Land and Environment Court New South Wales Medium Neutral Citation: Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113 Hearing dates: 25 March 2015 Date of orders: 31 March 2015 Decision date: 25 March 2015 Jurisdiction: Class 1 Before: Moore SC Decision: See (43) Catchwords: DEVELOPMENT APPLICATION: shop top housing; meaning of "ground level"; meaning of "above"; meaning of "footpath level" Legislation Cited: North Sydney Local Environmental Plan 2013 Cases Cited: Abret Pty Ltd v Wingecarribee Shire Council [2011] NSWCA 107 Blackmore Design Group Pty Ltd v Manly Council [2014] NSWLEC 164 Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114 Hrsto v Canterbury City Council (No 2) [2014] NSWLEC 121 Category: Principal judgment Parties: Arco Iris Trading Pty Ltd (Applicant) North Sydney Council (Respondent) Representation: Counsel: Mr P Clay SC (Applicant) Mr C Drury, solicitor (Respondent) Solicitors: McKees Legal Solutions (Applicant) Sparke Helmore (Respondent) File Number(s): 11072 of 2014 Judgment 1. SENIOR COMMISSIONER: 134 Military Road, Neutral Bay, slopes from Military Road to the north to Grosvenor Lane at its rear. The site is developed across its entirety. At the Military Road frontage, there is a foyer at the western side of the street frontage of the building and a set of retail premises occupied, at least at the present time, by a tailoring business to the east of the foyer. Unit 3, which is the subject of this application seeking development consent to be converted from a commercial use to a residential use, is accessed via the foyer. Exhibit 4, attachment 2, reproduces, amongst other things, at plan DA0202 a section of the building on the site along the western side of the site. It discloses the following relevant matters. 2. First, from the entry to the building to the closest point in unit 3, that is the wall at its southern end, is a distance of 15 metres. From that wall to the door of the unit, as observed during the course of the site inspection this morning, although not a distance able to be ascertained with any precision from the plans, was on my memory some three paces or so from the boundary wall with the tenancy in unit number 6, that being the tailor shop. 3. Unit 3 is some six or seven risers up a staircase from the level of the entrance foyer. It is shown on the section in DA0202, to which I have earlier referred, as having a height of 1.31 metres above the ground floor level of the foyer. 4. It is to be observed from that plan that the ground floor foyer slopes slightly upward from the entrance at Military Road to the foot of the stairs, with the relative levels showing a difference of about 350 millimetres over that distance. It is therefore possible that the floor level of tenancy 3 is about 1.6 metres above the level of the footpath at Military Road. That is a matter to which it will be necessary to turn further later. 5. The council opposes the granting of development consent for the proposed conversion on two quite separate bases. The first is that it says that the development is prohibited and therefore it is not possible to be granted consent, but as a contingent basis, it then says but if I am not so satisfied and I conclude that development consent is capable of being granted to the application, it fails the test of a number of matters that are called into play by the North Sydney Local Environmental Plan 2013 and, particularly, by the North Sydney Development Control Plan 2013. 6. I turn, first, to the question of whether the proposed development is prohibited or not. 7. The whole of 134 Military Road is located in the B4 mixed use zone. Shop top housing is permitted as a nominated permitted form of development in that zone by the land use table. Dwellings generally, however, are not permitted. 8. Therefore, it follows that if that which is proposed to be created by the change of use cannot be characterised as shop top housing, it is a prohibited development in the B4 zone. To analyse and reach a conclusion on this issue requires consideration of a number of definitions contained in the local environmental plan. The first of them is the definition of shop top housing. It is a definition in the following terms: "Shop top housing means one or more dwellings located above ground floor retail premises or building premises." 9. It is necessary in this context then to consider, and later return to, what is a dwelling. A dwelling is defined as meaning: "A room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile." 1. There is not, as I understand it, any contest that that which is proposed by the conversion of unit 3 to be for the creation of a dwelling. Retail premises is separately defined in the local environmental plan, and I do not understand it to be contested that the tailor's premises, unit 6 at the Military Road frontage of 134 Military Road, constitute retail premises for this purpose. It is unnecessary to recite the lengthy definition. 2. Business premises are defined in the local environmental plan as meaning: "A building or place at or on which: (a) an occupation, profession or trade other than an industry is carried on for the provision of services directly to members of the public on a regular basis, or a service is provided directly to members of the public on a regular basis." 1. There is then a list of occupations and types of business that are included. It is unnecessary to set that out for the purpose of this judgment. 2. There is no dispute, as I understand it, that the former and now ceased use of unit 3 constitutes use of that space for business premises, nor do I understand that there is any dispute that what are described on the sectional plans as tenancies 1, 2 and 4, are also used for those purposes. Tenancy number 5 at the rear of the premises overlooking Grosvenor Lane was subject to a conversion to a residential use that occurred under a former planning regime, not relevantly applicable in these proceedings. 3. As a consequence of the slope of the land in its former state, gently sloping, as I have earlier noted, from Military Road to Grosvenor Lane, the plans show, for approximately 80% of the site, an under development car park. This car park, which is essentially underneath portion of tenancy 2, and entirely under tenancies 3, 4 and 5, has an exit to Grosvenor Lane at its northern end. 4. There was, during the course of the proceedings, a dispute as to how one should describe this car parking space in a vertical sense, it being agreed, as I understand it, that it does not satisfy the definition of a basement as set out in the local environmental plan, that definition being: "basement means the space of a building where the floor level of that space is predominantly below ground level existing, and where the floor level of the storey immediately above is less than 1 metre above ground level existing." 1. The three sections through the building that are contained on plans DA0202 and DA0203 show the marking of what was the existing ground level for the purposes of the definition of basement. It is obviously from that, that in the pre development phase it also had a slight cross slope from west to east. However, having regard to all of that, the car parking area cannot conceivably satisfy the test of it being a basement as it fails both limbs. It is neither predominantly below ground level, and the floor level of the storey immediately above is certainly more than 1 metre above the existing ground level. 2. How is it to be characterised? 3. The building, as I have earlier indicated, is built from boundary to boundary. It slopes from Military Road to Grosvenor Lane. I am satisfied that it is possible to have two ground levels to a single building provided each ground level relevantly addresses a street frontage. The fact that one of the ground levels, in this case the car park, is a car park rather than some form of active use, does not mean that it is other than being a ground level. 4. I am therefore satisfied, for that reason, that any rational consideration of any of the sections contained in the two plans to which I have earlier referred, discloses that there is a car park which is at ground level, running at ground level to the south from Grosvenor Lane. 5. What then is the test of whether a proposed dwelling can be shop top dwelling for the purposes of the earlier definition? 6. That matter was dealt with by Sheahan J in Hrsto v Canterbury City Council (No 2) [2014] NSWLEC 121. His Honour held that it was necessary for the purpose of the definition of shop top housing for the lowest point of any dwelling that was proposed to be regarded as shop top housing to be entirely above ground floor retail premises or business premises, that is there have to be a vertical surmounting of the shop top housing from the underlying qualifying premises. However, importantly for these proceedings, his Honour also made it clear that it was possible for there to be a lateral displacement in such circumstances, in that there did not need to be a true directly vertical correlation between the shop top housing and the qualifying premises at the lower level. 7. In these proceedings I have a copy of the strata plan and sheet 2 of that strata plan, plan 20545, formed part of exhibit B in the proceedings. It discloses (in what it calls a basement, but which I have held for the purposes of these proceedings should be regarded as a ground floor level measured from Grosvenor Lane) that there are eight car parking spaces that are in this area, with a number of them along the western wall being allocated to premises that are units above. For the purposes of that with which I am now dealing, car parking space number 2 is allocated directly to tenancy 2 which is a tenancy used for commercial purposes. It is clear from an examination of DA0203 that that car parking space is directly below the lower level of tenancy 3 and under a significant portion of the upper level of tenancy 3. 8. For the purposes of shop top dwelling, the fact that there are two car parking spaces in the car park allocated to unit 3 is not, in my view, a matter that need detain me, and that those car parking spaces cannot form part of the dwelling for the purposes of definition or satisfaction of the definition of shop top housing. That, in my view, is the necessary conclusion that flows from the decision of Biscoe J in Blackmore Design Group Pty Ltd v Manly Council [2014] NSWLEC 164 where, in para 6 of his Honour's judgment, he sets out in subpara (a) further details concerning the development, the details of the parking space, it being necessarily to be inferred, in my view, from the number of parking spaces dealt with by his Honour, that some of those parking spaces must have attached to the residential dwellings that were to be located above. 9. As a consequence, consistent with the approach his Honour has taken in Blackmore Design, I do not consider, for the purposes of the definition of a dwelling, that the parking spaces form part of it. 10. However, critical to the approach that I need to deal with in these proceedings is whether the parking spaces in the Grosvenor Street ground level that attach to commercial premises are part of those commercial premises for the purposes of the definition and the shop top housing definition. First, it is appropriate to note at this point that each of the relevant parking spaces is allocated to, and forms part of, the relevant unit within the strata plan to which they are attached, and it is not a position where there is an entitlement at large for any particular unit to park in one of the parking spaces. They are identified on the strata plan and attaching to the relevant unit. 11. There is a difference between a use and a purpose. That is a matter that was discussed at some length by the Chief Judge in Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114, 151 LGERA 400. It is unnecessary for me to deal with that decision at length because in Abret Pty Ltd v Wingecarribee Shire Council [2011] NSWCA 107, Beazley JA, as she then was, noted at para 50 that his Honour the Chief Judge, had extensively reviewed the question of the case law and characterisation of uses and purposes in Chamwell and it was unnecessary for her Honour to deal with it further in light of that summary. It would be presumptuous of me to consider that I needed to go further than her Honour did in that decision. At 52 in Abret her Honour observed that: "The characterisation of the purpose of a use of land is done at a level of generality which is necessary and sufficient to cover the individual activities." 1. In para 53 her Honour said: "Preston CJ of the LEC held that the use of the car park and associated activities was subordinate to the purpose of the supermarket and were not capable of being for an independent use of a road. Accordingly, they were properly to be characterised as for the use of a shop, namely the supermarket, and thus the development in that instance was prohibited in the 2B zone." 1. That is a precise summation of the approach that I consider I should take following from Chamwell and Abret in these proceedings. 2. In this case, in addition, the car park allocated to commercial premises in the lower level constitutes part of the strata unit. Unit 3, the subject of this development application, is above, directly as it happens, in one instance part of a business premises, and is by examination of the relevant sections above part of two others, although not in a direct vertical sense. The use of those spaces, I am satisfied, as matter of fact necessarily following from an examination of them during the course of the site inspection - that is that they are accessed through a security door - are clearly intended to be used by the proprietors or operators of the business, or those directly associated with them, and are not for casual public parking and leads inevitably to the conclusion, in my view, that those parking spaces make the activity of parking as a subordinate purpose to the use of the premises to which they attach. 3. As a consequence of that parking forming part of the strata allotment to which it is attached, I am of the view that the test posed by his Honour in Hrsto is satisfied; that that for which the application is made is shop top housing; and that that is a permissible application to be considered in the context of these proceedings. 4. I know turn to the merit matters. 5. There are a number of matters in framework to which I need refer. The first is one of the aims of the North Sydney Local Environmental Plan 2013 contained in cl 1.2(2)(a) to promote development that is appropriate to its context and enhances the amenity of the North Sydney community and environment, and that which is contained in (c)(2), to maintain and provide for an increase in dwelling stock where appropriate. 6. It is my understanding from the way the council presents its case in these proceedings that the use of the word "appropriate" in each of those aims is transgressed by that which is proposed in this application. 7. Clause 2.3(2) of the LEP requires me to have regard to the objectives for development in the relevant zone, this being in the B4 mixed use zone, as earlier noted. The relevant objective of the zone is the fourth of the dot points and it is in the following terms: "To maintain existing commercial space and allow for residential development in mixed use buildings with non-residential uses on the lower levels and residential uses above those levels." 1. First, I observe in passing that Mr Drury, solicitor for the council, relied on the use of the plural "levels" in the council's position that there was only one level between that which is proposed and that to the bottom of the development. To the extent that that might be a relevant matter for consideration, it is in my view easily disposed of, given that I have held that there is a ground level fronting Military Road, a separate ground level fronting Grosvenor Street. Both of those levels are below unit 3, therefore there are two lower levels, and that that interpretation does not stand as an impediment. 2. In furtherance of the objectives, the council has published, in its 2013 North Sydney Development Control Plan. in s 2, a number of matters relating to commercial and mixed use developments. As I understood the matters that were raised in the merit aspects by the council, and supported by Ms Pearson who gave planning evidence on behalf of the council, that it is the failure of the proposal to interact in an appropriate fashion, consistent with either the streetscape objectives and provisions for commercial and mixed use development or the desired future character provisions of the North Cremorne planning area within which the premises lie engaged. 3. It is, in my view, sufficient to dispose of these contentions simply by addressing that which is said to be the necessary trigger or triggers for compliance to be required. 4. They lie in how I should regard the location of unit 3 with respect, particularly, to Military Road. I have earlier referred to the fact that exhibit 4, attachment 2, contains a section (a) of the building at plan DA0202, and that that discloses that the wall of unit 3 is at approximately 1.6 metres above the Military Road footpath; set back some 15 metres to the closest point of the unit from the entry door to the premises; and up six or seven steps. 5. Ms Pearson says that I should regard that being as either ground level or footpath level for the relevant matters that are called up by the development control plan. 6. That, in my view, is an absurd proposition and unable to be supported on any rational consideration of the facts. It is highlighted by the fact that Ms Pearson says that, consistent with her interpretation, unit 5 which is at the rear, which is 36 metres from the door and is entirely one level above Grosvenor Lane, should still be regarded as being at ground level or, relevantly, footpath level for the purposes of these provisions.Whether that absurdity is necessary to found my conclusion or not is perhaps a matter I can set aside. 7. Dealing with the matter entirely in the context of unit 3 and its vertical separation from the footpath level at Military Road, there is no rational basis, in my view, upon which I could conclude that it is either at footpath level or at ground level. 8. Having reached that conclusion, on my understanding of the council's case, there are no matters relevantly of contest arising concerning the development control plan. Having reached that conclusion, I note, however, that condition C1 in exhibit 3 needs to be further subject to drafting revision, although I also note that it is agreed between the parties that the redrafting is desirable and that the general parameters for the re-drafting are agreed. 9. As a consequence, subject to revised settled conditions being filed electronically as .doc document, the orders of the Court will be, when they are provided, the appeal will be upheld; Development Application DA245/14 to convert lot 3 in strata plan 20545 known as unit 3, 134 Military Road, Neutral Bay, from commercial to residential use will be determined by the granting of development consent, subject to the conditions to be settled, and that will, when provided, be annexed to the orders. The exhibits other than exhibits A, B, 2 and 3 are now to be returned. 10. To enable matters to be finalised I give the following direction. * The respondent is to file, electronically by the close of business on 30 March 2015, settled revised conditions of consent. 1. To guard against the contingency that that direction is unable to be complied with for some reason, the matter is listed at 4.15pm on 31 March 2015 before me on the basis that if the direction is complied with I will make orders in chambers and vacate the mention. Tim Moore Senior Commissioner 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. Decision last updated: 24 April 2015