In brief - What developers can learn from the decision in Made Property Group Pty Limited v North Sydney Council [2020] NSWLEC 1332, which highlights, among others, the highly technical requirements a written clause 4.6 request must meet 

A developer sought to rely on existing use rights to replace an inter-war apartment building in Sydney that exceeded the height limit with another apartment building. The developer's appeal against deemed refusal of their application was denied.

This recent decision serves as an important reminder of some principles regarding existing use rights and clause 4.6 requests. Notably:

  1. the height, bulk and scale of the existing building does not automatically entitle replacement with a similar building of the same height, bulk and scale

  2. a merit assessment of the application must still be conducted even if existing use rights are relied on, and

  3. Third, clause 4.6 written requests must be properly prepared. Deficiencies in both clause 4.6 request and the justifications for exceedance of development standards may result in the consent authority lacking jurisdiction to grant consent

Developer appeals North Sydney Council's deemed refusal of a development application

The applicant owned three inter-war apartment buildings in Neutral Bay, Sydney which all exceeded the current height development standard (8.5m).

The applicant appealed against deemed refusal of its application to replace the apartment buildings with one large building that exceeded the current height of buildings development standard (HOB standards).

The proposed development (at 12.52m) was taller than the existing apartment buildings (10m) and exceeded the HOB standards by approximately 47.3%. The applicant, in part, relied on the benefit of the existing-use rights, otherwise the proposed apartment building would not be permissible on the site.

Council acknowledged that the applicant enjoyed existing use rights in relation to its proposed development, but contended that the provisions of clause 4.3 of the North Sydney Local Environmental Plan 2013 (NSLEP) (the HOB standards) applied because clause 4.3 did not derogate from the incorporated provisions referred to in section 4.67 of the Environmental Planning and Assessment Act 1979 (EP&A Act).

What are the incorporated provisions?

Section 4.67 of the EP&A Act "Regulations respecting existing use" provides that the regulations may make provision for matters with respect to existing uses and those provisions (incorporated provisions) are taken to be incorporated in every environmental planning instrument. Importantly, an environmental planning instrument (of which the NSLEP is one) can contain provisions extending, expanding or supplementing the incorporated provisions but to the extent that the environmental planning instrument derogates from the incorporated provisions, it has no force or effect.

Accordingly, the applicant argued that clause 4.3 of the NSLEP did not apply because it would derogate from the incorporated provisions. As a result, the proposed apartment building did not need to comply with the HOB standards. 

If it was wrong on this point and clause 4.3 did apply, the applicant contended that it had provided a clause 4.6 request that sought to vary the HOB standards and which it said was well founded and should be upheld. Clause 4.6 of the NSLEP allows proponents to seek an exception to a development standard to provide an appropriate degree of flexibility in applying certain development standards to particular development.

The application and judicial consideration of clause 4.6 in various Local Environmental Plans has a long and complex history, including recent decisions of Al Maha Pty Ltd v Huajun Investments Pty Ltd [2018] NSWCA 245, Baron Corporation Pty Limited v Council of the City of Sydney [2019] NSWLEC 61 and RebelMH Neutral Bay Pty Limited v North Sydney Council [2019] NSWCA 130.

Does clause 4.3 of the NSLEP derogate from the incorporated provisions?

The Court found that clause 4.3 did not derogate from the incorporated provisions.

Following Saffioti v Kiama Municipal Council [2019] NSWLEC 57, the test is whether the clause in question detracts from or deleteriously impinges on any entitlement to make and have the consent authority consider and determine a development application seeking consent to enlarge, expand or intensify the existing use. Accordingly, provisions like clause 4.3 which fix development standards for development do not derogate from the incorporated provisions because these clauses do not impinge on any entitlement to make a development application.

The Court held clauses like clause 4.3 of the NSLEP may impose height standards because when read together with clause 4.6 of NSLEP, those provisions still allow a pathway for the grant of consent to the applicant's proposed development.

Additionally, the Court applied the judgment of Roseth SC in Fodor Investments v Hornsby Shire Council [2005] NSWLEC 71; that where the existing building is proposed for demolition, while its bulk is clearly an important consideration, there is no automatic entitlement to another building of the same floor space ratio, height or parking provision. 

Is the applicant's 4.6 written request to vary the HOB standards well founded?

The applicant prepared and lodged a written request in accordance with clause 4.6 of the NSLEP seeking to vary the HOB standards (Clause 4.6 request).

The Court applied the approach described by Chief Justice Preston in Initial Action Pty Ltd v Woollahra Municipal Council [2018] NSWLEC 118 (Initial Action) to assess whether the clause 4.6 written request was well founded. Preston CJ (describing the jurisdictional hurdle) said in Initial Action (at [13]) that clause 4.6(4) establishes preconditions that must be satisfied before a consent authority can exercise the power to grant consent for development that contravenes a development standard.

The formation of the opinions of satisfaction as to the matters in clause 4.6(4)(a) enlivens the power of the consent authority to grant development consent for development that contravenes the development standard (Preston CJ at [14]).

The Court found that, for a number of reasons, the applicant's clause 4.6 request did not clearly demonstrate how the proposed development achieved the objectives of the HOB standards, notwithstanding the exceedance of the HOB standards. Specifically it did not:

  • demonstrate that compliance with the objectives of the standard were unreasonable or unnecessary

  • provide sufficient environmental planning grounds to justify the requested variation to the HOB standards, and

  • demonstrate that it was consistent with the objectives of the R3 zone applicable to the site

The Court held that because satisfaction in relation to matters provided in clause 4.6(3) is a precondition to enliven the Court's power to grant consent, and as the Court was not satisfied that those matters had been adequately addressed and was not satisfied that the proposed development was consistent with the objectives of the R3 zone, the proposed development was not in the public interest and the Court did not have jurisdiction to grant the consent. 

This case again highlights the highly technical requirements a written clause 4.6 request must meet to enliven the jurisdiction of the consent authority to grant consent to a development that does not comply with the relevant development standards. 

Developers should bear in mind that where the proposed development exceeds prescribed development standards and clause 4.6 is relied on for an exemption to those standards, the written request must be carefully considered and specify in detail how the objectives of the development standards are met, notwithstanding non-compliance with those development standards.

What developers need to know

Developers should not assume that an existing residential flat building provides an automatic entitlement to redevelop. Merit assessment of any replacement development will occur against current development standards. Developers should not take for granted opening the jurisdictional gate of clause 4.6 even where the original development breaches height standards, for example. Clause 4.6 requests should always be carefully prepared.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.

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