Land and Environment Court New South Wales Medium Neutral Citation: 7 Pty Ltd v North Sydney Council [2023] NSWLEC 1289 Hearing dates: Conciliation conference on 31 March 2023, 24 April 2023, 8 May and 24 May 2023. Date of orders: 13 June 2023 Decision date: 13 June 2023 Jurisdiction: Class 1 Before: Horton C Decision: The Court orders that: (1) The Applicant is to pay the Respondent's costs thrown away by reason of the amendments referred to in Annexure B in accordance with s 8.15(3) of the Environmental Planning and Assessment Act 1979 in the sum of $20,000.00, payable within 21 days of the date of these orders. (2) The appeal is upheld. (3) Development consent is granted to Development Application DA182/22 for alterations and additions to the existing mixed-use building, including changes to the external façade and building envelope, a swimming pool, and the internal layout to provide a total of four residential units and five retail tenancies at Lot C in Deposited Plan 341833 and Lot 1 in Deposited Plan 430461, also known as 1 Hayes Street, Neutral Bay, subject to the conditions of consent in Annexure A. Catchwords: DEVELOPMENT APPLICATION: alterations and additions to existing mixed use building – effect of proposed development on item of heritage significance – conciliation conference – agreement between parties - orders Legislation Cited: Environmental Planning and Assessment Act 1979, ss 4.16, 4.66, 8.7, 8.15 Environmental Planning and Assessment Regulation 2000 Environmental Planning and Assessment Regulation 2021, ss 29, 38, 163, 164 Land and Environment Court Act 1979, s 34 North Sydney Local Environmental Plan 2001 North Sydney Local Environmental Plan 2013, cll 4.3, 4.4, 4.6, 5.10, 6.9, Sch 5 Standard Instrument (Local Environmental Plans) Amendment (Land Use Zones) Order 2021 State Environmental Planning Policy (Biodiversity and Conservation) 2021, ss 10.10, 10.11, 10.19, 10.23, 10.24 State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004 State Environmental Planning Policy (Resilience and Hazards) 2021, ss 2.10, 2.11, 2.12, 2.13, 4.6 State Environmental Planning Policy Amendment (Land Use Zones) (No 3) 2022 State Environmental Planning Policy No 65 – Design quality of residential apartment development, cll, 28, 30, Sch 1 Cases Cited: Bettar v Council of the City of Sydney [2014] NSWLEC 1070 Big Property Group Pty Ltd v Randwick City Council [2021] NSWLEC 1161 Texts Cited: Apartment Design Guide Category: Principal judgment Parties: 7 Pty Ltd (Applicant) North Sydney Council (Respondent) Representation: Counsel: A Pickles SC (Applicant) K Geraghty (Solicitor) (Respondent) Solicitors: Baron and Associates (Applicant) HWL Ebsworth (Solicitor) (Respondent) File Number(s): 2022/302126 Publication restriction: Nil Judgment 1. COMMISSIONER: This class 1 appeal is brought under s 8.7 of the Environmental Planning and Assessment Act 1979 (EPA Act) following the deemed refusal by North Sydney Council of development application DA182/22 (the DA) seeking consent for alterations and additions to an existing mixed use building, with external façade and building envelope changes and a new swimming pool, and internal demolition and layout changes to provide a total of 3 residential units and 5 retail tenancies at Lot C in DP 341833 and Lot 1 in DP 430461, otherwise known as 1 Hayes Street, Neutral Bay. 2. The Court arranged a conciliation conference under s 34(1) of the Land and Environment Court Act 1979 (LEC Act) between the parties, at which I presided on 31 March 2023. 3. At the conciliation conference, the parties reached in-principle agreement as to the scope of amendments required for the parties to reach terms of a decision in the proceedings that would be acceptable to the parties, subject to time being granted for certain amendments to the development the subject of the development application. 4. I granted the parties an adjournment to permit the preparation of amended plans and other documents. I subsequently granted a further adjournment so that those amendments agreed to between the parties could be incorporated into agreed conditions of consent. 5. This agreement between the parties involves the Court upholding the appeal and granting development consent to the development application subject to those agreed conditions of consent. 6. A signed agreement prepared in accordance with s 34 (10) of the LEC Act was filed with the Court on 24 May 2023. After certain corrections were made, an amended agreement was filed 1 June 2023. 7. The parties ask me to approve their decision as set out in the s 34 agreement before the Court. In general terms, the agreement approves the development subject to amended plans that were prepared by the Applicant, and noting that the final detail of the works and plans are specified in the agreed conditions of development consent annexed to the s 34 agreement. 8. Under s 34(3) of the LEC Act, I must dispose of the proceedings in accordance with the parties' decision if the parties' decision is a decision that the Court could have made in the proper exercise of its functions. The parties' decision involves the Court exercising power under s 4.16 of the EPA Act. In this case, there are jurisdictional prerequisites that must be satisfied before this function can be exercised. The parties explained to me during the conference as to how the jurisdictional prerequisites have been satisfied in order to allow the Court to make the agreed orders at [64], as follows: 9. At the time the DA was lodged, the site was located within the B1 Neighbourhood Centre, according to the North Sydney Local Environmental Plan 2013 (NSLEP). However, on 26 April 2023, the commencement of the Standard Instrument (Local Environmental Plans) Amendment (Land Use Zones) Order 2021, and State Environmental Planning Policy Amendment (Land Use Zones) (No 3) 2022 resulted in the re-zoning of the land to E1 Local Centre with additional zone objectives. 10. Development for the purpose of a residential flat building is prohibited in the E1 zone, as it was in the B1 zone. 11. However, the existing use of the site for the purpose of residential flat building is permitted because such a use was permitted prior to the commencement of the North Sydney Local Environmental Plan 2001 that prohibited such a use from 1 June 2001. 12. It is commonly held that the consent granted to building application BA 38/38 in 1938 establishes use for what is now termed a residential flat building, including residential use of a portion of the ground floor that is an existing use according to the terms of s 4.66 of the EPA Act, and which has not been abandoned. 13. As such, I accept it is lawful for an existing residential use to be altered or rebuilt, pursuant to s 163 of the Environmental Planning and Assessment Regulation 2021 (EPA Regulation), within terms prescribed by s 164 of the EPA Regulation. 14. Furthermore, I record here that those aspects of the proposed development characterised by the NSLEP as commercial premises are permitted with consent in the E1 zone. 15. The objectives of the E1 zone are as follows: • To provide a range of retail, business and community uses that serve the needs of people who live in, work in or visit the area. • To encourage investment in local commercial development that generates employment opportunities and economic growth. • To enable residential development that contributes to a vibrant and active local centre and is consistent with the Council's strategic planning for residential development in the area. • To encourage business, retail, community and other non-residential land uses on the ground floor of buildings. • To encourage active street life while maintaining high levels of residential amenity. • To minimise adverse effects on adjoining residentially zoned land. • To ensure the scale and intensity of non-residential development caters to local needs. 1. The proposed development exceeds the height and floor space ratio provisions at cll 4.3 and 4.4 of the NSLEP, and the Applicant relies upon written requests prepared in accordance with cl 4.6 of the NSLEP in respect of the exceedance of those development standards. The height of building standard is exceeded 1. A height of 8.5m applies to the site, according to the height of building standard at cl 4.3(2) of the NSLEP. The written request seeking to justify the exceedance of the height standard, prepared by GSA Planning dated 24 May 2023 (the height request), describes the proposed height in the following terms: * The proposed development will maintain the overall existing building height of RL13.13 AHD, other than a portion of roof that will exceed the existing height by 650mm. * The northern portion of the proposal will result in an overall height of between 7.55m and 12.03m. * The existing height is maintained to Hayes Street. 1. The height request also states the exceedance is due, in part, to the fall of land evident on the site, and the determination of the existing ground line, in accordance with the Court's decision in Bettar v Council of the City of Sydney [2014] NSWLEC 1070. 2. The height request asserts that compliance with the height standard is unreasonable or unnecessary as the objectives of the standard are achieved, notwithstanding the non-compliance. 3. The relevant objectives of the height standard, at cl 4.3 of the NSLEP are: (a) to promote development that conforms to and reflects natural landforms, by stepping development on sloping land to follow the natural gradient, (b) to promote the retention and, if appropriate, sharing of existing views, (c) to maintain solar access to existing dwellings, public reserves and streets, and to promote solar access for future development, (d) to maintain privacy for residents of existing dwellings and to promote privacy for residents of new buildings, (e) to ensure compatibility between development, particularly at zone boundaries, (f) to encourage an appropriate scale and density of development that is in accordance with, and promotes the character of, an area, … 1. The objectives are said to be achieved in ways summarised as follows: 1. In respect of objective (a), the site's landform has been extensively excavated so that natural landform is no longer discerned. Instead, the proposal steps down to follow the steep gradient of the site. 2. In respect of objective (b), the proposal promotes the retention of views from both the public domain and private properties in the vicinity, including Nos 2, 4, 4A and 9 Hayes Street. Private views will be not be affected, or will be only negligibly affected by the height exceedance when existing views are considered. 3. In respect of objective (c), all areas of additional overshadowing are imposed within the existing site, other than minor overshadowing to the Hayes Street turning head at 9am, and the Neutral Bay wharf at midday. This is offset by reduced overshadowing of the wharf at 3pm. 4. In respect of objective (d), there are no new openings, and no new sightlines created by the exceedance that would give rise to privacy impacts to adjoining properties. 5. In respect of objective (e), the site adjoins R3 Medium density residential zone to the north, in which a height standard of 8.5m also applies. The exceedance is minor and is limited to a portion of the roof to the rear of the site that is below the roof parapet fronting Hayes Street. As such, the exceedance will not be overly discernible from the streetscape or from neighbouring properties. 6. In respect of objective (f), the height request cites the Court's decision in Big Property Group Pty Ltd v Randwick City Council [2021] NSWLEC 1161 to the effect that desired future character is not limited to the building envelope determined by development standards alone. In this case, the minor nature of the exceedance, and its particular location on the site, results in a development that is appropriate in its scale and density when the character of the area is understood. 1. Next, the height request advances environmental planning grounds said to be sufficient to justify the contravention of the height standard, summarised in the following way: 1. The underlying topography is characterised by extensive existing excavation and a fall of 6m across the site. The proposal will largely be perceived above the level of the basement, that otherwise distorts the building height plane when understood from the Hayes Street frontage. The exceedance occurs above an area of excavation and so results in a breach of the height standard, with little visible effect in the streetscape. 2. The proposal is consistent with existing adjoining development of four storeys at No 9 Hayes Street that has a topmost level of 13.45m AHD. The exceedance is below this level, at 12.57m AHD, and is within a stepped form that follows the sloping topography of Hayes Street. When the existing development of three storeys and street level parking is also considered, the proposal maintains the desired future character of the area. 3. The exceedance is located within a portion of the development that is above a ground floor retail space. As such the development answers the description of shop top housing, which is a permitted use within the zone. To require strict compliance with the height standard would require the removal of one storey that would otherwise undermine the objective of the zone to 'encourage development for the purpose of shop top housing'. 4. The height exceedance arises from the increase in internal ceiling height from 2.3m to 2.7m that will improve the internal amenity for occupants. 5. The exceedance does not result in adverse environmental impacts. 6. The proposal presents as a two-storey development, wholly within the height plane. The exceedance is not visible in the Hayes Street streetscape. 1. Finally, the height request asserts consistency with the objectives of the zone, at [15], because the development: * Retains five retail tenancies at the ground floor to serve the needs of people, encourage business and generate employment opportunities and economic growth. * Replaces an ageing building with similar uses in a contemporary building that increases internal ceiling heights to improve the amenity for residents in a manner that is consistent with the existing and emerging character of Hayes Street. * Activates the street frontage, provide a new awning and relocate the existing driveway away from the centre of the site. * Does not imposes adverse impacts on adjoining residentially zoned land such as overshadowing, privacy or view impacts. 1. I note here that the Respondent is satisfied that the height request adequately addresses the matters required to be demonstrated by cl 4.6(3) of the NSLEP, and that the proposed development, as amended, will be in the public interest because it is consistent with the objectives of the height development standard and the objectives for development in the E1 Local Centre Zone. 2. Furthermore, the Respondent does not contend that the contravention of the development standard raises any matter of significance for State or regional environmental planning, or that there is any public benefit in maintaining the development standard, pursuant to cl 4.6(5) of the NSLEP. 3. Accordingly, the Respondent raises no issue regarding cl 4.6 and accepts that a variation of the height development standard under cl 4.3 is justified. 4. I am satisfied under cl 4.6(4) that the height request has adequately addressed the matters required to be demonstrated by subcl (3) and that the proposed development will be in the public interest because it is consistent with the objectives of the height development standard and the objectives for development within the E1 Zone, for the reasons given in the request. 5. In forming this opinion of satisfaction, I accept that the proposed development is substantially contained within the height plane at cl 4.3 of the NSLEP, that also applies to any form of development permissible in the surrounding neighbourhood within the E1 zone, and that the external form of the development substantially retains the envelope of the existing building on the site. 6. I have also considered whether the contravention of the development standard raises any matter of significance for State or regional environmental planning, and the public benefit of maintaining the development standard, pursuant to cl 4.6(5) of the NSLEP and I find there are no grounds on which the Court should not uphold the height request. The Floor Space Ratio standard is exceeded 1. The site is subject to a floor space ratio standard of 1:1, according to cl 4.4(2) of the NSLEP. The proposal exceeds the Floor Space Ratio (FSR) standard, and the Applicant relies upon a written request prepared by GSA Planning dated May 2023 in accordance with cl 4.6 of the NSLEP seeking to justify the contravention (FSR Request). 2. The FSR Request considers the FSR of the existing building to be 1.96:1, and states that the proposal will result in a reduction of 3.8m2 in gross floor area (GFA), resulting in a FSR of 1.96:1. 3. The FSR request asserts that compliance with the height standard is unreasonable or unnecessary as the objectives of the standard are achieved, notwithstanding the non-compliance. 4. The objectives of the FSR standard, at cl 4.4 of the NSLEP are: (a) to ensure the intensity of development is compatible with the desired future character and zone objectives for the land, (b) to limit the bulk and scale of development. 1. In respect of objective (a), the FSR Request cites the wide range of uses permitted in the E1 Local Centre zone, resulting in a desired future character that is said to be eclectic. Consistent with this, the proposed development retains the mixed-use nature of the development that will contribute to the surrounding high density residential (R4), Public Recreation (RE1) and Local Centre (E1) zones. Given the proposal is to reduce the GFA, the intensity of development on the site is less than the existing development, and so will remain compatible within the streetscape and the locality. 2. In respect of objective (b), the existing bulk and scale is largely retained when viewed from both Hayes Street, and the harbour. Accordingly, the impacts of the bulk and scale of the development are likewise consistent with the existing bulk and scale. 3. Next, the FSR Request advances two environmental planning grounds it considers to be sufficient to justify the contravention of the FSR standard, summarised as follows: 1. Firstly, as the existing building does not comply with the FSR standard, strict compliance would require the removal of GFA in the form of demolition of upper levels, where residential use is located. This would have the effect of undermining the objective of the E1 zone to 'enable residential development that contributes to a vibrant and active local centre and is consistent with the Council's strategic planning for residential development in the area.' 2. Secondly, the proposed development will not result in material environmental impacts in terms of solar access, views, visual or acoustic privacy and the Court has regularly held that lack of impact on its own can be a sufficient environmental planning ground within the terms of cl 4.6(3)(b) of the NSLEP. 1. Finally, the FSR Request asserts consistency with the objectives of the zone, at [15], for reasons that are identical to those at [23]. 2. I note here that the Respondent is satisfied that the FSR Request adequately addresses the matters required to be demonstrated by cl 4.6(3) of the NSLEP, and that the proposed development, as amended, will be in the public interest because it is consistent with the objectives of the FSR development standard and the objectives for development in the E1 Local Centre Zone. 3. Furthermore, the Respondent does not contend that the contravention of the development standard raises any matter of significance for State or regional environmental planning, or that there is any public benefit in maintaining the development standard, pursuant to cl 4.6(5) of the NSLEP. 4. Accordingly, the Respondent raises no issue regarding cl 4.6 and accepts that a variation of the FSR development standard under cl 4.3 is justified. 5. I am satisfied under cl 4.6(4) that the FSR Request has adequately addressed the matters required to be demonstrated by subcl (3) and that the proposed development will be in the public interest because it is consistent with the objectives of the FSR development standard and the objectives for development within the E1 Zone, for the reasons given in the request. 6. In forming this opinion of satisfaction, I accept that the proposed development reduces the GFA from that of the existing building on the site, and that the external form of the development substantially retains the envelope of the existing building on the site. 7. I have also considered whether the contravention of the development standard raises any matter of significance for State or regional environmental planning, and the public benefit of maintaining the development standard, pursuant to cl 4.6(5) of the NSLEP and I find there are no grounds on which the Court should not uphold the height request. Other provisions of the North Sydney Local Environmental Plan 2013 1. The site is identified in Sch 5 of the NSLEP as an item of local heritage significance, identified as, and contiguous with, the Neutral Bay Wharf (I0627). The site is also opposite the properties known as 'The Hastings', a state heritage item (I0628) and 'Kcot-Sedar', a local heritage item (I0629). 2. The site is also located within the Kurraba Point Heritage Conservation Area (Kurraba HCA). 3. On the basis of the conclusions and recommendations contained in the Heritage Impact Statement, prepared by Urbis dated 2 May 2022, and the amendments subsequently agreed between the relevant experts, I accept the conclusion of the parties that the effect of the proposed development is not detrimental to the item itself, or those items of heritage in the vicinity of the site, or in respect of the Kurraba HCA, pursuant to cl 5.10 of the NSLEP. 4. I also record here that while the site adjoins what is known as the Hayes Street beach, the site is not identified on the Foreshore Building Line Map to which the provisions at cl 6.9 of the NSLEP are directed. State Environmental Planning Policy No 65 - Design Quality of Residential Apartment Development 1. On the basis of the design statement authored by Mr Brian Bass, architect, on behalf of Popov Bass dated 24 May 2023 (the design statement), and prepared in accordance with s 29 of the EPA Regulation, I accept that the proposal has addressed the design quality principles contained at Schedule 1 of State Environmental Planning Policy No 65 – Design quality of residential apartment development (SEPP 65), as required by cl 28 of SEPP 65, and relevant parts of the Apartment Design Guide, which also satisfies me as to those matters about which I must form an opinion at cl 30(2) of SEPP 65. State Environmental Planning Policy (Resilience and Hazards) 2021 1. While the site is within the coastal environment area at s 2.10 of State Environmental Planning Policy (Resilience and Hazards) 2021 (RH SEPP), s 2.10(3) excludes the provisions where the land is within the Foreshore and Waterways Area as defined by Chapter 6 of State Environmental Planning Policy (Biodiversity and Conservation) 2021 (BC SEPP). 2. Likewise, while the site is located within the coastal use area at s 2.11 of the RH SEPP, operation of those provisions is excluded by s 2.11(2) in the same terms. 3. Given the proposal is within the footprint of the existing building, and works are proposed to improve water tightness of openings at the basement level of the proposed development, I accept the proposed development is not likely to cause increased risk of coastal hazards in accordance with s 2.12 of the RH SEPP. 4. Section 2.13 of the RH SEPP requires consideration of relevant provisions of any certified coastal management programs applicable to the land. However, as there are no such applicable programs, there are no programs that require consideration. 5. The DA is supported by a Preliminary Site Investigation (PSI) of a kind required by s 4.6 of the RH SEPP, prepared by EI Australia dated 22 April 2022. I accept the conclusion of the PSI that the site is suitable for the proposed development, and I note the recommendations contained in the PSI are incorporated in the agreed conditions of consent. State Environmental Planning Policy (Biodiversity and Conservation) 2021 1. The site is within the Sydney Harbour Catchment. Chapter 10 of the BC SEPP applies by virtue of the date the DA was lodged. 2. Chapter 10 contains objectives and planning principles that have been considered by the parties. 3. As the proposal is for alterations and additions to the upper levels of an existing building, the hydrological, ecological and geomorphological processes of Sydney Harbour will be protected, natural assets of the catchment maintained and cumulative impacts of the proposed development minimised in accordance with the principles at s 10.10 of the BC SEPP. 4. Section 10.11 of the BC SEPP sets out planning principles for the Foreshore and Waterways Area cited at [49] that I accept have been considered for reasons similar to those summarised above. 5. In respect of those matters at s 10.19 of the BC SEPP, I note advice from H&H Consulting Engineers Pty Ltd dated 30 May 2023 (Engineer's letter) that, as there is no increase in the catchment area of the roof, post development flows into Sydney Harbour do not exceed pre-development flows. Furthermore, runoff from the basement car park in the form of gross pollutants, fine sediments and oils are to be captured and treated prior to discharge by a pump out system described in the Engineer's letter, and at condition G12 of the agreed conditions of consent. 6. For reasons summarised at [21(5)], I accept that the scenic qualities of Sydney harbour and the views to and from the harbour have been considered in developing the proposal in accordance with ss 10.23 and 10.24 of the BC SEPP. State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004 1. I am satisfied that the application is accompanied by a BASIX certificate (Cert No. 1297017M_02 dated 15 May 2023, prepared by EMF Griffiths in accordance with State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004 and the Environmental Planning and Assessment Regulation 2000 (EPA Regulation). Conclusion 1. As the parties' decision is a decision that the Court could have made in the proper exercise of its functions, I am required under s 34(3) of the LEC Act to dispose of the proceedings in accordance with the parties' decision. 2. In making the orders to give effect to the agreement between the parties, I was not required to, and have not, made any merit assessment of the issues that were originally in dispute between the parties. 3. The Court notes that: 1. The Respondent, as the relevant consent authority, has agreed under s 38 of the EPA Regulation to the Applicant amending Development application No DA182/22 to rely on the plans and documents listed in Annexure B. 2. The Applicant filed the plans and documents in Annexure B with the Court on 24 May 2023. 3. The parties agree that the Applicant's written requests pursuant to cl 4.6 of the NSLEP, seeking a variation to the development standards for FSR in cl 4.4 and height of buildings in cl 4.3 should be upheld. Orders 1. The Court orders that: 1. The Applicant is to pay the Respondent's costs thrown away by reason of the amendments referred to in Annexure B in accordance with s 8.15(3) of the Environmental Planning and Assessment Act 1979 in the sum of $20,000.00, payable within 21 days of the date of these orders. 2. The appeal is upheld. 3. Development consent is granted to Development Application DA182/22 for alterations and additions to the existing mixed-use building, including changes to the external façade and building envelope, a swimming pool, and the internal layout to provide a total of four residential units and five retail tenancies at Lot C in Deposited Plan 341833 and Lot 1 in Deposited Plan 430461, also known as 1 Hayes Street, Neutral Bay, subject to the conditions of consent in Annexure A. T Horton Commissioner of the Court ********** Annexure A 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: 13 June 2023