Jofilo Pty Ltd v Randwick Municipal Council
[1988] NSWLEC 117
•04/29/1988
Land and Environment Court
of New South Wales
CITATION: Jofilo Pty Ltd v Randwick Municipal Council [1988] NSWLEC 117 PARTIES: APPLICANT
Jofilo Pty. LimitedRESPONDENT
Randwick Municipal CouncilFILE NUMBER(S): 10179 of 1987 CORAM: Stein J KEY ISSUES: :- LEGISLATION CITED: Environmental Planning and Assessment Act CASES CITED: McCulloch v. Randwick Municipal Council ((1986) ;
Buhagiar v. Randwick Municipal Council ((l986);
Randwick Municipal Council v. Crawley ((l986) ;
Hall v. Shoreham-by-Sea ((1964)DATES OF HEARING: 23/06/1987, 29/04/1988 DATE OF JUDGMENT:
04/29/1988LEGAL REPRESENTATIVES:
APPLICANT
Mr. Grunstein
RESPONDENT
Mr. Brennan
JUDGMENT:
HIS HONOUR: The applicant, Jofilo Pty. Limited, appeals against the refusal by the Randwick Municipal Council to approve an application for the strata subdivision of a residential flat building at 10 Blenheim Street, Randwick, into 6 allotments. The reasons for refusal communicated by the Council on 12 March 1987 were threefold:-
l. The property provides accommodation for low to moderate income earners;
2. The proposal is contrary to the aims of State Environmental Planning Policy No. 10 - Strata subdivision of buildings used for residential purposes (SEPP 10); and
3. The cumulative effect of the strata subdivision on a number of similar sized properties would have a negative effect on the availability of rental accommodation in the area.
The applicant admits that there is a shortage of affordable rental accommodation for low to moderate income earners within the Municipality. The principal issue for determination is whether the subject building provides rental accommodation for people on low to moderate incomes. If this question is answered in the affirmative it is necessary to consider further issues arising under SEPP l0 and section 90 of the Environmental Planning and Assessment Act.
Before addressing the issues, the history of the application should be shortly canvassed. The application was lodged with Council on 6 November l986 not long after the applicant acquired the premises, which consist of a 3 storey block of 6 x 2 bedroom residential flats with lock-up garages under the building. Each unit has a floor area of approximately 75m2. The block was built in or around 1970. The subject land is zoned Residential Cl under the Randwick Planning Scheme Ordinance and development consent to the strata subdivision is required under SEPP 10. The locality is predominantly one of similar flat buildings. The application was refused on 12 March 1987 and the applicant appealed.
In or around May 1987, and it appears at the instigation of Council, the applicant indicated that it would accede to conditions being imposed on a consent which would provide for a reasonable period of guaranteed non-disturbance of the occupancies. Council's Chief Town Planner recommended consent subject to a number of conditions designed to afford protection to the tenants. However, on 23 June 1987 Council again refused consent and adhered to its original decision.
On 3l July 1987 SEPP 10 was amended. The amendment established easy identification of weekly rents of accommodation for low to moderate income earners by reference to a schedule. By a further amendment gazetted on 18 September 1987 $180.00 per week was stipulated as the relevant threshold applicable to Randwick Municipality. On 2 September 1987 the applicant made a fresh development application to strata the building and this was refused by Council on 24 November 1987. However, this application forms no part of the current appeal but I record it for completeness and to avoid any confusion. Clause 8 of the Policy provides that applications made before the amendments, (July and September 1987), continue to be determined as if the amendments had not been made.
It is unnecessary for me to discuss in detail the aims and objectives of SEPP 10, suffice to refer to the discussion of principle in McCulloch v. Randwick Municipal Council ((1986) 60 LGRA 254), Buhagiar v. Randwick Municipal Council ((l986) 60 LGRA 266) and Randwick Municipal Council v. Crawley ((l986) 60 LGRA 277). In particular, on the issue of the difficult question of determining what constitutes "moderate income", I said in McCulloch (p.259):-
"In my opinion "moderate" in the present context must mean medium. This accords with the relevant dictionary definitions. Insofar as Mr. Mitchell may have been suggesting that the Housing Commission eligibility criteria or thereabouts are appropriate cut-offs for moderate income I do not accept that opinion. To my mind it certainly is not the intention of the policy nor is its wording indicative that it should cover only those who are eligible for public housing. The phrase "low to moderate incomes" is clearly intended to relate to a broader band of income earners than those eligible to join Housing Commission waiting lists.
As a general guideline I accept the DEP suggestions. I do so on the basis that they appear to be the most logical and reasonable approach and there is an absence of any more useful predictions. If the guidelines err at all they do so on the conservative side. Nevertheless, I accept the caution of a too dogmatic and rigid adherence to such figures."
The reference in the quotation to the Department of Environment and Planning is to the assessment guidelines published by the Department in November 1985 to assist councils in assessing strata subdivision applications to which the policy relates. In Buhagiar (p.270) I added:-
"....in the absence of what I would regard as any more useful guidance, I have regard to the assessment guidelines published by the Department of Environment and Planning (DEP) in November 1985. For the purposes of the policy (and as a guide only) I accept that income of $377.50 per week gross for a single person household and $4l2 per week gross for a couple are indications of the band of moderate income. In my opinion, if they err at all, they do so on the side of conservatism."
It is common ground that the most recently available figures on average weekly earnings from the Australian Bureau of Statistics for the December quarter 1987 are as follows:-
Household type Upper income limit Average weekly earnings
equivalent
Single person $408.60 All employees total earnings.
Couple $45l.40 Full time adult ordinary time
earnings.
Household + l dependant $478.30 Full time adult ordinary time
earnings male.
Household + 2 dependants $521.70 Full time adults' total
earnings males.
These updated figures may be substituted for the schedule of upper limits for determining moderate income appearing at page 10 of the DEP assessment guidelines (December 1985). The Council argues that the band of moderate income earners within the policy ranges up to $521.70 per week. The Council concedes that the tenant of flat 2 is not a low to moderate income earner since he earns in excess of $900 gross per week and has no dependants. However, Council argues that the occupants of the other 5 flats are all low to moderate income earners and therefore the building provides accommodation for persons covered by the State Policy.
It is therefore necessary to examine the evidence relating to the income of the occupants of the remaining flats. Flat l is occupied by a husband and wife and one dependent child. The joint income of the family is around $1,000 per week gross, well above the relevant DEP guide of $478.30. In my opinion this household is significantly above moderate income referred to in the Policy.
Flat 3 is occupied by a couple who both work earning between them $l,037.00 per week. In my opinion, whether looked at individually or as a household, the occupants are above moderate income earners.
Flat 4 is tenanted by a Mr. Diaz who earns around $800.00 per week. He has a dependent wife and child. His income is still well above the DEP guideline. Because of the need for a flexible approach to defining "moderate income" in SEPP 10 and my earlier conclusion that the DEP guidelines may err on the conservative side, I may be prepared to accept that the tenant of this unit, especially having a dependent spouse and child, could conceivably be treated as a moderate income earner. However, because of my ultimate decision on the issue I do not need to so find.
Flat 5 is occupied by 2 unrelated adults. One, a nurse, earns $521.00 per week gross and other earns $311.00 per week. Looked at individually the latter could be seen as coming within the Policy but the former earns in excess of average weekly earnings of a single person. Combining the two as a household clearly puts them over the moderate income category. At the very most only one of the occupants, looked at individually, could qualify within the Policy. Also, the evidence of their earnings is some 10 months out of date and their income is likely to have risen since. The same comment may be said for the evidence of the occupants of flat 6 since the information was obtained in February l987. Two adults rent the flat and between them earn $910.00 per week (the woman earns $485.00 per week and the man $425.00 per week). Considered as a household they are well above moderate income earners. Considered individually each is still above the DEP assessment guidelines.
The Council argues that, with the exception of the tenant of flat 2, all tenants and occupants are within the Policy since they would all have difficulty in purchasing a similar unit in the area. It may be relevant in the assessment of moderate income under the Policy to test the ability of a tenant to buy a similar property. However, at best it could provide only one indicia. Nonetheless, I find it virtually impossible to make such an assessment here. I have absolutely no information as to the assets of any of the occupants and their ability to pay a deposit or purchase. So far as I can see all of the occupants would probably have the ability to service a loan or loans for the purchase of a flat in the range of $130,000 to $150,000 said to be the market value of these units. Perhaps it might be suggested that Mr. Diaz would not so qualify, but I am far from certain.
I accept Mr. Brennan's submission on behalf of the Council that there is a need to retain flexibility in the definition of a moderate income earner (under the State Policy) and that the DEP guidelines should not be rigidly applied. (Indeed the document makes this clear). However, as a matter of fact I am driven to the conclusion that the occupants of this building, with one or two possible exceptions, are not moderate income earners within SEPP 10. Total household income will in some instances be material to be examined particularly when the occupants are related. Even where they are not so related it may still be relevant to look to total household income depending on the occupants' personal circumstances. The DEP guidelines may, on occasions, produce inconsistencies although I doubt that they do here. Nevertheless, as I have said before, in the absence of a more useful criteria they provide a helpful guide.
Since I have concluded that the building, as a whole, does not provide rental accommodation for people on low to moderate incomes it follows that the Policy does not apply to prevent development consent being granted for the Strata subdivision. No other issues under the Policy or the Environmental Planning and Assessment Act are therefore relevant. However, a number of conditions to be attached to the consent are in issue.
The applicant seeks the imposition of the following conditions:-
l. Development being carried out generally in accordance with the plans prepared by D. R. Buchan submitted with the application;
2. The applicant, owners and their successors in title shall not seek to evict any of the existing tenants within a period of twelve months of the date hereof;
3. Thereafter the owners and their successors in title shall not seek to evict any such tenants without first giving the tenant three months written notice of their intention;
4. The responsibility of the owners and their successors in title under (2) and (3) shall be subject to the tenant observing his or her obligations under any existing or future lease;
5. The weekly rents charged to existing tenants shall not exceed $180 per week for a period of twelve months.
The Council agrees only to proposed condition l. Mr. Brennan argues that the remaining conditions are beyond power. I mention that the suggested conditions are the very same as proposed by the Council's planner to Council when it reconsidered the application. I also note that in May 1987 the Council's solicitors asked the solicitors for the applicant whether the applicant would be prepared to consent to the imposition of conditions similar to those I imposed in Buhagiar. This request was answered in the affirmative and reaffirmed by the Managing Director of the applicant, Mr. Klein, in his evidence. Mr. Grunstein, on behalf of the applicant, asks that the conditions be imposed and submits that they are valid and enforceable.
The Council, however, submits that since the disputed conditions limit the exercise of an owner's property rights they cannot be imposed unless they are authorised clearly and unambiguously by statute. Reliance is placed on the Judgment of Willmer L.J. in Hall v. Shoreham-by-Sea ((1964) l All ER l at 7). Mr. Brennan argues that neither section 90 nor section 91 of the Environmental Planning and Assessment Act clearly authorise such conditions. In Buhagiar Mr. Brennan made a similar submission and I dealt with it thus (at p.275):-
"Mr. Brennan, on behalf of the council, submits that the suggested conditions are invalid and unenforceable. He submits that there is no valid legislative base for them and conditions cannot be imposed which alter property rights. Notwithstanding reservations I expressed in McCulloch I have concluded, on closer examination of the position, that the proposed conditions are a valid exercise of power under the Environmental Planning and Assessment Act. Section 91(3) of the Act provides that a condition may be imposed if it "(a) relates to any matters referred to in s 90(l) of relevance to the development the subject of the consent". Relevant matters arising under s 90(l) are (a) the provisions of the LEP and the State Policy, as well as (d) the social and economic effect of the development on the locality, (q) the circumstances of the case, and (r) the public interest. In my opinion the proposed conditions may be validly imposed. I note further that the applicants specifically request that the conditions be impo
sed. It is not a case of conditions fettering title being imposed against an owner's will."
There is little I can add to the above reasons. In my opinion the proposed conditions are of relevance to the development and are authorised by section 90(l) of the Act by specific reference from section 9l(3)(a). In Buhagiar I also dealt with the question of enforceability of such conditions and I will not repeat that here.
It follows that development consent should be granted to the strata subdivision of the building subject to the conditions previously mentioned. Accordingly the application is upheld and the following orders made:-
1. Development consent is granted to the Strata subdivision of the building at 10 Blenheim Street, Randwick, into 6 separate allotments subject to the following conditions:-
(a) Development being carried out generally in accordance with the plans prepared by D.R. Buchan submitted with the application;
(b) The applicant, owners and their successors in title shall not seek to evict any of the existing tenants within a period of twelve months of the date hereof;
(c) Thereafter the owners and their successors in title shall not seek to evict any such tenants without first giving the tenant three months written notice of their intention;
(d) The responsibility of the owners and their successors in title under (b) and (c) shall be subject to the tenant observing his or her obligations under any existing or future lease;
(e) The weekly rents charged to existing tenants shall not exceed $180.00 per week for a period of twelve months.
2. No order as to costs.
3. Exhibits may be returned.
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