Land and Environment Court of New South Wales CITATION : Cowman Stoddart Pty Ltd v Shoalhaven City Council [2006] NSWLEC 4 APPLICANT PARTIES : Cowman Stoddart Pty Ltd RESPONDENT Shoalhaven City Council FILE NUMBER(S) : 10787 of 2005 CORAM: Hoffman C KEY ISSUES: Development Application :- Change of use - supply of holiday accommodation versus permanent residential use - site area - landscaped area - objectives of the Zone 3(g) Development Area - coastal vegetation protection LEGISLATION CITED: Shoalhaven Local Environmental Plan 1985 Jervis Bay Regional Environmental Plan 1996 DATES OF HEARING: 31/10/2005 DATE OF JUDGMENT: 01/12/2006 APPLICANT Mr P Moggach, solicitor LEGAL REPRESENTATIVES: Of: Kearns & Garside RESPONDENT Mr G Gleeson, solicitor Of: Morton & Harris JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Hoffman C 12 January 2006 10787 of 2005 Cowman Stoddart Pty Limited v Shoalhaven City Council JUDGMENT 1 This is a Class 1 appeal No. 10787 of 2005 between Cowman Stoddart Pty Limited and Shoalhaven City Council, in regard to the refusal of a change of use proposal for Units 5-11 inclusive and Units 13 and 14 at No. 6-10 Monarch Place, Callala Bay. Its legal title is Strata Plan SP69928. 2 Those units currently had consent only for short term tourist accommodation. 3 The change of use proposed was to allow both permanent residential and short term holiday accommodation in those units. Unit 12 is the manager's flat and is already permitted to be permanent residential occupation. 4 The apartments are in a building of 2-storeys above basement carparking at Lot 1 DP 1040899 being No. 6-10 Monarch Place, Callala Bay. In 2 other buildings on the site are Units 1-4 and Units 15 and 16. They are all 2 storey-townhouses and are already permitted to be permanent dwellings but some are used as weekenders. 5 All the units face a public beachfront reserve at the mouth of Wowly Creek. The reserve is heavily vegetated. Wowly Creek is a popular swimming place in summer for families with young children. The main access to the creek is via Monarch Place where there is a small public car park. 6 The site is zoned No. 3(g) Business Development Area under the Shoalhaven Local Environmental Plan 1985. 7 On the south side of the site is another development of 7 townhouses with access from a street called Superb Crescent. Some of the townhouses face a continuation of the public beachfront reserve facing Jervis Bay. They are available for permanent residential use but several are used as weekenders. On the west of the site are 4 vacant residential size lots also fronting Superb Crescent. These neighbouring developments are zoned Residential 2(a1). Further west and south are detached houses and cottages in the same residential zone. 8 To the north of the site is vacant bush and heath land zone No. 7(f3) Environmental Protection. The roadway of Monarch Place and the public carpark are in that zone also. 9 East of the site is zone 7(f1) Coastal and that comprises the beach and reserves. 10 The subject site has only a narrow frontage to Monarch Place but has quite a large area of 4330 sq m. It is an irregular shaped allotment and relatively flat. 11 Part of the history of the site is that it and the land comprising the foreshore reserve, the townhouses on the south and the residential lots to the west on Superb Crescent over to Sealark Road were originally a single allotment and zoned 3(g) Business Development Area. That zone was described to me as being for mixed use tourist facilities. It came into existence in 1985. 12 In 1993 a subdivision application was lodged that brought about the current layout of the area between Sealark Road and Wowly Creek and Jervis Bay. There has been no development control plan for that area adopted by the Shoalhaven City Council. But the original developers plan envisaged that within that larger area, the subject site and part of the beach would be a yacht club with a small piece of public reserve on the north side to give public access to Wowly Creek from Monarch Place. The subdivision was refused and appealed in 1993. Before the hearing, the appeal was mediated and consent orders drawn up by agreement between the council and the then owner. The Court granted the consent orders for the subdivision. 13 In 1994 the area of zone 3(g) land was reduced by council to be only the subject site with the small piece at the northern end zoned 7(f1) Public Reserve. Also in the re-zoning some of the existing foreshore reserves to Wowly Creek and Jervis Bay beach front that had been dedicated by the then owner were also zoned as Reserve. The Yacht Club site retained some land including some of the beach front at that time to give access to water. 14 In 2001 an application for a sailing club and 16 tourist accommodation units was refused by the council and then appealed to the Court. During the proceedings that application was amended to remove the club house and dedicate additional foreshore reserve land on the beach front and to provide the existing mixture of 6 townhouses as permanent residential occupancies and 9 apartments as short term tourist accommodation with 1 apartment as a manager's flat permanent occupancy. 15 In the last approval the extent of additional foreshore reserve dedication was 3655 sq m and the subject site was left with 4330 sq m. 16 The issues in the appeal are: 1. Non-compliance with cl 17 of Jervis Bay Regional Environmental Plan 1996. 1.1 The proposal is not consistent with the instrument in that it does not contribute to the variety of accommodation for tourist visitors. The deletion of the requirement to provide a specified number of units for tourist accommodation necessarily derogates from the intent of the instrument. 2. Non-compliance with DCP 71 (Medium Density Code). 2.1 The proposal does not comply with the site density performance criteria specified in the DCP which requires for a development of this scale to have a minimum site area of 5,180 sq m. The site has an available area of 4,330 sq m. 2.2 The proposal does not comply with the landscape design performance criteria specified in the DCP which requires a total landscaped area of 1,880 sq m. The existing development has a total landscaped of 1,724 sq m. 3. Public Interest 3.1 This development should not be approved because it proposes to convert the existing development from a mixed use development to a wholly medium density residential development. Having regard to the circumstances of the case, approval would be contrary to the objectives of the 3(g) zone. 17 The respondent's evidence was heard from: o Mrs D. Krome, the president of the Callala Bay Progress Association. o Ms T. Brealey, local resident and member of the Progress Association. o Mr G. A. Debnam, consultant town planner. 18 The applicant's evidence was heard from: o Mr S. Richardson, consultant town planner. 19 Mrs Krome had a long association with Callala Bay and was authorised to speak for the Progress Association. Years ago there was a sign at the site on Sealark Road saying it was a public reserve and people used it that way to enjoy Wowly Creek. That concept had persisted in local peoples minds and motivated the Progress Association to have opinions about the various proposals for the site over the years. It had sought to retain public access to Wowly Creek and the beach as a result. The Yacht Club proposal originally had the 3,655 sq m of beach that was the last land to be dedicated. The beach front land attached to the Yacht Club would have given access to Jervis Bay. When the Yacht Club concept disappeared the Progress Association pressed the owner for the dedication. 20 As a result the Progress Association has an interest in the foreshore reserves and the maintenance of the vegetation on them, all along beach front not just at the subject site. The Progress Association also supported the 3(g) Business Zone as a potential site for tourist and commercial development to bring employment and facilities to the Bay. 21 Mrs Krome and the Association had noticed where there were permanent residential dwellings adjacent to foreshore reserves, the vegetation suffered. Whilst no one had ever been apprehended, it was obvious people cleared the reserve to obtain views to the water. Where there was holiday accommodation this did not seem to happen, possibly because short term holiday makers accepted the vegetation as it was. 22 Mrs Krome, Mrs Brealey and the Progress Association feared that if the apartments in this proposal became permanent dwellings the remaining vegetation on the beach reserve in front of them would suffer also. 23 In regard to the Progress Association supporting the promotion of Callala Bay as a tourist destination to encourage local employment, the Zone 3(g) Land was the only area that comprehensive tourist facilities could be built upon. The Association saw the current proposal to allow permanent residential use of the tourist units as the end of the possibilities for the 3(g) zone to attract a major tourist facility. 24 Mrs Krome also mentioned that she had observed holiday makers who did use the development. They often brought with them jet skiis and boats on trailers and there could be several cars per apartment when families or friends combined for a holiday. 25 At peak periods the on-site carparking could not accommodate the demand and the people parked these items in the Monarch Place public carpark. This restricted parking and access to Wowly Creek for other residents of Callala Bay. 26 Despite this disadvantage to the local residents, the Progress Association in its letter of the 3 March 2005 to the council pressed the applicable development control plan controls, and the conditions of consent, and the Zone 3(g) objectives that require the development to contain short term tourist accommodation. To allow what was now proposed was contrary to those controls and statute the Progress Association thought. 27 The respondent submitted that the applicant in the original consent for the mixed tourist and medium density residential development had agreed in a legal deed with the council to Condition 4 of the consent. That condition restricted the occupation of Apartments 5, 6, 7, 8, 9, 10, 11, 13 and 14 to no more than six consecutive weeks by any person, and no more than a total of 150 days in any one year by any person. Those restrictions were agreed to be on title via s 88B Instrument under the Conveyancing Act. 28 The applicant put that the deed related to arrangements for the dedication of the 3,655 sq m of foreshore land and the payment of s 94 Contributions provided a consent was issued for the amended plans at that time. Once consent was issued, and the development built and occupied, and the dedication of the foreshore land and subdivision of the proposal were completed, the applicant said that deed was exhausted. 29 The deed was in evidence and upon reading of it I agree with the applicant that the deed is exhausted, and what is left is the conditions of consent, and the s 88B Instrument on title. 30 In Exhibit 6 the bundle of respondent's documents was a copy of Strata Plan SP69928 for the subject site. It referred to the intention to create a s 88B Instrument for the purposes of: 1. Restriction of the use of land and 2. Right of access 0.5 m wide as set out in the accompanying instrument approved by the Shoalhaven City Council. 31 A copy of the s 88B was not included in Exhibit 6. When I asked if any approval by the Court in this appeal would be compromised by the s 88B Instrument the respondent made no submissions. The applicant said a Court approval would not be compromised. 32 The draft conditions filed by the respondent provided for the amendment of the s 88B. 33 Planning experts Mr Richardson for the applicant and Mr Debnam for the respondent had conferenced before the hearing and provided a joint report in Exhibit 7. 34 Mr Richardson said the so called shortfall in landscaped area under Development Control Plan 71 (DCP 71) is only a minor amount of 156 sq m. The site provides 1,724 sq m of landscaped area. The mathematical discrepancy on site area is larger. The calculation for all permanent dwellings on the site versus the current mix of short term and permanent would require 5,180 sq m. The actual lot area of SP69928 is 4,330 sq m. But Mr Richardson said at the time of the original approval the site contained foreshore land that was dedicated as public reserve and the site was then 7,985 sq m. That was well in excess of the current calculation of 5,180 sq m. 35 The council accepted that the total site at the time of approval was 7,985 sq m and that gave the development its landscape setting and recreation area it still possesses. It will always have that setting and recreation area because the public reserve is available to occupants of the proposal as well as everyone in Callala Bay. 36 Mr Debnam said using the past dedication to justify the shortfall in site area and landscape area would be double dipping. Mr Richardson said it was reasonable that the benefit of dedication was accepted by the council and there was a subdivision to permit it. The original site area should be taken into account still. 37 Mr Debnam said that in fact the original development with seven permanent occupancy dwellings complied with the site area and landscaped area requirements of DCP 71. Mr Richardson said that calculation left out the nine short term occupancy apartments, and that DCP 71 allowed for alternate "acceptable solutions" to the mathematical calculations of minimum area. Also the "acceptable solutions" used as examples in DCP 71 were not the only solutions permitted. They were only examples. They were not prescriptive statutory areas, nor even performance criteria in the DCP 71. Mr Richardson said the council previously agreed that the 7 permanent and 9 short term accommodation units plus the dedication of foreshore reserve constituted an alternate "acceptable solution" that should not now be found unacceptable. 38 In any case DCP 71 CL 3.1.4 allowed a 20% bonus increase in density where underground carparking is provided. The site has underground carparking. 39 Mr Richardson agreed in cross examination he had not been party to the original negotiations to know if that had been the council's reasoning. Nevertheless the purposes of the density control were in s 3.1.3 of DCP 71 and stated: To ensure that the building bulk of new development is compatible with the existing or desired future character of the locality. The scale of new development is compatible with and sympathetic to the scale and bulk of existing development in the locality, particularly on the perimeter of the development site, or where the locality or development site has some heritage significance or other distinctive character. 40 The two experts agreed these were the key purposes of the controls on the minimum areas and they did enable alternate "acceptable solutions" and that the existing buildings achieved those performance criteria. 41 It was the proposed use that two experts disagreed upon. Mr Debnam saying the statutory objective of Zone 3(g) was not achieved by allowing permanent occupation of the nine units. The objective of the Zone 3(g) is: To provide a strategic development area providing both for a variety of uses and for varying combinations of such uses including high density residential, commercial and tourist combinations, but not including ordinary retail uses that would compete with the local retail centre. The development is subject to a development control plan which will give guidelines for the type and scale of development. 42 Council had prepared a policy statement only for the site on 2 July 1985 which had three objectives: (a) To provide a yacht club; (b) The site should not be used for retail that would conflict with a proposed shopping centre between Callala Bay and the beach; (c) To provide public access to the foreshore and Wowly Creek. 43 Objectives (b) and (c) were complied with and objective (a) abandoned. 44 The only other relevant provisions are in the Jervis Bay Regional Environmental Plan 1996. 45 Mr Debnam noted the applicant in its original application stated the site is one of the few foreshore opportunities for short term accommodation. Clause 17 of the Jervis Bay Regional Environmental Plan 1996 says in effect that tourism proposal should achieve a variety of activities for visitors, a variety of accommodation for visitors and contribute to the visitor appreciation of the natural and cultural values of Jervis Bay. 46 Mr Debnam went to the definition of tourist accommodation. In the Shoalhaven Local Environmental Plan 1985 and it stated: Tourist accommodation unit means a dwelling used, designed, constructed or adapted to be used for the provision of holiday accommodation, not permanent accommodation, being one of a group of similar dwellings forming part of a tourist facility. 47 He said the proposal could not be that if it became permanent occupation use and the existing development would not be a tourist facility any longer. 48 Mr Richardson noted the objectives of the 3(g) zone did not specifically require tourist accommodation in any single development. And in any case the existing development consent was not for that, it was approved for mixed use tourist facility and medium density housing. The only control on nine of the medium density dwellings was Condition 4 that limited the period of occupation of those units and did not define them as tourist accommodation. Unit 12 that is permitted to be permanently occupied is not required to be a manager's flat, so there is no requirement for the other units to be serviced apartments although that was how they were currently presented for rent. 49 In considering these experts opinions I turn to the definition of tourist facility that is found in the model provisions of the Environmental Planning and Assessment Act 1979. It says: Tourist facilities means an establishment providing for holiday accommodation or recreation and may include a boatshed, boat landing facilities, camping ground, caravan park, holiday cabins, hotel, house boat, marina, motel, playground, refreshment room, water sport facilities or the club used in conjunction with any such activities. 50 From that definition there seems no doubt the existing approval and the short term accommodation apartments constituted the tourist facility component of the development. So I cannot accept Mr Richardson's opinion that the lack of use of the term tourist accommodation unit or holiday accommodation in the consent fails to require them when it was approved as partly a tourist facility. In any case the application is for a change of the approved use. 51 The experts went on to debate a report by Dain Simpson dated February 2002 prepared for the council in regard to the "demand for upmarket visitor accommodation in Shoalhaven". They agreed it said a tourist facility in that report was a more complex development than the proposal. A complex would include a reception area, all day dining and meeting rooms and break out areas earlier is with kitchen facilities. The approved development on the subject site had none of those extra services and the experts agreed the report suggested good locations for the larger type of complex would need to be closer to the larger town centres on Jervis Bay such as Huskisson. 52 Mr Debnam said in any case the approved development on this site was holiday apartments only and they still qualified as a tourist facility under the statute definition. The Simpson Report did not give guidelines for serviced departments. 53 It became clear to me that the Zone 3(g) development area, although it envisaged at its inception to have the potential for a large tourist facility, what had been approved was not that. It was a mix of holiday apartments and permanent residences. These were still permissible in the zone but were at the small scale end of what could be described as a tourist facility. I noted that council in its Deed of Agreement with the original developer had virtually supported the proposal as built. 54 The reduction of the area of the 3(g) zone over the years by the council from its original size that reached over to Sealark Road, down to the size of SP69928 had constricted the potential of it ever being a major tourist facility. The subject site must be only about 20% of the original area, and no longer has an absolute water frontage. 55 Recent policy documents of council identifying sites with potential for major tourist facilities did not show the subject site. 56 This leads me to the evidence in regard to the holiday letting statistics of the area. 57 The evidence shows that about 37% of all dwellings in Callala Bay are vacant and used only as weekenders. Many of them are rented out as holiday accommodation in peak periods. Mr Richardson had contacted the only three real estate agents for holiday lettings in Callala Bay. The agents were not called for cross-examination. 58 The subject site contained the only serviced upmarket apartments for rent in Callala Bay, there were a number of townhouses available for rent, but the vast majority of the accommodation was holiday houses. 59 The houses achieved approximately 51 days rental on average per year. The subject apartments had achieved rental periods as small as one week in a whole year. The evidence was faulted due to the actual statistics coming from one agent only. 60 The agents all said that holiday makers preferred detached cottages with their own allotments as it provided space for multiple cars and boats and playing areas immediately outside the dwelling and avoided noise and possible nuisance from occupants of adjoining apartments. 61 In inspecting the subject site it was obvious to me the apartments, although they had landscaped areas, one had to go down the stairs and out through the main foyer into the carpark and around the side of buildings to get to the landscaped areas. There was no privacy or exclusive use of the landscaped areas once you got there. 62 Parking of boat trailers would quickly absorb the visitor spaces on site. It could be seen the real estate agents' opinions to be correct that families would prefer cottages especially if two or three families combined for a holiday together with their cars, boats and other paraphernalia. 63 The respondent took me to several of the units on the subject site that had owners' belonging still in place and said that those apartments were not even on the holiday market although others in the development were. The applicant said the owners' belongings being left in place did not exclude the units from lettings. They were let so seldom there was no need to keep them in pristine condition for rental. If a rental opportunity arose they could be quickly tidied up. 64 In any case Mr Richardson put that the development consent conditions did not require the units to be rented to holiday makers. They could be used as weekenders under the terms of the consent. Nevertheless he said, if there was any continuous demand the units would be let because it would provide rental income. The trouble was holiday makers wanted cottages not apartments. 65 The applicant made the point that only three of the apartments had been sold since their construction three or four years ago. Three were owned by members of the original consortium and three were still owned by the consortium itself. It was put to me that this situation was caused by the low return on holiday lettings and the restriction of occupancy periods. 66 Mr Richardson agreed if the change of use amendment was allowed the units might well be sold because they would either be used as permanent residences or let on the long term rental market as well as the holiday lettings market. It would give the apartments a wider exposure. 67 Mr Debnam in his reply referred to a letter from Mr Phillips, council's tourism manager. 68 He listed other areas in Shoalhaven where there were upmarket serviced apartments similar to the existing development. Mr Phillips was not called for cross-examination. Indications from those other developments indicated reasonable demand for those serviced apartments. Mr Phillips and Mr Debnam noted that Callala Bay did not have a huge variety of accommodation. It was also noted that the Dain Simpson Report had identified a general lack of upmarket accommodation throughout the whole of Shoalhaven. They believe that the existing development at Monarch Place was what might be termed upmarket accommodation. They noted that the Department of Defence personnel particularly sought upmarket beachfront accommodation for long term rental. 69 Mr Phillips was critical of the extent of advertising done to market the subject site. He felt listing them with local agents in Callala Bay was not enough when most holiday makers who came to Callala Bay wanted cottages. The serviced departments needed to be advertised more widely. He noted the units were not listed on council's free service for tourist rental listings. 70 It seemed to me if Messrs Phillips and Debnam thought military personnel were a potential market for the units, they were wrong. Under the current conditions of consent long term tenancy was prevented. 71 Commissioner Hussey in his earlier decision that imposed the limited occupancy period in Condition 4 of the existing consent said that the condition appeared reasonable on the evidence before him in that case in 2001. However, he acknowledged that the condition could be reviewed in the future should circumstances change. 72 The applicant pressed that time had shown the condition did not service the demand for holiday accommodation and resulted in very low occupancy of the units. It was a mistaken development concept on the part of the developer. There was no good reason to keep the units empty as a result of the condition and market status. Whatever benefit there may have been to the local economy and employment has not occurred due to the non-occupation of the units. 73 The Progress Association's concern about coastal reserve vegetation is an important matter all the way along the foreshore, not just in front of this site. I noted that in front of the permanent units on this site the vegetation is a little thinner than in front of the unoccupied units. Elsewhere along the water front wholesale clearing of the foreshore reserve has occurred in front of cottages. The council needs to address this matter on the basis of a whole beach front policy. I do not think it should play a role in the decision I have to make. 74 Mr Richardson had also discovered the Shoalhaven Council had a draft Local Environmental Plan No. 375. It had been brought about by questioning of the legality of letting dwellings out as holiday accommodation. Technically the holiday letting may be a commercial activity and therefore prohibited in some residential zones. The aim of the draft LEP is to make holiday lettings permissible without consent in all dwellings in Shoalhaven. 75 That means even the townhouses on the subject site approved for permanent occupancy, as well as all the cottages in Callala Bay would continue to be capable of holiday lettings or long term rental. In that event the units on the subject site affected by Condition 4 would be the only dwellings in Callala Bay with a restriction on a period of rental. 76 The draft LEP has already been on exhibition and is soon to be referred to council for final decision and recommendation to the Minister. 77 Overall I have come to the conclusion that the continuation of the restriction on the period of rental in Condition 4 is not warranted. 78 Deleting it does not prevent holiday lettings and therefore does not conflict with the objectives of Zone 3(g). The development would not necessarily cease to be a tourist facility unless no apartments are occupied as holiday accommodation. In a way, use as a weekender is a holiday purpose. The low rates of permanent occupation of houses in the locality indicates the availability for holiday lettings would continue into the future and provide some contribution to the local economy and employment. There is no non-compliance with the Jervis Bay Regional Environmental Plan 1996. 79 The Zone 3(g) may continue to exist on the site and permit, as time changes demand in Callala Bay, for redevelopment in the future. 80 In terms of the density and landscape area and site area issues, I agree with the applicant that consideration of the original site area including the now dedicated foreshore land is reasonable given there will be no physical change to the existing buildings and no new buildings. The objectives of the controls will continue to be met. Given those parameters the development can be seen to comply with the alternate "acceptable solutions" on those matters provided in DCP 71. 81 The parties had agreed on draft conditions of consent forwarded to the Court after the hearing on 16 November 2005. 82 Therefore the orders of the Court are: 1. The appeal is upheld. 2. Development consent is granted to the change of use of existing units being Nos. 5, 6, 7, 8, 9, 10, 11, 13 and 14 at Nos. 6-10 Monarch Place, Callala Bay, being Strata Plan SP 69928 to be amended to enable both permanent and short term occupation subject to the conditions in Annexure 'A' hereto. 3. The exhibits are returned to the parties except Exhibits 2, 3, 4, 5, 7, 8, A, B and C. ___________________ K G Hoffman Commissioner of the Court Ljr/rjs 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.