Land and Environment Court of New South Wales CITATION : Hudak v Council of the Municipality of Waverley [1989] NSWLEC 190 APPLICANT Hudak PARTIES : RESPONDENT Council of the Municipality of Waverley FILE NUMBER(S) : 40212 of 1988 CORAM: Cripps J KEY ISSUES: :- LEGISLATION CITED: Local Government Act Environmental Planning and Assessment Act Milaninovic v. South Sydney Municipal Council 28 LGRA 195; F.N Eckold Pty Ltd & Anors v. Auburn Municipal Council 34 LGRA 114; CASES CITED: Woollahra Municipal Council v. T.A.J.J. Investments Pty. Limited 49 LGRA 123 at 125; R v. City of Oakley; Ex parte New Gamble Brick Works Pty Limited 19 LGRA 258 ; Council of the Municipality of North Sydney v. Boyts Radio and Electrical Pty Limited 13.4.1989 DATES OF HEARING: DATE OF JUDGMENT: 05/04/1989 LEGAL REPRESENTATIVES: JUDGMENT: His Honour: In proceedings No 20278/86 Mr Hudak has appealed to the Land and Environment Court in its Class 2 jurisdiction seeking to set aside or modify a Notice dated 13 December 1985 served on him by the Council of the Municipality of Waverley pursuant to the provisions of s.317B(1) of the Local Government Act requiring him within a period of sixty (60) days to demolish a two storey brick residential flat building at 46 Beaumont Street, Rose Bay, because it was in a dilapidated and unsightly condition and prejudicial to the properties in, and the inhabitants of, the neighbourhood. In proceedings No. 40212/88 the Council has made application to the Court in its Class 4 jurisdiction seeking the following declarations with respect to the same property: (1) that the building approval purportedly granted by the Council on 31 May 1974 to renovate the residential flat building and to add a storey to it was void; (2) that the building work the subject of the approval of 31 May 1974 was not substantially commenced within 12 months after the date of the approval; and (3) that the use of the building for the purpose of a residential flat building has been abandoned. The Council also seeks an order in the Class 4 proceedings that Mr Hudak be restrained from using the subject building as a residential flat building. The Council opposes the setting aside or modification of the 317B Notice on grounds, inter alia, that there are no existing use rights attaching to the land. It further alleges that if existing use rights have not been abandoned, Mr Hudak has no valid building approval to undertake any building work on the subject land which would make the present structure presentable and usable as a residential fIat building. Mr Hudak disputes Council's claim that the subject building is presently in such a dilapidated and unsightly condition that it ought be demolished. He further submits that even if it is, the Notice ought be modified to permit him to complete the building work commenced in 1975. He does not dispute that the use of the land and building for the purpose of a residential flat building is prohibited under the relevant zoning laws but claims an existing use right entitlement. 46 Beaumont Street, Rose Bay, was purchased by Mr Hudak and his wife in 1965. In 1986, the property was transferred into Mr Hudak's name in circumstances shortly to be mentioned. The land is, and at all material times was, zoned Residential 2A. The zoning prohibits the land or buildings to be used for the purpose of a residential flat building. However, the building was being used as a residential flat building immediately before the coming into force of the planning instrument having the effect of prohibiting the use and, accordingly, "existing use" rights attached to the land and building. The building was physically used as a residential flat building until 1980. I am of the opinion that the building is now (and was at the date of the giving of the notice pursuant to s.317B of the Local Government Act) in such a dilapidated or unsightly condition as to be prejudicial to the property in, and the inhabitants of, the neighbourhood. The building has not been occupied since 1980 and has been extensively damaged by vandals. As at 13 December 1985 (the date of the Notice), the building was not only unsightly and dilapidated but was also in a dangerous condition. After the notice was served, Mr Hudak propped the building up and boarded up some of the windows. No work of any significance has been undertaken on the property since Mr Hudak made it safe in 1986. Doubtless it has continued to deteriorate in the meantime. At the present time, it can only be described as an eyesore and expert evidence is not required to demonstrate that its present condition is prejudicial to properties in the neighbourhood and that its presence substantially affects the general amenity of the area (see Miladinovic v. South Sydney Municipal Council 28 LGRA 195). The work which was undertaken in 1986 was intended to be temporary only and I am not satisfied that the building is now not in a dangerous condition as well as being unsightly. The building work approved in 1974 by the Council, if now undertaken, would result, for all practical purposes, in a total rebuilding of the residential flat building with an added storey. I mention this because it appeared to be suggested early in the proceedings that, in the event that the work the subject of the 1974 approval were undertaken, new work would be added to a presently unsafe structure. The Council, if I understand its case correctly, does not dispute that the building is capable of being rebuilt in accordance with the approval granted in May 1984. It submits that the approval it gave Mr Hudak is void because he had undertaken no work as at May 1975 and such work as was thereafter undertaken did not amount to substantial commencement. It also submits that any existing use rights attaching to the land and building have been abandoned. It maintains that even if existing use rights have not been abandoned and the building approval remains valid and the work substantially commenced, the Notice should not be set aside because it is unlikely that Mr Hudak will ever repair the building. The neighbours wish the building to be removed because it is unsightly and dilapidated. Most do not oppose rebuilding but some object to the added storey and to the fact that the use will be inconsistent with the low density zoning. The building was constructed in 1938 as a pair of semi-detached dwelling houses. On 24 July 1973, the Council approved an application by Mr Hudak for extensive internal alterations and additions to the existing building which contained three flats and to erect an additional storey containing an additional unit. On 25 October 1973, Mr Hudak lodged an amended application which was approved on 13 November 1973. On 31 May 1974, Council approved the amended application of Mr Hudak to effect alterations and additions referred to above subject to a number of conditions. On 19 September 1974, Mr Hudak asked for an extension of time for 12 months to start the building because he was short of finance. On 20 September 1974, the Council informed Mr Hudak that his request for an extension was "somewhat premature" and suggested he make an application at a later time. On 5 March 1974, Mr Hudak wrote to the Council and said: "... . I wish to make application for building approval ...". Mr Hudak's application was considered by the Council officer who recommended: "an extension of building approval be granted for a period of 12 months .... subject specifically to the following conditions: 1. The reimposition of the previous conditions of approval imposed by Council on 28 May 1974. 2. The internal access stairway providing access to the additional flat at upper floor level being of reinforced concrete construction, and in this regard design details to be furnished by a recognised Structural Engineer prior to commencement of building operations. 3. The ceiling to the additional flat at the topmost floor level having a fire resistance rating of not less than one (1) hour from below. 4. The entrance doorway to each flat at the ground and upper floor levels of the building being fitted with approved self-closing non-combustible doors fitted to non-combustible frames having a fire resistance rating of not less than one (1) hour". On 29 August 1975, the Town Clerk wrote to Mr Hudak as follows: "I refer to your letter of 5th March 1975 in connection with an application to effect alterations and additions to premises No. 46 Beaumont Street, Rose Bay. I have to inform you that an extension of building approval has been granted for a period of twelve (12) months from the date of expiry of the previous building approval, being 28 May 1975, subject to compliance with the requirements of the Local Government Act and Ordinance 70 framed thereunder and subject specifically to the following conditions". (Then followed the Council officer's recommended conditions referred to above). Mr Hudak undertook certain work and on 31 May 1976, he was informed by the Council that the work he had undertaken had been inspected and that it was Council's opinion that he had substantially commenced the building work with the result that "the building consent which was to lapse on 28 instant is automatically extended for a period of building until the job is completed". Thereafter, Mr Hudak did little work on the premises. Whether this was due to his deteriorating domestic situation and/or his deteriorating financial situation is not clear. What is clear is that the last tenant moved out in 1980 and the premises have not been occupied since. Mr Hudak had domestic problems during the late 70s and his wife commenced divorce proceedings in 1980 which resulted in the marriage being dissolved in 1982. In October 1982, Mrs Hudak made application to the Family Court for a property settlement. Mr Hudak has said in evidence that he did not complete the work the subject of Council's approval because he believed that he would be technically disadvantaged in his dispute with his wife had he done so. He said that he believed that if he completed the building, his assets would have appeared greater than if he did not. I must say it is not clear to me why he would be tactically advantaged by not completing the building if he honestly disclosed his assets. But he has sworn that the reason for not completing the building was attributable to the then pending litigation and he was not really cross examined about the matter. I accept, therefore, that Mr Hudak determined toward the end of 1980 or the beginning of 1981 that he would do no further work on the building until the dispute with his wife was resolved. The dispute was resolved on 15 October 1986 and No 46 Beaumont Street was transferred into Mr Hudak's name. Mr Hudak claims that he never abandoned his intention to rebuild and that he always intended to commence the building work when he became sole owner of the property. As I have said, he has been sole owner of the property since 1986 and has done little, if any, work on the premises. The reason for not doing any work since 1986 is, I assume, referable to the pendancy of the present proceedings although why they have taken so long to be heard was not explained. Section 315 of the Local Government Act provides: "Any approval given under this Part, or under any ordinance made thereunder, shall be void if the building work to which it refers is not substantially commenced within twelve months after the date of the approval: Provided that the Council may if good cause be shown grant an extension or renewal of such approval beyond such period". In the light of Council's conduct in 1975 and 1976, it might be thought somewhat surprising that it is now asserting that the building approval it issued is void and that the work undertaken by Mr Hudak did not amount to substantial commencement of approved work. As I have said above, Mr Hudak did not commence any work within a period of 12 months from 12 May 1974. He did, however, undertake work after May 1985 and was told in 1986 that what he had done amounted to substantial commencement of approved work. On behalf of Mr Hudak, it is submitted that the approval was not void because his application for an extension of time had been made within the 12 month period. Alternatively, it is submitted that the application made to the Court in March 1975 was relevantly a fresh application and that the approval he received on 29 August 1975 was a valid building approval authorising the carrying out of the subject work subject to the conditions therein set out. He submits that he "substantially commenced" that work as is evidenced by the letter Council wrote to him. Finally, he submits that the Council is estopped from asserting that he is not entitled to continue the building work in accordance with the approvals granted in 1974 and 1975 by reason of the Council's conduct. Because I have come to the conclusion that I am not satisfied that the existing use has not been abandoned, it is probably unnecessary for me to express an opinion as to whether the Council is correct in its submission that Mr Hudak has no approval to undertake the work because the approval which was given became void in May 1975. I am, however, prepared to express the opinion that if Mr Hudak had established that existing use rights had not been abandoned, I would not have made the first two declarations sought by the Council. First, because, in my opinion, properly understood, the approval granted by the Council on 29 August 1975 was a valid building approval which was substantially commenced within a 12 month period as is evidence by the Council's letter. Although the word "extension" was used in the application in March 1975, it was, in terms, an application for building approval. Council treated it as a valid application and granted approval subject to conditions different to those previously attaching t o the approval in 1974 by adding to them. Whether the work was substantially commenced is a question of fact. The Council has admitted that it was. Second, if I be wrong in my conclusion that there was no fresh approval given by the Council, I would not make either declaration sought in the exercise of my discretion. Whether or not the Council is estopped by its conduct from asserting it did not give approval (as to which see F.N. Eckold Pty Limited and Others v. Auburn Municipal Council 34 LGRA 114 at 117), it is now established that the Court has a discretion whether or not to make declarations. Even if it were established that the approval was relevantly "void", I am entitled to have regard to the circumstance, when exercising my discretion, to the fact that the Council not only made no claim that Mr Hudak had no building approval until the commencement of the Class 4 proceedings but it conducted itself upon the basis that the approval was not void. In the course of resisting Mr Hudak's claim to set aside the Notice given pursuant to s.317B the Council's lawyers, I infer, alerted Council to the possibility that Mr Hudak's application could be defeated upon the ground that there is no extant building approval (if my earlier conclusions are incorrect). I have not overlooked the fact that the building work, although commenced, has not been completed and that, upon the assumption that existing use rights have not been abandoned and it is otherwise appropriate to set aside or modify the 317B Notice, it is possible that Mr Hudak will erect a substantial building without a valid building approval. But the work has, in fact, been substantially commenced and I think it is too late for the Council to be permitted to take advantage of its own incompetence thirteen years ago. However, the Council has consistently maintained throughout the relevant period that Mr Hudak is not entitled to undertake the building work for the purpose of a residential flat building because the existing use rights in respect of that building have long since been abandoned. Section 107 of the Environmental Planning and Assessment Act provides: nothing in this act or an environmental of an existing use. (a) ... (b)(i) ... (d) The continuance of the use therein (3) Without limiting the generality of sub-2(d), a use shall be presumed, the contrary is established, to be if it ceases to be actually so "The expression 'the continuance of the use' in its and ordinary sense may be conveniently expression connotes neither a use which is afresh after prior termination or nor a continuity of use which is it suggest use which is still continuing, that it may be marked by some or breaks which are not of such a the use". In the present case, existing use rights, as at the date of the service of the Notice given pursuant to 317B, had not been exploited for almost six years. As Hutley JA observed in Woollahra Municipal Council v. T.A.J.J. Investments Pty. Limited 49 LGRA 123 at 125: intention is vital". It would seem to me that where the physical use of a building or land has ceased for a period in excess of twelve months, the onus is on the person claiming an entitlement to existing use rights to establish that the continuation of the use has not been abandoned. In accordance with the authorities, it is necessary for me to determine in the present case whether Mr Hudak has discharged that onus. In my opinion, he has not. That is, I am not persuaded that the presumption of abandonment has been displaced by the explanation of Mr Hudak. Mr Hudak's stated intention, at the relevant time, was that the residential flat building would not be physically used for that purpose until the land was in his name. He believed that he would be tactically advantaged by keeping the property derelict. I infer in his favour that he believed that if he held out long enough, the property would be transferred into his name. I do not know what he would have done had the property been transferred into his wife's name but it is reaso nable to infer, I think, that he would not voluntarily have undertaken to do any work on the building. As events turned out, Mr Hudak's persistence was rewarded and, apparently, his wife was persuaded to agree to the property being transferred into his name towards the end of 1986. Thereafter, he did no further work on the property. Notwithstanding the lack of explanation as to why the litigation took so long to be heard, I have not taken account of the period since 1986 in determining whether Mr Hudak abandoned his existing use rights. That is, I am satisfied that the use was abandoned prior to October 1986. This is not a case where the reason for the cessation of the physical use is directly connected with the use itself as, e.g., where a quarry is left idle because of a slump in metal prices or a grain silo is left empty because of drought or a residential flat building is not used because tenants cannot be found (see R v. City of Oakley; Ex parte New Gamble Brick Works Pty Limited 19 LGRA 258 and Council of the Municipality of North Sydney v. Boyts Radio and Electrical Pty Limited 13.4.1989 unreported as illustrative of the principles adopted by the Court in determining whether existing use rights have been abandoned). In the present case, Mr Hudak resolved not to use the subject building for a collateral purpose which had no direct connection with the use of the building as a residential flat building. He did not keep it empty until such times as tenants were available. He determined not to do work necessary to make it usable as a residential flat building to defeat his wife's claim for sole ownership of it. I am of the opinion that he has not displaced the presumption and, accordingly, I am prepared to declare that the use of the building for the purpose of a residential flat building has been abandoned. In my opinion, existing use rights have been abandoned. The building is in a dilapidated, unsightly and, I think, dangerous condition. In my opinion, Council's Notice should not be set aside notwithstanding that I am not prepared to make declarations that the building approvals granted in 1974 or 1975 were void or that the work had not been substantially commenced because building work cannot now be undertaken and the land and building cannot be used for the purpose of a residential flat building. Accordingly, I make the following orders. In proceedings No. 20278/86 the appeal is dismissed. The order of the Court is that Mr Hudak within a period of sixty days from the date of this order demolish the two storey brick residential flat building on the land known as 46 Beaumont Street, Rose Bay. In proceedings No. 40212/88 I declare that the use of the residential flat building on the land at 46 Beaumont Street, Rose Bay, for the purpose of residential flat building has been abandoned. Costs In my opinion the appropriate order is that there be no order for costs. The Council succeeded in resisting Mr Hudak's claim to set aside the s.317B Notice and also succeeded in a declaration that existing use rights referable to the residential flat building had been abandoned. However, Mr Hudak was successful in resisting the Council's claim in the Class 4 proceedings that a building approval granted by it was void and that the work subsequently carried out by Mr Hudak was illegal. 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