its offer to only one of three owners of 17 Gerrale Street. I note also that the executor of the estate of that property's deceased owner indicated in a letter that the owner's widow does not wish to sell. In my opinion, the significance of these facts is minor in relation to the real difficulty of amalgamation revealed by Mr Egan's valuation evidence. I conclude therefore that the applicant's actions to acquire the additional sites are not a reason for refusing the application. 18 As regards the electricity substation site, in my opinion, it is an insignificant component of the amalgamation pattern. If the other four sites were amalgamated without it, the amalgamation plan would be so close to being achieved that it could be considered being achieved. The substation itself is visually receding and covered by trees. It provides relief to the ever-spreading hard surfaces of the Centre. If it stayed where it is, it would not detract from the DCP's objective to ensure Cronulla's future as a vibrant, attractive, sustainable, mixed-use urban village. 19 I turn to the second question. The development principle behind the amalgamation plan is to ensure that sites are not isolated, maximising development potential within the centre, whilst also creating human scale development through opportunities for public realm improvement, reduction in building bulk and amenity enhancement through coordination of development. According to the two planning experts, Mr K Nash, for the council, and Mr A Ludvik, for the applicant, all these aims can be achieved on an amalgamated site of 17 Gerrale Street and 2 Ocean Grove Avenue (with or without the substation site). The one exception suggested by Mr Nash was public realm improvement, which in his opinion could not be achieved. I do not accept that this is so. The amalgamated leftover site has excellent development opportunities. It has a long façade to the north, vehicular access through the subject site and pedestrian access to Ocean Grove Avenue. It can be developed in conformity with the DCP's controls and achieve maximum development potential. It is not an isolated site in the sense that planners use the word, ie a site for which the development opportunities have been severely curtailed. 20 For the above reasons, the applicant's failure to amalgamate the site in conformity with the DCP's Site Amalgamation Plan is not a reason for refusal. 21 I have considered the submission of the council's advocate, Ms S Duggan, that development of the site should wait until the relative values change so that the development values of 17 Gerrale Street and 2 Ocean Grove Avenue exceed their stand-alone values. In my opinion, this is unlikely to occur in the foreseeable future and may never occur. The submission is unreasonable and contrary to the objects of the Environmental Planning and Assessment Act 1979. I therefore reject it.

Variations from the DCP 22 The proposal fails to comply with the DCP's provisions for setbacks, height and FSR. With regard to setbacks, the variation is in relation to Surf Lane where the DCP requires a 4m setback. Mr Nash did not suggest that this was a major problem, though he did not condone it. Mr Ludvik defended it as a minor departure without negative environmental outcome. I accept that this variation is not a reason for refusal. 23 The variation of the height and FSR is another matter, however. The DCP limits the building to 6 storeys and the proposal is 7 storeys. The DCP provides that the height may be varied where an applicant can demonstrate, in situations of infill development adjoining buildings exceeding the prescribed height limit, that the proposed height is in context with adjoining development and has no negative impact on streetscape or the amenity of residents in the centre. According to Mr Ludvik, the above applies, according to Mr Nash it does not. 24 In my opinion the criteria for varying the height standard do not apply. Because the applicant has failed to amalgamate with the three allotments to the north, the adjoining buildings are two-storey. The evidence of both experts suggests that, if the three leftover sites were redeveloped, a new building would be lower than 6 storeys. In my opinion, there is no justification for varying the DCP's height standard. 25 I turn to the proposal's FSR. The DCP permits a FSR of 2:1. According to the definition of gross floor space in LEP 2000, the proposal's FSR exceeds 3.5:1. However, both experts agreed that the definition is an inadvertent mistake since it includes nearly half the basement parking area. To the extent that it does, it would be reasonable to vary the permissible FSR. Alternatively, it would be reasonable to assess the proposal's FSR by excluding all the basement parking area. 26 While there was some disagreement about minor inclusions, it was common ground that the proposal's FSR, when measured fairly, is around 2.5:1, ie 25% higher than required by the DCP. The only justification that Mr Ludvik was able to give was that amalgamation with 21 Gerrale Street was expensive and required a higher FSR. In my opinion, I would be committing an error of law if I varied a standard (whether a development standard or a quantitative requirement of a DCP) on the basis of a proposal's economic viability. Such consideration would be inappropriate also from a planning point of view, since it would encourage applicants to make unviable projects viable by exceeding the permissible density. The environmental result would be disastrous. 27 I conclude that the proposal's non-compliance with the maximum FSR of 2:1 is not justified and is therefore a reason for refusal. I am strengthened in the above conclusion by the fact that the proposal does not achieve an amalgamated site as required by the DCP. I have found that the failure to amalgamate is not a reason for refusal. It is a reason, however, to require that any proposal on a partial site fully comply with the other standards of the DCP.

SEPP 65 28 In the council's submission, the applicant has failed to provide an assessment of the proposal based on SEPP 65, signed by its designer. The issues raised under SEPP 65 are those discussed under compliance with the DCP, with the addition of the issue of lack of sunlight received by the apartments facing south. Given my findings on the other issues, it is not necessary to deal with this issue.

Licensed premises on the ground floor 29 The applicant proposes to use the ground floor of the building as a café/bar under an hotelier's licence. I do not know what a café/bar is, nor is it one of the permissible uses under LEP 2000. I must therefore consider it as a hotel, which is the nearest permissible use. Until the last hour of the hearing the hotel was to have opening doors or windows and drinking outside, but this changed to fixed glass and no drinkers outside. 30 The Court heard the evidence of Senior Sergeant G Beattie and Senior Constable G Forsdike of the Miranda Local Area Command. In their opinion a hotel on this site was inappropriate and a source of anti-social behaviour. On the other hand, a licensed restaurant would be much less of a disturbance. I note that there are already several licensed restaurants in the street. 31 The Court also heard the evidence of Mr A Walsh, who lives in an apartment across the road and is afraid of being disturbed by noise from the proposed hotel. 32 The applicant pointed to the fact that the makers of the DCP envisaged the Cronulla Centre as a tourist area, that taverns and hotels were mentioned as a desired use and that the aim was to have a vibrant centre. The applicant tendered a report by an acoustic consultant, Mr M Carter. In cross examination it became clear that Mr Carter had failed to state the assumptions on which his report was based and that the assumptions were either unjustified or at best relied on management practices that were not reflected in the application. I find Mr Carter's evidence so flawed that I am obliged to disregard it in its entirety. 33 By the end of the hearing the applicant had amended the proposal so that the hotel was constrained by conditions that required a solid wall and doors with airlocks to Gerrale Street and no drinking on the open terrace facing Gerrale Street. This would require management practices relying on constant supervision of the terrace. In my opinion, it is not good planning practice to establish land uses that are in conflict with each other (such as a hotel and residential) and then require onerous management practices to reduce the conflict. A hotel is not an appropriate use on the ground floor of this site. The evidence of the Police suggests that a licensed restaurant would not have the same problems.

Conclusion 34 A proposal on the amalgamated site of 19 and 21 Gerrale Street, without the other three sites in the DCP's Amalgamation Plan is acceptable. The non-compliance of this proposal with the DCP's requirements for height and FSR and the use of the ground floor as a hotel are unacceptable. The appeal is therefore dismissed.

Orders

The appeal is dismissed.
Development application to erect a mixed-use building containing commercial and residential use on lot Pt 21 DP 4759, known as 19-21 Gerrale Street, Cronulla is determined by refusal.
The exhibits are returned.

      Dr John Roseth
      Senior Commissioner

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