Land and Environment Court of New South Wales CITATION : McHugh Holdings Pty Limited v City of Sydney Council [2010] NSWLEC 1078 APPLICANT: McHugh Holdings Pty Limited PARTIES : RESPONDENT City of Sydney Council FILE NUMBER(S) : 10671 of 2009 CORAM: Tuor C KEY ISSUES: DEVELOPMENT CONSENT :- Alterations and additions and extension of Kinselas Hotel into the adjacent building, including external smoking and gaming rooms. Conditions of consent, trial period and noise impacts. Environmental Planning and Assessment Act 1979 LEGISLATION CITED: Liquor Amendment (Temporary Licence Freeze) Act 2009 South Sydney Local Environmental Plan 1988 CASES CITED: Zhang v Canterbury City Council (2001) 115 LGERA 373 McHugh Holdings Pty Limited v City of Sydney Council [2007] NSWLEC 194 DATES OF HEARING: 17 March 2010 EX TEMPORE JUDGMENT DATE : 17 March 2010 APPLICANT Mr P Clay, barrister SOLICITOR Bruce Stewart Dimarco, Lawyers LEGAL REPRESENTATIVES: RESPONDENT Mr S Kondilios, solicitor SOLICITOR Maddocks Lawyers JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Tuor C 17 March 2010 10671 of 2009 McHugh Holdings Pty Limited v City of Sydney Council JUDGMENT 1 This is an appeal against conditions imposed on a development consent (D/2009/1193) granted by the City of Sydney Council (council) on 23 November 2009. The approved development is described in the Notice of Determination as: Extension to the Kinselas Hotel into the adjacent building at 381 Bourke Street. Works include internal alterations, partial demolition and reconstruction of the central portion of the site to provide a new cloakroom, store, courtyard and partially open smoking and gaming areas. 2 The site, its locality, the history of the development application, the proposal and the planning controls are described in the Statement of Facts and Contentions filed by council on 20 October 2009, the Statement of Facts and Contentions filed by the applicant on 15 December 2009 and the Facts and Contentions in Reply filed by the council on 12 January 2010. 3 I note that the appeal was originally against council's deemed refusal of the application and that the application initially sought approval to increase patron numbers from 606 to 633. The application was subsequently amended to retain the approved patron numbers of 606 and approved by council subject to conditions. 4 The appeal before me now relates to the conditions of consent. A number of conditions initially in contention between the parties have been resolved and the key dispute relates to the hours of operation of the smoking room and, to lesser extent, the gaming room. 5 The difference in hours sought by the parties is set out in exhibit 7 and incorporated below: Proposed Base Proposed Trial Relevant condition 10am to 10pm 6 (for outdoor area) 10am to 12 midnight for 12 months Respondent 24 Hours/7 days per week 6am to 12 midnight 7 (for indoor area) Applicant 6am to 12 midnight 24 hours/7 days per week 6 (7 to be deleted) 6 The parties also disagree about whether food, drink and furniture should be provided in the smoking room. Evidence 7 The Court visited the site and heard evidence from three residents of Vivere Apartments who were mainly concerned about the potential noise impacts from the proposed smoking room and gaming room. They were also concerned about smoke drift and considered that the smoking room should be located to the Bourke Street frontage. 8 The residents considered that their amenity was already adversely affected by noise and activity associated with the number of late-night trading hotels, nightclubs and bars in the area and that recent approvals of other developments and the current proposal would exacerbate this situation. 9 Mr Cooper, an acoustic consultant for the applicant, responded to residents' questions on site. He also provided a Statement of Evidence and an acoustic assessment, which formed part of the Statement of Environmental Effects that accompanied the application. 10 Mr Cooper was not required for cross examination and council did not raise issue with the conclusions of Mr Cooper or call its own acoustic evidence. I will discuss noise impacts further in the judgment. 11 Mr Woodhouse, a resident at Potts Point, provided evidence onsite and a supplementary letter to the Court (exhibit 10). His main concern was that the Liquor Amendment (Temporary Licence Freeze) Act 2009 (Liquor Act) applies to the development application and under its terms the application must be rejected. He stated that if the Liquor Act were not applied there would be adverse impacts on this and other areas through an increase of licensed venues. In Mr Woodhouse's opinion the development application proposes an increase in patron numbers and was lodged during the relevant period. Therefore the Liquor Act applies and the development requires a licence approval. 12 Mr Kondilios, for the council, has considered Mr Woodhouse's submission and prepared a summary of the applicability of the Liquor Act to the application (exhibit 6). Mr Clay, for the applicant, concurs with this summary and tendered an approval of an application to amend the liquor licence that was granted by the Casino, Liquor and Gaming Control Authority on the 10 February 2010 (exhibit G). 13 The position of both parties is that the Liquor Act does not apply to the development application as it was lodged on 3 July 2009, prior to the introduction date of the Liquor Act being 3 September 2009. The development application does not increase patron numbers and an amended liquor licence has been granted. 14 I accept the position of the parties that the terms of the Liquor Act do not apply to the development application, however, the impacts of the proposal are clearly a relevant consideration under s 79C of the EP&A Act. 15 The key concern by residents and council is the potential for noise impacts from the proposed smoking room. Noise 16 Mr Cooper and the council agreed on the noise assessment criteria for the proposal, which are included as a condition of consent. The criteria include that noise from the use of the premises must not exceed the background noise at the boundary of any residential property and must not be audible in any habitable room of any residential property between 12 midnight and 7am. 17 Mr Cooper stated that: ….the only relevant residential site for an acoustic assessment is the Vivere Apartments which was the specific site considered in the DA acoustic report. Appendix D of the DA acoustic report identifies the sound pressure level contributions for normal voices to reveal an A-weighted basis levels some 30 dB(A) below the background level for the elevated levels of the Vivere Apartments. Appendix E of the DA acoustic assessment report identifies the sound pressure level contributions for raised voices is some 19 - 24 dB(A) below the night-time background level for level 2 and level 4 of the Vivere Apartments. Therefore, to suggest that because the Vivere Apartments are only some 6 metres from the rear of 381 Bourke Street there is likely to be noise disturbance is entirely inappropriate bearing in mind that the acoustic shielding, acoustic controls and real acoustic distance from the proposed smoking room and gaming room to affect the Vivere Apartments… 18 Mr Cooper stated that his assessment is conservative and that there is no reason to limit the hours of operation of the smoking room or gaming room on the basis of noise impacts. 19 Council did not raise issue with Mr Cooper's assessment and conclusions. However, Mr Jamieson, council's planner, raised concern about Mr Cooper's assumptions, which rely on management. In particular, the assessment of the smoking room is based on a limit of 10 persons at any one time and the gaming room is based on 17 persons at any one time. In Mr Jamieson's opinion it would be difficult to manage these limits on numbers. 20 Mr Jamieson considered that any extension above the 10pm base hours of operation of the smoking and gaming rooms should be limited to 12pm, with a one-year trial, to assess the management of these areas and to verify the assumptions of Mr Cooper. If successful, the applicant could then apply for a further extension and a further trial period. In Mr Jamieson's opinion, this approach is consistent with the requirements for trial periods in s 3.1 of the Late-Night Trading Premises Development Control Plan 2007 (DCP). 21 Mr Jamieson noted Mr Cooper's oral evidence that an increase in the numbers in the smoking room to 20 people would result in an additional 3 dB(A) and still be comfortably below the noise criterion. However, he stated that this was not included in Mr Cooper's written assessment and had not been verified by council. 22 Under cross examination, Mr Jamieson indicated that he was not concerned about the potential noise from the gaming room due to the nature of its use, provided it is managed and used only for gaming. 23 Mr Jamieson acknowledged that the larger an area the greater the potential for noise impacts due to the potential for increased capacity. The proposed smoking room is about 10 square metres which Mr Jamison acknowledged is small, but he still considered it had capacity to accommodate more then 10 people. 24 Mr Jamieson also accepted that the existing hotel has approval for 24-hour trading and that if the use of the proposed smoking room was restricted to 12 midnight, then smokers would use either the street or the balcony on level 1. In his opinion, this was acceptable given the existing noise levels in Bourke Street and Taylor Square and noise attenuation provided by the buildings. 25 Mr Lidis provided planning evidence for the applicant. He considered that there were no demonstrated amenity impacts arising from the proposal. The acoustic evidence shows that there would be no noise impacts from the proposed use of the smoking room and gaming room after midnight. In his opinion, it would be relatively easy to manage these areas to ensure that the maximum number of people was not exceeded. 26 Mr Lidis noted that there was the potential for more people to use the smoking room and gaming room, while it could not be guaranteed this would never occur, it was be unlikely to be on a regular basis given the location of staff and the size of the rooms themselves. Further, a condition could be imposed requiring signage that states that the gaming room is to be used only for the purposes of gaming. 27 Mr Lidis stated that the existing hotel had been appropriately managed. Based on the council's records there had been only one complaint (not substantiated that it related to Kinselas rather than to another hotel) and one complaint to the LAB, which had been resolved. Also the police had not objected to the proposal, subject to no increase in patron numbers and a trial period. Mr Jamieson accepted this history of complaints. 28 Mr Lidis noted that the hotel had recently been sold and that its operation could not rely on an individual operator, but was dependent upon compliance with appropriate conditions, including a management plan and the physical constraints of the building, including the limited size of the proposal. 29 Mr Lidis indicated that a condition requiring acoustic testing prior to the use of the area to ensure compliance with the noise criteria had been included. Further, he considered that a condition requiring quarterly monitoring of noise levels during the trial period would be appropriate to assess whether compliance with the conditions was achieved. 30 Mr Lidis stated that the smoking room hours should be consistent with the approved 24-hour trading of the hotel. He considered that people smoking on the street or the balcony would have a greater impact than the proposed smoking room. In Mr Lidis' opinion, an extension of the base hours and approval of a 24-hour trial period met the objectives of the DCP and was appropriate. Provision of food, drink and furniture in the smoking room 31 Mr Jamieson considered that the provision of if food, drink and furniture in the smoking room would encourage people to linger longer and increase the potential for the smoking room to be used by more than 10 people and increase noise. He also considered that moving furniture could exacerbate any noise issues. He acknowledged that noise was unlikely to be an issue up until about 8pm. Mr Lidis stated that the provision of food, drink and furniture would not result in any noise or amenity impacts and was appropriate. Findings 32 Mr Kondilios, Mr Clay and the planning experts all agree that the planning framework is established by the DCP and its application is set out in Zhang v Canterbury City Council (2001) 115 LGERA 373. Spigelman CJ at para 75 raises three important propositions. First, and although the Court has wide-ranging discretion, the discretion is not feted. Secondly, the provisions of a DCP are to be considered as a fundamental element or a focal point in the decision-making process, particularly if there are no issues relating to compliance with the local environmental plan. Thirdly, a provision of the DCP directly pertinent to the application is entitled to significant weight in the decision-making process, but it is not in itself determinative. The third proposition provides for some flexibility in the enforcement of the provisions of the DCP. 33 The main aim of the DCP is stated in s 2.1 as being: to assist the management of the impacts of late-night trading premises on the sites and neighbourhoods in which they are located and, in particular, protect the amenity of residential properties. 34 The DCP includes the following relevant objectives in s 2.2 e) encourage a broad mix of night time uses with broad community appeal that reflect the diverse entertainment and recreational needs of people who work and live in the City of Sydney as well as people who visit the City; ….. j) provide the possibility of extensions of trading hours for premises where they have demonstrated good management during trial periods; ….. l) ensure that appropriate hours are permitted for outdoor trading; and m) ensure a consistent approach to the assessment of applications for premises seeking night trading hours. 35 The premises is identified as Category A - High Impact in s 2.4 of the DCP and is within a Late Night Management Area identified in the maps in s 3.2 of the DCP. 36 Section 2.6 of the DCP provides matters for consideration in determining appropriate trading hours for late-night trading premises. Mr Clay's submission is that the proposal is appropriate when assessed under these matters for consideration. 37 Section 2.7 of the DCP requires that: Approvals for late-night premises will be limited in time to enable Council to assess the ongoing management performance of the premises and its impact on neighbourhood amenity. Any extending hours (ie beyond the base hours identified in Table 1), will be subject to a trial period. Trial periods also allow Council the flexibility to review the conditions of development consents and to respond to such things as changes in late-night character of a neighbourhood and changes in management. 38 Section 2.8 of the DCP identifies the "base" and "extended" trading hours for Category A premises in the Late Night Management Area as set out in Table 1, and s 3.1 specifies the following controls for trading hours and trial periods. Table 1 – Trading Hours CATEGORY A PREMISES Indoor Trading Hours Outdoor Trading Hours LATE NIGHT MANAGEMENT Base – 6am to Midnight Base – 10 am to 10 pm Extended – 24 hours Extended – 10am to 1am 39 Section 3.1 of the DCP specifies the following controls for trading hours and trial periods: a A renewal or extension of trading hours may only be permitted if Council is satisfied that a late night trading premises has demonstrated good management performance and compliance with a plan of management (or management checklist) following the completion of a satisfactory trial period. b Category A and B premises seeking extended trading hours may be permitted up to two additional operating hours per trial period if a previous trial period is considered by the Council to have been satisfactory. c Trial periods may be permitted up to the following durations: i. First trial – 1 year ii. Second trial – 2 years iii. Third and subsequent trials – 5 years d Once the full range of extended trading hours are reached (as prescribed in Table 1), a DA must be lodged every 5 years to renew trading hours. e If the Council determines that a trial period has been unsatisfactory then trading hours will revert to the base late night trading hours; or whatever hours have been approved as the maximum trading hours prior to the commencement of this DCP). 40 Mr Kondilios's primary submission is that the DCP establishes an incremental process for the implementation of extended trading hours and trial periods that should not be varied in this case. 41 In considering the particular circumstances of this case, I find that the aims and objectives of DCP can be met by allowing the extended hours sought by the applicant for a trial period (24-hour trading) rather than the extended hours sought by the council for a trial period (12 midnight). 42 I reach this conclusion for the following reasons: the proposal does not increase the overall number of the patrons or staff and therefore does not result in an intensification of use. the existing hotel has approval for 24-hour trading, 7 days a week. there is no material history of complaint and the police did not object to the proposal. the extended hours are subject to a one-year trial period. the unchallenged acoustic evidence of Mr Cooper is that the proposal, through its physical design, size and limitations on numbers will easily meet the required noise criteria. There is no evidence that Mr Cooper's assumptions are unrealistic. there will be monitoring to verify that the proposal meets the noise criteria prior to its occupation. the applicant has agreed to a condition to also require noise monitoring of the proposal's operation during the trial period. if the extended hours are limited to 12 midnight, there would be no trial period of whether the proposal satisfies the noise criterion after midnight, which is the period most sensitive to the adjoining residents. the DCP limits extended outdoor trading hours to 1am. It is not clear how compliance with the DCP controls and 24-hour trading could be achieved through successive trial periods. Even if 1am can be exceeded, it would require numerous trial periods to reach 24-hour trading which serves little purpose in this case. there is no reason to assume that the maximum numbers in the smoking and gaming rooms will be exceeded, particularly given the limited size and capacity of these areas and the proximity of staff. the restriction on the smoking room to 12 midnight will result in patrons using the street which is not an appropriate alternative, nor is a smoking room on the Bourke Street frontage, as discussed by council's Director of Planning in his memo to council on 19 November 2009. 43 For these reasons, I am satisfied that the proposal meets the aims and objectives of the DCP and that there would be no adverse impact on residential amenity. The proposal can be appropriately monitored during the trial period to verify this. 44 On this basis, I am also satisfied that the proposal is consistent with the objectives of Zone No. 3 - Business in cl 13 South Sydney Local Environmental Plan 1998. 45 I accept council's submission that the base hours should remain at 10pm rather than be extended to 12 midnight as sought by the applicant. This will enable monitoring during the trial period to assess compliance with the noise criterion prior to 12 midnight. 46 In relation to the provision of food, drink and furniture in the smoking room, I accept that this would encourage people to linger within this area and potentially result in patrons using areas such as the street to smoke. I therefore accept council's condition in relation to this matter. 47 In addition to the conditions agreed by the parties, the following conditions should be imposed: i. a condition which requires independent quarterly monitoring of the premises during the trial period to enable objective assessment of the proposal's compliance and management should a further trial period be sought. ii. a condition which requires signage to be provided that indicates that the gaming room is to be used only for gaming. 48 The concerns of residents about smoke drift was not raised as an issue by council and I accept, in the absence of expert evidence to the contrary, the comments of council's licensing officer that cigarette smoke drift from the small numbers proposed will not be an issue with where the surrounding residential receivers are located. 49 The only other outstanding issue, which arose during the proceedings, is the use of the level 1 balcony after 2am. There was initially a difference of opinion between the parties as to whether this had approval to be used after 2am. The applicant relied on condition 2 in development consent D/2006/818, which restricts its use to before 2am. This is also reflected in the current licence conditions. 50 The council relied on condition 5 in development consent D/2006/1061, which permits 24-hour trading of the basement, ground and first floor. This consent was granted by Bly C in McHugh Holdings Pty Limited v City of Sydney Council [2007] NSWLEC 194. I note the judgment refers to internal modifications and does not specifically refer to the use of the balcony or its impacts. 51 The parties agreed that the latter consent prevailed but the applicant has indicated that it has no intention to use the balcony area after 2am and raised no objection to its hours being restricted to 2am. The council indicated a preference that the licence should be amended to permit 24-hour operation of the balcony to enable it to be used for smoking. 52 There is no certainty that the balcony on level 1 could be used for smoking as the licence for this area is restricted to 2am and the applicant has indicated that it does not intend to use this area after 2am. 53 The suitability of using this area after 2am is also questioned, as it is large, open on all sides and unroofed except for a glass screen. There is no restriction on eating and drinking on the balcony after 2am and it has not been subject to a trial period. The impact on the residential amenity of Belgenny Apartments, which are nearby on the corner Campbell Street and Bourke Street is unclear. The applicant has indicated that it would accept a condition that restricts its use to 2am and I accept that this is appropriate. 54 For the reasons I have given earlier, I consider the extended use of the proposed smoking room to be acceptable regardless of whether the use of the balcony is permitted after 2am. Directions 55 The parties are to file agreed conditions that reflect the findings of this judgment by 24 March 2010. Final orders will then be issued in Chambers. ___________________ Annelise Tuor Commissioner of the Court ljr 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.