Lizard Apple Pty Ltd v Inner West Council

[2019] NSWLEC 1146

Land and Environment Court

New South Wales

Medium Neutral Citation:	Lizard Apple Pty Ltd v Inner West Council [2019] NSWLEC 1146
Hearing dates:	12 – 13 March 2019
Date of orders:	05 April 2019
Decision date:	05 April 2019
Jurisdiction:	Class 1
Before:	Walsh C
Decision:	The orders of the Court are: (1) Leave is granted to rely on the amended plans listed in Annexure A. (2) The appeal is upheld. (3) Development Application 10.2017.259.1 for demolition of existing structures and construction of three storey boarding house comprising 36 boarding rooms, one communal room and one manager’s room, and associated works including basement parking, at 75 Milton Street, Ashfield, is approved subject to the conditions of consent at Annexure A. (4) The exhibits, other than Exhibits 1, 2, 4, B and J, are returned.
Catchwords:	DEVELOPMENT APPLICATION: boarding house in R2 zone – weight to amending environmental planning instrument – character compatibility – overshadowing – reasonableness of restrictive covenant re-enforcing affordable housing ambitions
Legislation Cited:	Ashfield Local Environmental Plan 2013 Environmental Planning and Assessment Act 1979 State Environmental Planning Policy (Affordable Rental Housing) 2009 State Environmental Planning Policy (Educational Establishments and Child Care Facilities) 2017 Wingecarribee Local Environmental Plan 2010
Cases Cited:	Alamdo Holdings Pty Limited v The Hills Shire Council [2012] NSWLEC 1302 Architects Haywood and Bakker Pty Ltd v North Sydney Council [2000] NSWLEC 138 Challenger Listed Investments Limited v Valuer General (No 2) Fortunate Investments Pty Limited v North Sydney Council [2001] NSWLEC 70 MacDonald v Mosman Municipal Council [1999] NSWLEC 215 Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142 Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 1127 Omid Mohebati-Arani v Ku-ring-gai Council [2017] NSWLEC 143 Project Venture Developments v Pittwater Council [2005] NSWLEC 191 Steel v Liverpool City Council [2019] NSWLEC 1049 Terrace Tower Holdings Pty Ltd v Sutherland Shire Council [2003] NSWCA 289 Valuer-General v Fivex Pty Ltd [2015] NSWCA 53 Wang v Canterbury City Council [2013] NSWLEC 1098 Wingecarribee Shire Council v De Angelis [2016] NSWCA 189
Texts Cited:	Inner West Comprehensive Development Control Plan 2016 UNSW City Futures Research Centre, State Environmental Planning Policy (Affordable Rental Housing) 2009 and affordable housing in Central and Southern Sydney (June 2018)
Category:	Principal judgment
Parties:	Lizard Apple Pty Ltd (Applicant) Inner West Council (Respondent)
Representation:	Counsel: A Pickles SC (Applicant)   Solicitors: Conomos Legal (Applicant) M Bonanno, Inner West Council (Respondent)
File Number(s):	2018/80933
Publication restriction:	No

Judgment

1. COMMISSIONER: This is an appeal under the provisions of s 8.7(1) of the Environmental Planning and Assessment Act 1979 (‘EPA Act’) against the refusal by Inner West Council (‘Council’) of Development Application 10.2017.259.1 for a boarding house at 75 Milton Street, Ashfield (‘site’).

The proposal

2. The Application seeks consent for demolition of the existing single storey dwelling house and, under the provision of State Environmental Planning Policy (Affordable Rental Housing) 2009 (‘SEPP’), construction of a 3 storey boarding house.

3. The proposal ultimately before the Court, after leave was granted to amend the application, comprises 36 boarding rooms, plus a manager’s room and communal space, along with associated works. A total of 19 car parking spaces are proposed, in a two level basement, along with motor cycle and bicycle spaces.

The site and context

4. I rely in part on Council’s statement of facts and contentions (Ex 1) for the following particulars. The site is located on the western side of Milton Street, north of its intersection with Arthur Street.

5. The site compromises a single allotment which is legally defined as Lot 31 in Deposited Plan 707858. It is approximately 928.70m2 in area and has a frontage of 16.284m and a depth of 57.970m. The site presently accommodates a two storey brick and fibro dwelling house. There are two single storey detached residences between the subject site and Arthur Street. To the immediate north is a three storey residential flat building (‘RFB’), with a two storey RFB adjacent to it along Milton Street.

6. Further to the north along Milton Street are five local heritage items (61 through to 69 Milton Street) which have listings as 1x RFB, 3 x semi-detached houses and 1 x house. There are also heritage items (houses) immediately to the rear of the site (at 18-24 Cromwell Street).

Site inspection

7. The hearing commenced with a site inspection which included direct access onto the site. It was possible to view the site context during a walk with the parties along both sides of Milton Street and down Arthur Street and into Cromwell Street. While observing the heritage building at 24 Cromwell Street immediately behind the site, the owner of this property made himself known to the Court and invited us to view from the rear yard of that property. While without notice, this view, and the opportunity for a brief oral submission from this gentleman, was agreed by the parties.

Statutory planning framework

8. The Site is located within the R2 Low Density Residential zone of Ashfield Local Environmental Plan 2013 (‘LEP’).

9. The application is made pursuant to Division 3 of the SEPP which applies to the site. It is agreed among the parties that, under cl 29 of the SEPP, a floor space bonus applies to boarding house development on the site. The proposed floor space ratio (‘FSR’) is 1.12:1, which the experts agree complies with the statutory provisions (LEP related control of 0.7:1 + bonus 0.5:1 = 1.2:1).

10. It is also agreed with respect to cl 29 of the SEPP, that the proposal meets various other standards in relation to grounds which otherwise “cannot be used to refuse consent”.

11. In total this means that under the SEPP and in the applicable circumstances, the proposal cannot be refused in regard to: density, scale, height, landscaped area, solar access, private open space, parking, accommodation size.

12. It will be noted that the Council believes the development should be refused due to what is suggested to be its incompatibility with local character. Here Council references cl 30A of the SEPP. This line of argument draws in not only the LEP, including zone objectives; but also Inner West Comprehensive Development Control Plan 2016 for Ashbury, Ashfield, Croydon, Croydon Park, Haberfield, Hurlstone Park and Summer Hill (‘DCP’). Relevant aspects of the DCP are considered below.

13. An important aspect of the statutory setting is a very recent amendment to the SEPP which is considered directly below.

Issues

2019 Amendment to State Environmental Planning Policy (Affordable Rental Housing) 2009

14. On 28 February 2019, the SEPP was amended. The changes affected Division 3 which relates to boarding houses. The policy revision which has direct importance here, is that a new clause 30AA was introduced which provided as follows:

A consent authority must not grant development consent to a boarding house on land within Zone R2 Low Density Residential or within a land use zone that is equivalent to that zone unless it is satisfied that the boarding house has no more than 12 boarding rooms.

15. As indicated above, the proposal is located within zone R2 of the LEP and is for 36 boarding rooms plus a manager’s room.

16. Of particular interest in the hearing were the savings provisions (at now cl 54C of the SEPP) which relevantly provide:

54C Savings and transitional provisions – 2019 amendment

(1) This clause applies to a development application that was made before the commencement of the amending SEPP and was not determined by a consent authority or, if appealed, not finally determined by a court before that commencement.

(2) The application must be determined by applying all provisions of this Policy as if the amending SEPP had not commenced.

…

17. There is no doubt that the provisions of cl 54C(1) are triggered given the subject application was lodged with Council on 18 December 2017 (Ex1, p7).

18. The hearing involved considerable and differing submissions, based on a number of authorities, on the application of cl 54C(2), or, how proper regard might be given to the 2019 amendment.

19. Section 4.15(1) of the EPA Act’s reference to the consideration of proposed environmental planning instruments is well known. I reproduce this subsection selectively below, highlighting s 4.15(1)(a)(ii), which makes the direct reference:

4.15   Evaluation

(1) Matters for consideration—general

In determining a development application, a consent authority is to take into consideration such of the following matters as are of relevance to the development the subject of the development application:

(a)  the provisions of:

(i)  any environmental planning instrument, and

(ii)  any proposed instrument that is or has been the subject of public consultation under this Act and that has been notified to the consent authority …, and

(iii)  any development control plan, and

…

that apply to the land to which the development application relates,

(b)  the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality,

(c)  the suitability of the site for the development,

(d)  any submissions made in accordance with this Act or the regulations,

(e)  the public interest.

20. According to the submissions, and the referenced authorities, a fair amount turns on the phrasing used in the savings clause itself. In this case the phrasing tells me that I am to determine the application as if the amending SEPP “had not commenced”.

21. Both parties recognised a certain chain of cases which followed the “had not commenced” phrasing in savings provisions, and the inter-relationship with prior caselaw of pertinence (including Terrace Tower Holdings Pty Ltd v Sutherland Shire Council [2003] NSWCA 289 (Terrace Tower) and Architects Haywood and Bakker Pty Ltd v North Sydney Council [2000] NSWLEC 138 (Architects Haywood and Bakker)). However differing conclusions were reached.

22. In essence, the applicant’s position, as argued by Mr Pickles SC, was that the amendment, and cl 54C(2), should be read “plainly” and in turn the amendment should be given no weight at all. The Council’s position, as argued by Mr Bonanno, was not that the amendment should be applied retrospectively, which would, of itself, require refusal of the appeal as a consent authority could not be satisfied that the boarding house has no more than 12 boarding rooms. However, it was suggested that considerable weight be applied, and that this position aligned with the authorities. According to Mr Bonanno, when the SEPP amendment was given proper regard and weighed in with the other matters for consideration (that is, the merits concerns of Council under the heads of consideration at s 4.15(1)), the application should be refused.

Applicant’s submission on “proper regard” to 2019 SEPP amendment

23. There is something of an involved path to the reasoning followed by Mr Pickles, which can be summarised as follows:

1. Then Commissioner (now Senior Commissioner) Dixon’s judgement in Alamdo Holdings Pty Limited v The Hills Shire Council [2012] NSWLEC 1302 (Alamdo) remains a central authority on the interpretation of the savings phrasing: “had not commenced”. According to Mr Pickles, Alamdo if applied to these circumstances would find that, essentially, as a consequence of cl 54C(2), the amending provisions should be regarded as having no effect at all.

2. A number of cases were cited as following Alamdo. In Wang v Canterbury City Council [2013] NSWLEC 1098 (Wang), then Senior Commissioner (now Justice) Moore followed Alamdo in regard to the exercise of (now) s 4.15(1)(a)(ii) of the EPA Act. In addition, in Wang, direct re-attention was given to whether the amendment was required to be considered as a matter of the public interest (under now s 4.15(1)(e) of the EPA Act). In considering the submissions before him, Moore SC agreed with Dixon C’s findings on this question also, and determined to “(proceed) to hear and determine this development application without having regard to and setting aside any knowledge of, anything at all of any nature contained (in the instrument subject to the savings provisions)” [15].

3. In Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142 (Maygood), Pepper J considered an appeal against a decision of a Commissioner of the Court which followed the Alamdo decision in regard to savings provisions and the interpretation of the phrasing “not commenced” (the appealed decision was Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 1127). In the appeal decision Her Honour found that the savings provisions had been misconstrued. Her Honour set aside the Commissioner’s decision. Pepper J provided reasons why the phrasing “not commenced” should not be considered as excluding consideration of the amending instrument under now s 4.15(1)(a)(ii) of the EPA Act. Her Honour also found the amending instrument was considered to be of relevance to the public interest (ie s 4.15(1)(e)), either in a direct sense [34], or mindful of the need to not construe now s 4.15(1) of the EPA Act narrowly, as found in other judgements including Terrace Tower (see Maygood [35]-[36]). It was central to Mr Pickles’ argument that this decision was in error.

4. In Omid Mohebati-Arani v Ku-ring-gai Council [2017] NSWLEC 143 (Omid Mohebati-Arani), Robson J considered a related but not equivalent setting concerning savings provisions in regard to State Environmental Planning Policy (Educational Establishments and Child Care Facilities) 2017. The provisions under attention, relevantly, were as follows:

“(1) This Policy does not apply to or in respect of the determination of a development application made under Part 4 of the Act, but not finally determined before the commencement of this Policy.” (emphasis added)

His Honour found that the SEPP “does not apply” in the case of a development application before the Court captured by those savings provision. Robson J (at [20]) directly referenced the Maygood finding:

“This [“does not apply” finding] is made evident by the use of “clear language” in cl 1(1), Sch 5 of the SEPP, which, contrary to the legislation under consideration by Pepper J in Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142, does preclude consideration of the SEPP.”

5. Wingecarribee Shire Council v De Angelis [2016] NSWCA 189 (De Angelis) was then referenced by Mr Pickles. Here the Court of Appeal was concerned with the operation of savings provisions, but different questions were examined to those faced in Maygood. The phrasing of the savings provision was, in relation to the question here, the same as in Maygood (“… must be determined as if this Plan had not commenced”). However the question under examination involved whether a savings provision was “ambulatory”. Briefly, but to cover the point, the question before the Court of Appeal was (at [3]):

“Whether Development Application LUA 13/0968 lodged with Wingecarribee Shire Council on 11 November 2013 is saved by virtue of clause 1.8A of the Wingecarribee Local Environmental Plan 2010 or whether it is prohibited by the making of Wingecarribee Local Environmental Plan 2010 (Amendment No 38).”

The Court of Appeal found the primary judge in error in answering “yes” to the first wing of the question and thus “no” to the second wing. Rather, it found in De Angelis the original savings provisions of Wingecarribee Local Environmental Plan 2010 (WLEP 2010) applied only at the point in time of the making of that LEP, and had no operation for a development application lodged in November 2013. Mr Pickles’ argument was that the Court of Appeal found that the primary judge had, in a sense, written into the meaning of the savings provision, rather than adopted the “clear language” of the provisions. It was a central tenet of Mr Pickles’ argument that this finding of the Court of Appeal should be interpreted to find today that a similar thing had occurred in Maygood.

6. In support of his argument, Mr Pickles turned to Pepper J’s determination in Challenger Listed Investments Limited v Valuer General (No 2) [2015] NSWLEC 60 (Challenger). His proposition was that, following certain findings, it was evident that Her Honour’s opinion had changed from that taken in Maygood. There were two points to this aspect of Mr Pickles argument:

1. First, he sought to link the argument he put in regard to De Angelis with Challenger; and that statutory interpretation be founded on “clear language”. Mr Pickles referenced [24] in Challenger, where Pepper J referenced Valuer-General v Fivex Pty Ltd [2015] NSWCA 53 (Fivex). Mr Pickles pointed in particular to Her Honour’s citation of par [30] from the Court of Appeal judgement in Fivex, reproduced in part below:

“It would be no small thing for other textual or contextual considerations to displace the ordinary grammatical meaning of the words referred to above.”

2. Second, on seemingly an entirely different point, and in regard to comity, and in particular Her Honour’s commentary at [31] of Challenger where Her Honour expressly indicates a change of view from that expressed in Maygood as to the necessity for a Commissioner of this Court to follow a decision of a Judge of this Court. I will return to this point in my findings.

7. Mr Pickles’ conclusion was that Pepper J was in error in Maygood, for reasons which might be summarised as adopting the approach from Terrace Tower when the “words were not there” to do so; and that based on Her Honour’s stated position in Challenger, Her Honour would take the position today that the wording of cl 5.4(2) in the SEPP was to be read as allowing no consideration of the SEPP amendment at all.

Council submission on “proper regard” to 2019 SEPP amendment

24. I am briefer in summarising Mr Bonanno’s submissions, in part because I refer to some of his points more explicitly in my findings. The reasoning adopted by Mr Bonanno can be summarised as follows (with the commentary below in part quoting from a written submission titled “Respondent’s Remarks Regarding SEPP ARH Savings Provisions”).

1. The wording of cl 54C (2) requires the consent authority to assume that the amending SEPP has not commenced. That is all. It does not outlaw or deny the existence of the proposed instrument.

2. The statutes applying to the Governor’s making of a SEPP are pertinent, in particular in regard to consultation requirements. Section 3.30 of the EPA Act provides relevantly as follows:

3.30 Consultation requirements (cf previous s 38)

(1) Before recommending the making of an environmental planning instrument by the Governor, the Minister is to take such steps, if any, as the Minister considers appropriate or necessary:

(a) to publicise an explanation of the intended effect of the proposed instrument, and

(b) to seek and consider submissions from the public on the matter.

… (emphasis added)

An explanation of intended effect (Ex 8) was prepared and notified to the public. It is dated November 2018, and indicates the intended limitations on boarding rooms in the R2 zone. Mr Bonanno says:

“The savings clause only requires the consent authority to act as if the amendment had not commenced. It says nothing of dismissing the statement of intended effect, which is then a proposed instrument that is or has been the subject of public consultation under this Act. Its force and effect as a relevant consideration under section 4.15(1) (a) (ii) remains.”

3. Far from being ambiguous, as Mr Bonanno inferred was suggested by Mr Pickles, the case law is clear. Terrace Tower remains good law. Maygood is authority for the proposition that the slight variation in wording between Terrace Tower and the wording applicable here is of no great effect.

3. The question of what weight might be applied should follow relevant statutory provisions and the caselaw.

Finding of proper regard

25. My appreciation of applicant’s submission is, essentially, that for guidance in this case I should revert to the position adopted by the Commissioners of the Court before Maygood. That is, that proper regard for the SEPP’s February 2009 amendment is that it does not exist. The applicant acknowledges that in Maygood, Pepper J found the opposite position. But that, as Mr Pickles interprets it, the findings in Challenger, again by Pepper J, were inconsistent with the approach adopted in Maygood, and that Her Honour “has changed her mind” and Her Honour would hand down a different decision on Maygood today.

26. I cannot agree with the applicant’s submission. There are three reasons, which I summarise now and particularise, mindful of their inter-relationships, below. First, in my opinion, the suggested coherence linking Maygood to Omid Mohebati-Arani and De Angelis is not there. Second, I believe the applicant’s line of argument falls short in its point of inductive logic, that is, requiring me to infer that Pepper J has “changed her mind” in regard to Maygood as a consequence of Her Honour’s own decision in Challenger, and/or the decision of Court of Appeal in De Angelis. Third, even in recognising that while, of course, paying due deference to Her Honour’s decision, I am not bound by Maygood (mindful of Challenger [28]-[31]), I do not find in any event that Her Honour’s decision is wrong (“plainly” or otherwise). The following points explain the particulars:

1. There is no useful reliance on Omid Mohebati-Arani as it is apparent that there actually is “clear language” in the reference environmental instrument in that case (that the instrument “does not apply”) which in my interpretation provides a direct instruction. This distinguishes it from the setting in Maygood, which provides no such direct instruction. In Maygood, Pepper J distinctly and purposively draws out four lines of reasoning as to the proper interpretation. I will mention two. The first is the notion of irrationality to conclude an intention on the part of the drafters that an instrument that had commenced would be deemed less relevant than one that had not commenced – it has a particular pertinence here given that the explanation of intended effect aligned so directly with the final instrument. The second is more general, it is that Her Honour determined (at [31]) to connect to the findings in Terrace Tower directly:

“In my opinion, if the wording in cl 6(2) of the 2000 LEP ("but had not been made") in Terrace Towers was insufficient to permit a consent authority to shut its eyes to otherwise relevant provisions of a draft planning instrument, it is even less likely that a draft instrument that has been made but has "not commenced" can be ignored…”

2. The question in De Angelis is entirely different, and the findings cannot be seen as applying a rule that should be applied in the particulars of the question answered in Maygood (giving proper regard to the “had not commenced” phrasing).

3. The reference to Pepper J’s findings in Challenger, in regard to comity, have nothing at all to do with the question here, or Her Honour’s position in regard to giving proper regard to the “had not commenced” phrasing otherwise in Maygood.

4. Interpreting the phrasing “had not commenced” in accordance with Maygood is not at odds with what might be an “ordinary grammatical meaning of the words”. It is the case that “clear(er) language” was available if there was an intention that no regard was to be had to the new instrument. As put by Mr Bonanno, phrasing like “this policy does not apply” could have been used as in Omid Mohebati-Arani. This approach was not used by the drafters.

27. The position in Maygood is adopted, which requires me, principally, to “fictitiously” set things back to a point in time immediately before commencement of the amendment, or as per Maygood [29]:

“... In other words, the LEP becomes a mandatory relevant consideration under (under the EPA Act), assuming, of course, that the proposed instrument has been the subject of public consultation and proper notification to the consent authority, and failure to take it into account will give rise to jurisdictional error. ...”

28. It is clear to me from Ex 8, and Mr Bonanno’s submissions, that there has been public consultation and proper notification of the proposed instrument.

29. I note consideration of the amending provisions as a matter of public interest under s 4.15(1)(e) of the EPA Act is also available under Maygood, however in this case it adds nothing of significance to my conclusions.

30. The question then arises as to what weight should be applied. Mr Bonanno’s submission was that there was a need for significant weight, but not determinative weight. Although his view was that this weight, plus the merits issues in this case, would result in a refusal of the application.

31. An important point is that the “proposed instrument” is (just) one matter for consideration under s 4.15(1) of the EPA Act, and that there is no particular prioritisation of the matters under consideration in these provisions. Or as put in Terrace Tower [56]:

“Section 79C(1) [now s 4.15(1)] does not stipulate or imply a hierarchy among its various paragraphs or among the subparagraphs of (a). ...”

32. With a mind to the considerable stream of caselaw on the topic (see Terrace Tower say [41]-[57]), I agree with Mr Bonanno’s logic here, but as will be seen below, not with his conclusions when the questions of the circumstances of this case and merits are considered.

Merits considerations

33. Development standards are considered above at [9]-[11]. I note that the proposal is not in breach in that regard.

34. I further note that the experts have agreed that acoustic and visual privacy are satisfactorily addressed, along with other previous contentions in regard to: relationships with heritage sites to the west, parking (with an additional level of basement parking), landscaping (in particular in regard to mitigating against loss of established trees), internal amenity and extent of adaptable housing within the proposal.

35. Council submits that the proposal fails what it terms the “character test imposed by cl 30A (of SEPP – ARH)”. This clause provides as follows:

30A Character of local area

A consent authority must not consent to development to which this Division applies unless it has taken into consideration whether the design of the development is compatible with the character of the local area.

36. First, it was the appearance of the upper level and roof line which was of concern to Council. Council’s position seemed to be that the provisioning of three boarding rooms in the front section of the upper level resulted in an incompatible appearance. Mr Hugo suggested that if only two (say double) rooms were provided there could be less impact from the dormer windows and/or skylights in the roofline and thus a plainer and more consistent roof profile would present to Milton Street. A related element of concern was the building’s side setback.

37. Council’s second concern is that the building design results in overshadowing effecting an unreasonable and adverse impact in local character terms.

Considering the evidence on visual compatibility

38. The parties agreed on a defined “local area” as applicable for the interpretation of character compatibility. It ran along Milton Street and turning partially into Arthur Street, and included an area immediately behind the site fronting Cromwell Street. The Somerville Avenue cul-de-sac was also included in the agreed area, although it also seemed to be agreed that this area had a lower association.

39. Mr Hugo considered the area’s character as “framed” by the nearby items of environmental heritage (61-69 Milton Street and 22-24 Cromwell Street to the immediate rear of the site are all local heritage items). He pointed to the low density detached dwellings in the site environs (Ex 2 pars 19-20):

“These nearby period buildings are replicated by the predominate nature of the area consisting of low density residential dwelling houses.

The zoning of the area largely reflects the character of the area being located within Zone R2 Low Density Residential under the Ashfield Local Environmental Plan 2013.”

40. Mr Hugo noted the residential flat buildings (RFBs) in the site vicinity. He considered these RFBs to be “of greater scale” on the eastern side of Milton Street (ie opposite side of the road to the site). Due to this location, and the fact of the R3 Medium Density zone across the road, these RFBs were considered “of secondary relevance”.

41. Turning to the western side of Milton Street and the subject development, Mr Hugo noted the proposed side setbacks as less than nearby RFBs. He felt this contributed to the proposal’s appearance as a “fatter squatter” building than those of the nearby RFBs. According to Mr Hugo (Ex 2, pars 23-24):

“…This exacerbates the distinction between the proposed development and low density development that is predominates (sic) the area and results in as development that is not in harmony with its surrounds.

“…

…The appearance of the building in the context of the surrounding development would be considered in my option (sic) jarring or unsympathetic in the eyes of a lay person due to the use of dorma's to create an additional level and fatter squatter appearance of the building compared to the RFB's to the north. “

42. In Mr Hugo’s view the impacts on character come about as a consequence of “attempting to maximize the GFA of the development”. Or put another way:

“A design that focused on the character of the area would not be able to achieve the extent of the FSR bonus within SEPP ARH.”

43. A link was also drawn to the DCP which included (at Chapter A Part 2 Performance Criteria PC2.1 and PC8) “requirements for development to contribute to the character of the streetscape and to relate to the context of the development”. He acknowledged that some efforts to improve things had been made with amended plans but that it does not warrant approval for the reasons he suggested above, and that it is “not a positive contribution to the streetscape”.

44. Mr Kennan’s emphasised that the proposed development was for a boarding house (a permissible use) and thus was by its very nature different to the “type of low density residential development in the locality”, but that “difference” was not the test. He quoted from Project Venture Developments v Pittwater Council [2005] NSWLEC 191 (Project Venture) [22]:

“There are many dictionary definitions of compatible. The most apposite meaning in an urban design context is capable of existing together in harmony. Compatibility is thus different from sameness. It is generally accepted that buildings can exist together in harmony without having the same density, scale or appearance, though as the difference in these attributes increases, harmony is harder to achieve.”

45. Mr Kennan gave considerable emphasis to the fact that under Schedule 1 to the LEP, RFBs were in fact permissible on the site (ie as an additional permissible use despite the R2 Low Density zoning where RFBs are otherwise prohibited). He also referred to an approval for an RFB on the site (Ex H). Mr Kennan thought this permissibility relevant to the character question (ibid par 35):

“The character of the local area is made up of both the existing development in the locality and the type of development which is permissible in that locality in accordance with the land use table relating to the R2 Low Density Residential zone. This is so because the character of an area is dynamic and may change as redevelopment occurs.”

46. Mr Kennan also noted the design changes including the removal of the dormer facing Milton Street and the retention of the landscaping next door which would filter the views of the site. In regard to side setbacks, Mr Keenan observed that existing setbacks were not in the main used for landscaping. He referenced the streetscape elevation drawing (an excerpt only is reproduced at Figure 1) which in his view demonstrated good levels of visual compatibility, with the proposal “mediating”, in terms of height, buildings on either side.”

Considering the evidence on overshadowing effects

47. Two properties were subject to overshadowing from the proposal: 77 Milton Street (to the immediate south) and 75 Arthur Street (which backs onto the site’s southern boundary at the western end).

48. Council relied on its DCP, which Mr Hugo indicated required retention of two hours of direct sunlight to private open space between 9am and 3pm. He believed that the proposal results in physical overshadowing impacts beyond that normally expected in the R2 zone.

49. Mr Kennan believed that 77 Milton Street was already substantially overshadowed under existing conditions. He also noted that it would not receive solar access if the approved RFB on the site were to go ahead. He also believed shadowing to 75 Arthur Street was acceptable, although noting it would be increased in the backyard. He commented that a two storey complying development could have similar impacts to both properties.

50. There was considerable detailed exploration of the question of overshadowing during the course of the hearing, which I come to in my conclusions below.

Findings in regard to character compatibility

51. First I consider visual character. While I acknowledge the experts’ agreement on the area that “frames the character of 75 Milton Street”, I also tend to agree with Mr Hugo that the existence of RFBs to the west of Milton Street is reasonable considered of secondary interest. Milton Street is a busy road and, is itself both: (1) an element of character demarcation, and (2) an item of character definition.

52. Further, it seems to me when considering visual compatibility (and this is the only matter of pertinence on this point), the association with the heritage buildings to the north of the site is also secondary. In other street settings this would not be the case. That is to say heritage items in the same proximity could have a higher level of importance. To explain, if one turns to Project Venture, the question that is put (relevantly in the planning principle) is:

“Is the proposal’s appearance in harmony with the buildings around it and the character of the street?”

53. The character of Milton Street, as a traffic artery, brings its own resonance, which moderates other elements of street character. It draws me to the view that the local (visual) character compatibility test here is generally limited to the buildings almost immediately around the subject site.

54. I do not consider the proposed side setbacks or building separation elements as discordant, as a visual element in the street. This is because there is some similar separation distance adopted for the proposal. But also, in any event, the existing, at times wider, side setbacks are not strong character elements here. This would be different if there were more landscaping in place, which might otherwise establish “character”.

55. I also agree with Mr Kennan that the likely future character can be seen as having some relevance in determining the “character” of the local area under cl 30A of SEPP ARH. That is to say previous judgements of the Court have not confined “character” under cl 30A, necessarily, to the existing character (see for example Steel v Liverpool City Council [2019] NSWLEC 1049 at [33]).

56. I also note that Project Venture provides (at [23]):

“There are situations where the planning controls envisage a change of character, in which case compatibility with the future character is more appropriate than with the existing.”

57. This point applies to both the visual compatibility and overshadowing concerns raised by Council.

58. As I turn to overshadowing, I acknowledge the susceptibility of 77 Milton Street and 75 Arthur Street to overshadowing from the subject site given the permissibility of an RFB on that site. That is to say, the fact that an RFB is permissible on the site, already puts the site and its neighbours in quite a different position to what might be normally expected in regard to “physical overshadowing impacts … in the R2 zone” (to paraphrase from [48] above). I also believe that the modifications to the building footprint as worked up by the parties including during the hearing (the shift of the rear wing to the north) provides an adequate degree of accommodation of the requirements of the DCP given the existing degrees of overshadowing.

59. I acknowledge Mr Hugo’s argument that character compatibility is an important factor when considering applications under the SEPP due to the significant FSR bonuses that are applicable (Ex 2, par 17). It seems to me clear that there is an element of visual character difference between the subject proposal and “likely future character” based on the LEP alone (as might be envisaged from the approved RFB development for the site, evidenced at Ex H). In my own opinion there might be a more pleasing visual outcome to the eye without the dormers and skylights, as needed to accommodate the boarding rooms at the front. However the extent of diversity in building character and form in the immediate street environs does not draw me to the view that what is proposed is incompatible or out of harmony with what exists.

Reasonableness of restrictive covenant re-enforcing affordable housing ambitions

60. There is dispute about one condition. The condition would require the creation of a positive covenant over the site to address a contention of the Council in regard to ensuring both: (1) occupants of the boarding houses, and (2) the rental payments they are subject to; are in alignment with the affordable rental housing intentions of the SEPP. The condition would provide as follows:

“A Positive Covenant under Section 88E of the Conveyancing Act shall be created on the title of the property providing that while the property is being used as a boarding house:

(i) the only persons to whom accommodation within the boarding house will be offered shall be those who have a household income that is equal to or less than 120% of the Median Equivalised Total Household Income (Weekly) for Ashfield for the most recent year published, as published by the Australian Bureau of Statistics;

(2) the rent which the owner or operator of the boarding house will charge shall not exceed 30% of that income on rent;”

61. Mr Bonanno submits that the SEPP defines what affordable housing is (cl 6), and that there is no doubt that the intention of the SEPP is to assist in its provision (through an examination of the nominated aims at cl 3). I provide the relevant excerpts below and repeat Mr Bonanno’s emphasis in quoting cl 3:

3 Aims of Policy

The aims of this Policy are as follows:

(a) to provide a consistent planning regime for the provision of affordable rental housing,

(b) to facilitate the effective delivery of new affordable rental housing by providing incentives by way of expanded zoning permissibility, floor space ratio bonuses and non-discretionary development standards,

(c) to facilitate the retention and mitigate the loss of existing affordable rental housing,

(d) to employ a balanced approach between obligations for retaining and mitigating the loss of existing affordable rental housing, and incentives for the development of new affordable rental housing,

(e) to facilitate an expanded role for not-for-profit-providers of affordable rental housing,

(f) to support local business centres by providing affordable rental housing for workers close to places of work,

(g) to facilitate the development of housing for the homeless and other disadvantaged people who may require support services, including group homes and supportive accommodation. (emphasis added).

…

6 Affordable housing

Note. The Act defines affordable housing as follows:

affordable housing means housing for very low income households, low income households or moderate income households, being such households as are prescribed by the regulations or as are provided for in an environmental planning instrument.

(1) In this Policy, a household is taken to be a very low income household, low income household or moderate income household if the household:

(a) has a gross income that is less than 120 per cent of the median household income for the time being for the Greater Sydney (Greater Capital City Statistical Area) (according to the Australian Bureau of Statistics) and pays no more than 30 per cent of that gross income in rent, or

(b) is eligible to occupy rental accommodation under the National Rental Affordability Scheme and pays no more rent than that which would be charged if the household were to occupy rental accommodation under that scheme.

(2) In this Policy, residential development is taken to be for the purposes of affordable housing if the development is on land owned by the Land and Housing Corporation.

62. Mr Bonanno argues that it ought to be seen as a precondition to any approval that the housing be provided to the groups, and at rental rates, set out in cl 6(1). To quote from his written submission titled “Respondent’s Remarks Regarding Affordability Condition”:

“The Council has consistently, and to an extent, successfully, sought to ensure that the benefits of the SEPP go to the people who are named and stated as its proper recipients.

SEPP ARH ultimately extends generous concessions to developers in terms of floor space, height and relaxation of other controls to allow for larger buildings than the Council's own controls would normally allow.

This introduces a tension between the legitimate expectations of the property owners and tenants in an area; and the developers seeking to construct a proposal which exceeds the agreed provisions of the Council's own planning instruments.

The developer gets a bigger yield, accompanied by the financial reward. If the public are not getting housing that is dedicated to lower income persons, why are we doing this again?”

63. Mr Bonanno referenced two points of evidence in regard to his concerns as to whether the “people who are named and stated as the proper recipients” are actually receiving the affordable housing. The first was a research report prepared by UNSW City Futures Research Centre and titled State Environmental Planning Policy (Affordable Rental Housing) 2009 and affordable housing in Central and Southern Sydney – June 2018 (‘UNSW Study’) (Ex 7). The second was a newspaper advertisement (Ex 9). The latter item was a coloured display advert, headed “Rare DA Approval for 38 Self-Contained Studios – One of the Inner West’s Best Locations”. His concern was that the advertisement made no mention that the approved development was a boarding house with, as Mr Bonanno submitted, implied restrictions on occupation and rental levels.

64. It was acknowledged by Council that the Court has been reticent to apply conditions imposing restrictions of this kind. Mr Bonanno mentioned MacDonald v Mosman Municipal Council [1999] NSWLEC 215 as the lead authority which so finds. But he also referenced Fortunate Investments Pty Limited v North Sydney Council [2001] NSWLEC 70 as an example when Justice Pearlman did find to impose a condition requiring a restrictive covenant. Mr Bonanno indicated that the Council has regularly secured acceptance of the equivalent condition in conciliated agreements for boarding house development.

65. Mr Pickles’ view was that any potential buyer of a boarding house development would be expected to make proper inquiries, and that proposed conditions of consent provided due protection. Noting the 10 year limitation applying to affordable rental housing managed by community housing providers at cll 17 and 38 of the SEPP, Mr Pickles also queried why something stricter than the conditions imposed on these community housing providers should apply to a private provider.

66. But Mr Pickles’ strongest point in my view was that the suggested condition was provided without sufficient evidence that there was an existing problem.

67. Provision of affordable housing is well-known as a significant challenge in Sydney. It seems fair to me to say that bonuses available to boarding house development should be associated with addressing this affordability problem. If there was evidence that this was not occurring, then steps, such as that proposed by Mr Bonanno here, may come into play. However I cannot see the evidence in the material before the Court. I am generally with Mr Pickles in his argument that the advertisement (Ex 9) demonstrates little. More pertinent is the UNSW study which does provide information on the rental costs for boarding house development in comparison with other higher density housing options. Its findings in regard to medium density boarding houses include that (Ex 9, p35):

“Comparisons of boarding room rates and 1-bedroom unit rents in the same (area) show a differing degree of discounting, with around 20% lower rents on average.”

68. But a different question is faced here. This is the question of to what extent the rents in boarding rooms are aligned with cl 6(1) of the SEPP. While it seems the data behind the UNSW report may be not so far off point, this question is not able to be answered from the comparative material presented.

69. There is insufficient evidence before the hearing to support the inclusion of the condition requiring the aforementioned positive covenant.

Conclusions

70. To draw a conclusion requires a linking of the merits issues considered immediately above and the statutory questions considered earlier. That is, how the amendments to SEPP ARH might be factored into conclusions on merits considerations. Mr Bonanno’s argument was that the proposal’s failures on merits (and in particular character incompatibility) would, when joined with the consideration of cl 5.4C of the SEPP, require a finding of refusal.

71. While I do not dispute his point in principle, in the circumstances at hand, and given my findings on character compatibility, I cannot agree with his view in this case. If I were to, as a consequence of my findings on merit, I would need to give cl 30AA determinative weight. Mr Bonanno has agreed that that action cannot be appropriate.

72. Before concluding I also note that the objector’s concerns in regard to stormwater management, and particularly the associated risks with the basement parking, have been satisfactorily addressed through draft conditions.

Orders

73. The orders of the Court are:

1. Leave is granted to rely on the amended plans listed in Annexure A.

2. The appeal is upheld.

3. Development Application 10.2017.259.1 for demolition of existing structures and construction of three storey boarding house comprising 36 boarding rooms, one communal room and one manager’s room, and associated works including basement parking, at 75 Milton Street, Ashfield, is approved subject to the conditions of consent at Annexure A.

4. The exhibits, other than Exhibits 1, 2, 4, B and J, are returned.

………………………..

P Walsh

Commissioner of the Court

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Annexure A 

Decision last updated: 05 April 2019