Investa Nominees (2) Pty Ltd v City of Sydney Council - [2024] NSWLEC 1048

Land and Environment Court

New South Wales

Medium Neutral Citation: Investa Nominees (2) Pty Ltd v City of Sydney Council [2024] NSWLEC 1048
Hearing dates: 15 November 2023
Date of orders: 15 February 2024
Decision date: 15 February 2024
Jurisdiction: Class 1
Before: Peatman AC
Decision:
The Court orders:
(1) The appeal is upheld.
(2) Pursuant to s 4.16(1)(a) of the Environmental Planning and Assessment Act 1979, and s 39(2) of the Land and Environment Court Act 1979 development consent is granted to DA/2022/613 (PAN-230552) for the stratum subdivision of Lot 11 in Deposited Plan 777449 into two lots at 1 Market Street Sydney, subject to Annexure A.
(3) The exhibits are retained.

Catchwords:
DEVELOPMENT CONSENT – stratum subdivision of 1 lot into 2 lots – FSR – city high rise building - applicability of cl 4.6 variation of development standard – orderly and economic use and development of the land

Legislation Cited:
Conveyancing Act 1919, s 88B
Environmental Planning and Assessment Act 1979, ss 1.3, 1.5, 4.2, 4.5, 8.7, 8.10, 8.11, 4.15, 4.16, 16
Land and Environment Court Act 1979, ss 17, 39
Environmental Planning and Assessment Regulation 2021, s 23
Sydney Local Environmental Plan 2012, cll 1.2, 1.3, 2.1, 2.6, 4.3, 4.4, 4.5, 4.6, 6.4, 6.5, 6.16, 6.17, 6.19, 6.21C, 7.18, 7.20

Cases Cited:
Landcorp Australia Pty Ltd v The Council of the City of Sydney [2020] NSWLEC 174
Mirvac Projects Sydney Pty Ltd v Council of the City of Sydney (2003) NSWLEC 219
Nancy Shetland Pty Ltd v Melbourne and Metropolitan Board of Works (1974) 48 ALJR 448; (1974) 34 LGRA 151
Parrott v Kiama [2004] NSWLEC 77
Shoalhaven City Council v Lovell (1996) 136 FLR 58
Smith v Randwick Municipal Council (1950) 17 LGR (NSW) 246
Wehbe v Pittwater Council [2007] NSWLEC 827

Texts Cited:
Community Engagement Strategy and Participation Plan 2022, The City of Sydney Council
Sydney Development Control Plan 2012

Category: Principal judgment
Parties: Investa Nominees (2) Pty Ltd (Applicant)
The Council of the City of Sydney (Respondent)
Representation:
Counsel:
A Galasso SC (Applicant)
A Pickles SC (Respondent)
Solicitors:
HWL Ebsworth Lawyers (Applicant)
The City of Sydney Council (Respondent)

File Number(s): 2023/32597
Publication restriction: Nil

Judgment

COMMISSIONER: The Applicant is appealing the deemed refusal of development application DA/2022/613 (DA) which seeks consent for the stratum subdivision of Lot 11 in Deposited Plan 777449 into two lots being Lots 110 and 111 at 1 Market Street Sydney (Site).
The Site has an area of approximately 4,676m² and is irregular in shape. The northern portion of the Site adjoins Market Street and has a 55m frontage. The eastern portion of the Site adjoins Kent Street and has a 60m frontage. The western portion of the Site adjoins Sussex Street and has a 55.5m frontage. The Site fall from Kent Street to Sussex Street by approximately 7m and has a gradient of 13%.
The Site contains:

A 33-storey office tower in the north-eastern corner of the Site and has frontages to Market Street and Kent Street (the Tower).

A commercial carpark in the southern portion of the Site which has frontages and driveway access to both Sussex and Kent Streets (the Carpark).

A low-rise retail and commercial podium building in the middle of the Site, south of the Tower and east of, and adjacent to, the Carpark (the Podium).

A pedestrian accessway between the Tower and Carpark/Podium connecting Kent and Market Streets which includes a licensed outdoor seating area for the adjoining Shelbourne Hotel on the corner of Market and Sussex Streets.

The Shelbourne Hotel is adjacent to the Site (both in Market and Sussex Streets) and has frontages to Market and Sussex Streets. Presently it is a 4-storey hotel, and includes driveway access from Sussex Street, which also provides basement access via an easement to the Tower, Carpark/Podium and the pedestrian accessway. There is a proposal to develop the Shelbourne Hotel land, and the Planning Secretary’s Environmental Assessments Requirements were issued on 12 January 2022 for a concept proposal redevelopment which includes a tower envelope to a maximum height of RL 152 (110m).
Figure 1 below is an extract from The City of Sydney Council’s (Council) Statement of Facts and Contentions filed 24 February 2023 (SOFAC) Ex 1, and shows the Site outlined in red.
The history of the Site is summarised as follows (only noting the most relevant consents) at Ex 1 Council’s Statement of Facts and Contentions p 8:

Development consent was issued on 24 October 1983 being DA 44/83/0183 for the erection of a 22 level office building and a public parking station.

Development consent was issued on 3 April 1986 being DA 44/85/0885 (1986 DA) for the construction of a 33 level office tower including a 3 storey podium and basement, together with a 3 level podium building for use for loading vehicle facilities, pedestrian accessway, retail, commercial and plant room purposes.

Development consent was issued on 21 November 2017 for alterations to the basement level to provide end of journey facilities and changes to the services within the basement.

The DA proposal seeks consent to subdivide the Site in stratum into 2 lots as follows:

Lot 110: Carpark and Podium (retail and low rise commercial offices) including the lift access to the loading dock,

Lot 111: Tower (office tower and basement).

Proposed Lots 110 and 111 are partially limited in height and depth, with easements created by a s 88B instrument, and have shared services and areas documented in a building services plan. The proposed easements include:

Easement for support and shelter;

Easement for fire egress;

Right of access to shared facilities;

Easement for light and air; and

Right to use loading dock.

The history of the DA is as follows:

The DA was lodged with Council on 21 June 2022 with the consent of the owner in accordance with s 4.2 of the Environmental Planning and Assessment Act 1979 (EPA Act), and in compliance with s 4.5(d) of the EPA Act as the Council is the authorised consent authority.

The DA was notified for 21 days between 22 July 2022 and 12 August 2022 in accordance with Council’s Community Engagement Strategy and Participation Plan 2022. One email was received from the Shelbourne Hotel, indicating that a submission would be forthcoming. No written submission was received.

Council requested further information from the Applicant on several occasions, the last request for further information prior to the Applicant lodging an appeal was on 16 November 2022.

On 31 January 2023 the Applicant filed an appeal in the Court for Council’s deemed refusal of the DA pursuant to ss 8.7(1) and 8.11(1) of the EPA Act, and in accordance with the time provisions in s 8.10(1) of the EPA Act.

Council raised the following contentions in its SOFAC, Ex 1 pp 13-15:

FSR and cl 4.6 variation: The stratum subdivision would result in a breach of the permitted FSR for the development site and no cl 4.6 variation request has been submitted to justify the variation. At the commencement of the hearing, the Council acknowledged that the Clause 4.6 Variation Report by Ethos Urban, authored by Mr Oliver, had been filed (Ex B)(4.6 Variation Report) and that part of Contention (1) was satisfied. However, Council pressed its argument that the DA exceeded the FSR control contained in cl 4.4 of Sydney Local Environmental Plan 2012 (SLEP 12), and that the Clause 4.6 Variation Report gave insufficient reasons for Council to agree to vary the FSR standard. The following particulars in Contention 1 remain relevant:

“23 The permitted base FSR for the site as per cl 4.4 of SLEP 12 is 8:1. Additional floor space may be considered pursuant to part 6, division 1 of SLEP 12. However, absent information about how the development meets these provisions, additional floor space is not able to be utilised.
24 Based on a review of Council’s files… it is anticipated that the resultant FSR for lot 111 will be 17.9:1. This represents an 124% exceedance of the base permitted FSR for the site.
25 … it is anticipated that the resultant FSR for lot 110 will be 7.2:1.
26 [Re cl 4.6 variation written request]… As per cl 4.6(3) and (4) of SLEP 12, development cannot be granted absent an adequate written request.
27 This level of exceedance is inconsistent with the objectives in cl 4.4(1) of SLEP 12…
28 The proposal is also inconsistent with the objectives of the B8 zone. The stratum subdivision will not result in the efficient and orderly development of the land.”

The stratum subdivision is not orderly development of land. The following particulars in Contention 2 remain relevant:

“30 The development is inconsistent with the objects of the EPA Act. Specifically, cl 1.3(c) of the EPA Act to promote the orderly and economic use and development of land.
31 The stratum subdivision will result in lot 111 having 125% more FSR than the development standard in cl 4.4 of SLEP 12. It would also result in proposed lot 111 taking the benefit of the entire site area. This will result in development which is inconsistent with the aims of the SLEP 12.
32 As per cl 4.5(9) of SLEP 12, a restrictive covenant to prevent the creation of floor area on lot 110 is required. However, the imposition of this condition to limit the floor space on proposed lot 110 may restrict the future development of this lot. This may also entrench the existing land use, being a commercial carpark, which is a land use not supported by cl 7.18 of SLEP 12 and 3.11.15 of SDCP 12.
33 A Concept development consent or a site-specific development plan as set out in cl 7.20 of SLEP 12 and 4.23 of EPA Act, would provide a better planning mechanism to enable the orderly and economic use and development of the site as a whole.”

The subdivision is not in the public interest – at the hearing the Council no longer pressed Contention 3.

Insufficient information. At the hearing the Council no longer pressed Contention 4.

At the commencement of the hearing Council confirmed that the one objector has not lodged a formal submission, but attended the commencement of the s 34(1) Conciliation Conference which occurred on 23 June 2023. The objector was given notice of the hearing on 15 November 2023 but did not attend.
Council drew the Court’s attention to the planning controls set out in Council’s Bundle of Document, Ex 2.

Tab 1: The objects of the EPA Act as set out in s 1.3, with particular reference to s 1.3(c):

Tab 2: SLEP 12:

Clause 1.2: Aims of the Plan – and in particular subcll cl 1.2 (d) and (g):

(d) to encourage the economic growth of the City of Sydney by –

(i) providing for development at densities that permit employment to increase, and
(ii) retaining and enhancing land used for employment purposes that are significant for the Sydney region,

…

(g) to ensure that the pattern of land use and density in the City of Sydney reflects the existing and future capacity of the transport network and facilitates walking, cycling and the use of public transport,…

Clause 2.1 Land use zones: the Site is zoned SP5 Metropolitan Centre, and the Council relies upon the following objectives of the SP5 Zone:

To recognise and provide for the pre-eminent role of business, office, retail entertainment and tourist premises in Australia’s participation in the global economy.

To provide opportunities for an intensity of land uses commensurate with Sydney’s global status.

To promote land uses with active street frontages within podiums that contribute to the character of the street.

To promote the efficient and orderly development of land in a compact urban centre.

To promote a diversity of commercial opportunities varying in size, type and function, including new cultural, social and community facilities.

To promote the primary role of the zone as a centre for employment and permit residential accommodation and serviced apartments where the accommodation complements employment-generating land uses.

Clause 2.6: Subdivision – consent requirements: cl 2.6 (1):

(1) Land to which this Plan applies may be subdivided but only with development consent.

Clause 4.3: Height of Buildings. The Site is located in Area 3 of the Height of Buildings Map. No maximum height is shown for land in Area 3 – the maximum height for buildings on this land is determined by the sun access planes that are taken to extend over the land by cl 6.17: Sun access planes. It is noted that in this case if the DA is granted consent, the height of the buildings remain the same as before the DA was lodged.

Clause 4.4: Floor space ratio (FSR), and its objectives are:

(1) The objectives of this clause are as follows—

(a) to provide sufficient floor space to meet anticipated development needs for the foreseeable future.
(b) to regulate the density of development, built form and land use intensity and to control the generation of vehicle and pedestrian traffic.
(c) to provide for an intensity of development that is commensurate with the capacity of existing and planned infrastructure.
(d) to ensure that new development reflects the desired character of the locality in which it is located and minimises adverse impacts on the amenity of that locality.

(2) The maximum floor space ratio for a building on any land is not to exceed the floor space ratio shown for the land on the Floor Space Ratio Map.

Clause 4.5: Calculation of the FSR and site area

(2) Definition of “floor space ratio” The FSR of building on a site is the ratio of the gross floor area of all buildings within the site to the site area.”
……
(9) Covenants to prevent “double dipping”. When development consent is granted to development on a site comprised of 2 or more lots, a condition of the consent may require a covenant to be registered that prevents the creation of a floor area on a lot (the restricted lot) if the consent authority is satisfied that an equivalent quantity of floor area will be created on another lot only because the site included the restricted lot.

Clause 6.4 provides on subdivision there are two types of additional floor space as possible allocations: cl 6.4(1) Accommodation floor space – in relation to Area 3:

…
(e) Area 3, business premises, educational establishments, entertainment facilities, function centres, health services facilities, information and education facilities, light industries, office premises or retail premises – 2.5:1,
(f) Area 3, centre-based child care facilities, community facilities or hotel or motel accommodation – 3.5:1,
…

Clause 6.5 Car parking reduction floor space:

Development on land in Central Sydney that results in the use of any part of a basement of a building being changed from a car park or from an area that is used for parking cars to any other use, causes the building to be eligible for an amount of additional floor space (car parking reduction floor space) equal to the area of any such changed use.

Clause 7.18 Car parks:

Development consent must not be granted to development for the purposes of a car park unless the consent authority is satisfied that –

(a) the development will not encourage persons to travel in private vehicles between 7am and 9.30am or between 3.30pm and 7pm on weekdays, and
(b) there will be restrictions on the hours of opening and the amount of time a vehicle can remain within the car park, and
…

Tab 3: Sydney Development Control Plan 2012 (SDCP 2012), cl 3.1 Public Doman elements:

Clause 3.1.2.2 Through-site links:

“(3) Through-site links are to be an easement on title unless identified in a contributions plan for dedication to Council.”

Clause 3.2.5 Colonnades:

“Colonnades may be appropriate in exceptional circumstances for weather protection where they can extend along the entire street frontage of a street block, or for pedestrian amenity where they provide a sunlit environment for active pedestrian use including outdoor dining”

Clause 3.8 Subdivision, Strata Subdivision and Consolidation

“The subdivision and consolidation of land can have long term effects on the economic performance and urban form of the City.
As the City grows, older properties that have been strata titled, particularly commercial and industrial properties, can create a barrier to achieve new higher density and more sustainable development. Therefore, Council generally discourages the strata subdivision of commercial and industrial development.
…
Objectives
(a) Ensure lot sizes and street frontages can support the desired building type and use and achieve internal spaces appropriate to their function.
…”

Clause 3.8.1 General:

“…
(2) The strata titling of commercial and industrial development and affordable housing is discouraged.”

Clause 3.11.15 Public car parking in Central Sydney:

“To discourage commuter car parking and provide short stay car parking in Central Sydney, a fee structure and restriction on hours of use is to apply to public car parking. Both the restricted hours of use and the fee structure support the efficient use of spaces for people within Central Sydney for retail, recreation and cultural activities and discourage commuter parking. The implementation of the fee structure alone is not acceptable.”

Mr Pickles SC refined the Council’s case as follows:

“So in this case development consent when it was granted to the original tower was granted on the assumption that the lots would be consolidated and thereby the land achieved, what was at the time the maximum FSR of 11.1. What is now proposed of course is the subdivision of the site which will provide for most of the floor space on lot 111, and slightly less than the permitted maximum on lot 110.

So the proposition which the council puts in this case is that it would be appropriate to prevent double dipping if the Court were to approve the subdivision to ensure that the site on lot 110 does not achieve more than its permitted maximum…..”

Tcpt 15/11/23 p 6 lines 41-10 and p 7 line 1.

In response to my question: “Mr Pickles is that the essential objection of Council?”, he replied:

“No its not really, the essential objection actually is orderly and economic development of the land. The fact that the division of this land will – in this way, has a couple of consequences. One is that lot 111 will in a sense be preserved in aspect (sic), because it has no further development potential that’s different to what it currently has. So it will probably mean that the tower in its current form will remain as is. Likewise in respect of the carpark, it has very limited development potential as well, because it is although not in exceedance of its floor space ratio yet, it is not far from it.

So the proposition is there is very little economic development left in that site, in that lot 110 because the carpark use is probably the best it can get …… the council would seek to wherever commercial carparking can be converted to other productive uses would seek to do so.”

Tcpt 15/11/23 p 7 lines 14-30.

Mr Galasso SC opened for the Applicant:

In many respects the Court has been taken to controls that demonstrate a shift in policy with respect to subdivision and consolidation – consolidation is now eschewed but it was required as part of the original 1986 consent.

“The argument about highest and best use is an interesting but irrelevant one to subdivision, I don’t say irrelevant in a disrespectful sense. The position is that the present uses on the site, in terms of the current controls, provide for an exceedance of the floor space ratio that would apply today. The easiest way for you to see that is there’s a table in the joint planning report, exhibit 4 at p 6.” (Tcpt 15/11/23 p 13 lines 37-47)

“…the floor space ratio for this site based upon the uses of this site is 11.12:1 in circumstances where the permitted floor space ratio is 9.56:1.” (Tcpt p 14 lines 22-24)

“Now, there is presently an exceedance of the floor space ratio. So any argument about additional capacity and the life is misplaced when one recognises that exceedance.” (Tcpt p 14 lines 26-28)

“Quite clearly the site has a very distinct form and use. Even if you just pick two of them, the carpark and the commercial office tower, they are naturally separate. The subdivision is in fact reflective of an orderly development of land, because it reflects that built form. (Tcpt p 14 lines 30-35)

“This application doesn’t change anything, it doesn’t reduce the development potential of the carpark. Because the development potential of the site in circumstances where this appeal would be refused, is already at its maximum. And the only potential argument is that there is a small prospect of additional floor space under the planning controls…in cl 6.4 where there is either a centre based childcare facility, or community facilities, or hotel or motel accommodation. And then, as I understand it at least not for 3.5:1 to the whole of the site, but only 3.5:1 with respect to that part of the site that has those uses.” (Tcpt p 14 lines 45-50)

Consolidation of sites is discouraged under Council’s SDCP 2012 cl 5.11.15.
Having development which involves disparate FSR controls across two sites is a matter that’s specifically contemplated by SLEP 12 cl 4.5(9) by the invitation for a covenant to prevent double dipping. Clause 4.5(9) seeks to ensure that Lot 110 does not apply for development for the gap between its FSR and the control FSR. In fact the Applicant agrees, pursuant to cl 4.5(9) of SLEP 12 to the registration of a covenant on Lot 110 to prevent ‘double dipping’ in relation to the FSR controls.
What the Applicant is doing is not only orderly, certainly economic, but more importantly completely consistent with that which is contemplated in the legislative regime. So the Applicant does not see that there is any impact or identifiable consequence from the subdivision.
The use of the Site is an extant use. There is no reason to suggest that there is a need for a variation of the FSR by applying cl 4.6 of SLEP 12. The cl 4.6 objection is made without admission. (Ex B, Clause 4.6 Variation Request, p 4, par [1.0]):

“This clause 4.6 variation request has been prepared by Ethos Urban on behalf of Investa Nominees (2) Pty Ltd. … Whilst it is unclear that a clause 4.6 variation is required because the DA relates to simple subdivision only and does not result in any change in gross floor area (GFA), this clause 4.6 variation request has been prepared out of an abundance of caution, without admission.”

The development when approved in the 1986 DA did not exceed the FSR control at that time, as it included a bonus granted by Council for the office and retail space in the Podium. The exceedance in the FSR control arises because of later amendments to the planning controls.
The Applicant has agreed to limit the Gross Floor Area on proposed Lot 110 by a covenant as proposed by the town planners in Ex 4, p 13 par [44], and Ex 6 Conditions of Consent, Condition (3).
This application is simply a stratum subdivision, which is to occur on buildings which are already substantially separate. The five columns within Lot 110 which support the built structure in Lot 111, as shown on Ex D, Draft Plan of Subdivision of Lot 11 in DP 777449 Sheet 2 of 3, remain intact but are not such a fetter on Lot 110 as to refuse consent to the DA.

Surveyor’s Evidence

A Joint Surveying Experts’ Report was filed on 18 October 2023 (Ex 3), which was prepared by Mark Andrew for the Applicant and Chris Gorman for the Respondent (Survey Experts). The Survey Experts agreed on the following:

In relation to Contention (3): The stratum subdivision is not in the public interest, and relevantly par [36] of Council’s SOFAC:

There is an existing Right of Carriageway and Easement for Services benefiting the subject site over Lot 1 in Deposited Plan 739093 (Shelbourne Hotel) with a sunset clause.

The Right of Carriageway is for vehicular access only.

The Right of Carriageway is not in perpetuity and is subject to a sunset clause.

The Easement for Services is not in perpetuity and is subject to a sunset clause.

The sunset clause limits the existing Right of Carriageway and Easement for Services to the year 2093 or to the existence of the current building on Lot 11 in Deposited Plan 777449, that is served by the Easements.

The terms of these easements may constrain any future site development prospects.

The Survey Experts agreed that sufficient information relevant to their area of expertise has been provided to satisfy Contention (4), and in particular the stratum subdivision plan filed on 9 November 2023 as Appendix A to Ex B – Clause 4.6 Variation Report. The stratum subdivision plan creates the following agreed easements:

Easement for support and shelter (whole of lot);

Easement for fire egress (whole of lot);

Easement for services (whole of lot);

Right to access shared facilities (whole of lot)

Easement for light and air variable width (limited in depth); and

Right to use loading dock variable width (limited in stratum).

Ex 3, p 6 par [20].

The Survey Experts disagreed (p 9 par [23-26] of Ex 3) on whether the pedestrian accessway should be registered on the title to the land. At the hearing the Applicant agreed to the registration of an instrument on its title of a Right of Public Access, pursuant to s 88B of the Conveyancing Act 1919, in favour of Council on the pedestrian accessway from Kent Street to Market Street.

In cross examination, Mr Gorman stated that the importance of registering the Right of Public Access (which is not registered on title at present) is that Council can provide maintenance and insurance to the public who use the pedestrian access from Kent Street to Market Street. (Tcpt 15/11/23 p 24 lines 25-31)

Agreed Town Planners’ Evidence

There were two Joint Experts’ Reports filed by the town planners: Michael Oliver for the Applicant and Erin Faulkner for the Respondent. The first Joint Experts’ Report (Town Planning Joint Report – Ex 4) was filed on 18 October 2023, and the second on 14 November 2023 (Town Planning Addendum – Ex 5). In the Town Planning Joint Report Ex 4, p 5 pars [14-21] the experts agreed:

“Contention 1: Floor space ratio and no clause 4.6 written variation

…
The Site is located in the SP5 Metropolitan Centre Zone. The Site includes an office premises, business premises and a commercial carpark (public carpark). Each of these uses is permitted with consent within the SP5 Zone.
The permitted base floor space ratio (FSR) for the site as per cl 4.4 of SLEP 12 is 8:1.
The Site is located in Area 3 and in accordance with cl 6.4 of SLEP 12 it is eligible for additional floor space for particular land uses. The office and business premises are eligible for additional floor space which equates to an additional 1.46:1 FSR.
The total FSR for the Site which is available under Sydney LEP 2012 is 9.56:1.
Based on the GFA audit, the current gross floor area (GFA) of the Site is 52,001.6m²_. The current Site area is 4,676m² and the current FSR is 11.12:1.
The proposed subdivision will result in the following FSRs:

Aggregate

Proposed Lot 110

Proposed Lot 111

GFA

52,001.6m²

20,981.1

31,020.5m²

Site Area

4,676m²

2,946m²

1,730m²

Resultant FSR

11.12:1

7.12:1

17.93:1

Permitted FSR in accordance with cl 4.4 of SLEP 2012

8:1

8:1

8:1

Accommodation floor bonus permitted under cl 6.5 of SLEP 2012

1.56:1

0.17:1

2.5:1

Total permitted FSR

9.56:1

8.17:1

10.5:1

Exceedance of permitted FSR

1.56:1

% - 16%

GFA – 7,302m²

No exceedance (site is -1.05 less than permitted)

7.43:1

% - 71%

GFA – 12,856m²

For the purpose of understanding the GFA audit and FSR, the experts have used the FSR breakdown on the podium level plan. This reflects the highest FSR and lowest FSR for the sites.
The experts have not sought to determine whether the site is or would be eligible for any further additional floor space under clauses 6.5 to 6.9 of Sydney LEP 2012.”

Contention (2), Ex 4, p 13 par [44]:

“If the Court was of a mind to approve this development application, a condition requiring a restrictive covenant on title which restricts the floor space on Proposed Lot 110 to the existing quantity would address the first matter raised by the respondent in Particular 32 of SOFAC. A condition worded to the effect of the following would be suitable: ‘A restriction on the use of land, pursuant to s 88B of the Conveyancing Act 1919 must be registered in conjunction with the subdivision certificate. The terms of the restriction must require that the Gross Floor Area … on Lot 110 is not to exceed 20,981.1 square metres.”

The Council responds to the Applicant’s submission on Issue no 3 as set out in Ms Faulkner’s evidence in Ex 4 as follows:

Weight should be given to the reasons behind the 1986 DA, and in particular the requirement to consolidate the lots (Condition (6)), and the bonus floor space allocated was based on the site being considered as one lot (Ex 4, pp 16, 17). The stratum subdivision of the existing buildings on the Site would be contrary to the intent of the 1986 DA. It would allow the owner to take the benefits of the 1986 DA (being the floor space) without its burdens (the carpark).

If the restrictive covenant is imposed on Lot 110, it will limit any future development potential on Lot 110 to a maximum of 20,981m² or an FSR of 7.12:1 (Ex 4, p 18 par [54]).

The FSR for proposed Lot 110 is significantly below the permitted FSR for Lot 110, being a base FSR of 8:1 under cl 4.4 of SLEP 12, and up to an additional 3.5:1 bonus FSR (depending on use) under cl 6.5 of SLEP 12. Lot 110 has a permitted height of up to 110m, subject to constraints under cll 6.17 and 6.19 of SLEP 12.

The limitation of floor space on Lot 110 may sterilise it, rendering redevelopment to another land use unfeasible. This would be a very poor outcome for Central Sydney and not in the public interest. That is, the existing carpark use encourages persons to travel in private vehicles to the City, increases congestion on roads including reducing the moving of public transport on roads. Under cl 7.18 SLEP 12 and s 3.11.15 SDCP 2012 car parks are discouraged for these reasons (Ex 4, p 18 par [55]).

The public domain interface of the existing carpark, particularly along Sussex Street, does not demonstrate design excellence. It offers no pedestrian interest or interaction. It offers no vitality to Sussex Street. This is also contrary to the design excellence provision in cl 6.21C of SLEP 12 and ss 3.1 and 3.2 of SDCP 2012.

Ms Faulkner considers that the best planning approach is for the stratum subdivision to be refused, and a site-specific development control plan, concept development application or a planning proposal be considered for the whole of the Site. This would allow for a whole scale consideration of the built form, access and services for a new tall building or buildings in Central Sydney (Ex 4, p 20 par [58]).

To say this DA is a simple subdivision ignores the history of the Site, the existing approval and consent conditions which burden the land. A development application has been lodged and development consent is required for this stratum subdivision. Given the Tower took the benefit of the entire Site area and the bonus floor space available at that time, it cannot be considered to be an orderly and economic use of land for the Tower and Carpark to be separated, and the burdens of the consent ignored/dismissed. The DA fails to have regard to the future prospects of the overall site and this is not orderly and economic use of land (Ex 4, p 20 par [60]).

Mr Galasso SC cross examined Ms Faulkner on the FSR issue relevantly as follows:

Mr Galasso SC	Ms Faulkner in response
“4” – p 6 FSR table: this is a table with which you agree in terms of the metrics	That’s correct
In relation to the uses on the site as an unsubdivided whole, the FSR is 11.2:1?	That is correct.
An exceedance as we see from the FSR table is 1.56:1?	That’s correct.
There is no part of this application that changes the overall floor space for the combined sites?	There’s nothing that changes the overall gross floor area but floor space, if you mean floor space ratio, I would say there is a change.
The site’s redefined and the site area of each site is redefined?	That’s correct.
What the FSR table then does is tell the Commissioner what the result would be if there was a consent for the subdivision. And again, this is a table with which you agree in terms of the metrics, correct?	That’s correct.
For the Carpark site (lot 110) for its redefined site, that is redefined in a sense of being carved off from the whole, with a permitted FSR of 8.17:1? So it would be under what is otherwise permitted?	That’s correct.
If there was a redevelopment of the existing allotment then to a certain extent the numbers would be irrelevant, because the numbers in a redevelopment scenario are a function of what is proposed – correct?	Do you mean in terms of available FSR – then yes.
Redevelopment of lot111 - the starting point may well be lot 111 as 17.93:1 but the proposed use in terms of compliance with FSR would depend upon what is proposed	That is correct
Nothing stopping in a redevelopment scenario of both lots 110 and 111 together	No
Council’s controls contemplates circumstances in which two allotments may be developed together?	That’s correct
The site area is defined by cl 4.5 (of SLEP2012: calculation of FSR)?	Yes it is.
That’s the provision that contemplates that where it’s carried out on two or more lots, it’s the area of any lot on which the proposal is to be carried out which has a common boundary with another lot on which the development is being carried out?	That’s correct.
So if the Commissioner was minded to approve this development, in terms of a redevelopment of what is presently the whole, the subdivision in and of itself does not take away the ability to redevelop the whole except that the application would be with respect to two separate lots, lots 110 and 111?	That’s correct.
4.4 (FSR) and 6.4 of SLEP 12 – provides a mix to promote additional FSR	That is correct
Ex “2” tab 2 p. 18 cl 6.4 of SLEP 12: The Site is in Area 3 and you could get up to 2.5:1 for business, etc, that is in addition to 8:1 under cl 4.4	Yes, that’s correct.
Proposed lot 111 10.5:1 (p6) 2.5:1 is not in respect to the whole site, it is a bonus only for the office ….	Agreed
Additional bonus cl 64 (f) 3.5:1 centre based child care facility	That is correct
52,000m² child care facility	Unlikely
Community facilities – only remaining candidate an hotel or similar 11.5:1 and 11.12:1.	110 and 111 if they are separate
111- the control Mr Oliver has formulated is 10.5:1 because on lot 111 all of it is office premises?	That is correct
3.5:1 only available if the whole of the site is completely used for hotel or motel accommodation	That is correct
Or retail? And the 2.5:1 is not for the whole of the site, it’s only for the office premises bit?	That’s correct – I think part 1 of the clause goes to that issue.
There’s additional bonus in cl 64(f) for Area 3 that goes up to 3.5:1 correct:	That’s correct
But that’s only if you would have a centre based childcare facility, a community facility, or hotel or motel accommodation. Unlikely for 52,000m2 for a centre based childcare facility that anyone would ever build?	It would seem unlikely yes.
So the only remaining candidate is hotel or motel accommodation, and this is relevant to your argument that the existing uses do not represent the highest and best use on the site? You say that in the joint report don’t you?	Yes.
That’s because potentially you could get 11.4:1, but the existing uses are 11.12:1. You were talking about that difference aren’t you?	I was more referring to proposed lot 110 that has the total permitted FSR at the moment of 8.17. And proposed lot 11 if they were to be separate, but mostly proposed lot 110.
But proposed lot 111 would have a use which is higher and better than an 11.5:1, because it’s 17.93:1? Yes, that’s the case is it not?	If it was to remain as existing. That’s correct.
Carparking – a reduction of floor space. Clause 6.5 of SLEP 12 on p 19 of Ex 1: it provides that if there is a conversion of carparking to other use you could use that floor space – any area converted from a carpark to any other uses causes the building to be eligible for an amount of additional floor space (car park reduction floor space) equal to the area of any such changed use.	Only in relation to the ….
The Carpark: par [32(b)] of Ex 4, you say that ‘There is a risk that the existing land use and built form on proposed lot 110 will be retained in perpetuity”. Is that because of the use, or the FSR for lot 110?	It's because of the restriction related to the floor space, that it risks staying as it is.
Go to par [52] on p 17 of Ex 4: you say that a restrictive covenant is required, and then you say ‘by not including a restrictive covenant on 110 and allowing the stratum subdivision to occur the site would be eligible for significantly more floor space than is currently located on the site.	That’s correct.
Council has put forward a condition requiring a covenant to prevent double dipping?	That’s correct
So the matter that you are concerned about in par [52] of Ex 4 is no longer the case?	That’s the case.
Carparking use over a number of levels: it is a very efficient floor space: as a GFA. As a land use it is perhaps the most efficient use.	Correct. It is one of the most efficient.
There is nothing wrong with there being a bulk up of the floor space on one portion, or on one of the lots, rather than the other of the lot, in fact the controls contemplate that, correct.	That is correct.
The introduction of the covenant would protect any argument about doubling up?	That’s correct.
So if someone other than the Applicant happens to be the owner of 110, they will be well aware of the cap on GFA?	Yes.
Use of site for carparking and office p 18 [55] “limitation” : lot 110 if the FSR as a function of the covenant was limited to 20,181m². 7.12:1 that is still an FSR as commensurate with 8:1.	It is still less than the base of other sites in the CBD 8:1. It is just less than the maximum …
The carpark: as a land use it is perhaps the most efficient land use on a floor plate basis in terms of generation of GFA?	I wouldn’t say it is the most efficient, I think it’s one of the most efficient.
There are other uses that are less efficient such that on a redevelopment of the carpark you may well have circumstances of a taller building than a five or six level carpark	Most definitely.
Ex 4, p 18 at par [55] you say, “That the limitation of floor space on this site may sterilise the site rendering redevelopment of another land use unfeasible.” You are talking about lot 110?	Correct
If Council are concerned that there’s an under development of the land, then the 8.1:1 doesn’t operate as a cap does it?	No.
There is potential for the covenant to be relaxed if as a planner you consider there might be good arguments for a future development, or an added development of the land?	That would be at the discretion of the decision maker at the time.
The predominant use of lot 110 is as a commercial carpark	Correct
Would you go so far as to say the Carpark would not be approved today?	No, but they have some very stringent conditions that would need to be met for it to be approved today.
Carparking per se is not something that is presently encouraged by the Council’s controls, or by the Council’s policies?	That’s correct.
For example, the 1986 consent required 70 carparks for the Tower. That was a requirement for carparking back then, but not only would it not be a requirement today it would be something that would be actively discouraged in any approval today.	Yes, it’s currently a prohibition, there a maximum number of carparking spaces you’re allowed to have.
If there was an application to delete the condition (in the 1986 consent) requiring that 70 carparking spaces be kept in the commercial carpark, that would be consistent with the present controls?	Yes.
Controls change over time	They do.
Present controls in SLEP2012 for tall towers unheard of 10 years ago, and 5 years ago?	It was around 5 years ago.
And tall towers means that there’s potential of significant uplift in FSR for particular sites in the CBD?	That’s correct
That’s an example of the evolution of controls?	Correct.
It is difficult to project what the table (Ex 4, FSR table) will be in the future – current controls are not the controls when DA originally granted	Yes
In the Supplementary Report (Ex 5) par [13] you say the development fails to have regard for the desired future character? But this is a subdivision is it not?	The outcome of the development has the ability to limit the desired future character of that block by intrenching a built form on proposed lot 111, because of the fact that it would have an FSR significantly above what the controls allowed at the moment and by including a covenant on proposed lot 110 which is less than the controls would otherwise allow for.
Does not remove the capacity for lots 110 and 111 to be developed in the future does it?	Makes it significantly more difficult and unlikely because they would be in 2 separate lots
The controls in fact contemplate the two owners might get together and redevelop it, consolidated site or 2 sites together?	No different to any other two sites in the CBD might get together.
The subdivision in and of itself doesn’t change that does it?	It makes it more difficult in my opinion.
Do you recognise that the stratum subdivision does not limit the ability for the two lots to be the subject of a redevelopment together?	Yeah, I agree, I acknowledge that.
As an historic consent and an existing operation, that is the commercial carpark, it’s quite valuable is it not?	I don’t know the value of it.
You have not done an economic feasibility study	Economic feasibility? No.
The carpark is a commercially operating use that appears to be viable and, in circumstances where there’s unapologetic discouragement of carparking in the city, will continue to be as valuable tomorrow as it is today, if not more so?	Most likely yes.
That in and of itself entrenches the use rather than any aspect of subdivision?	I think the subdivision though risks making it more entrenched because you are carving off that as a single title….it’s just a carpark and in theory could be in separate ownership. So any incentive to improve the site …is going to be reduced as a result of subdivision.
Redevelopment – the starting proposition is the existing uses exceed the control and any proposal would involve a recalculation of the FSR across the whole of the site?	The difference is if it was under one ownership the actual ability to do that would be very different than if it was in two lots and two separate ownerships. What’s being proposed at the moment is columns going through, (Ex D) sheet 2, sitting in proposed lot 110. …. Two separate lots, how those two operate together, or separately, becomes extreme complicated if the site is subdivided
The columns are limited in plan – only a minor number which in the operation of the site	There’s 5 of them. It makes it more difficult.
But not prohibitively, surely?	Not prohibitively so, no.

Extracts from Tcpt 15/11/23 pp 27-45

The Applicant contends that the DA subdivision is orderly development of the Site in accordance with the objects set out in s 1.3(c) of the EPA Act, and is supported by the evidence of Mr Oliver in Ex 4 Town Planners’ Expert Report:

Noting the agreement for a restrictive covenant set out in Ex 6 Condition (3), and [44] of Ex 2, and noting the content of the 1986 consent (pars [48-50]) of Ex 2, in particular in relation to the requirements for consolidation and the transfer of FSR from the proposed Lot 110 to proposed Lot 111.

The DA is for a simple subdivision which complies with all applicable planning controls, and does not result in any change to the land uses or built form of the subject site. Therefore the development cannot be considered disorderly or uneconomic development, but rather it is consistent with the objects of the EPA Act (Ex 2 p 21 par [62]).

The process by which FSR was approved in the 1986 DA has limited or no relevance to the DA at hand. The DA is to be assessed with the current statutory framework (Ex 2 p 21 par [63]). In particular:

The process by which FSR provisions are to be applied was set out in Table 1 on p 6 of Ex 4, par [17(1)(f)] above.

Condition (6) of the 1986 DA (consolidation of lots) was satisfied at the required time, and has no further work to do. There is no minimum subdivision or lot size requirement under SLEP 12. The nearest that the SLEP 12 comes to imposing a minimum lot size is cl 6.16 Erection of Tall Buildings in Central Sydney, which sets a minimum lot size of 1,000m² for development involving the erection of a building with a height greater than 55m or an FSR 8:1. Both proposed lots achieve this minimum area, indicating that the proposed lots are sufficiently sized. Clause 3.8 of SDCP 2012 sets out the consent authority’s requirements in respect of subdivision and consolidation, and the DA complies with all of these provisions (Ex 4, p 21 par [63(b)]).

Condition 6 of the 1986 DA should not be expected to operate in perpetuity or operate to prevent future subdivision that is the subject of a separate application for consent.

The 1986 DA is a right in rem and runs with the land. Therefore the requirement to provide 70 car parking spaces by the carparking lot to the Tower lot continues to operate (Ex 4, p 22 par [63(d)]).

In relation to the proposed covenant on Lot 110 which restricts the grant of further FSR on that allotment, Mr Oliver notes that if this proposed covenant becomes obsolete or unnecessary, for example as a result of a proposed redevelopment, the covenant could readily be removed with the agreement of the relevant planning authority by following the relevant legislative requirements (Ex 4, p 22 par [65]).

In relation to the proposition that the DA will entrench the carparking use for Lot 110, Mr Oliver says that the simple subdivision of land along logical boundaries that reflects the existing structures and land uses does nothing to entrench nor unlock any of the uses currently present on the land (Ex 4, p 22 par [66]).

Mr Oliver says that the view that the subdivision may ‘lock in’ the existing uses and sterilise the site or render redevelopment to another land use unfeasible, is mere speculation by Ms Faulkner and not borne out by the numerous sites with the Sydney CBD that have been and continue to be, redeveloped from one land use and built form to another on a regular basis (Ex 4, p 22 par [67]).

Division 4 Design Excellence of the SLEP 12 does not apply to this DA as it only applies to developments involving the erection of a new building or external alterations to an existing building on land.

The existing uses have been lawfully approved and there is no requirement or obligation on any future landowner to redevelop either Lot 110 or Lot 111 (Ex 2 p 23 par [68]).

A future consent authority’s ability to amend environmental planning instruments or issue a development consent for some other development on the Site would not be fettered by the proposed restrictive covenant in relation to FSR on Lot 110 (Ex 2, p 24 par [74(d)]). Approval of a new development is at the consent authority’s discretion in accordance with the legislative regime applicable at the time.

Developers regularly deal with and amalgamate multiple parcels of land to facilitate development projects, and the act of subdividing this land does not preclude the future redevelopment of proposed Lot 110 in conjunction with proposed Lot 111 or any other neighbouring property (Ex 2, p 24 par [74(f)]).

There is no requirement for a site specific development control plan for the DA under cl 7.20 of SLEP 12 which applies only to development for the purpose of a new building or development increases to the gross floor area of an existing building.

Mr Pickles SC cross examined Mr Oliver as set out below.

Mr Pickles SC

Mr Oliver in response

Ex 4, par [35]: this is in response to the question of an imbalance between floor space and you say in response to Ms Faulkner, “That it’s common for one part of a site to have more GFA than another part of the site and that doesn’t constitute an imbalance”. That’s true isn’t it while ever the site remains in a single lot, and in one ownership, because one doesn’t need to worry about the balance on one part of the site to another?

Yep, that’s right.

The consequences of the potential for sale as a consequence of subdivision is that different lot owners might have different demands or needs, or interests?

Yes

So if one lot takes all of the floor space, or most of the floor space that pertains to the site and another lot is left with a small amount but with a covenant that restricts the ability to develop it beyond its current potential, doesn’t that have a potential economic impact on the lots?

No, so as I say in this paragraph [35] (Ex 4) to the extent that there’s an imbalance that is dealt with by the confidence that there’s no change in effect from the current position.

No actual change to GFA?

Yup.

But your assertion that follows is that there is no environmental, social or economic impact?

Yes

But the proposition I’m putting to you is that there may well be an economic impact might not there if the land is separately disposed of? If one parcel is sold off there’s a potential economic impact about what becomes of that parcel, and it’s development ability?

I think to the extent that there’s any economic impact that would be the subject of whatever the future land owner, if that is a different land owner, chose to do with the site. It’s not a consequence of the subdivision.

They have no development potential?

Well it wouldn’t have an impact in that what’s proposed here is a prospective imposition of a covenant, so any future purchaser of lot 110 would be fully aware of the effect of that covenant.

It has an impact, an economic impact on the develop ability of that parcel?

Not in any different way to what is currently occurring in the consolidated site. As Ms Faulkner and I have agreed, the FSR of the site currently is in excess of the FSR permitted under SLEP 12. So to the extent that there’s any limitation or impact on restricting floor space on either lot 111 or 110, that impact already occurs.

No, but you could redistribute that floor space, that’s my point. If the site were left in one ownership and on one lot, you can redistribute – knock down the tower and the carpark and put the floor space on any part of the site you so desire?

No, that’s not correct. It’s not a redistribution of the existing floor space because that is in excess of the current FSR You would be seeking consent for a whole new development application.

Once they are in separate ownership, then they have imposed upon them with the covenant the carpark lot has imposed upon it an inability to achieve more?

That’s no different to the imposition currently enforced because of the SLEP FSR standard that limits the amount of floor space across the confined site. There is no change.

Yes, but across a bigger site that still vests that single lot owner with a lot more flexibility as to where they place that floor space, doesn’t it?

To some extent, but I think if you look at the site area of both of the proposed lots, these are very large sites compared to other sites within the Sydney CBD. We’re not talking about the extreme example of carving off 3,000m² and leaving 100m² lot. We’re leaving two sites that are both well in excess of any kind of … site area requirement of either the SLEP or SDCP. So we’re not talking about an extreme situation, we’re talking about two very readily developable lots.

But it’s not correct to say that it has no economic impact upon the new lots, it does have an economic impact upon those two lots as they are subdivided? One has all the value embedded in its floor space, and the other one has the value embedded only in its carpark?

The covenant is just reflecting the existing situation. …… I don’t agree that there is an impact because that covenant is just reflecting what is currently there and the restrictions that currently apply.

Extracts from Tcpt 15/11/23 pp 45-49

Issues

The issues to be determined are:

Is the FSR control in cl 4.4 of SLEP 12 exceeded as a consequence of granting consent to the DA?

If the answer to (1) is yes, does the Clause 4.6 Variation Report (Ex B) satisfy the tests in cl 4.6 of SLEP 12?

Is the stratum subdivision orderly and economic use and development of the Site?

Applicant’s Submissions

The basis for which consent may be granted for subdivision is found in cl 2.6(1) of SLEP 12, which relevantly states:

(1) Land to which this Plan applies may be subdivided, but only with development consent.

Accordingly, subject to the considerations in s 4.15 of the EPA Act, the proposed subdivision is permissible with consent.
The DA is for a subdivision simpliciter, it does not propose any change of use, to alter the existing uses or to alter any of the existing structures on the Site. There is no legal requirement on the Applicant to nominate a future use for a simple subdivision of the Site pursuant to SLEP 12 and SDCP 2012.
The Court in Parrott v Kiama [2004] NSWLEC 77 revised 16/03/2004 (Parrott) recognised at par [17] that it is usual practice in Australia to subdivide land without future constraints on development of that land.
However, the exception to the usual practice is articulated in the planning principle where the Court in Parrott stated at par [17] (Planning Principle):

“…a subdivision application should provide constraints on future buildings when the proposed allotments are smaller than usual or environmentally sensitive or where significant impacts on neighbours is likely and needs careful design to minimise them.”

The planning principle is not engaged in the circumstances of this appeal because:

The resultant lot sizes do not offend any development control in the SLEP 12 or any other control in SDCP 2012;

The Site is not environmentally sensitive; and

The use and built form on the Site will not change as a result of the proposed development, as such there will be no impact on the neighbours.

In Shoalhaven City Council v Lovell (1996) 136 FLR 58 at p 62, fourth par, Gleeson CJ regarding impact of a subdivision on flight paths:

“In my opinion, there were some matters affecting such issues which were proper to be taken into account in the exercise of the discretion to grant or refuse consent to the subdivision. If the Regulations be, for the moment put aside, it would in my opinion be relevant in deciding whether to grant consent to the subdivision, to consider whether the subdivision involved, or was apt to lead to, the erection of structures on the land which might increase the risk to aircraft using the air base. It would be relevant to consider whether the activities apt to flow from subdivision of the land and its use would affect, for example, communications with aircraft using the air base…

…

It is arguable that safety and similar considerations were not in fact relevant in this case because the consent sought was a consent merely to subdivision of the land and that matters affecting the safety of the aircraft, for example, the height of structures or the interference with communications, could and should be controlled when the occasion arose to approve the erection of buildings or structures or the use of the subdivided land generally…”

The proposed development is not the type of development that requires the nomination of a future use, or where constraints on future buildings are required, in order for approval to be granted. The proposed development is consistent with the Planning Principle.
Historically and/or conventionally, the lion’s share of subdivisions occurs ahead of the built form, where built form requires the subdivision in order to be carried out. In this instance, the built form is being affected and the subdivision seeks to recognise the fact of affectation or effecting of the built form and provide for a subdivision as Mr Oliver mentioned, that in his opinion, is not an unnatural dividing line between the uses.
Council seem to be misdirected by the concept of punitive future uses. This is just a subdivision that doesn’t putate any future uses, we have current uses, and it does nothing more than effect a subdivision of the built form. It is not something that is antecedent to a future use, and the site is not one which, on any realistic assertion, could be said to be underdeveloped.
Under the current controls, the current uses are in exceedance of even the ratcheting provision of floor space bonuses. And it is only in the very single circumstances of complete demolition of the structure on the site, and childcare facilities, or community facilities as well, that there’s a potential argument for future FSR, in the default levels of control.
We recognise that the subdivision results in Lot 110 having an existing FSR less than the base FSR of 8:1. So the potential concern is that armed with a site which has a FSR of 7.12:1, the owner of Lot 110, whether it’s the existing owner or any other owner, might seek to avail itself of additional floor space, up to the maximum control, in circumstances where the site area has been utilised for the purposes of the overall development, in other words ‘double dipping’. However, the legislative scheme pursuant to cl 4.5(2) of SLEP 12 contemplates a disparate result in terms of the allotments, that is cadastral allotments, and the floor space on them, when they are utilised – it talks prospectively, but it doesn’t matter that we’re talking historically upon a subdivision, together to effect a result.
And we would submit, that in such circumstance, where there is proffered a condition for a covenant to prevent double-dipping, there should in fact be no cause for concern, either in and of itself and particularly in circumstances where the covenant is in fact reflective of the legislative scheme. And that would ensure in fact compliance with any notion of orderly and economic development of land, because it is the manifestation of what is in the controls.
There is then the residual issue of cl 4.4 of SLEP 12. Our primary submission is that there is, in the circumstances of this application, no breach of cl 4.4 of SLEP 12 for the following reasons:

Council’s Bundle of Documents (Ex 2, p 11 under tab 2) cl 4.4(2) of SLEP 12: the maximum FSR for a building on any land is not to exceed the FSR shown for the land on the floor space ratio map. That map gives the number 8:1, leaving aside for the moment the provision for accommodation floor space in cl 6.4 of SLEP 12:

FSR is defined in cl 4.5(2) (Ex 2, tab 2, p 11) as the ratio of GFA of all buildings within the site, to the site area. And cl 4.5(3) of SLEP 12 as follows:

(3) Site area in determining the site area of proposed development for the purpose of applying a FSR, the site area is taken to be –
(a) if the proposed development is to be carried out on only one lot, the area of that lot, or
(b) if the proposed development is to be carried out on 2 or more lots, the area of any lot on which the development is proposed to be carried out that has at least one common boundary with another lot on which the development is being carried out…

So that in determining the site area of proposed development for the purpose of applying a FSR, the site area is taken to cl 4.5(3)(a). If the proposed development is to be carried out only on one lot the area of that lot, so that would be existing Lot 11.

If the proposed development is to be carried out on two or more lots, the area of any lot on which the development is proposed to be carried out, that has at least one common boundary, with another lot on which development is being carried out. Now, whether you are in the sub (a) category (Lot 11) or sub (b) category (Lots 111 and 110) the FSR number does not change. That’s our primary proposition, that there is nothing in what is before the Court that is affecting the result of the maximum FSR for a building on any land that exceeds the FSR for the land, where in the before there is one lot, and in the after where there are two lots.

In the definition of the site area, the reference is not to development per se, but it is to propose development to be carried out. Whilst development is defined in s 1.5 of the EPA Act, it’s defined to include subdivision. It is clear that in subclause (3), what it is concerned with is the carrying out of development and where subdivision is not the use of the land. We would submit that equally it is not the carrying out of development, but rather development per se.

The Applicant relies upon the decision of Justice Duggan Landcorp Australia Pty Ltd v The Council of the City of Sydney [2020] NSWLEC 174 (Landcorp). In Landcorp, Justice Duggan dealt with a similar issue, except the relevant control was the height of the subject building on the Respondent’s Height Control Map, and the relevant paragraphs are set out below:

The development as proposed in the DA is not development that contributes to or is altering the height of the building. It is, as it presently exists, at a height of 64m and, therefore, in excess of the maximum height of 55m fixed in the Height of Buildings Map for the Subject Site.
The context of this clause is that it is located in that part of the LEP which is directed to the provision of development standards for new development. It manages change. To read the clause in this context it can only be relevantly operative where the development proposed creates some exceedance to the height of a building as objectively determined by reference to the objective means of measuring height as provided for in the LEP.”
1. In relying upon the decision in Landcorp, regarding cll 4.4 and 4.5 of the SLEP 12, the application of FSR is about new buildings. Clause 4.5(3) of SLEP 12 applies to two lots, but it will not create any additional floor space on the grant of consent to the DA and therefore this DA will not result in a breach of cl 4.4 of SLEP 12 as appropriately constructed.
2. Clause 4.5(9) provides a discretion by the use of the word “may” to permit the consent authority to impose a covenant to prevent double dipping. The proposed development, namely the existing uses are to be carried on, and the area of the lots are combined for the purposes of determining the FSR. There is no breach of cl 4.4 and therefore no need for a cl 4.6 variation of development standard report.
3. Council contends in Contention 2 of Ex 1, SOFAC, that the stratum subdivision of the Site will not result in orderly development of the land. In fact, the converse is the case, especially when it is acknowledged that the subdivision reflects, and mirrors, the disparate uses on the subject land.
4. The DA does not seek consent to change the lawfully approved uses or structures currently on the Site. In this respect, and as relevant to this appeal, it is to be noted that subdivision of itself, does not involve the use of land: Smith v Randwick Municipal Council (1950) 17 LGR (NSW) 246 at [205] (Smith), Nancy Shetland Pty Ltd v Melbourne and Metropolitan Board of Works (1974) 48 ALJR 448; (1974) 34 LGRA 151 at [152]; Wehbe v Pittwater Council [2007] NSWLEC 827at [26].
5. Moreover, the Court in Smith stated at par [250]:

“[a]pproval of subdivision is approval of subdivision simpliciter and not approval of subdivision for any particular purpose, or with a view to the erection of some particular sort of building, either in the sense that it alone restricts the owners or in the sense that, by approving the particular subdivision, the Council must be taken to have approved some particular sort of building being erected upon or some particular use being made on the land.”

As the DA is for subdivision simpliciter, this application is not the appropriate application to consider the possible future uses of the Site. In this regard, the Court in Mirvac Projects Sydney Pty Ltd v Council of the City of Sydney [2003] NSWLEC 219 (Mirvac) relevantly stated at [35] (emphasis original):

“…what a future applicant might seek to do does not constitute present disorderly development. Any such application would require consideration by the relevant consent authority and the satisfaction of that body that any such proposal complied with the aims and objectives of the LEP. If that body were not so satisfied and considered that the proposal would result in disorderly development it could reject the proposal on that ground.”

Accordingly, the DA ought to be considered an orderly development as it does not propose to change the existing lawful use and built form of the Site as such consideration is for any future development application.

Council’s submissions: Mr Pickles SC

I shall deal firstly with the planning principle in Parrott, and then the decision in Landcorp, and then revert to the contentions. The planning principle in Parrott is only marginally relevant in this case, obviously because this isn’t a case where there are no buildings on the land. But that does not mean that nothing needs to be considered about the constraints that potentially might arise from future redevelopment of the Site. Whilst it is normal practice in Australia to subdivide land without the constraints of buildings that could later be built, I’ve adopted the planning principle that a subdivision application should provide constraints on future buildings when the proposed allotments are smaller than usual or environmentally sensitive, or where significant impacts on neighbours is likely, and need careful design to minimise them.
So unlike a scenario where you have a subdivision of vacant land, where you might have to consider future buildings, the constraints in the context of a site which already has existing buildings, is such that it has the potential to need to consider the impacts on, not only neighbours, but on the people on whose land the buildings have already been built. And the potential for future redevelopment of those sites to affect the redevelopment of those buildings.
I am relying on the last sentence in par [17] of Parrott:

“I have adopted the planning principle that a subdivision application should provide constraints on future buildings when the proposed allotments are smaller than usual or environmentally sensitive or where significant impacts on neighbours is likely and needs careful design to minimise them.”

Now, we’re dealing here with a constrained scenario, in the sense that the existing buildings provide a constraint to future development, by reason of the sheer fact that this being a plan proposal for stratum subdivision, is based upon the framework of the existing buildings. It means that there will be a significant degree of complexity in the redevelopment of either of the two buildings that are on this land, because of the need to take account of the adjoining owners’ desires and wishes, and indeed the impact that such construction might have upon the adjoining owner, should the two lots be in separate ownership. It adds a layer of complexity to the ability of either lot owner in the future to redevelop their land, and that is a matter that goes to the orderly and economic development of the land. That needs to be considered in the context of whether or not to approve the subdivision.
Next I shall deal with Contention 1, and the need for a cl 46 variation of the development standard in cl 4.4 of SLEP 12. In relation to Landcorp, there is a significant difference between the control which her Honour was considering in Landcorp which related to the height of a building, and the control for floor space ratios. The reason is that the definition of FSR in terms has two integers:

The GFA of the buildings; and

The site area.

Whereas in Landcorp, where the height of the building was not changing, it did not have two integers, it only had one. The sole question for her Honour was: what is the height of the building on the land or proposed on the land? Given that the proposal for a sign did not alter the height of the building, it stood to reason that no cl 4.6 was required because the development was not changing that facet.
In this case we are dealing with the FSR, and the definition of FSR is in cl 4.5 of SLEP 12. The FSR of buildings on a site is the ratio of the GFA of all buildings within the site, to the site area. Council accepts the Applicant’s position that the development being carried out on one lot, might be said to not be being changed. Likewise, if you regard the development as two lots, the FSR is not changing. But the problem with cl 4.5(3)(a) of SLEP 12 is you have to do the exercise twice, because the proposed development is being carried out on one lot, but it is the subdivision of one lot into two. From one lot which has a FSR as it currently exists, to two lots from which you have two potential future developments. And the potential developments on each of those lots, or indeed the existing development on each of those lots, has a different calculation because it has a different lot area. The situation here is that the proposed development is effecting the division of one into two, which means you then have to understand what effects the development, the subdivision, has on the FSR of the buildings on the site within which that building is located. Because that’s the effect of the development.
And indeed, her Honour gives some indication that it’s not the case for all circumstances, that the fact that you are not physically changing something, that might not result in the need to have a variation of development standard report pursuant to cl 4.6 of SLEP 12. Her Honour said at paragraphs:

“[56] The context of this clause is that it’s located in a part of the LEP which is directed to the provision of development standards for new development. It manages change. To read the clause in this context, it can only be relevant operative, where the development proposed creates some exceedance to the height of a building, as objectively determined by reference to the objective means of measuring the height as provided for in the LEP.

[57] This does not have the consequence that only wholly new buildings will be subject to the development standard in this clause. In some cases, this may be where an alteration to an existing building alters the nature and extent of an existing exceedance, or where a compliant existing building is altered such that, it exceeds the height of buildings map.”

So, in the circumstances which arise here is that, although there is no wholly new building, or even part of a building that is being altered in this context, one of the integers of the determination of the FSR, is being altered. So that the proposed development is being carried out on one lot, yet will result in two. And therefore, there are three FSR calculations which need to be done. The existing development has one FSR, but it technically does not need to be done. Because it is not the proposed development.
In applying cl 4.4(a) of SLEP 12, regarding the objective of providing sufficient floor space to meet anticipated development needs for the foreseeable future, the problem with this DA is, in both cases, in respect of both lots; Lot 111 has no further potential because it already very substantially exceeds the FSR on that lot. And Lot 110 would have very limited potential on its own, but with the covenant, which is a necessary consequence to prevent double-dipping, and the appropriate application of cl 4.5(9) of SLEP 12 to the site which was required to be consolidated as a consequence of its original development, it then has no development potential either.
That has the consequence of infringing or being unable to achieve any prospect of providing additional floor space that feeds in to objective cl 4.4(d) of SLEP 12 to ensuring that new development reflects the desired character. Although it is true that this development doesn’t change the character of this site, the fact is that it will freeze or preserve what is there in terms of floor space availability. It simply means that there is no real prospect of the redistribution of floor space on this site, or a fundamental change in the way in which the buildings address themselves in the locality.
That is my submission; it will likely result in the entrenchment of both buildings, essentially in their current form. The tower will be unable to readily fill in the colonnade or improve the amenity on the podium level, and the car park will probably find itself in the position of being unable to add substantially, if at all, to its height or scale, because it has the effect of the covenant, leaving the carpark use as being the highest and best use of that site.
The proposal is contrary to the orderly and economic development of the land and the DA should be determined by refusal.

Submissions in reply by Mr Galasso SC

The use of the Site is an extant use. No reason to suggest it is one that requires a s 4.6 variation under SLEP 12.
The Applicant embraces the reference by Council to par [57] of Landcorp. If there was to be more FSR proposed, there would be a breach of the FSR development standard to Lot 111. There is no extra floor space proposed.
As to the proposition that any proposed development after subdivision would be considered a breach of the FSR control, any proposed subdivision does not change the FSR as it is a subdivision. The FSR controls arise because of the 1986 consent; that is a right in rem which runs with the land. The subdivision may change the cadastral boundary but in the circumstances of land use there is no change.
As to cl 4.4(d) SLEP 12, the desired future character of the locality:

Floor space for the foreseeable future: already done.

Desired future character: already done.

Environmental planning grounds: envelope with Carpark Lot 110 with FSR 7.19:1 – control 8:1 – controlled by covenant.

Reset if demolished.

Environmental grounds: the existing FSR for Lot 111 is as a result of a mathematical exercise – no alteration to the built form. The subdivision entrenches the current use. The current uses for FSR are 11.12:1.

Findings

The appeal by the Applicant and description of the proposal has been set out above, as have the provisions in the EPA Act which give the Applicant the right to appeal the deemed refusal of the DA.
I note under tab 7 of the Class 1 Application filed 31 January 2023, that owner’s consent was given to the DA in accordance with s 23(1)(b) of the Environmental Planning and Assessment Regulation 2021.
The Court has power to hear and determine the appeal as it falls within Class 1 of the Court’s jurisdiction pursuant to s 17(d) of the LEC Act, and the Court exercises its powers and functions under s 16(1)(a) of the EPA Act and s 39(2) of the LEC Act.
Contention 1, and Issue No. 1, both raise the question of whether by granting subdivision, the FSR is changed so that it is such as to warrant a refusal of the DA. If necessary, a variation of development standard report is available to the Applicant (Ex B): is it required? And if yes, does it give sufficient reasons to vary the development standard?
The FSR Table (Ex 4, p 6) provides details of the GFA, Site area and FSR in the existing development (1986 consent), together with the proposed Lots 110 and 111. As the built form is not changing, the addition of the GFA and Site area for Lots 110 and 111 equals the existing GFA and Site area for the undivided Lot 11.
For the extant development on lot 11, the FSR at 11.12:1 exceeds the current control of 8:1 (and total permitted FSR of 9.56:1), but did not exceed the FSR control when consent was originally granted in 1986.
There have been various changes to the planning controls since the 1986 consent, and in the future there will continue to be changes to the controls. (Tcpt 15/11/23 Ms Faulkner in cross examination, p 40 lines 22-49, and p 40 lines 1-5).
If proposed Lots 110 and 111 are taken together, the FSR remains 11.12.1.
If the proposed Lots 110 and 111 are taken as wholly independent lots, the FSR on subdivision of Lot 110, is 7.12:1, and Lot 111, 17.93:1.
In relation to Lot 110, to reflect the FSR on Lot 11, the Applicant has agreed to Condition (3) in the Conditions of Consent in Annexure A, which prevents the allocation to additional FSR to proposed Lot 110 – this is a reflection of the total FSR for Lot 11 where the Carpark/Podium transferred its right to FSR to the Tower.
The legislative scheme provides for transfer of FSR from one lot to an adjoining lot, whether or not the two lots are in the same or disparate ownership, pursuant to cl 4.5(9) of SLEP 12.
Both parties rely on the planning principle espoused in Parrott, the Applicant submitting that the planning principle is not engaged in relation to providing constraints for future buildings, whereas the Respondent relies upon the last sentence of Parrott (pars [45–48] above). The Council submits that the last sentence should be taken into consideration in whether or not to grant consent to the DA where the subdivision is of a site which has already been developed by the construction of buildings, particularly in relation to:

The potential impacts on neighbours;

The potential impacts of the owners of Lots 110 and 111.

I find the DA complies with the planning principle in Parrott, and that the submissions by Council are not upheld for the following reasons:

The proposed allotments are not smaller than usual (Tcpt 15/11/23 Mr Oliver p 48 Lines 40-50, pp 1-4);

The proposed lots are not environmentally sensitive; and

The stratum subdivision is dividing Lot 11 into proposed Lots 110 and 111. There is no change to the built environment. Therefore there are no significant impacts on neighbours as there will be no change to the built environment or its use.

Both parties rely upon the decision of Duggan J in Landcorp; the Applicant relies upon pars [55-56] and the Respondent relies upon pars [56-57]. I have also considered the following paragraphs of her Honour’s judgment:

“Sun Access Plane

[46] The contention raised by the Council turns upon the construction of the provision of cl 6.17 of the LEP. The proper approach to the construction of statutory instruments is the same as for legislation: Environment Protection Authority v Grafil Pty Ltd (2019) 101 NSWLR 245 at [257]. In broad terms the meaning is to be determined from both the text and the context of the provision and where a construction would promote the object or purpose underlying the instrument such is to be preferred over a construction that would not: s 33 Interpretation Act 1987.

[47] The subject provision of the LEP is expressed in terms of an outcome, namely that if a development as proposed is approved it will result in the building projecting higher than the identified Sun Access Plane. The enquiry is, therefore, directed not to whether the building on which the development is proposed projects through the Sun Access Plane (present factual situation) but whether the development proposed will have the consequence of the building (that is, the development proposed) itself causing a projection higher than the Sun Access Plane (proposed future situation).

In the context of the text of the clause it matters not whether the signs themselves are a “building” (being a part of a structure or building) as the clause is looking to the consequence of the development proposed. On the agreed facts of this DA the answer must be: alter or change the existing projection above the Sun Access Plane.

[49] This is not to say that all development applications that rely on a building that is in existence above a Sun Access Plane will not be subject to cl 6.17 where a proposal operates to increase the loss of sunlight from a projection into the area above the Sun Access Plane. It would result in a building that was higher that the plane and, therefore, be subject to the provision of cl 6.17.

This approach to the construction of the text of the clause is also consistent with the context in which the clause is found. The stated objective of the clause is to maximise sunlight access. The concept of maximising sunlight access can only have application where a proposal will have the capacity to affect the desired level of sunlight access (by decrease or the possibility of increase if, by way of example, the building was to be demolished and rebuilt). The provision is to control projections into the plane that may reduce the amount of sunlight on certain nominated features of the public domain and sandstone buildings. This context indicates that where the building exists and there is no change to the sunlight impacts of that building from other development on the Subject Site (including on that part of the building that projects higher than the Sun Access Plane) the provisions of the clause are not relevantly applicable to that development. This context is reinforced by the similar terminology of a “result” the exceptions expressed in cl 6.18.
Accordingly, the signs proposed are not development that will result in any building on the Subject Site projecting higher that any part of the Sun Access Plane relevant to Subject Site.

Building Height

[52] This contention also turns on the construction of the LEP as a statutory instrument and the same considerations to that task as were identified at [46] above apply to the task of construing the meaning of cl 4.3 and determining whether it relevantly applies to the facts of this DA.

The text of the operative part of cl 4.3 makes the clear statement that the height of a building on land is not to exceed the maximum height fixed by reference to a map. The Dictionary to the LEP defines the manner in which the building height or height of building is to be determined as:
building height (or height of building) means—
(a) in relation to the height of a building in metres—the vertical distance from ground level (existing) to the highest point of the building, or
(b) in relation to the RL of a building—the vertical distance from the Australian Height Datum to the highest point of the building,
including plant and lift overruns, but excluding communication devices, antennae, satellite dishes, masts, flagpoles, chimneys, flues and the like.
The difference in the defined term (“Height of Building) and the term used in the clause(“Height of a Building”) is of no consequence as the clause refers to the particular building in question and the defined term is formulated such that it refers to the determination of the height of any building and then in its substantive provisions relates to “a” building for the purposes of the application of the means of measuring height.

…

Contrary to what was submitted by the Council this clause cannot be construed by a consideration of the merits or the particular characteristics of a building that exceeds the height provided for in the map. The Council’s suggestion that the text of this clause applies even where there is no increase in height proposed, because in this case the quality of views and the relationship to heritage buildings and special character areas are relevant considerations and the relationship of height to those features, is referenced in the objectives of the clause. Those features are identified in the objectives as the reason why the clause is formulated and the heights fixed in the map are determined; they are not drafted to identify circumstances in which the provision of the control will operate. That is, it is not intended that a merit consideration of impacts would be necessary to determine if the clause is operative on a particular development. Whether the clause applies is intended to be objectively ascertained. The height of a development and the impact on matters such as the views and the relationship to heritage areas may be relevant to the consideration of the merits under s 4.15 of the EP&A Act but it does not have the consequence that it is subject to the operation of the development standard and requires a variation pursuant to cl 4.6 of the LEP to be permissible development.

Further, I accept the Applicant’s submission that the definitions of words must be read subject to the context in which they are used. In this clause the reference to a building is not a reference to anything that may fall within that defined term but to a thing so defined that has the consequence of the building, objectively measured, exceeding the maximum height. In the circumstances of this case, it does not matter if the sign can be defined as a “building”; the sign does not have the consequence of the breach of the Height Control – the existing building upon which the sign is to be affixed already breaches it, such that the clause does not apply to the elements affixed to the existing built form.”
1. To adopt her Honour’s reasoning in Landcorp:
1. The meaning of the provision of cl 4.4 of SLEP 12 in ‘broad terms ….. is to be determined from both the text and the context of the provision and where a construction would promote the object or purpose underlying the instrument such is to be preferred over a construction that would not” (par [46]).
2. The enquiry is direct not to whether the building on which the development is proposed exceeds the FSR control, but whether the development proposed will have the consequence of the building (that is, the development proposed) itself causing an increase in the FSR in breach of the FSR control in cl 4.4 of SLEP 12 (par [47]).
3. The objectives of cl 4.4 have already been met by the extant building constructed pursuant to the 1986 DA.
1. The town planners agree that the base FSR for the Site as per cl 4.4 and the Floor Space Ratio Map of SLEP 12 is 8:1, as determined by cl 4.5 (2) of SLEP 2012 and the total FSR for the Site which is available under SLEP 12 is 9.56:1 (Ex 4, p 5 pars [14-18].
2. The GFA for the Site does not change after the stratum subdivision, taking the GFA of both Lots 110 and 111.
3. The 1986 consent permitted an FSR for the Site of 11.12:1 – an exceedance under the current controls of 1.56:1.
4. On stratum subdivision the permitted FSR for Lot 110 is 8.17:1, and the actual FSR is 7.12:1, an FSR of 1.05:1 less than that permitted under the current controls.
5. On stratum subdivision the permitted FSR for Lot 111 is 10.5:1, and the actual FSR is 17.93:1, an FSR of 7.43:1 more than that permitted under the current controls.
6. The Applicant submits, in applying Landcorp, that the application of FSR is about new buildings. The Applicant has accepted the Council’s request for a covenant on Lot 110 restricting the floor space to the present level, Lot 110 having transferred its floor space to the proposed Lot 111 in the 1986 consent. Consent to this DA will not create any additional floor space, and therefore the DA will not result in a breach of cl 4.4 of SLEP.
7. The Council submits, applying par [57] in Landcorp:
1. That although there is no building being altered in this context, one of the integers of the determination of the FSR is being altered. As a result of the transfer of floor space from the Carpark to the Tower element of the 1986 consent, and the covenant being registered on title for Lot 110 (Ex 6, Condition 3 and Ex 7, Draft covenant), neither proposed lot has any prospect of providing additional floor space that feeds into objective (d) in cl 4.4 of SLEP 12 to ensure that new development reflects the desired character of the area.
2. In Landcorp there was only one integer to be determined – the height of the building measured from ground level. In this DA the stratum subdivision requires two calculations to be made in relation to ascertaining the FSR for proposed Lots 110 and 111.
1. The 1986 consent is a right in rem, and was compliant with the FSR control when it was granted in 1986. The stratum subdivision does not require any alteration to the built form on the Site.
2. Noting the Site is already in breach of the current FSR control, the consequence of the stratum subdivision is that:
1. Lot 110 will have an FSR below that available to it under the present control; and
2. Lot 111 will have an FSR above that available to it under the present control.
1. In order to maintain the status quo for the FSR on the Site, Council has imposed a covenant on Lot 110 pursuant to s 4.5(9) of SLEP 12 to prevent double dipping. The covenant prevents (at the least creates a fetter on) any further FSR for Lot 110.
2. There is no change on the Site in relation to the FSR, and the covenant ensures that the DA does not change that fact.
3. Clause 4.4 of SLEP 12 is prospective, not retrospective. The objects refer to the future development; not reassessing past development, is “(a) to provide:, “(b) to regulate”, “(c) to provide” and “(d) to ensure that new development”.
4. In relation to Contention 1 (Issues 1 and 2), the DA is not development for a building, or buildings, which exceed the maximum FSR for the Site in 1986 when consent was granted, and there are no building works proposed in this DA. Further the covenant in Condition 3 prevents any further FSR on Lot 110, maintaining the status quo of the FSR on the Site. Therefore, the FSR development standard in cl 4.4 of SLEP 12 does not apply to a determination of the DA. It follows that there is no need for a cl 4.6 variation of development standard report pursuant to SLEP 12, and I have not considered it (Ex B).
5. It remains for me to address Contention 2 (Issue 3): whether or not the DA satisfies s 1.3 of the EPA Act, and in particular s 1.3(c):

The Applicant relies upon:

Smith, in that the DA is for the approval of a subdivision simpliciter, and not for any particular purpose on the Site.

Mirvac, in that it is not appropriate to consider the future uses of the Site.

Mr Oliver, in cross examination, responded to the following question:

“Pickles: Yes, but across a bigger site that still vests that single lot owner with a lot more flexibility as to where they place that floor space, doesn’t it?

Witness Oliver: To some extent, but I think if you look at the site area of both of the proposed lots, these are very large sites compared to other sites within the Sydney CBD. We’re not talking about the extreme example of carving off 3,000m² and leaving 100m² lot. We’re leaving two sites that are both well in excess of any kind of … site area requirement of either the SLEP or SDCP. So we’re not talking about an extreme situation, we’re talking about two very readily developable lots.”

T 15/11/23 p 48 Lines 40-5-, p 49 Lines 0-3

The legislative scheme provides for two lots, whether in disparate ownership or one ownership, to transfer FSR from one lot to another. (cl 4.5 (3)(b) of the EPA Act).
The consent authority changes the planning controls over time, as agreed by Ms Faulkner in cross examination. There is nothing to prevent the consent authority changing the controls in the future, but they will only be applicable if there is a development application on one or both of the allotments to construct a new building or alter the existing buildings.

The Council submits that the objective in s 1.3(c) of the EPA Act has not been met because of:

The degree of complexity of the redevelopment because of the need to take account of the adjoining owners desires and wishes; and

The five pylons on Lot 110 supporting Lot 111 introduce a further degree of complexity when considering redevelopment on either Lot 110 or 111.

It adds a layer of complexity to the ability of either lot owner in the future to redevelop their land, and that is a matter that goes to the orderly and economic development of the land.

I do not consider that the reasons set out by Council in par [92] above are such as to ground a refusal of the DA. Numerous properties in the Local Government Area of The City of Sydney require the proponent to address legacy issues on the subject land as the development is usually the redevelopment of a brownfield site.
The Council’s proposition pursuant to cl 3.8 of SDCP 12 is that subdivision is not supported as the subdivision “can create a barrier to achieve new higher density and more sustainable development”. That provision applies to properties being strata titled, and sold into multiple ownerships resulting in a fetter on redevelopment because of fragmented ownership. That argument does not apply to this DA where the resultant Lots 110 and 111 will, in the worst case scenario, result in 2 large city blocks (well in excess of 1,000m² each) for possible development of high rise buildings, being in two ownerships.
I accept the submissions put forward by the Applicant, and consider that the DA meets the objectives in cl 1.3(c) of SLEP 12 in that the DA provides for the orderly and economic use and development of the land.
I note that the parties have agreed the Conditions of Consent in Ex 6.
In accordance with s 4.16(1)(a) of the EPA Act and s 39(2) of the LEC Act I shall uphold the appeal and grant consent to the DA subject to Annexure A.

Orders:

The Court orders:

The appeal is upheld.

Pursuant to s 4.16(1)(a) of the Environmental Planning and Assessment Act 1979 and s 39(2) of the Land and Environment Court Act 1979, development consent is granted to DA/2022/613 (PAN-230552) for the stratum subdivision of Lot 11 in Deposited Plan 777449 into two lots at 1 Market Street Sydney, subject to Annexure A.

The exhibits are retained.

M Peatman

Acting Commissioner of the Court

32597.23 Annexure A

**********

Decision last updated: 15 February 2024

Medium Neutral Citation:	Investa Nominees (2) Pty Ltd v City of Sydney Council [2024] NSWLEC 1048
Hearing dates:	15 November 2023
Date of orders:	15 February 2024
Decision date:	15 February 2024
Jurisdiction:	Class 1
Before:	Peatman AC
Decision:	The Court orders: (1) The appeal is upheld. (2) Pursuant to s 4.16(1)(a) of the Environmental Planning and Assessment Act 1979, and s 39(2) of the Land and Environment Court Act 1979 development consent is granted to DA/2022/613 (PAN-230552) for the stratum subdivision of Lot 11 in Deposited Plan 777449 into two lots at 1 Market Street Sydney, subject to Annexure A. (3) The exhibits are retained.
Catchwords:	DEVELOPMENT CONSENT – stratum subdivision of 1 lot into 2 lots – FSR – city high rise building - applicability of cl 4.6 variation of development standard – orderly and economic use and development of the land
Legislation Cited:	Conveyancing Act 1919, s 88B Environmental Planning and Assessment Act 1979, ss 1.3, 1.5, 4.2, 4.5, 8.7, 8.10, 8.11, 4.15, 4.16, 16 Land and Environment Court Act 1979, ss 17, 39 Environmental Planning and Assessment Regulation 2021, s 23 Sydney Local Environmental Plan 2012, cll 1.2, 1.3, 2.1, 2.6, 4.3, 4.4, 4.5, 4.6, 6.4, 6.5, 6.16, 6.17, 6.19, 6.21C, 7.18, 7.20
Cases Cited:	Landcorp Australia Pty Ltd v The Council of the City of Sydney [2020] NSWLEC 174 Mirvac Projects Sydney Pty Ltd v Council of the City of Sydney (2003) NSWLEC 219 Nancy Shetland Pty Ltd v Melbourne and Metropolitan Board of Works (1974) 48 ALJR 448; (1974) 34 LGRA 151 Parrott v Kiama [2004] NSWLEC 77 Shoalhaven City Council v Lovell (1996) 136 FLR 58 Smith v Randwick Municipal Council (1950) 17 LGR (NSW) 246 Wehbe v Pittwater Council [2007] NSWLEC 827
Texts Cited:	Community Engagement Strategy and Participation Plan 2022, The City of Sydney Council Sydney Development Control Plan 2012
Category:	Principal judgment
Parties:	Investa Nominees (2) Pty Ltd (Applicant) The Council of the City of Sydney (Respondent)
Representation:	Counsel: A Galasso SC (Applicant) A Pickles SC (Respondent) Solicitors: HWL Ebsworth Lawyers (Applicant) The City of Sydney Council (Respondent)
File Number(s):	2023/32597
Publication restriction:	Nil

Aggregate	Proposed Lot 110	Proposed Lot 111
GFA	52,001.6m²	20,981.1	31,020.5m²
Site Area	4,676m²	2,946m²	1,730m²
Resultant FSR	11.12:1	7.12:1	17.93:1
Permitted FSR in accordance with cl 4.4 of SLEP 2012	8:1	8:1	8:1
Accommodation floor bonus permitted under cl 6.5 of SLEP 2012	1.56:1	0.17:1	2.5:1
Total permitted FSR	9.56:1	8.17:1	10.5:1
Exceedance of permitted FSR	1.56:1 % - 16% GFA – 7,302m²	No exceedance (site is -1.05 less than permitted)	7.43:1 % - 71% GFA – 12,856m²

Mr Pickles SC	Mr Oliver in response
Ex 4, par [35]: this is in response to the question of an imbalance between floor space and you say in response to Ms Faulkner, “That it’s common for one part of a site to have more GFA than another part of the site and that doesn’t constitute an imbalance”. That’s true isn’t it while ever the site remains in a single lot, and in one ownership, because one doesn’t need to worry about the balance on one part of the site to another?	Yep, that’s right.
The consequences of the potential for sale as a consequence of subdivision is that different lot owners might have different demands or needs, or interests?	Yes
So if one lot takes all of the floor space, or most of the floor space that pertains to the site and another lot is left with a small amount but with a covenant that restricts the ability to develop it beyond its current potential, doesn’t that have a potential economic impact on the lots?	No, so as I say in this paragraph [35] (Ex 4) to the extent that there’s an imbalance that is dealt with by the confidence that there’s no change in effect from the current position.
No actual change to GFA?	Yup.
But your assertion that follows is that there is no environmental, social or economic impact?	Yes
But the proposition I’m putting to you is that there may well be an economic impact might not there if the land is separately disposed of? If one parcel is sold off there’s a potential economic impact about what becomes of that parcel, and it’s development ability?	I think to the extent that there’s any economic impact that would be the subject of whatever the future land owner, if that is a different land owner, chose to do with the site. It’s not a consequence of the subdivision.
They have no development potential?	Well it wouldn’t have an impact in that what’s proposed here is a prospective imposition of a covenant, so any future purchaser of lot 110 would be fully aware of the effect of that covenant.
It has an impact, an economic impact on the develop ability of that parcel?	Not in any different way to what is currently occurring in the consolidated site. As Ms Faulkner and I have agreed, the FSR of the site currently is in excess of the FSR permitted under SLEP 12. So to the extent that there’s any limitation or impact on restricting floor space on either lot 111 or 110, that impact already occurs.
No, but you could redistribute that floor space, that’s my point. If the site were left in one ownership and on one lot, you can redistribute – knock down the tower and the carpark and put the floor space on any part of the site you so desire?	No, that’s not correct. It’s not a redistribution of the existing floor space because that is in excess of the current FSR You would be seeking consent for a whole new development application.
Once they are in separate ownership, then they have imposed upon them with the covenant the carpark lot has imposed upon it an inability to achieve more?	That’s no different to the imposition currently enforced because of the SLEP FSR standard that limits the amount of floor space across the confined site. There is no change.
Yes, but across a bigger site that still vests that single lot owner with a lot more flexibility as to where they place that floor space, doesn’t it?	To some extent, but I think if you look at the site area of both of the proposed lots, these are very large sites compared to other sites within the Sydney CBD. We’re not talking about the extreme example of carving off 3,000m² and leaving 100m² lot. We’re leaving two sites that are both well in excess of any kind of … site area requirement of either the SLEP or SDCP. So we’re not talking about an extreme situation, we’re talking about two very readily developable lots.
But it’s not correct to say that it has no economic impact upon the new lots, it does have an economic impact upon those two lots as they are subdivided? One has all the value embedded in its floor space, and the other one has the value embedded only in its carpark?	The covenant is just reflecting the existing situation. …… I don’t agree that there is an impact because that covenant is just reflecting what is currently there and the restrictions that currently apply.