West Apartments Pty Limited v City of Sydney Council [2009] NSWLEC 1411 | Case summary

This decision was given as an extemporaneous decision. It has been revised and edited prior to publication. 1 SENIOR COMMISSIONER: This matter concerns an application for a stratum subdivision of a property at 485-511 Wattle Street, Ultimo. A large mixed use commercial and residential development is being erected on the site - comprising two residential tower blocks. Also on the site, in its north eastern corner, is a heritage building known as the Briscoe building, restoration of which, as that building is in a substantial state of dilapidation, is an essential element of the development approval for the mixed use development and was a significant contributor to, if not the sole reason for, bonus floor space which was given to the developer. 2 The application that is made for stratum subdivision seeks to create three stratums out of the present allotments or land area involved encompassing both residential/commercial towers and the Briscoe building. 3 It is intended by the applicant that the Briscoe building's satisfactory restoration will be anchored by the value that will be left within the stratum that is proposed to accompany it, being a stratum that will involve not merely the Briscoe building but a number of separated levels in one of the residential/commercial towers (comprising the uppermost residential levels and the commercial space at the ground floor) accompanied by various elements of the parking and basement spaces that service the totality of the development. 4 The application for the stratum subdivision is opposed by the council on two fundamental bases; the first is that on an economic and heritage basis tet restoration of the Briscoe building cannot be guaranteed by the arrangement and, secondly, that the arrangement of the three proposed stratums is inappropriate on town planning grounds. The council says that each of these bases separately, as we understand it, warrants refusal of the application. 5 It is appropriate, having set out the nature of the application, to set out a little of the process leading up to our determination of the present application which is an application to adjourn the matter (on terms to which we will return) until February 2010. 6 We attended the site on 28 July and undertook a view of various parts of the building. We did not enter the Briscoe building for reasons of safety, but we were able to observe its exterior. We walked through the basement areas and inspected parts of the residential towers and the public domain both on that site and on adjacent sites. 7 There was subsequently, on that day, a hearing. On 29 and 30 July there were further hearings. During 30 July, we expressed concerns that the state of the evidence with respect to what we might (in shorthand terms) describe as the heritage related issues was such that we would not be able to determine them, there being an insufficiency of appropriate evidence of either a heritage, engineering or economic analysis basis. The matter was adjourned until 6 August. 8 The matter came back on 6 August and on four subsequent occasions for directions, the most recent being on 17 November when the council was represented by Mr Larkin of counsel and the applicant was represented by its solicitor, Mr Arraj. On that day, when matters of some limited slippage in the evidentiary timetable were being dealt with, we expressly (and with some care) drew to the attention of both parties that if they wished to put on any additional evidence about any topic whatsoever that it would need to be dealt with in a fashion that permitted the hearing (which was set for yesterday and today) to go ahead. In particular we drew to the attention of Mr Arraj the terms of evidence that had been filed and served by the council in statements of Mr Wiltshier filed on 12 November and of Mr Poulton also filed on 12 November. 9 We indicated, expressly, that any material that was sought to be elicited in response to them (amongst other documents) needed to be dealt with promptly. Mr Arraj indicated that, with the exception of a number of further evidentiary matters, such as proposed affidavits from a financier and the like, there was no intention to put further evidence on concerning Mr Wiltshier or Mr Poulton (although Mr Arraj, to be fair to him, made that statement in generality and did not mention Mr Wiltshier and Mr Poulton personally although we had expressly identified them). 10 We granted liberty, on short notice, to re-list the matter if either party wished to make some alterative application about further evidence. We did so because we had carefully read the evidence in this case (as it had come in) as we were concerned at the degree of intensity of management that was necessary for this case given the inadequacy of the evidence as identified during the original hearing. We read the evidence with, as it were, a small 'r' not prejudicing any opportunity for the evidence to subsequently be objected to before it was read with a big 'R', as it were, so that we were informed of appropriate matters. 11 Subsequently, the statements of Mr Wiltshier and Mr Poulton to which we have adverted were tendered and admitted without objection. It is important to note, in our view critically to the issues that we are dealing with this morning, Mr Wiltshier's conclusion in the statement to which we have referred - where he says: "I do not believe that the drawings provided to me provide sufficient information to either carry out conservation works to the historic fabric or prepare an adequate cost estimate for such works. The architectural drawings refer to the structural drawings for detail, however, the structural drawings do not contain that detail. I cannot determine what documents the budget estimate was based on. The descriptions of items within the budget estimate is not detailed, therefore I cannot determine if the budget estimate covers all the conservation of the fabric items We would expect to be included." 12 Mr Poulton's report, also admitted without objection, says, under 2.2, that there are a number of differences between two sets of drawings, being the drawing by Tony Owen Partners dated September 2009 and those of the in-house architect dated June 2007. He details those differences between the drawings. At 2.3 he details a number of inconsistencies between the drawings of Tony Owen Partners dated September 2009 and the approved drawings for the development consent. At 2.4 he draws attention to a number of inconsistencies between the applicant's quantity surveyor's report and the development consent approved plans. 13 On 17 November, Mr Larkin, on behalf of the council, foreshadowed that evidence would be put before us to indicate that the development had not been constructed in accordance with the development consent plans. 14 On 23 November, a statement of evidence of Mr Siganakis was filed and on 24 November an amended statement by Mr Siganakis was filed. Those statements together, because the first statement is necessary for an understanding of the amendments in the second statement, were admitted as evidence without objection. Mr Siganakis is a building surveyor employed by the council. Mr Siganakis' statement of evidence sets out a number of discrepancies between the development consent plans and that which has actually been constructed on the site. We do not need to know, nor is it potentially relevant in these proceedings, whether the applicant has constructed matters as they are according to construction certificate plans as that would potentially give rise to matters involving the certifier that would be dealt with elsewhere in some fashion. 15 It is sufficient for us to observe that, prima facie, the differences between the development consent plans and that to which Mr Siganakis' evidence goes showed discrepancies that are simply beyond anything possibly contemplated by the scope of adjustment between development consent and construction certificate stage plans (where minor refinements or matters of detail can be added). In this case, a significant number of additional apartments have been added, at least one level in the commercial area arguably has been added and a significant additional area of floor space appears (and we say, advisedly, appears) prima facie to have been added. 16 In addition, we have filed on 23 November a joint report concerning amongst other things, heritage costings matters in which the experts taking part, being two experts on behalf of the council, Mr Poulton and Mr Wiltshier, and Mr Rappaport, the heritage expert for the applicant, agree (on the first page of the joint conference report dated 19 November 2009) that there is insufficient information submitted with the quantity surveyor's report to determine the extent and appropriateness of the conservation works to the Briscoe building. 17 As a result it was agreed that there is a need for a more detailed scope of conservation works which is to include annotated drawings and specifications. This scope would then ensure a more accurate costing of the proposed conservation works for the Briscoe building, the scope of conservation works should be prepared by the applicant's heritage consultant in consultation with their structural engineer and other specialist in accordance with accepted heritage practice. 18 There are a number of consequences of the evidentiary inadequacies to which we have referred. The first is that it is clear, subject to possibly giving Mr McEwen SC for the applicant the right to make further submissions, that there is no evidentiary basis upon which we could found a decision on the heritage economic element of the application to permit a stratum subdivision proposal to overcome that objection raised by the council. 19 Second, and fundamentally in addition (because the additional mezzanine level in the commercial space is apparently a structural element within the concrete forming of the building), we have no evidence that would permit us to conclude that, if there subsequently became a requirement for the removal of that slab, the commercial element of the stratum which incorporates the Briscoe building and the residential element of the same stratum at the upper part of that building would provide adequate structural support for the portion of the other stratum that intervenes between them. 20 It would be necessary, in our view consistent with what was said by Bignold J in Ireland v Cessnock City Council 110 LGERA 311, that we would require such structural evidence before we were able to deal with the matter. We have no such evidence. 21 We move on to note that, although it is something that is admitted to evidence but has not yet been subject to contest (therefore we do not place sufficient weight upon it merely note this is an additional factor warranting consideration), that on 19 November 2009 an expert witness report of Mr Paul Challenor, a valuer of Egan National Valuers, was filed on behalf of the council. Mr Challenor, although dealing with a valuation of the various parts of the stratum proposed to incorporate the Briscoe building, expresses some monetary amounts as valuations. He makes a particular, and for us, troubling comment on p 26 of his report where he comments on the project's feasibility (given the fact that that which has been built significantly departs from that which has been approved in the development consent stage) and he expresses the view: "I would consider the above points to be a very substantial impediment to the marking of the proposed Lot 202 [ the proposed stratum incorporating the Briscoe building] and in my opinion may render it virtually unsaleable whilst these problems remain." 22 When the matter resumed yesterday we drew to the attention of Mr McEwen our concerns about the state of the evidence and the fact that, prima facie, we did not have any evidence that would permit us to hear and determine the first of the major contentions put by the council. 23 We did not express a view about our ability to hear and determine the town planning issues but, prima facie, we are of the view, except for the extent that one may be linked to the other, the town planning issue might have been (and probably was) able to be heard and determined. However, on the state of the other matters, it was clearly impossible to do so to the extent that that was critical to the case on the state of the evidence we believe that we would have no alternative but to dismiss the appeal. 24 In response to that, after allowing a deal of time during the day to permit Mr McEwen to obtain instructions and to have discussions with Mr Larkin on behalf of the council, Mr McEwen was instructed to make an application to adjourn until February 2010 and to set a timetable that would permit an appropriate evidentiary basis to be provided to the Court to determine all issues in the proceedings at that time. As a consequence of the usual process where such an adjournment might only be offered on terms, Mr McEwen was instructed to offer an undertaking to pay the sum of $120,000 to the council by bank cheque within twenty-one days of yesterday's date. It is in all of that context that we turn to consider the question of whether we should or should not grant an adjournment as sought. 25 The first matter is that the Civil Procedure Act 2005, in s 56, sets as the overriding purpose of that Act and of the rules of court which apply to us in civil proceedings being to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Mr Larkin put, on behalf of the council, that we should have regard to primarily the recent decision of the High Court in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 that has altered the past practice where provided there was appropriate fiscal compensation and there was no incurable prejudice to the party that was opposing the adjournment or amendment to the pleadings, such amendment or adjournment should be permitted. 26 Mr Larkin put the proposition to us that it was not appropriate to grant the adjournment for reasons based on Aon and a number of other cases to which we do not propose to refer. He did so on the basis, firstly, that a number of council witnesses had been inconvenienced both in being available yesterday and having had to spend their time preparing for and participate in the earlier hearing and activities subsequent to the earlier hearings. He put that, in addition, they were being detached from their ability to deal with other matters that the council might be required to deal with (although we have no evidence of what specific disadvantage might be occasioned and we give little heed to that proposition). 27 Effectively, Mr McEwen puts to us that if we allow the matter to go over there will be a period of proper preparation; that in addition to there being sufficient time in his submission, for proper evidentiary foundations to be established and the applicant would also be in a position to commence discussions or have further discussions, the difference not being relevant, with the council about either rectifying or regularising the position concerning the departures between the development consent plans and that which has actually been built. 28 We consider it is relevant also to have regard to what would be the position of the applicant if the applicant were to be denied the right for an adjournment and if, as a consequence of that, the appeal would be dismissed now. 29 There are a number of matters that we think are relevant in that regard. First, with respect to the potentially unlawful departures between the plans as approved and that which has been constructed it has been for some nine years or so the position in this Court since the decision of Talbot J in Windy Dropdown Pty Limited v Warringah Council [2000] NSWLEC 240 that the fact that an approved structure has been modified without development consent does not act as an inhibition to a subsequent modification of the development consent to regularise that structure, that position being contrary to the position that it is not possible to obtain a retrospective development consent for a complete structure (those circumstance needing to be dealt with according to the principles in Ireland v Cessnock to which we have earlier referred). 30 Second, there is no reason to exclude the possibility of the applicant lodging a fresh development application to pursue exactly the same ends as they are now seeking because in the merit appeal area of this Court's jurisdiction, and indeed in council consideration of it, matters of res judicata are not in our view likely to arise because we have expressed no merit determination on any aspect of this case whatsoever. 31 Similarly, we are of the view that there would be no inhibition arising from what is known as Anshun estoppel arising from the decision of the High Court of the Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45 (1981) 147 CLR 589. 32 We now turn to the question of what the High Court has said to us in Aon. First, the High Court (we are of the view from the majority judgment at para 98) says that the objectives of the Civil Procedure Act, in s 56, should have us give primacy to that subject to proper opportunities being given to the parties, in this case the applicant, to plead its case. We note however that those comments are followed by the remark that there are to be limits placed upon such repleading when delay and costs are taken into account. 33 Paragraphs 102 and 103 deal with the question following the decision of the High Court in Queensland v JL Holdings Pty Limited [1997] HCA 1 (1997) 189 CLR 146 that there should be some explanation offered if there is a good reason why an indulgence, because an indulgence an adjournment unquestionably is, is to be granted to a party in proceedings. 34 We have concluded, first, that if we were to grant an adjournment, given the unsatisfactory nature of the evidentiary trail that has evolved from the applicant since the adjournment of matters on 30 July, there would need to be close supervision by us of that process and a regular requirement to do so that if there were to be even the slightest slippage of any significance in a future evidentiary timetable that it was brought to us to be dealt with. That would involve not merely costs to the parties but potentially a significant demand on the time of the Court. The High Court having made it clear in Aon that it is not merely the costs to the parties that is to be considered, but as the Chief Justice says at para 30, that we ought to have regard to the use and potential waste of public resources in dealing with matters. 35 Second, given what has happened since July and the comparatively intense supervision that we have given to these proceedings and the evidentiary process, we are not confident that, if the matter were to be adjourned until February, even if it were to be adjourned until late February, the time necessary to set it down for hearing, being on our estimate a further two days with a third day in reserve, might not be subject to a further application to vacate as the range of issues both arising out of these proceedings and necessarily interlinked with them. One might be the question of whether or not we could approve, for example, a stratum subdivision involving structures that were not lawfully erected and into a building envelope beyond that which had been approved - Mr McEwen sharing with us the view that that is a novel proposition fraught with appealable error on our part [but that not being a reason not to venture there]. 36 However, we are not confident that those matters that might need to be dealt with either by rectification or s 96 modification application could appropriately be ready or resolved by that time. 37 When that is coupled with the fact that we have no adequate explanation for the reasons for the present evidentiary position and the fact that on, 17 November, an express opportunity was given to the applicant to deal with or make application to deal with the evidentiary defects, particularly in the reports of Mr Wiltshier and Mr Poulton, we have concluded that the application for adjournment should be refused. AFTER A BRIEF EXCHANGE WITH COUNSEL FOR THE PARTIES, THE FOLLOWING ORDERS WERE MADE: 1. The appeal is dismissed; 2. Development Application 2008/2140 for stratum subdivision of 485 - 501 Wattle Street, Pyrmont, is determined by the refusal of development consent; and 3. The exhibits are returned.

West Apartments Pty Limited v City of Sydney Council

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