Land and Environment Court New South Wales Medium Neutral Citation: Petersen Property Pty Ltd ATF Petersen Property Unit Trust v Council of the City of Sydney [2023] NSWLEC 1443 Hearing dates: Conciliation conference on 30 May 2023 Date of orders: 10 August 2023 Decision date: 10 August 2023 Jurisdiction: Class 1 Before: O'Neill C Decision: The orders of the Court are: (1) The Applicant is to pay those costs of the Respondent thrown away as a result of the amendment of the application, in the sum of $7,700, within 28 days of the date of these orders. (2) The appeal is upheld. (3) Development Application No D/2022/200 for alterations and addition to a commercial development at 2 Foster Street, Surry Hills, NSW 2010 (legally known as Lot 1 in DP 1186940) as amended, is approved, subject to the conditions of consent at Annexure A. Catchwords: DEVELOPMENT APPLICATION – alterations and additions to an existing hotel – conciliation conference – agreement between the parties - orders Legislation Cited: Environmental Planning and Assessment Act 1979, ss 4.16, 8.7 Environmental Planning and Assessment Regulation 2021, s 37 Environmental Planning and Assessment Regulation 2021, s 4.6 Land and Environment Court Act 1979, ss 34, 39 State Environmental Planning Policy Amendment (Land Use Zones) (No 6) 2022 Sydney Local Environmental Plan 2012, cl 1.8A, 4.3, 4.6, 5.10, 6.21C Cases Cited: Cumming v Cumberland Council (No 2) [2021] NSWLEC 117 Four2Five Pty Ltd v Ashfield Council [2015] NSWLEC 90 Initial Action Pty Ltd v Woollahra Municipal Council (2018) 236 LGERA 256; [2018] NSWLEC 118 RebelMH Neutral Bay Pty Limited v North Sydney Council [2019] NSWCA 130 Wehbe v Pittwater Council (2007) 156 LGERA 446; [2007] NSWLEC 827 Category: Principal judgment Parties: Petersen Property Pty Limited (Applicant) Council of the City of Sydney (Respondent) Representation: Counsel: A Whealy (Solicitor) (Applicant) A Singh (Solicitor) (Respondent) Solicitors: Mills Oakley (Applicant) Council of the City of Sydney (Respondent) File Number(s): 2022/352089 Publication restriction: No Judgment 1. COMMISSIONER: This is an appeal pursuant to the provisions of s 8.7(1) of the Environmental Planning and Assessment Act 1979 (EPA Act) against the refusal of Development Application No D/2022/200 for alterations and addition to the existing building known as the Hollywood Hotel, including partial demolition and construction of a two storey addition, retaining the pub use on the basement and ground floor levels (the proposal), at 2 Foster Street, Surry Hills (the site), by the Council of the City of Sydney (the Council). 2. The Court arranged a conciliation conference under s 34 of the Land and Environment Court Act 1979 (LEC Act) between the parties, which was held on 30 May 2023. I presided over the conciliation conference. At the conciliation conference, the parties reached agreement as to the terms of a decision in the proceedings that would be acceptable to the parties. 3. 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 the function under s 4.16 of the EPA Act to grant consent to the development application. 4. There are preconditions to the exercise of power to grant development consent for the proposal. Amended Plans 1. Pursuant to s 37(1) of the Environmental Planning and Assessment Regulation 2021, the Council, as the consent authority, consented to the amendment of the application (the plans and documents of the amended application are listed under Pt A, Condition 1 of the Conditions of Consent at Annexure A). Jurisdictional prerequisites 1. The current use is a long-term use and the site is suitable for the development, pursuant to s 4.6 of State Environmental Planning Policy (Resilience and Hazards) 2021. 2. The site was zoned B4 Mixed Use at the time the application was lodged (cl 1.8A of Sydney Local Environmental Plan 2012 (LEP 2012)). State Environmental Planning Policy Amendment (Land Use Zones) (No 6) 2022 commenced on 26 April 2023 and amended the zone applying to the site to MU1 Mixed Use without a savings provision for applications lodged and not yet determined. The objectives of the MU1 zone, to which regard must be had, are: • To encourage a diversity of business, retail, office and light industrial land uses that generate employment opportunities. • To ensure that new development provides diverse and active street frontages to attract pedestrian traffic and to contribute to vibrant, diverse and functional streets and public spaces. • To minimise conflict between land uses within this zone and land uses within adjoining zones. • To encourage business, retail, community and other non-residential land uses on the ground floor of buildings. • To ensure land uses support the viability of nearby centres. • To integrate suitable business, office, residential, retail and other land uses in accessible locations that maximise public transport patronage and encourage walking and cycling. 1. The site is a local heritage item (Item 1544, Sch 5 to LEP 2012) "Hollywood Hotel including interior". Pursuant to cl 5.10(4) of LEP 2012, the consent authority, or the Court exercising the functions of the consent authority, must consider the effect of the proposal on the significance of the heritage item. I accept the analysis and conclusion of the Statement of Heritage Impact prepared by TKD Architects and dated December 2021 that the proposal has been designed to avoid, minimise or mitigate potential adverse impact on its heritage significance as much as possible. The report concludes that the proposed works to the Hollywood Hotel are acceptable and will not reduce the building's heritage significance. 2. I am satisfied that the proposal achieves design excellence pursuant to cl 6.21C of LEP 2012, for the reasons set out in the Statement of Environmental Effects (SEE) prepared by Perica & Associates and dated 11 May 2023, which addresses each of the matters listed under cl 6.21C(2) of LEP 2012. I adopt the reasoning of the SEE in relation to design excellence. Contravention of the height of buildings development standard 1. The proposal has a maximum height of 18.3m above existing ground level. The height of buildings development standard for the site is 18m pursuant to cl 4.3 of LEP 2012. The relevant objectives of the height of buildings development standard, at cl 4.3(1) of LEP 2012, are: 4.3 Height of buildings … (a) to ensure the height of development is appropriate to the condition of the site and its context, (b) to ensure appropriate height transitions between new development and heritage items and buildings in heritage conservation areas or special character areas, (c) to promote the sharing of views outside Central Sydney, 1. The applicant provided a written request seeking to justify the contravention of the height of buildings development standard, prepared by Perica & Associates and dated 11 May 2023. 2. Clause 4.6(4) establishes preconditions that must be satisfied before a consent authority, or the Court exercising the functions of a consent authority, can exercise the power to grant development consent (Initial Action Pty Ltd v Woollahra Municipal Council (2018) 236 LGERA 256; [2018] NSWLEC 118 at [13] ("Initial Action")). The consent authority must form two positive opinions of satisfaction under cl 4.6(4)(a). As these preconditions are expressed in terms of the opinion or satisfaction of a decision-maker, they are a "jurisdictional fact of a special kind", because the formation of the opinion of satisfaction enlivens the power of the consent authority to grant development consent (Initial Action [14]). The consent authority, or the Court on appeal, must be satisfied that the applicant's written request has adequately addressed the matters required to be addressed by cl 4.6(3) and that the proposal will be in the public interest because it is consistent with the objectives of the contravened development standard and the zone, at cl 4.6(4), as follows: 4.6 Exceptions to development standards … (4) Development consent must not be granted for development that contravenes a development standard unless: (a) the consent authority is satisfied that: (i) the applicant's written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and (b) the concurrence of the Secretary has been obtained. 1. On appeal, the Court has the power under cl 4.6(2) to grant consent to development that contravenes a development standard without obtaining or assuming the concurrence of the Secretary of the Department of Planning and Environment, pursuant to s 39(6) LEC Act, but should still consider the matters in cl 4.6(5) of LEP 2012 (Initial Action at [29]). The applicant's written request to contravene the height of buildings development standard 1. The first opinion of satisfaction required by cl 4.6(4)(a)(i) is that the applicant's written request seeking to justify the contravention of a development standard has adequately addressed the matters required to be demonstrated by cl 4.6(3) (see Initial Action at [15]), as follows: 4.6 Exceptions to development standards … (a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and (b) that there are sufficient environmental planning grounds to justify contravening the development standard 1. The applicant bears the onus to demonstrate that the matters in cl 4.6(3) have been adequately addressed by the written request in order to enable the Court, exercising the functions of the consent authority, to form the requisite opinion of satisfaction (Initial Action at [25]). The consent authority has to be satisfied that the applicant's written request has in fact demonstrated those matters required to be demonstrated by cl 4.6(3) and not simply that the applicant has addressed those matters (RebelMH Neutral Bay Pty Limited v North Sydney Council [2019] NSWCA 130 at [4]). 2. The common ways in which an applicant might demonstrate that compliance with a development standard is unreasonable or unnecessary are summarised by Preston CJ in Wehbe v Pittwater Council (2007) 156 LGERA 446; [2007] NSWLEC 827 at [42]-[51] ("Wehbe") and repeated in Initial Action [17]-[21]: 1. the objectives of the development standard are achieved notwithstanding non-compliance with the standard; 2. the underlying objective or purpose of the development standard is not relevant to the development, so that compliance is unnecessary; 3. the underlying objective or purpose would be defeated or thwarted if compliance was required, so that compliance is unreasonable; 4. the development standard has been abandoned by the council; 5. the zoning of the site was unreasonable or inappropriate so that the development standard was also unreasonable or unnecessary (note this is a limited way of establishing that compliance is not necessary as it is not a way to effect general planning changes as an alternative to strategic planning powers). 1. The five ways to demonstrate compliance is unreasonable/unnecessary are not exhaustive, and it may be sufficient to establish only one way (Initial Action [22]). 2. The applicant's written request justifies the contravention of the height of buildings development standard on the basis that compliance is unreasonable or unnecessary because the exceedance is confined to a small corner of the parapet at the lowest point on the site, where the addition abuts the adjoining building. 3. The grounds relied on by the applicant in the written request under cl 4.6 must be "environmental planning grounds" by their nature, and environmental planning grounds is a phrase of wide generality (Four2Five Pty Ltd v Ashfield Council [2015] NSWLEC 90 at [26]) as they refer to grounds that relate to the subject matter, scope and purpose of the EPA Act, including the objects of the Act (Initial Action at [23]). The environmental planning grounds relied upon must be sufficient to justify contravening the development standard and the focus is on the aspect of the development that contravenes the development standard, not the development as a whole (Initial Action at [24] and Cumming v Cumberland Council (No 2) [2021] NSWLEC 117 at [78]). Therefore, the environmental planning grounds advanced in the written request must justify the contravention of the development standard and not simply promote the benefits of carrying out the development as a whole (Initial Action at [24]). 4. I am satisfied, pursuant to cl 4.6(4)(a)(i), that the applicant's written request has adequately addressed the matters required to be demonstrated by cl 4.6(3). I am satisfied that justifying the aspect of the development that contravenes the development standard as an appropriate height transition to the adjoining building for the purpose of concealing the blank wall on the shared boundary can be properly described as an environmental planning ground within the meaning identified by his Honour in Initial Action at [23]. Whether the proposal is in the public interest because it is consistent with the objectives of the contravened development standard and the zone 1. The second opinion of satisfaction in cl 4.6(4)(a)(ii) is that the proposed development will be in the public interest because it is consistent with the objectives of the development standard that is contravened and the zone objectives. The consent authority must be satisfied that the development is in the public interest because it is consistent with these objectives, not simply that the development is in the public interest (Initial Action at [27]). The consent authority must be directly satisfied about the matters in cl 4.6(4)(a)(ii) (Initial Action at [26]). 2. I accept and adopt the reasoning set out in the written request. I am satisfied that the proposal is consistent with the zone and development standard objectives under LEP 2012. Conclusion 1. I have considered the submissions made by the Council in the Jurisdictional Statement and Statement of Reasons for entering into the agreement, filed with the Court on 3 July 2023, and I am satisfied on the basis of the evidence before me that the agreement of the parties is a decision that the Court could have made in the proper exercise of its functions. Orders 1. The orders of the Court are: 1. The Applicant is to pay those costs of the Respondent thrown away as a result of the amendment of the application, in the sum of $7,700, within 28 days of the date of these orders. 2. The appeal is upheld. 3. Development Application No D/2022/200 for alterations and addition to a commercial development at 2 Foster Street, Surry Hills, NSW 2010 (legally known as Lot 1 in DP 1186940) as amended, is approved, subject to the conditions of consent at Annexure A. Susan O'Neill 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: 10 August 2023