Council of the City of Sydney v JMC Development Group Pty Ltd [2014] NSWLEC 137

Land and Environment Court New South Wales

Medium Neutral Citation: Council of the City of Sydney v JMC Development Group Pty Ltd [2014] NSWLEC 137 Hearing dates: 8 August 2014 Decision date: 08 August 2014 Jurisdiction: Class 4 Before: Pain J Decision: See paragraph 26 Catchwords: INTERLOCUTORY RELIEF - exercise of discretion whether to make orders on interlocutory basis restraining use of premises for short term accommodation whether as tourist accommodation or boarding house Legislation Cited: Environmental Planning and Assessment Act 1979 s 121B, s 121G Land Environment Court Rules 2007 r 4.2(3) Sydney Local Environmental Plan 2012 Cases Cited: Castlemaine Tooheys Ltd v South Australia [1986] HCA 58; 161 CLR 148 Tegra (NSW) Pty Ltd v Gundagai Shire Council [2007] NSWLEC 806; (2007) 160 LGERA 1 Category: Interlocutory applications Parties: Council of the City of Sydney (Applicant) JMC Development Group Pty Ltd (First Respondent) Alex J Investments Pty Ltd (Second Respondent) Mr Danny Masoud (Third Respondent) Representation: Mr C Norton (Applicant) No appearance (First Respondent) No appearance (Second Respondent) No appearance (Third Respondent) Council of the City of Sydney (Applicant) File Number(s): 40536 of 2014

EX TEMPORE Judgment 1The Council of the City of Sydney (the Council) moves on a Notice of Motion dated 6 August 2014. The motion as first served before me this morning sought orders as against the First and Second Respondents to restrain the use of premises at 106-108 Quarry Street, Ultimo, for the purpose of tourist and visitor accommodation, which accommodation is prohibited under the Sydney Local Environmental Plan 2012. Secondly, an order restraining the First and Second Respondents from using or causing or permitting the use of those premises for the purpose of a boarding house without first obtaining development consent. 2The first matter I consider is the fact that neither the First nor Second Respondents has appeared today. They were called outside the Court this morning and there has been no appearance on their behalf, and no communication to the Council at all from them. The first issue I resolved today was would I proceed on an ex parte basis. To that end, Mr Norton handed up four affidavits of Mr James Twigg, the first two being sworn on 29 July 2014. Mr Twigg, a licensed commercial agent process server, attests to serving the summons commencing these proceedings by leaving the relevant documents at the registered office of each of the Respondents. The Respondent JMC Development Group was served at 38 Claremont Road, Burwood Heights, which is confirmed in other material before me as the registered office of that company. The second affidavit sworn 29 July 2014 confirmed there was service on Alex J Investments Pty Ltd by leaving the documents at the registered office at 4 Russell Avenue, Frenchs Forest. The summonses were served in accordance with the relevant court rules. 3Turning now to service of the Notice of Motion brought on urgently by the Council today before me as the duty judge, I have read two affidavits of Mr Twigg sworn 7 August 2014. The first I will refer to relates to the service of the Notice of Motion on JMC Development Group at its registered office at 38 Claremont Road, Burwood Heights. In addition to the Notice of Motion, the Respondent company was served with the points of claim, the affidavit of Ms Fagan, sworn 4 August 2014; further affidavit of Ms Fagan, sworn 6 August 2014; an affidavit of Mr Simpson, sworn 4 August 2014; and an affidavit of Mr Hahn, sworn 6 August 2014; all of which affidavits have been read before me today. In addition, a letter was sent explaining to JMC Development Group the nature of the proceedings this morning. 4The same material was also served on Alex J Investments Pty Ltd at the registered office of that company at 4 Russell Avenue, Frenchs Forest as attested to in another affidavit of Mr Twigg, sworn 7 August 2014. I consider that service was properly effected on the two Respondents who are, it is clear from Mr Simpson's affidavit dated 9 August 2014, the owners of the premises in Ultimo that are the subject of the Notice of Motion. I therefore resolved this morning that I would proceed on an ex parte basis today. 5I now turn to the substantive material which the Council has relied on in making its application for interlocutory orders today. Mr Norton has provided a very comprehensive summary of the evidence he has relied on in this matter, which appears so thorough I can largely adopt his written submissions in relation to those affidavits. I will briefly outline what they relate to. 6Ms Fagan is an Area Planning Manager with the City of Sydney Council,. In her affidavit sworn 9 August 2014 she attests to her role at the Council. Most relevantly for these proceedings, she has searched the Council's records in relation to the development application history for the subject premises which she is obviously well qualified to do. She sets out that planning history at paragraph 12 of her affidavit. I note that in particular the premises currently have the benefit of a development application granted in 2006, which has been modified including most recently as 2010. The effect of that development consent and subsequent modifications is that the approval for the current use of the premises is as a single dwelling house. 7The plans approved for the premises are further identified by Ms Fagan in her next affidavit sworn on 6 August 2014 to which she has attached plans which show the currently approved use on three levels of the premises. Essentially what is approved for both the building construction and use of the premises is a single dwelling being a large, three-bedroom residence. 8I have also been provided with the affidavit of Mr Andrew Simpson, solicitor, sworn 7 August 2014, and he provides the relevant title searches relating to the property in Ultimo, the subject of these proceedings at lot 40, DP 255552, known as 106-108 Quarry Street, Ultimo. The property title search identifies the two Respondents as being owners as tenants in common and in equal shares. Mr Simpson also provides evidence of correspondence sent to the companies at their registered offices raising issues that are before me today. 9The other affidavit is fairly lengthy and I adopt Mr Norton's summary, in his submissions at par 7-18, of the affidavit of Mr Hahn dated 6 August 2014. This attests to the role of Mr Hahn as a building surveyor with the Council who has carried out four inspections of the premises. He provides extensive information about those four inspections in his affidavit. The first inspection was on 12 May 2014 when he attended the premises with officers from Fire and Rescue NSW. Mr Hahn attests to the extensive building work that has occurred in the building, which includes extensive partitioning of large areas to create many smaller rooms. 10Mr Hahn undertook a second inspection on 16 May 2014 following the service of emergency fire safety orders of the Council on the Respondents which required evacuation of the premises by 16 May 2014. He observed on that occasion that most of the furniture that he had seen on the previous occasion was still there. This furniture includes a very large number of bunk beds, wardrobes and drawers. Mr Hahn estimates some 60 beds have been provided in the premises across all floors. Signs up at the premises refer to the payment of rent for short term periods. 11Mr Hahn undertook a further inspection on 24 July 2014 where he noticed that there was still the same furniture in place and a large number of people were present. At this stage they were supposed to have all vacated the premises. He also noticed a new plasterboard partition had been erected creating what was the twenty-first numbered bedroom. His affidavit attests to the large number of rooms numbered throughout the premises, and I particularly note his description at paragraph 13 of his affidavit of the rooms and beds on the ground floor, first floor and top floor. 12Mr Hahn attests to the fact that the Council issued further fire safety orders on 25 July 2014 to the two Respondents once again requiring evacuation of the building, on that occasion by 12.00 pm on 29 July 2014. He attests to a fourth inspection of the building on 29 July 2014 to determine whether the fire safety orders had been complied with. On that occasion he noted that, essentially, there was no effective change in the state of premises as at 29 July 2014 and he observed approximately 12 occupants present at that time. 13Most importantly for my decision today are his chief concerns in relation to fire safety at the premises which he sets out and I accept but will not read out at paragraph 43 of his affidavit. I have been provided by the Council's solicitor with a copy of the Building Code of Australia (the Code) to which Mr Hahn refers in concluding that the current unauthorised use of the building for short-term accommodation means this is a class 3 building. The fire measures which are virtually nonexistent in the building come nowhere near meeting what would be required for such class of premises under the Code. 14At paragraph 44 Mr Hahn concludes that he considers that the current state of the building poses a very significant risk to the safety of occupants in the event of a fire emergency. Mr Hahn believes the fire safety issues raised should be addressed urgently as the risk could materialise at any time. He goes on to explain what further measures would be required in a class 3 building. 15An affidavit of Mr Mark Castelli, sworn 7 August 2014, a station officer with Fire and Rescue NSW was read. Mr Castelli sets out the efforts Fire and Rescue NSW has been making in relation to the premises, commencing with a visit on 29 April 2014 at which an order to install fire alarms was issued on the spot. Fire and Rescue NSW have made later inspections of the premises including in the presence of council officers, and his affidavit also attest to discussions with a Mr Danny Masoud who describes himself as the manager of the premises. I should also note that the Council has also been advised in writing by Fire and Rescue NSW of the concerns they have with the premises and that is as identified in a letter at annexure at C to Mr Castelli's affidavit. 16I have also been provided with a copy of emergency orders issued by Fire and Rescue NSW on 7 August 2014 (exhibit A) requiring that the use of the premises cease as of midday today. I have been informed from the bar table by Mr Norton that officers of Fire and Rescue NSW have gone out again at midday and found that there are people on the premises. It is the intention of Fire and Rescue NSW to issue an emergency evacuation order under s 121B of the Environmental Planning and Assessment Act 1979 (EPA Act) (which allows Fire and Rescue NSW to issue such an order following the issuing of an order 8). 17I have been referred to s 121G of the EPA Act which states that: (1) If an order will or is likely to have the effect of making a resident homeless, the person who gives the order must consider whether the resident is able to arrange satisfactory alternative accommodation in the locality. 18It also makes provision for what information should be provided in the event that an order may have that result. As Mr Norton said, the EPA Act is contemplating a situation where people would have to vacate premises urgently. 19I adopt the reference to authorities Mr Norton has referred to at par 19, 20 and 20A in his written submissions. Castlemaine Tooheys Ltd v South Australia [1986] HCA 58; 161 CLR 148 requires that I must be satisfied there is a serious question to be tried, that the Applicant will suffer irreparable injury for which damages will not be an adequate compensation, and that the balance of convenience favours the granting of an injunction. 20These matters were expanded on in Tegra (NSW) Pty Ltd v Gundagai Shire Council [2007] NSWLEC 806; (2007) 160 LGERA 1 by Preston J, where he identified that additional issues to be considered may include whether there is irreparable injury caused to the Applicant or the environment, whether damages are an adequate remedy, whether an undertaking as to damages is to be offered, where status quo lies, the nature of the interlocutory relief sought, the strength of each party's case, and whether there is prejudice to innocent third parties and the public interest. 21I have been referred to the parts of the Sydney Local Environmental Plan 2012 that pertain to the general residential zone in which the building is located. Dwelling houses are permitted with consent, tourist and visitor accommodation is prohibited. Boarding houses are permitted with development consent. Given the nature of the development consents which currently pertain to the premises, there is clearly a serious question to be tried about the current use of the premises as a boarding house being in breach of the existing consents, and the possibility that prohibited development of tourist accommodation is also taking place on the premises. 22In relation to the balance of convenience, I have alluded to the substantial fire safety risk that Mr Hahn attests to in his affidavit and also the evidence of the actions of Fire and Rescue NSW. This is clearly a matter where damages would not be an adequate remedy and it is generally a situation where I think I should issue an order. There is clearly a major health and safety concern given the state of the premises and the fire safety risk to the building's occupants. 23The only other matter I would like to address is the possible prejudice to innocent third parties, that is, the people who are currently availing themselves of short term accommodation at the premises. It is likely that if I make an order returnable in the near future it will have an impact on a number of people. That is outweighed, I believe, by the substantial fire risk at the premises. 24I will issue an order based on the amended Notice of Motion filed in Court with leave this afternoon. That sought to join a Third Respondent Mr Danny Masoud which amendment I allowed. I will make no orders in relation to the Third Respondent now. 25The Council has said it is not prepared to give an undertaking as to damages, the reasons being that it is acting in the public interest in enforcing public health and safety in taking these actions. As identified by Mr Norton, there is provision in the Land Environment Court Rules 2007, r 4.2(3), for an application in this form for the Court not to require in an interlocutory injunction an undertaking to damages, and I will not do so in making the order sought.