Dexus Funds Management Limited v The Council of the City of Sydney

[2019] NSWLEC 1483

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Dexus Funds Management Limited v The Council of the City of Sydney [2019] NSWLEC 1483
Hearing dates:	4 September 2019
Date of orders:	11 October 2019
Decision date:	11 October 2019
Jurisdiction:	Class 1
Before:	Horton C
Decision:	The Court orders: (1) The appeal is upheld. (2) Consent is granted to Modification Application No. D/2015/66/C being the modification of development consent No. D/2015/66/A, subject to the final and consolidated conditions of consent contained in Annexure ‘A’. (3) The Exhibits are returned, except for Exhibit A and B.
Catchwords:	DEVELOPMENT APPEAL – design excellence – application of development control plan – street awning – opportunity site floor space – pedestrian amenity and weather protection – central Sydney
Legislation Cited:	Environmental Planning and Assessment Act 1979 Land and Environment Court Act 1979 Sydney Local Environmental Plan 2012
Texts Cited:	City of Sydney Retail Action Plan (2013) City of Sydney Tourism Action Plan (2013) Sydney Development Control Plan 2012
Category:	Principal judgment
Parties:	Dexus Funds Management Limited (First Applicant) The GPT Group, GPT Re Limited (Second Applicant) The Council of the City of Sydney (Respondent)
Representation:	Counsel: N Eastman (First Applicant) A Pickles SC (Respondent)   Solicitors: Dentons (First Applicant) City of Sydney (Respondent)
File Number(s):	2018/178278
Publication restriction:	No

Judgment

1. COMMISSIONER: This is an appeal under s 8.9 of the Environmental Planning and Assessment Act 1979 (the EPA Act) against the partial refusal by the Council of the City of Sydney (‘the Respondent’) of the Modification Application No. D/2015/66/C seeking to modify development consent No. D/2015/66/A (‘the 2015 DA approval’) with respect to 19-29 Martin Place, 41-45 Castlereagh Street and 27-39 Castlereagh Street, Sydney, commonly known as the MLC Centre.

2. By way of background, the redevelopment of the MLC Centre seeks to take advantage of the provisions of cl 6.9(2) of the Sydney Local Environmental Plan 2012 (SLEP) which permits additional floor space to be added to sites described as ‘Opportunity sites’ if it will result in more than one of the following:

(a)  the infilling of setback areas or colonnades that adjoin a public road,

(b)  the reconfiguration of pedestrian and disabled access between the street and the existing building,

(c)  the reconfiguration of public open space between the street and the existing building,

(d)  the relocation of existing driveways and ramps.

3. The Applicant seeks to modify the consent, pursuant to s 4.55 of the EPA Act, by deleting condition 2(a) that requires the design of the building to be modified by the addition of an awning structure to a portion of the frontage to Castlereagh Street.

4. To be clear, the awning structure that is the subject of the proceedings is shown in architectural drawings at Exhibit 3, Annexure C and which the Respondent confirms satisfies the condition imposed with the 2015 DA Approval. Architectural drawings attached to the Class 1 Application (Ex A, Tab 6) show the awning structure deleted.

5. In accordance with its usual practice, the Court arranged a conciliation conference under s 34(1) of the Land and Environment Court Act 1979 (LEC Act) between the parties, which was held on 4 February 2019 and at which I presided. The conference commenced with an on-site view and reconvened at the Court later the same day. As resolution was not reached, the conciliation conference was terminated. The parties subsequently consented to me hearing the matter.

6. Prior to the commencement of the hearing, the Applicant was granted leave to amend its application and rely on additional documents which included a short report prepared by the Applicant’s town planning expert (Ex B), Mr Robert Chambers, who later conferred with the Respondent’s town planning expert, Ms Marie Burge to prepare a joint expert report (Ex 3). The Court was also assisted by experts in urban design, including Mr Jon Johansen for the Applicant, and Mr Tony Smith for the Respondent who joint prepared the urban design joint expert report (Ex 2).

7. At this point, it is worth stating that the MLC Centre, which addresses Martin Place, Castlereagh Street, King Street and Rees Court/Rowe Lane, is recognised by the parties as an architecturally significant ‘modern movement’ building, designed by architect Harry Seidler in the 1970s comprising a tower form and smaller buildings arranged around a multi-level plaza with wide, shallow steps fronting Martin Place. It was awarded for its design by the Australian Institute of Architects in 1979 (Merit Award) and 1983 (Sir John Sulman Medal). The 2015 DA Approval is being undertaken by architects Wood Bagot and Harry Seidler & Associates (HSA) working in collaboration.

The Issues

8. The Applicant submits that any awning structure to the Castlereagh Street frontage is inappropriate as it was not part of the original design by HSA; is incompatible with the prestige retail tenancies intended for the Castlereagh Street frontage; and is incompatible with the architectural form and expression of the 2015 DA Approval.

9. Furthermore, imposing a requirement for an awning structure in this location is unreasonable as the existing awning structure was only added after the completion of the building and for specific reasons, being the location of the US Consulate in the ‘Nervi mushroom’ at the corner of Castlereagh Street and Martin Place, and which sought to cater for long queues of people seeking a US visa, and for a flagpole. In the words of Mr Chambers, HSA was not supportive of the awning structure then, and as HSA remains involved in the redevelopment of the site defined by the 2015 DA Approval, it is relevant that HSA is not supportive now (Ex B, page 6).

10. The Respondent argues that it is the building’s unique design that is the reason it is applying its policy on street awnings in a flexible and appropriate manner, and why it supports the extent of the awning being applied to only the frontage that adopts the Castlereagh Street alignment, and which is similar to the extent of the awning structure designed by HSA in 1991.

11. While the parties agree that the building is not a heritage item, it is common ground that a Heritage Study Review (Ex 6) prepared by TKD Architects for the City of Sydney, and dated 13 March 2019 includes an assessment of the heritage significance of the MLC Centre. The parties jointly submit that a planning proposal informed by the study at Exhibit 6 and which is currently on exhibition carries little determinative weight in this matter but is submitted for the purposes of s 4.15(1)(a)(ii).

12. The SLEP contains provisions related to Design excellence at cl 6.21 that are, relevantly:

…

(4) In considering whether development to which this clause applies exhibits design excellence, the consent authority must have regard to the following matters—

…

(d)  how the proposed development addresses the following matters—

…

(ii)  the existing and proposed uses and use mix,

…

(vi)  street frontage heights,

…

(viii)  the achievement of the principles of ecologically sustainable development

(ix) pedestrian, cycle, vehicular and service access and circulation requirements, including the permeability of any pedestrian network,

(x) the impact on, and any proposed improvements to, the public domain,

…

(xii) achieving appropriate interfaces at ground level between the building and the public domain,

…

13. The parties agree that the provisions of cl 6.21 relevant in this matter are given effect through Section 3.2.4 of the Sydney Development Control Plan 2012 (SDCP) which relate to footpath awnings as follows:

“3.2.4 Footpath awnings

Awnings are important for the amenity and attractiveness of streets. They provide protection from the weather and if designed well create visual interest.

It is important to provide continuous weather protection on footpaths. Awnings are the preferred form of weather protection. Appropriately designed awnings create attractive pedestrian environments and ensure clear visibility on the footpath.

Refer to the relevant Schedule 4 Projections over or into public roads.

Objective

(a) Encourage footpath awnings to enhance pedestrian amenity and provide weather protection.

Provisions

(1) An awning over the footpath is to be provided in the locations nominated on the Footpath awning and colonnades map.

(2) New awnings are to be compatible with the scale of host and adjacent buildings and the architectural features of the host building.

(3) Where an awning is to be provided, it is to be provided along the full extent of the street frontage of the building or for the part along the main entry or with ground floor retail or commercial uses.

(4) Awnings where provided are to be located between the ground and first floors to maximise weather protection. The height of an awning may vary between 3.2m and 4.2m above the footpath. The height of the awning must ensure continuity in appearance with adjacent awnings and to relate to any distinctive features of the building.

…

(6) Where there is no existing continuity of awnings on buildings within the same block on the same side of the street, or there would be a major adverse impact on the consistency of development within a heritage conservation area, awnings are not permitted.

…”

14. The Applicant relies on the Footpath awning and colonnades map as evidence that the Respondent’s condition of consent requiring an awning structure along only a part of the Castlereagh Street frontage is not a consistent application of the Council’s policy, and further, the concession by the Respondent that an awning structure is not appropriate to King Street, or to other parts of the Castlereagh Street frontage is recognition of the unique design of the MLC Centre that should exempt it from the provisions of Section 3.2.4 of the SDCP.

15. Furthermore, the Applicant submits that the provisions of Section 3.2.4(6) are, in effect, a prohibition on an awning structure, as it cannot be said that there is any existing continuity of awnings on buildings within the same block on the same side of the street.

16. In the alternative, Mr Pickles SC for the Respondent, cautions that Section 3.2.4(6) cannot be read in isolation, but instead all provisions of 3.2.4 are to be read conjunctively and particularly draws my attention to 3.2.4(2) which requires “new awnings to be compatible with the scale of host…and the architectural features of the host building”, and 3.2.4(3) which states that:

“where an awning is to be provided, it is to be provided along the full extent of the street frontage of the building or for the part along the main entry or with ground floor retail or commercial uses”.

17. For that portion of the building that adopts what Mr Pickles describes as the ‘street wall’ frontage to Castlereagh Street, the provisions of Section 3.2.4(3) should apply, and the awning structure should be designed, in accordance with 3.2.4(2), to suit the scale and architectural features of the host building.

18. The Respondent rejects the depiction of a solid awning structure shown in Figure 27 of the Architects Report (Ex A, Tab 5) and relies on Figures 1-4 prepared by Ms Burge in the expert report which shows a portion of the approved awning structure being glazed to provide a sightline to the first floor retail that is a part of the 2015 DA Approval.

19. In any event, Ms Burge does not regard there to be a sound planning rationale to prioritise views to upper floor retail over the public amenity provided by an awning structure. Instead, in her oral evidence, she prefers a broad view of the objectives of Section 3.2.4, in which she believes ‘pedestrian amenity’ also encompasses the wider ‘pedestrian experience’, so in addition to protecting against sun, wind and rain, awnings can enhance the experience in other ways, including the integration of sightlines in to the awning of first floor retail frontages.

20. By contrast, the Applicant considers the addition of first floor retail with unimpeded views from the footpath to be consistent with the Council’s own strategic planning vision for the central Sydney area, as follows:

1. Retail Action Plan, which, relevantly:

“seeks to encourage expansion of retail into first floor and basement levels with street level access and exposure”

2. Tourism Action Plan, which, undertakes to:

“…work with all our partners in the retail sector to position Sydney as Australia’s premier retail destination with a shopping experience in the city centre that matches those in comparable global cities”

21. The Action Plans reflect an evolution in what the Applicant terms ‘prestige retail’ and Mr Johannsen provides images of premium street front retail from Milan, Rome, New York, Chicago, London and Paris to show examples of two-level retail tenancies without awnings (Ex 2). However, such examples do not assist in an Australian context, according to the Respondent, as those locations consider loads from snow and other variables unsuited to what Mr Smith describes as Sydney’s warm, sub-tropical climate that requires protection from sun, rain and wind in order to provide amenity for pedestrians.

22. The Applicant directs me to page 24 of the Architects Report (Ex A, Tab 5) which refers to technical environmental studies commissioned by the owners of the MLC Centre that are said to demonstrate that an awning would provide benefit to most pedestrians for an average of only six minutes each day, given the contribution of existing mature street trees in mitigating wind and light rainfall. Along with the limited utility provided by the awning, the Applicant also contends that an awning extending to only 40% of the Castlereagh Street frontage would likewise provide limited amenity and protection, especially when viewed in the context of the generous shelter and connectivity offered by the through-site links, cover and other amenities on the site.

23. However, Ms Burge regards the aims of the SDCP to encourage amenity to be improved in the public domain in preference to the forcible diversion of pedestrians into private property which is not always open and where through-site links are not always an option, particularly after-hours. Furthermore, failing to provide an awning in this location also fails then to achieve the provisions found at cl 6.9(3) of the SLEP relating to opportunity site floor space which is in the following terms:

(3)  Development consent must not be granted to development that utilises opportunity site floor space unless the consent authority has taken into consideration the effect of the proposed development on each of the following—

(a)  the amenity of the area in and around the site of the development,

(b)  pedestrian movement in and around the site,

(c)  the opportunities for pedestrians to use and enjoy the space between streets and buildings on the site,

(d)  traffic safety and whether pedestrians will be separated from vehicle traffic,

(e)  the security of persons in and around the site,

(f)  the exposure of pedestrians to the weather,

(g)  the continuity and visual consistency of buildings on and around the site.

24. Mr Chambers considers the amenity provided by the MLC Centre to be what he describes as a ‘package’ of amenity that cannot be isolated to a single dimension of amenity, being the awning structure, and includes:

• North-facing steps to Martin Place

• Activation on level 6 (foodcourt) and level 7

• Through-site links in a multitude of directions

• Public art and sculpture

• The relocation of the basement driveway from Castlereagh Street to remove this impediment to pedestrians

• The opening up of the Theatre Royal to King Street

• Activation to King Street and Castlereagh Street within stringent retail controls

25. Seen in this context, Mr Chambers is of the strong view that an awning structure is incompatible with the form and expression of the MLC Centre’s modernist design, which is evident in the images of the original design intent, shown in Figure 19 (Ex A, Tab 5) and which he describes as a solid rectangular mass suspended over a glazed façade. While he does not suggest that the proposed redevelopment of the Castlereagh Street frontage restores the form depicted in Figure 19, Mr Chambers refers me to the design principles guiding the 2015 DA Approval that are found in the Architects Report, including the objective of removing unsympathetic non-1977 elements to re-establish the legibility of the original design.

26. To Mr Chambers, this includes removing the awning structure designed by HSA in 1991 but not supported by HSA, as stated earlier. In support of this, Mr Chambers relies on a letter contained in Annexure B (Ex 3) from Harry Seidler to the City of Sydney, dated 27 November 1989 in which the architect requests that the provisional heritage listing of the MLC Centre not be finalised until redesign of certain elements were completed “especially the Castlereagh Street fronting shops (which we did not originally design)”.

27. Mr Pickles, for the Respondent, asks me to consider this letter as evidence that HSA, who subsequently completed the work, must have been satisfied that the result is compatible and in sympathy with the original design. However, in a letter from Mr Greg Holman providing comments on the Amended Statement of Facts and Contentions (Ex 1) on behalf of HSA, dated 8 August 2019 (Ex 3, Annexure G), he states:

“Typical of most commercial architecture, MLC Centre has suffered from an incremental reduction of the integrity of the original design. The clarity of the original architecture has been eroded. Works undertaken in part by Harry Seidler & Associates in the early 1990’s have contributed to the loss of the integrity of the original architecture.

…

The amendments to the SOFAC appear to have no relationship to, and ignore, the supporting evidence and considerations for omission of the awning that the Applicant has persistently reiterated:

…

Precinct characteristics (tree-lined Castlereagh Street north compared with Castlereagh Street south, relationship to Martin Place. Without an awning the desirable precinct characteristics of north Castlereagh Street are extended a further block south. Sky view is extended and enhanced within the public realm).

…

Architectural considerations (not typical of the built form of the city, a total and integrated architectural design by a world-recognised modernist, current project aims to re-establish the assessed architectural values which will support an imminent heritage listing. Legibility of the original design of unadorned architectural forms and materiality is realised without an awning).”

28. Mr Chambers advises that design options, developed by the architects, included an awning structure at a higher level, similar to that seen in the vicinity at the Westfield development on Castlereagh Street. However, the Council’s Design Advisory Panel (DAP) did not support this option. Minutes of the DAP are appended to Exhibit 3 and are helpful in recording the consideration of the awning by the DAP at meetings in October and November 2014, and in August 2015.

29. The DAP had the following comments in relation to the awning:

1. On 21 October 2014, the DAP did not support a proposal to cantilever building form over the Castlereagh Street frontage by 2.5m, and recommended an awning be provided instead for pedestrian amenity.

2. On 13 November 2014, the DAP recommended that an awning proposed to the new Castlereagh Street entry to the office tower be deleted, noting, in effect, that the alternative was more consistent with the language of the building. The DAP also reiterated its earlier recommendations on the awning structure to Castlereagh Street retail frontage, made at the October meeting.

3. The DAP also discussed the impact of the retail design on the proposal, and recommended that:

“Given the significance of the building, the panel requested that all aspects of the architectural proposals that interface with the public domain be in accordance with the recommendation of Seidler Associates [HSA] to ensure design integrity”.

Conclusion

30. The Applicant essentially submits that the evolution of prestige retail, as proposed for the Castlereagh Street frontage, demands a new kind of visual prominence that the Footpath awning controls in Section 3.2.4 of the SDCP do not recognise or support.

31. It is true that Council’s controls do not appear to provide ‘carve outs’ or exemptions for particular development types or land uses. Instead, the chapeau to the section states that:

“It is important to provide continuous weather protection on footpaths. Awnings are the preferred form of weather protection. Appropriately designed awnings create attractive pedestrian environments and ensure clear visibility on the footpath.”

32. Clearly, awning structures over footpaths are a preferred means of providing weather protection, and the wording in Section 3.2.4 does not discriminate between building types or land uses, such as prestige retail. However, the Respondent advises me that the intent of the Footpath awnings and colonnades map is to focus the delivery of footpath awnings in what is termed the ‘retail quarter’ of the city, as distinct from the ‘financial quarter’ where footpath awnings are not shown to be required, for whatever reason. If that is the case, it would appear that footpath awnings are preferred in retail development, presumably designed to be compatible with the scale of host and adjacent buildings and the architectural features of the host building as in 3.2.4(2), and to be provided along the full extent of the street frontage of the building or for the part along the main entry or with ground floor retail as in 3.2.4(3).

33. According to the objective of Section 3.2.4 of the SDCP, the purpose of footpath awnings is to enhance pedestrian amenity and provide weather protection. While I have sympathy for the Applicant’s position that 3.2.4(6) appears to prohibit an awning as there is no existing continuity of awnings on buildings within the same block on the same side of the street, on balance, I consider it more reasonable to adopt the Respondent’s invitation to read all the provisions of Section 3.2.4 together for guidance on the application of the objective in different conditions.

34. However, in finding that there is no prohibition on the provision of an awning, for the reasons stated below, I consider there to be grounds, pursuant to s 4.15(3A) of the EPA Act to apply the provisions of the SDCP flexibly, especially as the awning in question would provide limited weather protection, and where I am satisfied that greater pedestrian amenity is provided by the development as a whole than would be derived from a footpath awning in this location.

35. Firstly, I accept Mr Chamber’s view that the MLC Centre is a rare, if not unique condition in Central Sydney. On a typical site, buildings in the central Sydney area, and more specifically on Castlereagh Street, are developed to the full site area, creating a zero setback to the one frontage that may be available to the site, which generally addresses a public footpath over which the Council reasonably seeks to provide pedestrian amenity and weather protection by requiring an awning structure. When joined together, awnings from adjoining buildings form a continuous path of weather protection, and it is reasonable that standards are developed to ensure a general consistency applies to the street when viewed as a whole.

36. However, the redevelopment of the MLC Building, as evident in the 2015 DA Approval, owes its geometry and street address, not to the grid pattern of the CBD street layout, but to the fluid form and expression of Seidler’s original design. Mr Chambers describes this as being an arrangement of box and cylindrical shapes, which is reflected in the plan of the Castlereagh Street level in which both rectilinear and curvilinear forms vary in their setback to the street and the footpath. It is this innate characteristic that makes the application of an awning more challenging, a fact acknowledged by both parties.

37. Secondly, I consider the letter from Mr Holman advising that HSA considers an awning to be detrimental to the 2015 DA Approval to be significant. The relevance of this is found, in my view, in the direction given to the Applicant by the Respondent’s DAP that all aspects of the architectural proposals that interface with the public domain be in accordance with the recommendation of HSA to ensure design integrity. The treatment of the retail tenancies to Castlereagh Street frontage and their interface with the public domain appear to be matters that the Applicant now seeks to modify on the recommendation of HSA and I favour Mr Holman’s letter over Ms Burge’s opinion that the awning is consistent with HSA’s design objectives for the building more broadly.

38. Thirdly, I accept the Applicant’s submission that there are numerous through-site links provided with pedestrian connectivity to all points of the compass under cover in pathways that are obvious and likely to be accessible at times coinciding with periods of greatest demand. The spaces between the forms described by Mr Chambers allow generous areas for circulation and, when required, refuge – from sun, wind or rain. I accept Mr Chambers’ position that amenity should be considered as a whole and that I should not isolate the amenity provided by an awning structure from what the site as a whole offers back to the public domain. I accept that the development, when viewed as a whole, does much to enhance pedestrian amenity and weather protection across the site, including the removal of the car park ramp on Castlereagh Street which currently conflicts with the pedestrian footpath.

39. In the absence of an awning structure, a pedestrian walking on the western side of Castlereagh Street in a southerly direction from the next northern intersection, being Hunter Street, would encounter no street awning until he or she crossed King Street. The alternative, in the event the appeal is dismissed and the awning structure is constructed, is that the same person, walking the same path with the awning structure in place would experience the amenity and weather protection afforded by the awning structure at a location where greater pedestrian amenity and weather protection are provided by the development as a whole, in the form of generous covered areas that also provide through-site links, access to food, toilets and other forms of amenity available to pedestrians.

40. Furthermore, accessing this amenity does not require a pedestrian to pass through a conventional lobby door, as may be generally the case in a typical commercial building in the CBD described at [36], and where Ms Burge’s concerns over the rights of access may lie. Instead, access to the amenity described in the plans is via open pathways such as the through-site link afforded by the Rowe Street walkway. Given the ease of access and generosity of covered space available to pedestrians during the hours likely to be the peak demand, I consider the overall design of the building to achieve the objectives of the provision found in Section 3.2.4 of the SDCP.

41. In considering all of the evidence before me, it is my view that the absence of an awning structure will not materially alter the extent or degree of amenity provided by the MLC Centre when the works defined by the 2015 DA Approval are considered as a whole. The generous extent of cover and connectivity provided at street level provides amenity in and around the site for pedestrians, with opportunities for them to use and enjoy space between streets and buildings, without exposure to the weather as stated in cl 6.9(3) of the SLEP.

42. For the reasons set out above, I am satisfied that the provisions of the footpath awnings standard should be applied flexibly, and in accordance with s 4.15(3A)(b).

43. The orders of the Court are as follows:

1. The appeal is upheld.

2. Development consent is granted to Modification Application No. D/2015/66/C being the modification of development consent No. D/2015/66/A, subject to the final and consolidated conditions of consent contained in Annexure ‘A’.

3. The Exhibits are returned, except for Exhibit A and B.

……………………..

T Horton

Commissioner of the Court

Annexure A (100 KB)

**********

Amendments

18 October 2019 - Pursuant to UCPR r 36.16(3B), and by consent of the parties, amend Order (2) of the Court’s orders of 11 October 2019 to include reference to conditions of consent contained in the final and consolidated conditions of consent at Annexure ‘A’.

Decision last updated: 18 October 2019