Symond v North Sydney Municipal Council

[1989] NSWLEC 168

Land and Environment Court

of New South Wales

CITATION:

Symond & Anor v North Sydney Municipal Council [1989] NSWLEC 168

PARTIES:

APPLICANT
Symond & Anor

RESPONDENT
North Sydney Municipal Council

FILE NUMBER(S):

10366 of 1988

CORAM:

Bignold J

KEY ISSUES:

:-

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979
Land and Environment Court Act 1979
Local Government Act 1919

CASES CITED:

North Sydney Municipal Council v. Lycenko & Associates Pty. Ltd (unreported 15th November, 1988);
Pioneer Aggregates Ltd. v. Secretary of State for the Environment (1985) AC 132;
Clyde & Co. v. Secretary of State for the Environment (1977) 1 AllER 1123; Westminster City Council v. British Waterways Board (1984) 3 AllER 737;
John Bruce & Partners v. Willoughby Municipal Council (1987) 64 LGRA 67

DATES OF HEARING:

DATE OF JUDGMENT:

03/17/1989

LEGAL REPRESENTATIVES:

JUDGMENT:

A. INTRODUCTION

This judgment which may conveniently be read with the two interlocutory judgments delivered earlier in these proceedings, finally disposes of the proceedings in this Court.

This is an appeal pursuant to s.97 of the Environmental Planning and Assessment Act 1979 against the refusal by the Respondent of a development application for the alteration and refurbishment of an existing building known as "The Ritz" erected at premises known as Nos. 48-50 Milson Road, Cremorne and the conversion of the use of the altered and refurbished building from its most recent (but now terminated) use as a boarding-house to that of a residential flat building comprising ten x 3 bedroom flats.

At the request of the Applicant and with the concurrence of the Respondent, the Court's determination of the subject appeal has taken the form of a series of determinations on a number of discrete issues in dispute. The judgment now delivered attends to the only outstanding issues in dispute between the parties. In my interlocutory Judgment handed down on 23rd November, 1988 I concluded that the Applicant's objection under State Environmental Planning Policy No. 1 - Development Standards was well founded and, subject to State Environmental Planning Policy No. 10 - Retention of Low Cost Rental Accommodation and to s.90(1)(d) of the Environmental Planning and Assessment Act 1979 I was of the opinion that the granting of consent to the Applicant's development application was consistent with the aims set out in clause 3 of State Environmental Planning Policy No. 1.

In my interlocutory judgment handed down on 23rd December, 1988 which was confined to matters raised by s.90(1)(d) of the Environmental Planning and Assessment Act (excluding State Environmental Planning Policy No. 10) I concluded (p.16), "that subject to the resolution in the Applicant's favour of the outstanding issue concerning the validity of State Policy No. 10 I would be disposed to uphold the appeal and grant development consent subject to appropriate conditions which in my opinion should include the condition sought by the Respondent (but disputed by the Applicant) requiring a cash contribution towards the Low Income Housing Fund established by the Respondent in a modest attempt to alleviate the shortage of such accommodation in the Municipality".

These two interlocutory judgments left outstanding the question of the validity of State Policy No. 10 which the Applicant acknowledged early in the proceedings (following the decision of the Court of Appeal in North Sydney Municipal Council v. Lycenko & Associates Pty. Ltd (unreported 15th November, 1988) he must successfully impugn if his appeal was ultimately to succeed, since he conceded that he was unable to establish that sufficient comparable boarding-house accommodation is available to satisfy the demand for such accommodation in the locality (see agreed fact 7 referred to at p.3 of my judgment of 23rd December, 1988).

Just a few days before the scheduled hearing of the Applicant's challenge to the validity of State Policy No. 10, that Policy was materially amended by the publication in Government Gazette No. 12 of 30th January, 1989 of "State Environmental Planning Policy No. 10 - Retention of Low-Cost Rental Accommodation (Amendment No. 4)".

On 2nd February, 1989 the Solicitors acting for the Applicant notified the Court that in view of these amendments to the State Policy they had been instructed to abandon the foreshadowed challenge to the validity of the State Policy and that they intended to submit that the Court was now empowered to approve the development application on the merits and should do so.

When the matter came on for hearing on 3rd February, 1989 Counsel for the Respondent sought and obtained an adjournment of the hearing in order to allow the Respondent sufficient opportunity to consider the implications for this case of the amendments to the State Policy and to properly prepare its case.

Upon the adjourned hearing the Respondent has submitted that the Court should exercise the discretionary judgment called for by cl.7(3) of the amended Policy by refusing development consent. No further evidence has been adduced on this issue beyond that adduced in the proceedings which resulted in the aforesaid two interlocutory judgments.

The other principal matter debated concerns the question of whether a s.94 cash contribution towards the costs of the Respondent providing in its Municipality low income public housing as a consequence of the granting of consent to the development application before the Court is called for in the circumstances of this case, the Respondent seeking such a contribution in the sum of $500,000.

I should mention that it is common ground that the development application before the Court is to be determined by reference, inter alia, to the amended form of State Policy No. 10 (see cl.7 'Transitional' of the Amendment No. 4).

It is also common ground that the outstanding task for the Court in the present case, having regard to its interlocutory judgments, is to determine the development application in accordance with s.90 of the Environmental Planning and Assessment Act (a task substantially achieved by the aforesaid two interlocutory judgments) and in particular in accordance with the requirements of cl.7(3) of State Policy 10 (a task untouched by those interlocutory judgments) which clause now provides as follows:-

"Clause 7(3)

In determining a development application required by this clause, the council shall consider --

(a) in each case - whether, on the basis of written information given to it by the applicant, there is available sufficient comparable accommodation in the locality to satisfy the demand for such accommodation in that locality; and

(b) in the case of an application to alter or add to the structure, fabric or finish of the inside or outside of the building - whether, on the basis of written information given to it by the applicant --

(i) there is likely to be a major reduction in the number of households or units of accommodation on the land to which the application relates; and

(ii) the development, if carried out, is likely to cause adverse social and economic effects on the general community; and

(iii) adequate arrangements have been made to assist the residents (if any) of the building likely to be displaced to find satisfactory alternative accommodation in the locality; and (c) in each case - the structural soundness of the building, the extent to which the building complies with any relevant fire safety requirements and the estimated cost of carrying out work necessary to ensure the structural soundness of the building and the compliance of the building with the fire safety requirements; and

(d) in each case - the financial viability of the continued use of the building as a boarding-house."

B. THE 1989 AMENDMENTS TO STATE POLICY NO.10

It is common ground that the amendments made to State Policy No. 10 are material. In the course of argument they were conveniently described as having the effect of converting erstwhile mandatory requirements into discretionary considerations. A comparison of cl.8(2) of the previous Policy with cl.7(3)(a) and (b) of the current Policy supports this description of the effect of the amendment, although subclauses (3)(c) and (d) introduce new considerations having no counterpart under the previous Policy. The overall effect of cl.7(3) will be considered presently.

Although in the present case attention has properly focussed on new cl.7(3) it is helpful to gain an overall appreciation of the changes made to the State Policy. In this respect it is appropriate to firstly note the express aim of Amendment No. 4 as set forth in cl.3 as follows:-

"3. This Policy aims to amend the principal Policy so as to specify matters to be taken into consideration by Councils in determining development applications to which the Principal Policy applies and by the Director of Housing in determining whether to grant concurrence to certain of those development applications."

The "aims and objectives" of the Principal Policy are changed to now read:-

"2. The aim of this Policy is to facilitate conservation of low-cost rental accommodation."

If the 'aim or objective' of Amendment No. 4 and the new 'aim or objective' of the principal Policy are read together (as would seem a legitimate interpretive exercise) the overall result revealed is that the aim of the current Policy is to facilitate conservation of low-cost rental accommodation by specifying matters to be taken into consideration by councils in determining development applications required by the Policy to be made. Such development applications are required by cl.7(1) of the Policy in respect of 3 actions in relation to boarding-houses (including vacant buildings the last significant use of which was as a boarding-house, - see new cl.6(1)(a)) namely -

(i) demolishing the building;

(ii) altering or adding to the structure, fabric or finish of the inside or outside of the building; and

(iii) changing the use of the building to another use.

The current Policy like the previous Policy exerts the same controls on these actions in relation to boarding-houses by requiring development consent of the Council and concurrence of the Director of Housing. However a very material change in the Policy's control is introduced at this point. Previously the power of the Council to grant development consent was severely circumscribed or controlled in that such consent could not be granted unless the Council was satisfied, in alia, "that sufficient comparable accommodation is available in the locality to satisfy the demand for such accommodation in that locality": former cl.8(2)(a). By contrast the current Policy requires the Council in determining the development application to consider whether there is available sufficient comparable accommodation: new cl.7(3)(a).

Thus in relation to the question of comparable accommodation in the locality it is apparent that the Council has a wider discretion under the current Policy than it had under the previous Policy eg in the case of sufficient comparable accommodation not being available - under the previous Policy the Council had no discretion to grant development consent whereas under the current Policy the Council has the discretion to grant development consent. Whether in the latter case such discretion is exercised depends upon the Council's consideration of all relevant matters set forth in cl.7(3) in conjunction with its consideration of all relevant matters under s.90 of the Environmental Planning and Assessment Act. The particular considerations made relevant by cl.7(3) of the Policy are themselves, together with the stated aim of the Policy as set forth in cl.2, made relevant to the overall statutory duty of the Council to determine the development application in accordance with s.90 of the Environmental Planning and A

ssessment Act by virtue of s.90(1)(a).

Before proceeding to apply those particular provisions to the facts of the present case it is instructive to consider how the provisions of the State Policy are intended to operate so as to achieve its stated aim "to facilitate conservation of low-cost rental accommodation".

In a general and somewhat elliptical sense the answer to this question is provided by the express aim of Amendment No. 4 which I have earlier cited. Expressed more fully the answer appears to be that conservation of low-cost rental housing accommodation is facilitated by the following factors operating in concert -

(i) the Policy's express requirement that development consent and concurrence be obtained for the prescribed actions;

(ii) the Policy's express requirement that particular factors be considered by the Council in the determination of relevant development applications;

(iii) the Policy's implicit assumption that in certain cases the discretionary planning judgment called for by cl.7(3) of the Policy (in the context of the overall planning judgment called for by s.90 of the Act) will result in the refusal of development consent to applications which would have the effect of eliminating or substantially reducing existing boarding-house accommodation; and

(iv) the Policy's implicit assumption that as a result of refusing development consent to such applications existing boarding-house accommodation probably will be retained and utilised and hence conserved.

In order to appreciate the effect of the current State Policy it is important to appreciate the nature of the planning controls exerted by the State Policy, and the inherent limitations of those controls. Most significantly by adopting the control medium of 'development control' the Policy necessarily exerts a negative influence in the sense that just as the grant of development consent does not necessarily secure the carrying out of the approved development, so the refusal of development consent does not necessarily secure the retention of an existing use. These inherent limitations in 'development control' have been expounded in a number of important English decisions eg Pioneer Aggregates Ltd. v. Secretary of State for the Environment (1985) AC 132; Clyde & Co. v. Secretary of State for the Environment (1977) 1 AllER 1123; Westminster City Council v. British Waterways Board (1984) 3 AllER 737 referred to in my judgment in John Bruce & Partners v. Willoughby Municipal Council (1987) 64 LGRA 67. In Westminst

er City Council Lord Bridge speaking of the English statutory counterpart to s.90 of the Environmental Planning and Assessment Act said at p.742:-

"In a contest between the planning merits of two competing uses, to justify refusal of permission for use B on the sole ground that use A ought to be preserved, it must, in my view, be necessary at least to show a balance of probability that, if permission is refused for use B, the land in dispute will be effectively put to use A".

I cite those English authorities principally for the purpose of demonstrating that the Policy's foundation is the essentially negative planning influence exerted by conventional development control. Additionally I regard them as casting some light on how, in a given case, the discretionary planning judgment called for by cl.7(3) of the current State Policy can reasonably operate to promote the stated aim of the State Policy of conserving low-cost rental accommodation. In suggesting this I am, of course, not attempting to interpret or read down the Policy by reference to these English authorities because the statutory language of the State Policy, properly understood in the light of its stated aim, is clear in its requirement that an ultimate discretionary planning judgment be arrived at by considering all of the specified factors and, where necessary, balancing those factors. Rather the English decisions are to be appreciated as illustrating the anatomy or dynamics of an analogous discretionary planning judgm

ent operating in a similar field.

C. DETERMINATION IN ACCORDANCE WITH CLAUSE 7(3)

OF THE STATE POLICY

With these background and necessarily generalised observations I come now to apply the provisions of cl.7(3) to the facts of the present case. I shall consider separately each of the specified factors, noting that ultimately it was common ground between the parties that notwithstanding my findings expressed in my interlocutory judgments (and especially the later one dealing with s.90(1)(d)) cl.7(3) of the State Policy now requires a further discretionary planning judgment to be made. Although, in the light of the manner that this appeal has been hitherto determined, the judgment required by cl.7(3) is to be undertaken as an isolated exercise, ultimately that judgment must be accommodated within the overall planning judgment required to be made by s.90 of the Environmental Planning and Assessment Act for the determination of the development application that is before the Court.

Subclause (3)(a)

The Applicant concedes that he is unable to establish that sufficient comparable boarding-house accommodation is available to satisfy the demand for such accommodation in the locality.

This concession leads me to conclude for the purpose of cl.7(3)(a) that there is not available sufficient comparable accommodation in the locality to satisfy demand for such accommodation in that locality.

This finding confirms and supplements my findings based upon my entire acceptance of the evidence adduced by the Respondent relevant to s.90(1)(d) of the Environmental Planning and Assessment Act which findings are summarised at pp.4 and 5 of my Interlocutory judgment of 23rd December, 1988.

Subclause (3)(b)

This provision poses a difficulty of interpretation inasmuch as it is not clear whether it applies to a case such as the present which involves an application "to alter or add to the structure, fabric or finish of the inside or outside of the building" (cl.7(1)(b)) coupled with an application "to change the use of the building to another use" (cl.7(1)(c)).

Paragraphs (a), (c) and (d) of cl.7(3) are all expressed to apply "in each case" meaning, it would appear, in the case of each development application required by cl.7 to be made. Only paragraph (b) specifies a particular application, namely one "to alter or add to the structure, fabric or finish ........" etc.

Whereas it is possible that paragraph (b) is intended to operate both in the case of such an application simpliciter and in the case of such an application, coupled with an application to change the use of the boarding-house to another use, the more likely and hence preferable interpretation, which is supported by the text of subclause (3)(b) (especially subparagraphs (i) and (iii) is that the subclause does not apply to the present case involving a dual application and applies only to the case where the boarding-house use is not to be changed to another use. Such an interpretation accords with the statutory language and does not prejudice or impair the promotion of stated aim and objective of the Policy.

One apparently puzzling aspect of cl.7(3) is that it is only in the case of an application to which subclause (3)(b) applies that the Council is specifically required to consider "whether ...... the development, if carried out, is likely to cause adverse social and economic effects on the general community". Perhaps the answer to this puzzle lies in the fact that the Policy, given its stated aim, (which is clearly directed to the social and economic needs of residents (actual and prospective) of low-cost rental accommodation) logically assumes an adverse social and economic effect in the case of an application to demolish a boarding-house (cl.7(1)(a) and in the case of an application to change the use of a boarding-house to another use (cl.7(1)(c)) because in each case the boarding-house accommodation is entirely eliminated whereas no such assumption is made in the case of an application "to alter or add to the structure fabric or finish ......" etc (cl.7(1)(b)) because the boarding-house accommodation is not

so eliminated. Therefore it is necessary to expressly stipulate in such a case that adverse social and economic effects be considered by the Council. This reasoning, which explains the absence of express stipulation for the consideration of adverse social and economic effects in the case of applications to demolish or change the use of a boarding-house, lends some support for the preferred interpretation of subclause (3)(b) which I adopt.

Accordingly on this view of the meaning of subclause (3)(b) it is not a relevant consideration in the present case.

However if I be wrong in this interpretation (which I suggested in the course of argument) and since the Applicant has asked that I also consider subclause (3)(b) on the assumption that it does apply to the present case I proceed to apply it to the facts of the present case, but in so proceeding I immediately encounter difficulty.

Of all the factors specified in cl.7(3) which the Council is required to consider in determining a development application those factors specified in paragraph (b) present the greatest difficulty of ready application to "a building that is vacant but the last significant use of which was as a boarding-house" (cl.6(1)(a)).

This apparent difficulty has given rise to competing submissions by the parties as to how the factors specified in paragraph (b) are to be considered in relation to the facts of the present case. The Applicant submits in effect that since the 'Ritz' is now vacant and does not now provide boarding-house accommodation there is no "major reduction in the number of households or units of accommodation .............." (subparagraph (i)), the adverse social effect, if the proposed development is carried out, is 'slight' in accordance with my earlier determination in respect of s.90(1)(d) (subparagraph (ii)) and there are accordingly no residents of the building likely to be displaced (subparagraph (iii)). The Respondent's competing submission is that (i) there is likely to be a major reduction of households or units of accommodation by dint of comparing some 97 boarding-house rooms when the 'Ritz' was last used as a boarding-house with the proposed 10 x 3 bedroom flats (subparagraph (i)) and the development, if car

ried out, is likely to cause adverse social and economic effects, by virtue of the loss of the boarding-house accommodation previously provided by the 'Ritz' (subparagraph (ii)).

The possible explanation for these competing submissions, is to be found in the manner in which effect has been given to what may be described as the statutorily extended definition of boarding-house (see cl.6(1)(a)) namely a "building which is vacant but the last significant use of which was as a boarding-house". It is clear that the Policy is intended to operate in respect of such vacant buildings. Is there any indication that subclause (3)(b) is not intended to apply in the case of such a vacant building or is the subclause simply incapable of so applying? I think the clear answer to both these questions is "no". In these circumstances the interpretation advanced by the Respondent which lays emphasis on the extended definition is to be preferred since it is a genuinely available interpretation and best meets the stated aim of the Policy (s.25(3) of the Environmental Planning and Assessment Act). However as will be seen, the precise effect on the operation of cl.7(3) of the extended definition does not, in

my opinion, ultimately support the Respondent's submission, which in effect attributed an extra operation to the extended definition, which, in my opinion, is not sustainable. I am referring to an ingredient which I consider to be necessarily implicit in the Respondent's submissions, namely that in considering the factors specified in subclause (3)(b), the vacant building is notionally to be regarded as being occupied or available for occupation as a boarding-house.

The problem is illustrated by considering subparagraph (ii). How, I ask, can it be held that the development of an entirely vacant boarding-house is likely to cause adverse social and economic effects unless there is some foundation for holding that it is not likely to remain so vacant but instead is likely to be re-devoted to its former boarding-house use in the event of the development not being carried out or unless an assumption to that effect (such as is implicit in the Respondent's submission) is made?

In other words to so find, as the Respondent would urge me, on the facts as found in the present case in relation to s.90(1)(d) would be to beg the very questions raised by subclauses (3)(c) and (3)(d).

If consideration of the matters specified in subclauses (3)(c) and (3)(d) were to lead to the same findings as the Court has already made in relation to s.90(1)(d) that there is little probability of the former boarding-house use being revived or resumed (and nothing has been put by the Respondent that would require or justify a departure from those findings) it would be obvious that the major premise supporting the finding for which the Respondent contends under subclause (3)(b)(ii) would be entirely destroyed and absent. In other words in such circumstances it would not be reasonably open to conclude that the carrying out of the proposed development would be "likely to cause adverse social and economic effects on the general community".

An alternative approach to subclause 3(b)(ii) that is based upon the fact that cl.7(3) separately specifies in paragraphs (a), (b), (c) and (d) the factors required to be considered by the Council in determining the development application, is to separately consider each of the specified factors in isolation from the other factors whilst recognising (i) that there may be degree of overlap or inter-dependence or inter-action in the specified factors and the consideration of them and (ii) that ultimately all the specified factors and the consideration of them have to be accommodated in the overall and final discretionary planning judgment called for by cl.7(3).

A minor variant of this alternative approach (which I think is the most meaningful approach) would be to reach a provisional judgment on each of the separately specified factors recognising that each such judgment must ultimately be accommodated in the final and overall-discretionary planning judgment made under cl.7(3). Thus in the case of subclause (3)(b)(ii) it would be open to conclude that the development would be likely to cause adverse social and economic effects in the manner contended for by the Respondent provided that (or on the assumption that) there was a reasonable probability that the building would, assuming the proposed development is not carried out, not remain vacant but would instead be re-devoted to its previous boarding-house use. A finding of such a probability would be substantially dependent upon compatible and supportive findings in relation to the matters specified in paragraphs (c) and (d).

Subparagraph (b)(iii) received little attention in the course of argument, for the apparent reason, that it was common ground that the subparagraph only applied in the case of a building occupied by residents and hence not to a vacant building without residents. This common ground appears to be based upon the juxtaposition of the words "residents (if any)". Obviously in the case of a vacant building there is no possibility of there being residents "likely to be displaced".

In view of the common ground between the parties on this matter I am content to proceed accordingly.

In the light of the foregoing and on the assumption that subclause (3)(b) applies to the present case (I must confess that my aforesaid labored grappling with the operation of the subclause reinforces me in my conclusion that it does not apply to the present case) I make the following findings -

(i) Subparagraph (i)

There is likely to be a major reduction in the number of units of accommodation on the appeal site subject to the following qualifications -

(a) the finding is based upon the simple comparison between the number of boarding-house rooms in the 'Ritz' building when it was last used as a boarding-house (some 97 boarding rooms) and the number of units proposed in the refurbished 'Ritz' building (10 x 3 bedroom flats);

(b) the finding is based upon the assumption that, though currently vacant the 'Ritz' is capable of providing the same or similar accommodation that was provided when the 'Ritz' was last used as a boarding-house; and

(c) the finding is subject to the validation of the assumption set forth in paragraph (b) by appropriate findings in relation to the factors specified in subclauses (3)(c) and (3)(d).

(ii) Subparagraph (ii)

The development if carried out, is likely to cause adverse social effects on the general community by virtue of the elimination of the boarding-house accommodation previously provided by the 'Ritz' from the available low rental housing stock in the Municipality subject to the following qualifications -

(a) it is assumed that the former boarding-house accommodation provided by the 'Ritz' would be revived or resumed in the event of the proposed development not being carried out; and

(b) the validation of the assumption set forth in paragraph (a) by appropriate findings in relation to the factors specified in subclauses (3)(c) and (3)(d).

(iii) Subparagraph (iii)

Since there are no residents of the building no arrangements are required to be made in consequence of displacement.

Subclause (3)(c)

The factors specified in this subclause have all been considered in my Interlocutory judgment of 23rd December, 1988. No additional evidence was adduced relevant to these matters. Nor was there any submission that consideration of the factors specified in subclause (3)(c) supported, required or justified a departure from my earlier findings. Indeed as I understood the Respondent's submission it was conceded that my earlier findings operated in favour of the Applicant in relation to both subclauses (3)(c) and (3)(d).

Accordingly I adopt as relevant for present purposes and therefore confirm, my earlier findings which may be summarised as follows -

(i) On 9th May, 1988 the Respondent served on the then owner of the 'Ritz' building a number of statutory notices under the Local Government Act 1919 and the Public Health Act 1902 requiring health and building works to be carried out on the 'Ritz' building: Agreed fact 4.

(ii) On 1st February, 1988 and again on 18th March, 1988 the Respondent served a notice pursuant to Section 317D of the Local Government Act. That notice has not been complied with to date: Agreed fact 5.

(iii) Licensing of the premises under Ordinance 42 has lapsed and the premises are not in a condition to be licensed under that Ordinance: Agreed fact 6.

(iv) The cost of work necessary to comply with the notices issued by the Council is in the order of $500,000 and represents the minimum work required to enable the premises to be re-licensed as a boarding-house pursuant to Ord. 42: Agreed fact 10.

(v) There is little probability of $500,000 being expended by the Applicant, on any one else, on the 'Ritz' building in order to satisfy the public health and building requirements in order to obtain a boarding-house license under Ordinance 42 and hence little probability of the former boarding-house use being revived or resumed (p.12 of my Interlocutory judgment of 23rd December, 1988).

Subclause (3)(d)

Again the Respondent advanced no submission that my findings in my Interlocutory judgment on 23rd December, 1988 on the issue of the financial viability of the continued use of the building as a boarding-house were inapplicable to the consideration of the factor specified in subclause (3)(d).

Although not intended to be directed to this issue the evidence adduced by the parties on the adjourned hearing including the purchase price of $3.2 million paid by the Applicant for the 'Ritz' in 1987 and the present day value of some $11 million of the appeal site, if developed, as proposed by the development application (being evidence principally directed to the s.94 cash contribution question) confirms and strengthens my earlier findings based upon my entire acceptance of Mr. Woodley's valuation evidence that the continued use of the building for low-cost residential accommodation was not a viable option.

Accordingly I again adopt, for present purposes my earlier finding that the continued use of the 'Ritz' as a boarding-house is not financially viable.

CONCLUSION IN RELATION TO cl.7(3)

Having regard to my aforesaid findings on each of the factors specified in cl.7(3) what is the result of overall and total consideration required by the subclause? It is this that in view of (i) the considerable expense ($500,000) of carrying out minimum work to enable the 'Ritz' to be re-licensed as a boarding-house (ii) the little probability of such sum being so expended and (iii) the financial non-viability of the continued use of the 'Ritz' building as a boarding-house there is little or no probability of the resumption or revivor of the former boarding-house use with the result that the carrying out of the proposed development in real terms will not have the effect of -

(i) eliminating available low-cost rental accommodation from the existing stock of such accommodation available in the Municipality;

(ii) reducing the number of units of accommodation available on the appeal site; and

(iii) causing adverse social and economic effects on the general community.

The foregoing conclusion is in my opinion, the inevitable result of my consideration of the factors specified in subclauses (3)(c) and (3)(d) significantly outweighing and overbearing, if not eclipsing, my consideration of the factors specified in subclauses (3)(a) and (3)(b), once it is appreciated, as I trust I have demonstrated, that the factors in subclauses (3)(a) and (3)(b) are each based on the implicit assumption that the vacant building is "capable" (see cl.7(5)) of providing boarding-house accommodation (which I would understand as embracing physical, legal and practical "capability") and that there is a probability that the former boarding-house use of the vacant building will be resumed or revived. In my opinion neither assumption is validated in the present case.

In the result my ultimate conclusion on the exercise of the discretionary planning judgment called for by cl.7(3) is little different from my conclusions in relation to s.90(1)(d) of the Act expressed in my Interlocutory judgment of 23rd December, 1988 namely that "the real social effect of the development proposal is not that the proposal will result in the cessation of a boarding-house use but that the proposal (if implemented) will result in the final elimination of all possibility of the erstwhile boarding-house use being resumed or revived" (p.10) and that "the weight or importance of this social effect ............ is to be properly ............. assessed in the light of the probability or prospect (if any) of the premises being re-devoted to their former boarding-house use .........." (p.10) and "having concluded that there is little probability of the former boarding-house use being revived or resumed the inevitable consequence is that the weight I attribute to the identified social effect is very sli

ght ........." (p.15).

Accordingly for all of the foregoing reasons I reject the Respondent's submission in relation to cl.7(3). My consideration of the matters specified therein leads me to conclude that development consent should be granted. That conclusion is entirely consistent with my earlier determinations in relation to s.90 of the Environmental Planning and Assessment Act (excluding State Policy No. 10) as set forth in the earlier Interlocutory judgments.

Accordingly I propose to grant development consent.

In so concluding I also take into account the fact that the Director of Housing, who has the "concurrence" function under the State Policy (see cl.7(1) and cl.8(4)), has notified the Applicant's Solicitors that he has had regard to the 1989 amendments to the State Policy and "is willing to grant concurrence ......... In the event that the consent authority or the Land and Environment Court grants consent to the demolition of, or alteration and additions to 'The Ritz'".

It may be accepted, as the Respondent has submitted that this notification by the Director does not itself constitute the granting of concurrence in terms of the State Policy, although it is also accepted that the Court in determining the appeal is not bound by the decision of the Director to grant or with-hold concurrence (s.39(6) of the Land and Environment Court Act 1979). In any event the substance of the Director's notification to the Applicant's Solicitors, in response to their advice that the proceedings were pending in this Court, provides some support for the Court's decision to grant development consent in this case.

D. CONDITIONS OF DEVELOPMENT CONSENT

This brings me to the question of appropriate conditions of development consent. Except for the question of the s.94 contribution sought by the Respondent in the sum of $500,000 "for the provision of low to moderate income housing" (Condition D21(b)) the parties are generally agreed that the conditions set forth in Exhibit 9 are appropriate (including the agreed amendment to condition D47 by deleting reference to the Statement of Environmental Effects).

The only other condition requiring adjudication is D50 which requires the submission to and approval by the Respondent's Director of Development and Planning of "a certified Structural Engineers report" detailing "the method by which the existing walls are to be retained and the support system to be used during construction".

The Applicant submits that the appropriate servant of the Respondent to undertake this responsibility is the Council Engineer. The Respondent submits that because of the special features of this case (the retention of existing walls is essential for the overall heritage conservation objective of the proposal) the Director of Development and Planning is the appropriate servant for the condition to designate. I accept the Respondent's submission noting in passing that condition D24 (not objected to) confers another function on the Director in the building approval process.

E. SECTION 94 CONTRIBUTION FOR THE PROVISION OF

LOW TO MODERATE INCOME HOUSING

In my Interlocutory judgment of 23rd December, 1988 I concluded that it would be appropriate, in the event of the appeal being upheld, to impose a condition on the grant of development consent requiring a cash contribution towards the Low Income Housing Fund established by the Respondent in a modest attempt to alleviate the shortage of such accommodation in the Municipality.

My judgment continued (p.16):-

"The Respondent submits that the condition is sustainable by reference to the reasoning and result in Lycenko. The Applicant did not challenge Lycenko but submitted that the present case is distinguishable on the facts because here there was no prospect of the resumption of the former boarding-house use whereas in Lycenko such resumption was held to be a possibility albeit "slight and remote". Having regard to my factual findings, the present case also involves, by virtue of the grant of development consent, the final elimination of a slight and remote possibility of the resumption of the former use.

Accordingly it is, in my opinion, appropriate to impose the condition sought by the Respondent."

The amount of that contribution, based upon an established formula of $800 for each boarding-room lost, was $77,600.

On the final hearing, following the 1989 amendments to the State Policy the Respondent seeks to have imposed Condition D21(b) in these terms:-

"The Applicant shall pay a contribution to Council for the provision of low to moderate income housing. This contribution shall be a total of $500,000."

Further evidence was given by Mr. Rosenberg the Respondent's Housing Officer. According to that evidence, which was not challenged, and which I accept, the Respondent has since February 1985 applied a Policy on s.94 contributions in respect of developments having adverse social and economic effects on the occupants of low to moderate private rental housing stock. Up to 1st January, 1989 the total amount of such contributions was $186,000.

Mr. Rosenberg Stated:-

"Council is of the view that a s.94 contribution bearing a closer relation to replacement cost of housing lost would be necessary in the event of 'The Ritz' ceasing to be a boarding-house."

His testimony goes on to point out that a contribution of $3.685 million would represent replacement cost of 67 x 1 bedroom units (67 being his estimate of the net loss of bedrooms involved in changing the former boarding-house use of the 'Ritz' to the proposed use) at $55,000 per unit. This sum excludes the land cost component.

An alternative replacement cost figure was $36,000 per unit representing the cost of a small boarding-house development, such as the Respondent was currently considering for a Council owned property at 7 Mil Mil Street.

Mr. Rosenberg mentioned 2 other initiatives that the Respondent is currently undertaking or considering in the Municipality to provide low-cost rental housing.

Mr. Rosenberg noted that a contribution of $2.4 million (adopting the lesser replacement unit rate) "may be difficult for the Applicant to meet", and after referring to the normal profit a developer would expect from a project such as the proposed development stated:-

"Given this, Council has determined to seek a s.94 contribution of $500,000. This would allow a reasonable return for the developer and provide the means for Council to proceed with the Mil Mil boarding-house. The surplus would be put towards other housing ventures through the low-cost housing fund."

The Applicant adduced evidence which would put in serious issue the Respondent's calculation of likely developer's profit from undertaking the proposed development.

I do not think it necessary to refer to this evidence in any detail (although if there is any need for the factual issue to be resolved I would prefer the evidence adduced by the Applicant on the likely financial results of the development venture) because I do not think the evidence bears materially on the fundamental questions concerning s.94 raised by this case, particularly in the light of my findings in relation to cl.7(3) of the State Policy.

The Respondent seeks to sustain the disputed condition entirely by reference to s.94(1) which relevantly provides:-

"............ where a consent authority is satisfied that a development, .........., will or is likely to require the provision of or increase the demand for public amenities and public services within the area, the consent authority may grant consent to that application subject to a condition requiring -

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(b) the payment of a monetary contribution."

In view of my findings in respect of (i) the social effect in terms of s.90(1)(d) of the proposed development and (ii) the factors specified in cl.7(3) of State Policy No. 10, it cannot, in my opinion, be reasonably held that the proposed development will or is likely to require the provision of or increase the demand for public housing on anything like the basis suggested by the Respondent. That basis, according to Mr. Rosenberg's testimony, is either the loss of 97 boarding-house rooms formerly provided by the 'Ritz' or the net loss of 67 boarding-house rooms (after allowance is made for the accommodation to be provided by the proposed development which obviously is not low income boarding-house accommodation). Such a basis is, in view of my relevant findings, entirely unsustainable and irrelevant.

In my opinion any relevant decision to be made in the present case in accordance with s.94(1) must reasonably reflect my aforesaid findings.

The Respondent sought to have read into the expression "a development, the subject of a development application" appearing in s.94(1) the effect of the current State Policy No. 10 on the development proposal before the Court. I must confess to some difficulty in understanding the precise import of this submission, but even assuming its validity and application, my findings in the present case in relation to cl.7(3) of that Policy firmly and insurmountably stand in the Respondent's way in its attempt to justify a contribution upon the basis fully revealed in Mr. Rosenberg's evidence. In my opinion there is no other basis that could reasonably be invoked to sustain the Respondent's condition, and I did not understand the Respondent to invoke any other basis than that revealed by Mr. Rosenberg.

This leaves the following result. The Respondent has entirely failed to justify or sustain disputed Condition D21(b). In my Interlocutory judgment of 23rd December, 1988 I indicated a preparedness to impose a condition requiring a cash contribution of some $77,600 in accordance with the Respondent's policy on s.94 contributions relating to low-income housing. I do not understand that Policy to have been abandoned by the Respondent in the course of adopting its particular decision in the present case.

The Applicant has submitted that the matter has now been fully argued and that I should not adhere to the view I expressed in my Interlocutory judgment. It has submitted that with the benefit of full argument a more reasonable sum of $36,000 should be adopted reflecting a fair attempt to quantify the real social effect, as found by the Court, of the proposed development on low-cost rental housing in the Municipality. The $36,000 reflects the replacement cost (excluding land cost component) of 1 boarding-house room, according to the Respondent's project at Mil Mil Street.

It is fairly conceded by the Applicant that this is an arbitrary assessment but produces a fair result in seeking to quantify the real social effect of the proposed development, according to the Court's factual findings.

The Respondent additionally relies on the fact that in his affidavit sworn on 5th August, 1988 and filed in these proceedings the Applicant stated (paragraph 17) that he was agreeable to a condition on development consent proposed by the Respondent in October 1987 for the payment to the Respondent of "approximately $250,000 to assist any disadvantaged occupants of the building and low-income housing in the Municipality of North Sydney".

Much has occurred since the date of that affidavit, including of course these extended appeal proceedings and in these circumstances I do not think, it reasonable to rely for the purposes of making a reasonable assessment upon that former representation which I am prepared to assume has been overtaken by subsequent events.

In the final analysis it is apparent in this case that any amount of contribution that is required pursuant to s.94 will necessarily involve some element of arbitrariness. Having regard to all the circumstances I think a less arbitrary and ultimately reasonable basis for assessment is to adhere to my decision in my Interlocutory judgment of 23rd December, 1988 and adopt the Respondent's s.94 Policy of $800 for each of the boarding-house rooms formerly provided by the 'Ritz' when it was used as a boarding-house.

Accordingly I shall impose pursuant to s.94 of the Act a condition in terms of Condition D21(b) but substituting the sum of $77,600 for the sum of $500,000 therein stated.

F. ORDERS

For all of the foregoing reasons the appeal is allowed and development consent is granted subject to the Conditions D1 to D52 (inclusive) including the amendments made to D21(b) and D47 as set out in Exhibit 9 (a copy of which is hereunto annexed).

The exhibits may be returned.