Council of the City of Sydney v Oaks Hotels & Resorts (NSW) No.2 Pty Ltd
[2010] NSWLEC 182
•30 September 2010
Land and Environment Court
of New South Wales
CITATION: Council of the City of Sydney v Oaks Hotels & Resorts (NSW) No.2 Pty Ltd [2010] NSWLEC 182 PARTIES: APPLICANT
Council of the City of Sydney
RESPONDENT
Oaks Hotels & Resorts (NSW) No.2 Pty LtdFILE NUMBER(S): 40516 of 2009 CORAM: Sheahan J KEY ISSUES: INJUNCTIONS AND DECLARATIONS :- use of residential apartments as serviced apartments with no relevant approval on foot - question of relief - concurrent class 1 proceedings LEGISLATION CITED: Conveyancing Act 1919
Environmental Planning and Assessment Act 1979
Property, Stock and Business Agents Act 2002
Residential Tenancies Act 1987
Central Sydney Local Environmental Plan 1996
Sydney Local Environment Plan 2005CASES CITED: Council of the City of Sydney v Oaks Hotels and Resorts (NSW) No.2 Pty Ltd [2010] NSWLEC 181 DATES OF HEARING: 10 February 2010
DATE OF JUDGMENT:
30 September 2010LEGAL REPRESENTATIVES: APPLICANT
Mr M Baird, Barrister
SOLICITORS
Council of the City of SydneyRESPONDENT
Mr T Hale SC with Mr J Maston
SOLICITORS
Minter Ellison
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESSheahan J
30 September 2010
JUDGMENT40516 of 2009 Council of the City of Sydney v
Oaks Hotels and Resorts (NSW) No. 2 Pty Ltd
Introduction
1 His Honour: These proceedings concern the use and operation of an apartment block known as “Oaks Harmony”, at 107-121 Quay Street, Haymarket (‘Harmony’). Separate but similar proceedings between the same parties (40515 of 2009), heard immediately prior to the present case, concern “Oaks Maestri Towers” (‘Maestri’), and are the subject of judgment [2010] NSWLEC 181.
2 The proceedings concern the Council’s allegation that some of the 197 apartments are being used as “serviced apartments”, in contravention of the conditions of relevant development consents.
The Pleadings
3 The Council’s summons, issued on 31 July 2009, seeks the following declaratory relief and orders:
- “1. A declaration that the Respondent is carrying out development at the premises situated at and known as ‘Oaks Harmony’, 107-121 Quay Street, Haymarket, NSW (‘the Premises’) for the purposes of ‘serviced apartments’ (‘the said Purpose’) in contravention of the conditions of Development Consents D/00/01015P and D/2003/860A and in breach of s.76A(1) of the Environmental Planning and Assessment Act 1979 (‘the EPA Act’).
The following orders are sought:
2. An Order restraining the Respondent (by itself or through a related entity or agent) from using or permitting the use of the Premises for the said Purpose until development consent for such use is granted pursuant to the EPA Act and such consent is in force.
3. An order restraining the Respondent (by itself or through a related entity or agent):
- (a) from advertising or holding out the Premises or any part of them as available for the said Purpose; and
(b) from leasing or licensing the Premises or any part of them for the said Purpose
without first obtaining a development consent specifically authorising the said Purpose.
5. Such further or other orders as this Honourable court deems fit.”
4 The Council contends in its detailed Points of Claim (‘POC’), filed on 25 September 2009, that, in accordance with the relevant development consents, properly construed, none of the apartments in the project may be lawfully used as serviced apartments (POC 23), but that (1) on a number of occasions in 2008-09 some apartments were used for overnight or short-term accommodation (POC 32); (2) receipts for such use were issued by the respondent, and (3) some units are available to be so booked through various agencies (POC 33-5).
5 When it received a complaint on 28 August 2007 (POC 24), Council’s solicitors wrote to the Oaks Group alleging illegal use of residential apartments as serviced apartments. The solicitors for Oaks Hotels and Resorts Limited asserted in reply that the group was not leasing out apartments as serviced apartments and that all units in the building were either owner-occupied or occupied by a tenant holding a lease under the Residential Tenancies Act 1987 (‘the RT Act’) (POC 25-27).
6 Following a further complaint in April 2008 (POC 28) Council identified that units in the building were being offered for short-term accommodation via the internet (POC 29). The Owners Corporation claimed in July 2009 that all the approved residential units were either owner-occupied or subject to leases under the RT Act (POC 30-1).
7 The respondent’s Points of Defence (‘POD’) filed 16 October 2009 denied the Council’s assertions in relevant POC, and any entitlement to relief. The respondent also pleaded discretion. It chose to put on by way of evidence only the relevant class 1 application (No.10/10055) filed by it against the Council on 5 February 2010 (Exhibit R1).
8 By letter dated 12 August 2009 (Exhibit S5), Council put the relevant owners corporation (SP 72673) on notice that unit holders might be in breach of the law if their units were allowed to be used as serviced apartments, contrary to relevant conditions and covenants (see T10.2.10, p25, L12-p26, L34). However, neither the corporation nor any owners is/are parties to these present proceedings.
The Oaks Group of Companies
ASIC Searches
9 The proceedings have been brought against Oaks Hotels and Resorts (NSW) No.2 Pty Ltd ACN 114 193 065 (‘Oaks 2’), first registered 10 May 2005. Oaks 2 is but one of a number of related companies in what might, for simplicity, be referred to as “The Oaks Group”.
10 The respondent company, Oaks 2, is a wholly owned subsidiary of a “holding company”, Oaks Hotels and Resorts Limited ACN 113 972 366 (‘OHR Ltd’), first registered on 26 April 2005.
11 The business name “Oaks Harmony” is registered, pursuant to the provisions of the Business Names Act 2002, in the name of Oaks Hotels and Resorts (SA) Pty Ltd ACN 108 230 164 (‘Oaks SA’). The name was first registered 8 December 2004, and the search suggests, in its normal terminology, that Oaks SA has been “carrying on [the Harmony’] business” since 8 December 2004.
Prospectus
12 In evidence (as Exhibit S2) is the prospectus for the float of OHR Ltd. The prospectus says that “Oaks” was founded in 1991 by its CEO Brett Pointon. The Chairman of the company, quoted in the prospectus, is Mr John Cowley, a former senior executive of News Limited. Cowley is described (at p37) as a non-executive independent Chairman. He and Pointon are two of about six directors of the holding company, and Pointon is the only director of Oaks 2, with Pauline Elizabeth Coles as secretary. Leanne Summers is described (at p39) as Corporate Services General Manager. Only John Cowley and Peter Barrow are described as independent non-executive directors, although Messrs Archer and Greenslade are also non-executive directors (p103).
13 In his “letter” dated 15 November 2005 (on p1 of the prospectus), Mr Cowley says:
- “ Oaks occupies a strong position within the hospitality industry as a specialist management and letting rights [‘MLR’] business”.
14 In the glossary at the back of the prospectus (at p95), the term “MLR” is defined as “management and letting rights in respect of serviced apartments”. “MLR agreements” are made between The Oaks Group and the body corporate for each complex for periods of 5 to 30 years (p70, s 8.2.3). The prospectus notes (pp6-7) that the group has properties throughout Australia and New Zealand, including six in Sydney – “21 properties currently under management with six more under contract and due to open by June 2007 and a further stage of Shores to be completed in 2006”. “Harmony”, “Maestri”, and “Trafalgar” (at 361-363 Kent Street) are identified among those group properties. Harmony is pictured in the prospectus (at pp 20 and 77) .
15 In the “Investment Overview” section of the prospectus (at p12), Harmony is shown as having opened in January 2005 with total room numbers of 189, and a star rating of 4.5 (explained on p33). The number of rooms “under management” is shown as 110. The following explanatory footnote appears in the relevant section of the prospectus (at pp12 and 32):
- “ Rooms under management are based on the actual number of rooms Oaks made available as either short stay or permanent rental serviced apartments as at 30 September 2005, except for Collins Street. This takes into account those multi-bedroom apartments with appropriate facilities that are able to be made available as more than one room, commonly known as ‘dual keys’. ….”
16 In the prospectus (s 8.2.5 on p70) the following text appears under the heading “Performance Risk”:
- “ In addition to receiving the body corporate management fee in consideration for performing caretaking responsibilities for each property, the Company will also derive income from individual apartment owners for whom Oaks provides a letting service. Accordingly, the performance of the company depends, to large extent, on the ability of the Company to preserve its contractual arrangements with apartment owners in relation to managing their property and to maintain and grow the letting pool of each MLR business.
- In accordance with legislative requirements, apartment owners presently in the letting pool for each property under Oaks’ management are able to terminate Oaks’ appointment as letting agent by providing 90 days notice of the same to Oaks. The Company will manage this risk by continuing to deliver quality services and good returns to apartment owners, as well as maintaining good relationships with the individual apartment owners and relevant bodies corporate”.
The Issues
Council’s allegations
17 As already noted, allegations as to unauthorised use of units within Harmony were the subject of communications between solicitors for the Council and solicitors for the holding company respectively, in October 2007, following a complaint (POC 55 and [5] above).
18 On 10 October 2007, a letter (Annexure ‘A’ to Snell) was sent to the General Manager of the holding company, OHR Ltd, indicating Council’s concern at that “company’s ongoing illegal use of residential premises as serviced apartments”. Trafalgar, Maestri, and Harmony were all named in the letter, and the Council referred to the prospectus, which said (Exhibit C2, at par 8.2.4 on p70):
- “ In respect of four properties in the Oaks’ portfolio, a number of apartments zoned for permanent residential use are being used for short stay service accommodation. Accordingly, Oaks is applying to the relevant authorities to change the zoned use from permanent residential use to short stay serviced apartment use. There is a risk that these apartments will not be rezoned. If that occurs and the apartments must be used for permanent residential accommodation, this could adversely affect the forecast revenue for those three properties ”.
19 The Council contended that the group/company was, therefore, aware (1) that the use of various buildings under its management for short stay as serviced apartments was illegal, and (2) that the company considered compliance with the planning laws to be a business risk. Undertakings were sought and Class 4 proceedings threatened. Specifically the Council asked the company to do the following:
- “ 1. Provide details of the location of the four buildings referred to in paragraph 8.2.4 of the Prospectus;
2. To the extent that any of the buildings referred to in paragraph 8.2.4 are located in the Sydney local government area, provide a written undertaking to the Council that the units in the buildings will not be let for the purpose of short stay serviced apartments. In this regard the Council considers any stay of less than three month (sic) to be short term.
3. Provide evidence that you have advised the Australian Stock Exchange that the zoning risk identified in paragraph 8.2.4 of the Prospectus has become a reality and that the apartments referred to in that paragraph may now only be used for permanent residential accommodation.”
20 Solicitors for the holding company (Storey & Gough) replied on its behalf on 26 October 2007 (Annexure ‘B’ to Snell) in respect of each of the three relevant projects and, in respect of Harmony, said:
“… we are instructed to undertake investigations as to its current and desired use, to retain consultants to work with Council to prepare and submit any necessary application if required.
- In the circumstances, we request that Council refrain from commencing proceedings until our client has been given the opportunity of taking advice and, if necessary lodge an appropriate application.”
21 The solicitors’ response concluded:
“ We are hopeful of achieving an outcome that will resolve Council’s concerns without the necessity of enforcement proceedings. To this end, we would appreciate Council’s understanding of our client’s position and our client’s genuine endeavours to resolve Council’s concerns”.
22 Storey and Gough wrote again to Council on 29 April 2008, in specific reference to Harmony, and allegations regarding apartments in it being leased by Oaks Group as serviced apartments, saying:
- “ We are instructed that the Oaks Group is not leasing out apartments as serviced apartments contrary to Development Consent D/2000/01015. All units in the building are either owner/occupied or occupied by a tenant with a residential lease under the Residential Tenancy (sic) Act 1987.
- In these circumstances , the Conditions of Consent are being complied with”.
23 Ms Snell deposes (par 6) that in her review of the Council records she could find no record of the Council receiving the disclosure requested in its letter of 10 October 2007 as to the identity of the four properties to which the prospectus referred (in par 8.2.4).
The Respondent’s Case
24 The respondent argues that these proceedings are inappropriately brought against it, primarily because it operates only as a “real estate agent”, as defined in s 3 of the Property, Stock and Business Agents Act 2002 (“the Agents Act”), and in so operating is not “developing” or “using” land, such that it (cf. perhaps other Oaks companies) can be in breach of the EPA Act, as alleged.
25 As already noted, “discretion” was specifically pleaded in the POD, and several arguments on that point were also articulated, including the absence of any environmental harm to justify the court’s intervention.
The question of relief
26 At the end of the hearing the applicant Council argued its case for the granting of the relief sought, and the respondent also made its submissions on that question.
27 However, the respondent submitted (T10.2.10, p36, LL48-50) that the court should make no orders while the relevant class 1 proceedings remain on foot (see [7] above).
Planning and Development Evidence
28 Harmony is zoned “City Centre” under Sydney Local Environment Plan 2005 (‘LEP 2005’ – Exhibit S1, tab 1), under which plan the use of the premises as “serviced apartments” is permissible with consent. The term “serviced apartments” is defined in Central Sydney Local Environmental Plan 1996 (‘LEP 1996’ – Exhibit S1, tab 2).
29 LEP 2005 (Exhibit S1, tab 1, at pp47-48) includes the following definitions:
- “ Residential accommodation in Central Sydney means a building or part of a building that provides permanent or long term accommodation, and includes residential flat buildings, dwellings, boarding houses, hostels, student accommodation and the like.
- Serviced apartment in Central Sydney is a form of tourist and visitor accommodation and means a building or part of a building that provides self-contained accommodation which is serviced or cleaned by the owner or manager of the apartments or the owner’s or manager’s agents.”
30 LEP 1996 includes the following definitions (Exhibit S1, tab 2, at p107-108):
- “ Residential building means a building which contains one or more dwellings, and in which the residential component is owner-occupied or occupied by a tenant with a residential tenancy agreement within the meaning of the Residential Tenancies Act 1987.
- Serviced apartments means a building containing two or more self-contained dwellings:
(a) which are used to provide short-term accommodation, but not subject or residential tenancy agreements within the meaning of the Residential Tenancies Act 1987, and
(b) which are serviced or cleaned by the owner or manager of the apartments or the owner’s or manager’s agents.”
31 Timothy Wise, a senior planner at the Council, deposes in his affidavit sworn 30 July 2009 (‘Wise’) that a thorough search of the records of the Council reveals no approval for the use of any of the subject property as serviced apartments, but several relevant Council approvals, namely Development Consent D/00/01015 (current version ‘P’), and Development Consent D2003/00860A. (These consents appear in several places among the evidence, including Exhibit S1, tabs 5 and 6).
32 On 13 December 2000, Hayson Enterprises Pty Ltd lodged a Development Application D/00/01015, seeking consent to demolish the then “Her Majesty’s Theatre” and an adjacent two-storey commercial building, to enable the construction of a 16 storey building containing 197 residential strata apartments, some ground floor retail and commercial space, and four levels of basement parking for 209 vehicles. The development application was approved on 12 March 2001.
33 Relevantly Condition 10 of the development consent provides as follows:
(10) The following restriction applies to buildings approved for residential use:‘RESTRICTION ON RESIDENTIAL DEVELOPMENT
- (a) The accommodation portion of the building (Ground Level to Level 16) must be used as permanent residential accommodation only and not for the purpose of a hotel, motel, serviced apartments, private hotel, boarding house, tourist accommodation or the like, other than in accordance with the Central Sydney Local Environmental Plan 1996.
(b) All approved residential units in the building must be either owner occupied or occupied by a tenant with a residential lease under the Residential Tenancy (sic) Act 1987. A certificate signed by the owner or the body corporate (if the development is strata subdivided) or a solicitor (holding a current certificate to practice), must be forwarded to Council within 12 months of the completion of the development, and every 12 months thereafter, certifying that all units approved in the residential building are either owner occupied or are subject to residential leases under the Residential Tenancy (sic) Act 1987
(c) A restrictive covenant is to be created pursuant to Section 88E of the Conveyancing Act, 1919, restricting any change of use of the Ground Level to Level 16 of the building from residential as defined in the Central Sydney Local Environmental Plan 1996. The covenant is to be executed prior to issue of a Construction Certificate under the Environmental Planning and Assessment Act 1979 to the satisfaction of the certifying authority (Council or a private accredited certifier). All costs of the preparation and registration of all associated documentation is to be borne by the applicant.”
34 That development consent was the subject of various applications for modification and/or review, none of which impacted upon the terms of Condition 10. The current consent carries identifier ‘P’ and that relevant modification application was approved on 20 August 2004 (see Annexure ‘B’ to Wise. The stamped plans are at Annexure ‘C’).
35 On 26 August 2003 Meriton Apartments Pty Ltd lodged D/2003/00860 seeking consent to the strata subdivision of the approved development D/00/01015P. The strata subdivision application was approved as D/2003/860/A on 19 November 2003.
36 Condition 10 of that approval (‘D’ to Wise, at p80) provides as follows:
- ‘ RESIDENTIAL USE RESTRICTION
- (10) The residential component of the building must be used for permanent residential accommodation only and not for the purpose of a hotel, motel, serviced apartments, boarding house, tourist accommodation or other short term rental accommodation.
- A documentary Restriction on Use is to be created over all residential lots in the Strata plans, pursuant to Section 88B of the Conveyancing Act 1919, appurtenant to Council and to its satisfaction, in terms to this effect and prohibiting any use other than Residential as defined in Central Sydney Local Environmental Plan 1996”.
- (The strata subdivision approval was modified in a minor way by a Council decision of 4 May 2004, which did not have any effect on Condition 10).
37 Pursuant to the conditions of those two consents, various restrictive covenants were placed on the strata plans 72673 and 73143. Clause 3 of each (pp 82 and 86 of Annexure ‘E’ and ’F’ to Wise), provides as follows:
- “ TERMS OF RESTRICTION ON USE OF LAND THIRDLY REFERRED TO IN THE PLAN
3.2 This restriction on use may only be varied, modified or extinguished with the consent of the authority benefited. ”3.1 The owner of the lot burdened must not use or allow to be used the lot burdened for a use other than residential use (or uses associated with residential use such as car space use or storage use) as defined in Central Sydney Local Environmental Plan 1996 as varied or replaced.
38 A later application by Meriton (D/03/00873 – received 27 August 2003) seeking approval to change the use of all residential units to allow flexible use of individual units for residential or serviced apartment use at the discretion of the owner (see p89 of Annexure ‘E’ to Wise and tab 7 of Exhibit S1) was withdrawn on 30 October 2003 (tab 8 of Exhibit S1).
39 On 21 October 2009 the respondent company lodged with the Council a development application (D/2009/2071). The class 1 application to which I referred above ([7] – Exhibit R1) appeals against its deemed refusal by the Council. The subject development application nominated 49 apartments within Harmony, and seeks approval for a change of their use from permanent residential to serviced apartments. The 49 apartments are located throughout the building. The outcome for the complex would be 26% serviced and 74% residential. The serviced apartments would continue to be managed by Oaks 2 on behalf of unit owners, with a 24 hour check-in concierge service, security, etc. systems and controlled servicing. As all apartments are furnished with kitchen facilities there would be no room service provided.
40 The accompanying Statement of Environment Effects (‘SEE’ – included in Exhibit R1) asserts that the building is managed by the respondent company on behalf of the unit owners, and that the market for the serviced apartments is longer-stay guests. Annexure ‘D’ to the SEE lists the following apartments as affected by the application: 24, 27, 33, 35, 43, 44, 45, 47, 49, 52, 60, 64, 65, 68, 72, 83, 86, 91, 93, 94, 95, 96, 99, 100, 103, 108, 109, 111, 121, 122, 125, 128, 129, 139, 143, 147, 149, 153, 160, 161, 169, 174, 176, 180, 183, 185, 186, 189, and 191. These apartments are located on levels 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20, and range in size from studio apartments to two-bedroom apartments.
Council’s other witnesses
Lesley Nash – Management Agreements
41 Lesley Nash, a law clerk employed by Council, affirmed two affidavits in the proceedings, one dated 19 October 2009, to which some documents were annexed in error, and the second affirmed on 5 February 2010, explaining and correcting the error. She deposes to her examination and review of 420 pages of property management documents, produced on subpoena by the holding company OHR Ltd and the related company Oaks Hotels & Resorts (NSW) No.1 Pty Ltd (all contained in Exhibit S4).
42 She annexed to her later affidavit (cf. the earlier affidavit’s annexures), and identified, examples of three types of “agreement” document:
(B) “ Addendum to appointment of agent – letting and property management” (‘LPM’);
(C) “ Essential terms and conditions – appointment of agent ” (‘AoA’);
(D) “Residential tenancy agreement” (‘RTA’).
43 The LPM (in annexure ‘B’ to Nash) shows the owner of a unit appointing Oaks 2 as “agent”. The document sets out in s 4 what services the agent is to perform – “letting/leasing a property”, “collection of rent”, and/or “other property management services” (identified as “marketing the property, supervising the repairs and maintenance and refurbishment, and payment of accounts as requested or agreed”).
44 The agent must (s 4.1) competently and diligently let the apartment, and may accept bookings from tourism wholesalers and accept wholesaler industry rates.
45 The agreement specifies (s 4.2) the type of appointment, whether a single appointment for a particular service, or a continuing appointment for a number of services over a period. That period can be terminated 90 days after written notice by one party to the other. A commission is payable (s 5), being 5% of the accommodation rentals collected (plus GST). Body Corporate levies, Council rates, insurance and repairs, etc. remain the responsibility of the “client” owner (s 6). The agent, in a “special condition” (s 8), offers the clients a performance undertaking, which includes a term of 24 months, and provides for a gross payment per month.
46 Under the “addendum” to that LPM appointment document (also in ‘B’), the client owner acknowledges that the agent is the only person authorised, and that the agent lets other premises in the complex. The agent will set both rentals and tariffs to maximise rental income for the client and is authorised to supervise the daily servicing, minor repairs, etc. The agent is not required to commence legal proceedings for overdue rent or damage. Other responsibilities are set out in s 5, including supervision of daily servicing, and depositing “all accommodation rental received on behalf of the client into a trust account prior to disbursement”. The client owner retains a right (by s 8) to use and occupy, or have relatives or friends use or occupy, subject to availability. Occupants must “check in” even if it is the client owner himself. There are elaborate provisions regarding the transfer of management rights (s 13) in which the term “letting pool members” is used – it means “investors in the letting pool excluding the letting agent and its associates”.
47 The AoA (in annexure ‘C’) looks very similar to the LPM in annexure ‘B’, except that it does not have the special condition regarding the performance undertaking, and, instead of the addendum document, there is a document entitled “Essential terms and conditions – appointment of agent”. That document includes a “performance undertaking” (at s 3), and sets out (in s 4) “client obligations”, and (in s 5) “client acknowledgements”. Whereas the addendum document in ‘A’ talks about the agent subletting premises to other parties, the “essential terms” document talks about using the property in the serviced apartment pool for short and long term lettings. On examination, many of the conditions are the same (the document looks like simply a later model or version).
48 The RTA (in annexure ‘D’) is a standard real estate industry residential tenancy agreement for a tenancy of less than three years. In that annexure, Oaks 2 is named as the tenant, but may include “other people who will ordinarily live at the premises”.
49 Ms Nash reviewed “all of the copies of management agreements” produced in the proceedings, and prepared a summary report (Annexure ‘D’ to the first Nash affidavit), in which she lists all the documents and in respect of each gives the following particulars in columns: Unit address, owner, date of document, type of agreement (B, C or D), and “relevant clauses”. 57 documents are studied (45 LPM, 6 RTA, and 6 AoA, bearing dates in the range 1 March 2005 to 9 August 2009).
50 In respect of documents of type ‘LPM’, Nash highlights a dollar amount per month “performance undertaking”, (cl 5) daily servicing and marketing of the building as a quality apartment hotel, (cl 8) use of the unit by the client, and (cl 9) use of the unit for promotions.
51 In documents of type ‘AoA’, Nash highlights (cl 3) “performance undertaking $xxx to include in the service apartment letting pool”. She also mentions cl 5.1 which acknowledges that lettings can be either short or long term, cl 10 which requires the agent to fully furnish the apartment “for the purpose of the service apartment operation”, and (cl 11) “use by the client”.
52 Each of the six RTA documents has its own individual aspects noted, but Nash notes, in particular, the number of persons allowed to live at the premises at any one time.
53 In respect of some particular apartments Nash notes special features of the agreement in place (of whatever type), e.g. dealing with furnishings.
Peter Harding – Renting Apartments
54 Peter Harding, Council’s Manager of Health and Building since 2004 swore two affidavits, one dated 30 July 2009, and the other 24 September 2009 (‘Harding’). His duties include supervision of 112 staff, including Council’s compliance investigation staff. He commutes on a daily basis from the Central Coast and his contract provides for some overnight accommodation in Sydney. As part of Council’s investigations of the subject matter of these proceedings, he was instructed to secure overnight accommodation at Harmony, on several occasions.
55 On 4 November 2008 he stayed in “Room 68 on Level 10”, on 10 December 2008 in “Room 44 on Level 9”, on 26 February 2009 in “Room 43 on Level 9”, and on 15 &16 September 2009 in “Room 100 on Level 13”.
56 In his affidavits Mr Harding gave evidence of his personal observations, and of some conversations with Reception staff, notably ‘Corrina’, ‘Deborah’ and ‘Rochelle’.
57 His relevant observations were of the provision in the “rooms” of single-use towels, toiletries, tea/coffee etc, and of guest information for “short term customers”.
58 I am prepared to allow the evidence of conversations with staff, but not as admissions of any breach of the law. The respondent’s objections were to most of this evidence, but on the basis of authority more relevant to “common purpose” in conspiracy cases. The evidence indicates what Mr Harding says was said to him, by way of “customer information”, by people handling his occupation of the subject premises, but it and they are untested. While it may be consistent with some breach of relevant consent conditions, it does not prove it. The contentious information provided to Harding in those conversations was that “the rooms range from studio apartments to three-bedroom units and they are scattered throughout the building”, any feedback should be addressed to “‘The Oaks Hotels and Resorts’ care of which address you’ve stayed at”, “just over 30” units are available for overnight accommodation, but “we only have about five studios. Most of the available units are 1 and 2 bedroom apartments”.
59 Annexed to Harding are some “welcome” letters handed to him advising, inter alia, of 24 hour Reception services, daily and weekly servicing arrangements, available recreation facilities, etc; confirmation letters and emails in respect of bookings made; a copy of the “guest services” material in the room; photographs of single use toiletries etc; and trust account receipts for accommodation payments bearing ACN 114 193 065, being the ACN number of Oaks 2.
Franco Appadoo – Council’s investigations
60 Franco Appadoo is a Building Compliance Investigator with the Council. He swore an affidavit on 30 July 2009 (‘Appadoo’), in which he included the results of some searches he made of Council’s records and various internet sites, once he had been allocated the investigation of complaints received on 28 August 2007 and 16 April 2008 alleging unauthorised use of some Harmony units as serviced apartments.
61 His investigations of the Oaks website indicated that, despite his understanding of the terms and conditions of the development consent, accommodation could be booked in Harmony for one or two nights. He in fact made a booking direct through the Oaks website on 21 August 2008 (see Annexure ‘J’), and made further booking enquiries by email on 6, 7 and 8 July (Annexure ‘N’).
62 On 11 June 2009, Mr Appadoo wrote a letter (Annexure ‘K’) to the owners of Strata Plan 72673, drawing attention to consent D/00/01015N, and pointing out that Council did not hold a certificate signed by the body corporate or its solicitor in accordance with Condition 10(b) of Council’s Conditions of Development Consent (see [33]) above). He requested the required certificate by 10 July 2009.
63 On 3 July 2009, the Strata Manager (Strata Title Management Group, or ‘STM’) replied indicating that it wished “to confirm the fact that all approved residential units in the building are either owner occupied or are subject to residential leases under the Residential Tenancy (sic) Act 1987” (Annexure ‘L’). The Strata Manager wrote a further letter on 6 July, and attached to it the seal of the Owners Corporation 72673. That letter (at Annexure ‘M’) includes the following paragraph:
- “ We acknowledge receipt of Council’s letter regarding the Development Consent of the Harmony Apartments. The issue has been discussed among the executive committee for the owners corporation of strata plan 72673 and they wish to confirm the fact that all approved residential units in the building are either owner occupied or are subject to residential leases under the Residential Tenancy (sic) Act 1987 ”.
Greg Stevens – Council’s Investigations
64 Greg Stevens is a Compliance Investigator with the Council, and deposes in his affidavit affirmed 23 September 2009, that he undertook some internet searches during September 2009 regarding short-stays at Harmony. He observed that apartments could be booked for one-night stays, and he annexes copies of material from the website, which quotes prices and accommodation options for Harmony.
Ashley Keith – Private Investigator
65 Ashley Keith is a Private Investigator who was engaged on Council’s behalf to investigate an allegation that units in Harmony were available for overnight accommodation. In his affidavit dated August 2009 he deposed that, after visiting the Oaks Group website and observing that overnight accommodation was available at $189 per night, he secured a booking for 3 September 2008, prepaid on a Visa card.
66 He details his observations on checking in, involving the payment of an additional $100 bond in cash. He occupied apartment 188, a one-bedroom apartment on the 20th floor. On entering the room he observed the guest information book containing a letter from the CEO Brett Pointon welcoming guests “whether you’re here overnight or for a longer stay”. (A copy of that letter is annexed as ‘D’ to his affidavit). He observed that linen was provided and that there was single use soap, shampoo, and conditioner. At Reception, on 3 September, he spoke to ‘Rochelle’, learned from her that “there are 33 single bedroom apartments available for single night stays”, and obtained an information brochure. (The respondent objected to the conversation – as to which see again [58] above – but not to the brochure).
67 Annexed to his affidavit as well as the Pointon letter, are an email confirmation, the usual welcome letter, a receipt for the bond (not indicating the identity of any company), some photographs, and the accommodation brochure, which speaks of “Oaks Harmony Apartment Hotel”.
Consideration and Findings
68 As already noted, at least one party has appropriately suggested that the court make findings on the evidence, and not proceed, at this stage, to make any declarations or grant further relief ([27]).
69 There is no dispute between the parties as to what amounts to use of any of the lots/units in the subject development as a “serviced apartment”, as compared with some other longer term occupancy.
70 Apartments (“rooms”?) in Harmony can be “under management” (Prospectus – Exhibit C2 – p12), without being made available or used as “serviced apartments” ([15]).
71 It is clear from the evidence that no apartments in Harmony have relevant planning approval to be used as serviced apartments (as defined in either LEP).
72 When Harding and Keith sought overnight accommodation in Harmony on various occasions, the confirmations and “welcome” documents he received were typical of short-term stay “rooms”, covering concierge services, security arrangements, daily servicing, additional linen, access to facilities, checkout/payment arrangements, etc. Nash has examined documentation placing all of the four apartments Harding occupied, but not the one Keith occupied. All four had an agreement of the ‘LPM’ type.
73 Mr Hale says that Oaks 2 is merely an estate agent, perhaps only one of several agents dealing with Harmony.
74 The issue before the court is whether or not the present respondent, Oaks 2, could be held to be in breach of the law by “using” any of the “land” in the complex, in breach of the relevant consent.
75 The definition of “real estate agent” and “real estate transaction”, contained in s 3 of the Agents Act, and other relevant provisions of that Act do not preclude a finding that the activities of Oaks 2 in respect of Harmony, which may include but are not limited to the traditional tasks of a real estate agent (including “property management services”, not specifically defined) amount to “using’ the subject land.
76 Oaks 2, as the applicant for consent in the DA the subject of the class 1 appeal (see Exhibit R1), announces itself as manager of the serviced apartments (in its SEE). The way it deals with the units in its care (offering apartments for short term lettings, setting tariffs, taking bookings, maximising income, informing short-term occupants in detail, organising servicing, etc) is to “use” them as serviced apartments, clearly beyond the conditions of consent.
Conclusion
77 On the basis of these findings the Council would appear prima facie to be entitled to the relief it seeks, subject, of course, to discretionary and some other considerations.
78 As the relevant class 1 proceedings have been heard but not yet decided, these class 4 proceedings are stood over for call-over by the Registrar on Wednesday 27 October 2010, so that she can consider their further disposition (including as to costs).
79 The exhibits may be returned.
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