Reported Decision : 134 LGERA 379 New South Wales Court of Appeal CITATION : McCLENAHAN & ANOR v NORTH SYDNEY COUNCIL [2004] NSWCA 208 revised - 9/07/2004 HEARING DATE(S) : 11 June 2004 JUDGMENT DATE : 24 June 2004 JUDGMENT OF : Sheller JA at 1; Ipp JA at 12; Stein AJA at 13 DECISION : 1 Appeal allowed; 2 Set aside the orders made by Lloyd J and in lieu thereof; (1) Answer the question in the consent order; 1(a) No; 1(b) Yes; 1(c) No; (2) Remit the proceedings to the Land and Environment Court to determine; 3 The respondent to pay the appellants' costs of the appeal but to have a certificate under the Suitors' Fund Act 1951 if so entitled. CATCHWORDS : LAND AND ENVIRONMENT COURT - North Sydney Local Environmental Plan 2001 - development application refused - definition of 'apartment building adaptation' - meaning of 'within' - whether denial of procedural fairness LEGISLATION CITED : N/A CASES CITED : Chambers v Maclean Shire Council (2003) 57 NSWLR 152 Moreton Central Sugar Mill Co Ltd v The Commissioner of Taxation (Cth) (1967) 116 CLR 151 PARTIES : John McClenahan and Tomoko McClenahan - Appellants North Sydney Council - Respondent FILE NUMBER(S) : CA 40846/03 COUNSEL : B J Preston SC/S E Pritchard - Appellants S Austin QC/G Furness - Respondent SOLICITORS : Dibbs Barker Gosling - Appellants Mallesons Stephen Jaques - Respondent LOWER COURT Land & Environment Court JURISDICTION : LOWER COURT L & E 10552/03 FILE NUMBER(S) : LOWER COURT Lloyd J JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40846/03 L & E 10552/03 SHELLER JA IPP JA STEIN AJA McCLENAHAN & ANOR v NORTH SYDNEY COUNCIL The appellants made a development application to the Respondent ('the Council') for a proposed development at 57 Cremorne Road, Cremorne Point. Erected on this property is a dwelling know as "Strathmore", which is listed as a heritage item under the North Sydney Local Environment Plan 2001 ('the LEP'). The development application provided for the partial demolition of Strathmore and the creation of four apartments and an underground car park by way of alterations and additions to that existing building. The Council refused this application on the basis that it was a prohibited development because it did not come within the definition of "apartment building adaptation" provided by the LEP. The matter came before Lloyd J in the Land and Environment Court on 27 August 2003 for a determination as to the meaning of "apartment building adaptation" in the LEP. By consent order, the Court was asked to determine whether the definition required the creation of an apartment building to be 1(a) wholly within, 1(b) substantially but not wholly within or 1(c) any part of the proposed building be created within, a building other than an apartment building, that lawfully existed on the appointed day. Lloyd J favoured the construction set out in 1(b). Further, his Honour held that the areas proposed to be constructed outside the fabric of the existing building were so extensive that it could not be said that the proposed apartment building was substantially within the existing building. His Honour therefore held that it was a prohibited development. The appellants challenged this conclusion and contended that the appropriate construction was that in 1(c) and submitted that the decision by the trial Judge that the development was prohibited was a denial of procedural fairness as it was not an issue for determination by his Honour and was a finding not based on any evidence. However, the Council submitted in a notice of contention that the correct construction was 1(a). Held: per Sheller JA, Ipp JA and Stein AJA agreeing: 1. The trial Judge did not err in his conclusion that on the true construction of the LEP an "apartment building adaptation" requires the creation of an apartment building to be substantially but not wholly contained within a building, other than an apartment building, that lawfully existed on the appointed day. 2. Clause 26(1) of the LEP sets out apartment building revision or adaptation objectives and clearly contemplates that the development may be carried out outside the fabric of the existing building with the objective of the controls to limit the extent to which this happens. Such a provision would serve no purpose if the definition of "apartment building adaptation" required the creation of a building entirely within a building. 3. The LEP must be looked at as a whole in determining what the definition of "apartment building adaptation" means. The definition has to work in the context of the substantive provisions of the LEP and should not be construed so as to defeat those objectives. 4. Prima facie "within a building" means wholly within a building but conformably with the working provisions of the LEP this definition should be extended to mean "substantially" within. 5. It was not open to the trial Judge to determine whether the proposed development in the present case was a prohibited development. The appellants had not been afforded an opportunity to put submissions on the question of whether, as a matter of fact, the development proposed was substantially within the building. Further, the terms of the consent order provided that the proceedings before the trial Judge were limited to a determination of the preliminary questions of law. Cases cited: Chambers v Maclean Shire Council (2003) 57 NSWLR 152 Moreton Central Sugar Mill Co Ltd v The Commissioner of Taxation (Cth) (1967) 116 CLR 151 ORDERS 1. Appeal allowed, 2. Set aside the orders made by Lloyd J and in lieu thereof: (1) Answer the question in the consent order: 1(a) No 1(b) Yes 1(c) No; (2) Remit the proceedings to the Land and Environment Court to determine; 3. The respondent to pay the appellants' costs of the appeal but to have a certificate under the Suitors' Fund Act 1951 if so entitled. ********** IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40846/03 L & E 10552/03 SHELLER JA IPP JA STEIN AJA Thursday, 24 June 2004 McCLENAHAN & ANOR v NORTH SYDNEY COUNCIL Judgment 1 SHELLER JA: John McClenahan and Tomoko McClenahan (the appellants) appeal from a decision given in the Land and Environment Court (the Court) by Lloyd J on 27 August 2003. The appellants had appealed to the Court from the respondent, North Sydney Council's (the Council), refusal of consent to a development application. The question for determination was the meaning of the expression "apartment building adaptation" in the North Sydney Local Environmental Plan 2001 (the LEP). Schedule 2 of the LEP contains the following definitions: " apartment building means a single residential building containing three or more dwellings but does not include attached dwellings. apartment building adaptation means the creation of an apartment building within a building, other than an apartment building, that lawfully existed on the appointed day. apartment building revision means: (a) the carrying out of alterations for the purpose of an apartment building, or (b) the creation of a new apartment building within the envelope of an apartment building. that lawfully existed on the appointed day." 2 On 25 June 2003 a consent order was made by the Court for determination of the following questions of law: "(a) Whether on a true construction of [the LEP], subject to the principle 'de minimus [sic] non curat lex', an 'apartment building adaptation' requires the creation of an apartment building to be wholly within a building, other than an apartment building, that lawfully existed on the appointed day. (b) Whether on a true construction of [the LEP], an 'apartment building adaptation' requires the creation of an apartment building to be substantially but not wholly within a building, other than an apartment building, that lawfully existed on the appointed day. (c) Whether on a true construction of [the LEP], it is sufficient in order for a development to constitute an 'apartment building adaptation', that any part of the proposed building (subject to the de minimus [sic] principle) be created within a building, other than an apartment building, that lawfully existed on the appointed day." 3 In his reasons for judgment, Lloyd J favoured the construction set out in 1(b) of the consent order. The appellants challenge that conclusion and submit that the appropriate construction was that set out in 1(c). The Council did not stop at defending the construction preferred by Lloyd J, but submitted in a notice of contention that the construction set out in 1(a) was correct. The importance of this question of construction springs from the fact that the appellants' development application to the Council was for a proposed development at 57 Cremorne Road, Cremorne Point. Erected on the property is a dwelling house known as "Strathmore", which is listed as a heritage item of local significance under the LEP. The development application provided for the partial demolition of Strathmore and the creation of four apartments by way of alterations and additions to that existing building. The plans which accompanied the development application showed one apartment on each floor and an underground car park for six cars. The proposed apartments and the car park extended outside the fabric of the existing building. The "areas" proposed to be constructed outside the fabric of the existing building were, according to Lloyd J, "extensive". The proposed development was within the residential G zone (Cremorne Point). Development which may be carried out in this zone includes "apartment building adaptation". If the proposed development does not come within the definition of "apartment buildings adaptation", it is a prohibited development. 4 It is clear that if the correct construction was that contended for by the Council in 1(a) of the consent order, the proposed development is a prohibited development. If, on the other hand, the correct construction is that in 1(b) or 1(c), there remains an argument, which Lloyd J was not asked to deal with and indeed about which no evidence was led, as to whether the proposed development was a prohibited development. Having construed the expression "apartment building adaptation" in accordance with 1(b) of the consent order his Honour said: " Application to the proposed development application 24 The conclusion to which I have come is not the end of the matter. It would serve no utility unless it is applied to the development application in the present case. The question remains as to whether, on the proper construction of the term ' apartment building adaptation ' in the LEP, the development proposed in this case is prohibited. 25 I have briefly described the proposed development in pars [3] and [4] above. An examination of the plans which have been tendered in evidence show extensive areas of the proposed apartments outside the fabric of the existing building. It is self-evident that the areas outside the fabric of the existing buildings are so extensive that it cannot be said that the proposed apartment building is substantially within the existing building ( Moreton Central Sugar Mill Co Ltd v The Commissioner of Taxation (Cth) (1967) 116 CLR 151) . 26 This means that the proposed development in the present case is prohibited. There is no power to consent to it ( Chambers v Maclean Shire Council [(2003) 57 NSWLR 152]. This conclusion is determinative of the appeal, which should as a consequence be dismissed. Orders 27 The formal orders of the Court are: (1) The appeal is dismissed. (2) Development application No 85/03 for alterations and additions to the existing house at No 57 Cremorne Road, Cremorne to accommodate four luxury residential apartments is determined by refusal of consent. (3) The exhibits may be returned." 5 The appellants' third and fourth grounds of appeal in their amended notice of appeal were: "3. His Honour denied the appellants procedural fairness by holding, as a matter of fact, that the proposed development application was not 'substantially within the existing building' when such factual finding was: (a) beyond any question for determination than (sic) before His Honour; (b) not based on any evidence; (c) made without the appellant being afforded an opportunity to make submissions or adduce evidence in relation to that factual question. 4. His Honour failed to give any or adequate reasons for holding, as a matter of fact, that the proposed development application was not 'substantially within the existing building'." 6 Despite the careful arguments put by Mr Preston SC for the appellants, both in writing and orally, I am not persuaded that Lloyd J erred in his conclusion that on the true construction of the LEP an "apartment building adaptation" requires the creation of an apartment building to be substantially but not wholly contained within a building, other than an apartment building, that lawfully existed on the appointed day. 7 In reaching this conclusion, an important matter for consideration is cl 26 of the LEP headed "Apartment building revision or adaptation" which provides as follows: "(1) Apartment building revision or adaptation objectives The specific objectives of the apartment building revision or adaptation controls are to ensure that development for the purpose of apartment buildings in apartment or other buildings that lawfully existed at the appointed day: (a) is carried out substantially within the fabric of the existing building, and (b) substantially retains the existing external walls and roof of the building in its existing dimensions and locations, and (c) minimises the extension of buildings to accommodate apartment development, and, in particular, minimises any increase in the height or gross floor area of the building, and (d) minimises any reduction in the landscaped area of the site. (2) Apartment building revision or adaptation controls Development for the purpose of apartment building revision or apartment building adaptation must not be carried out if the development involves any alteration or addition to the apartment or other building that lawfully existed at the appointed day which would: (a) cause any material loss of views from other properties or public places, or (b) cause any material overshadowing of other properties or public places, or (c) cause any material loss of privacy to other properties, or (d) increase the height of the existing apartment or other building, or (e) decrease the landscaped area of the existing apartment or other building below the requirements set out in clause 20, or decrease the landscaped area where the landscaped area is already below the requirements in clause 20." 8 Mr Preston submitted that since the definition did not state that the apartment building be created "totally" within a building, it was sufficient that only a part (even if not a substantial part) of the apartment building created was within a building. He pointed by way of comparison to the definition of "attic" which is defined, by contrast, to mean space "wholly" contained within the roof space of a dwelling. 9 In support of the notice of contention, Mr Austin QC, who appeared for the Council, submitted that cl 26 should not be construed in a way which effectively read down the definition. However, he conceded that, on his argument, not all of cl 26 could apply to an apartment building adaptation. 10 Prima facie "within a building" means wholly within a building but conformably with the working provisions of the LEP, this definition should be extended to mean "substantially" within. To go further, as Mr Preston contended, nullifies the stated objectives of the apartment building adaptation controls and extends the definition to include "the creation of an apartment building substantially outside a building". 11 Clearly, cl 26(1) contemplates, as a specific objective of apartment building adaptation controls, ensuring that the development for the purpose of apartment buildings in apartment or other buildings, that lawfully exist at the appointed day, is carried out "substantially within the fabric of the existing building", "substantially retains the existing externals walls and roof of the building in its existing dimensions and locations", "minimises any increase in the height or gross floor area of the building" and "minimises any reduction in the landscaped area of the site". Such objectives assume that the development may be carried out outside the fabric of the existing building, without retention of the existing external walls and roof of the building or with an increase in the height or with a reduction in the landscaped area of the site. In such situations, the objectives of the apartment building adaptation controls are to limit the extent to which this happens by ensuring that the development, for example, is substantially within the fabric of the existing building. Such a provision would serve no purpose, in the case of an apartment building adaptation, if the definition of "apartment building adaptation" required the creation of an apartment building entirely within a building. 12 The LEP must be looked at as a whole in determining what the definition of "apartment building adaptation" means. The definition has to work in the context of the substantive provisions of the LEP and should not be construed so as to defeat those objectives. For that reason, I would reject the Council's notice of contention. For the reasons I have given, I agree with Lloyd J's conclusions about the construction of the LEP. 13 However, absent an opportunity for the appellants to put submissions on the question of whether, as a matter of fact, the development proposed was substantially within the building and in light of the terms of the consent order, which provided that the proceedings before Lloyd J on 4 August 2003 were limited to a determination of the preliminary questions of law, the appeal should be allowed. Although the appellants' construction argument failed, the appeal against Lloyd J's order dismissing their appeal to the Court is allowed and the appellants successfully resisted the respondent's notice of contention. In these circumstances, I am of opinion that the respondent should pay the appellants' costs of this appeal. 14 The orders I propose would be: 1. Appeal allowed; 2. Set aside the orders made by Lloyd J and in lieu thereof: (1) Answer the questions in the consent order: 1(a) No 1(b) Yes 1(c) No; (2) Remit the proceedings to the Land and Environment Court to determine; 3. The respondent to pay the appellants' costs of the appeal but to have a certificate under the Suitors' Fund Act 1951 if so entitled. 15 IPP JA: I agree with Sheller JA. 16 STEIN AJA: I agree with Sheller JA. ********** Last Modified: 07/12/2004 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.