Land and Environment Court New South Wales

• Medium Neutral Citation: Jojeni Investments Pty Ltd v Mosman Municipal Council [2014] NSWLEC 120
• Hearing dates: 11 March 2014
• Decision date: 08 August 2014
• Jurisdiction: Class 4
• Before: Sheahan J

Decision

(1) The Court declares that the property known as 7 Arbutus St, Mosman, has the benefit of existing use rights as two flats in a house.

(2) The applicant's summons is otherwise dismissed.

(3) The question of costs is reserved.

(4) The exhibits may be returned, including those in Mr Lovell's affidavit.

• Catchwords: EXISTING USE: characterisation of existing use - 1933 approval for conversion of dwelling house into two flats - whether existing use extends to flats in general or restricted to two flats
• Legislation Cited: Environmental Planning and Assessment Act 1979; Environmental Planning and Assessment (Savings and Transitional) Regulation 1998; Local Government Act 1919; Mosman Local Environmental Plan 1998; Mosman Local Environmental Plan 2012
• Cases Cited: Abret v Wingecarribee Shire Council [2011] NSWCA 107; (2011) 180 LGERA 343; ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67; (1987) LGRA 117; Ashfield Municipal Council v Armstrong [2002] NSWCA 269; (2002) 122 LGERA 105; Baiada & Ors v Waste Recycling & Processing Service Of NSW [1999] NSWCA 139; 130 LGERA 52; Botany Bay City Council v Workmate Abrasives Pty Ltd (2004) 138 LGERA 120; Botany Bay City Council v Parangool Pty Ltd [2009] NSWLEC 198; Calleja v Botany Bay City Council [2005] NSWCA 337; (2005) 142 LGERA 104; Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400; El Boustani v The Minister administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198; GrainCorp Operations Ltd v Liverpool Plains Shire Council [2013] NSWCA 171; (2013) 194 LGERA 83; MM & SW Enterprises Pty Ltd v Strathfield Council [2010] NSWLEC 8; (2010) 172 LGERA 125; Royal Agricultural Society v Sydney City Council (1987) 61 LGRA 305; Shire of Perth v O'Keefe [1964] HCA 37; (1964) 110 CLR 529; (1964) 10 LGRA 147; Weston Aluminium Pty Ltd v Environment Protection Authority [2007] HCA 50; (2007) 156 LGERA 233; Winn v Director General, National Parks and Wildlife [2001] NSWCA 17; (2001) 130 LGERA 508
• Category: Principal judgment
• Parties: Jojeni Investments Pty Ltd (Applicant); Mosman Municipal Council (Respondent)
• Representation: Mr I Hemmings, SC with; Ms A Hemmings, barrister (Applicant); Mr T Robertson, SC (Respondent); Hones La Hood (Applicant); Pikes & Verekers Lawyers (Respondents)
• File Number(s): 40512 of 2013

Judgment

Introduction

1 In this Class 4 matter, the Court is asked to define the nature and extent of existing use rights affecting the building on Lot 48 DP3953, known as 7 Arbutus St, Mosman.

2 The applicant company is the present owner, and asserts that the subject property has the benefit of existing use rights as a residential flat building ("RFB"). Its summons seeks a declaration to that effect.

3 A RFB is defined (in the Model Provisions 1980) as a "building containing 2 or more dwellings", but the Mosman Local Environmental Plan ("LEP") 2012 defines it as a building containing 3 or more dwellings, but not including an attached dwelling or multi dwelling housing. The LEP includes [RFB] in its definition of "residential accommodation". (See the expert planning report of James Lovell, in his affidavit of 24 September 2013, at fol 128, c.f. fols 291 - 292).

4 A "dwelling" is a room or suite of rooms capable of occupation and use as a separate domicile; a "dwelling house" is a building containing one, but not more than one, dwelling on its own allotment; "multiple dwellings" means "two or more dwellings, whether attached or not", and "attached" dwelling means a building containing 3 or more dwellings, having their own lots of land, common walls, and none above another (see definitions in the 1998 and 2012 Mosman LEPs, and Lovell, at fols 167, 171, 264, 272, and 286). All are also listed among the items included in the wide 2012 definition of "residential accommodation" (fol 291).

5 Robert Ferguson & Associates Architects Pty Ltd currently has a class 1 appeal before the Court (matter no 13/10751), in respect of Council's refusal of a development application ("DA"), seeking approval for "demolition, and construction of" a RFB on the site (Refusal at Exhibit A1, tab 7.19). That appeal has been stood over pending delivery of this judgment.

6 The applicant's DA relies on the existing use of the land as being characterised as "flats" in general, as it is seeking to expand the present use of the land for flats, from two flats to three flats - i.e. three dwellings, with basement parking.

7 The Council contends that such expansion is impermissible, as it would involve a change in the use of the land.

8 It submits that the protected "existing use" is as a (conventional) "duplex" (a dwelling on each level - see Tpp39 - 40, and Calleja v Botany Bay City Council [2005] NSWCA 337; (2005) 142 LGERA 104), or "two flats in a single house or building", that the question needs to be resolved, and that the Court should make a declaration limiting to two flats the existing use rights enjoyed by the property, as that will "settle the outstanding issue in the class 1 proceedings" (Tp34, L41 - p38, L11).

9 There was significant agreement between the parties on the relevant factual history, and on the evolution of the planning regime over the years, but voluminous historical documentation has been put before the Court to put that history in context. It was important for the Court to have, and to examine, all that material, and have counsel explain it, but, in view of the concessions and agreements between the parties, it need be summarized only very briefly.

10 A single dwelling house was erected on the subject land in the early 1900s. From 1924 to 1936, the use of the land for flats was permitted, and, in 1933, Council approved its "conversion into [two] flats". No approval has ever been given for a "RFB", strictly so defined, on the subject land.

11 The actual Council approval in 1933 cannot be located, but the Court has before it secondary evidence of it, from which the Council's approval can be inferred, namely:

(1) a copy of the Council's building register (see Baiada & Ors v Waste Recycling & Processing Service of NSW [1999] NSWCA 139; 130 LGERA 52); and

(2) the original approved and stamped plan for that 1933 conversion (Exhibit R2).

12 The respondent concedes that that 1933 approval was lawfully given, pursuant to the powers conferred at that time by ss 311 and 314 of the Local Government Act 1919 ("the LG Act 1919"), and that, since the 1933 approval was implemented, the subject property has operated continuously as two separate residences, one on each of the ground and first levels, with a shared laundry and service area in the basement.

13 It appears that no other approvals were sought or obtained from Council between 1933 and 1978, but, in June 1978 Council consented to the then owner, Wendy Slonim, renovating a kitchen at ground floor level (BA159/78). Further alterations and additions were later approved by Council. Relevant documents regarding such applications and approvals refer to the property as "a dwelling", "the existing duplex building", or "two flats", but never as a RFB. However, a July 1983 approval imposed conditions of a kind usual in the case of an RFB.

14 Council contends that it is as it "simply now appears to be", namely a two to three storey dwelling house, converted into two flats, or a "duplex", or a "dual occupancy", but the Court notes the caution expressed by the Court of Appeal against characterising according to "impressionistic" tests: see GrainCorp Operations Ltd v Liverpool Plains Shire Council [2013] NSWCA 171; (2013) 194 LGERA 83, at [310] - [311] per Ward JA.

15 In any event, Council concedes that the current use is not unlawful.

Planning Issues

16 There is no controversy surrounding the historical planning instruments that have applied to the land (see applicant's subs par 21, and the Lovell report).

17 As a consequence of successive changes to the planning regime, which deem the 1933 building approval to be now a post-Environmental Planning and Assessment Act 1979 ("the EPA Act") development consent ("DC"), any consent granted and in force at the commencement of the EPA Act is protected by s 109B of that Act as a species of existing use. The applicant contends that it has an existing use right as a RFB, but the Council insists that it is for a building containing no more than two flats. See Winn v Director General, National Parks and Wildlife [2001] NSWCA 17; (2001) 130 LGERA 508, at [248].

18 The current use of the land is prohibited under the 2012 Mosman LEP, which zones the land "R2" (a "low density residential" zoning - the land was formerly zoned "2(a1) Residential").

19 One objective of the "R2" zone (Lovell fol 207) is retention of Mosman's "low density residential environment", and, in environmentally sensitive residential areas, its "single dwelling character". Dwelling houses, boarding houses, semi-detached dwellings, bed and breakfast accommodation, home businesses, respite day care centres, and home occupations are permitted (only home occupations without consent). "Dwelling house" means the same as in 1998 (Lovell fols 271 - 272). "Multi dwelling housing" means three or more attached or detached on a single lot, but not "RFB" (fol 286). The relevant land use table specifies that "dwelling-houses" and "semi-detached dwellings" are permissible with consent, and all other uses are prohibited (with the exception of home occupations, which is irrelevant for present purposes). It is agreed between the parties that the current use remains prohibited by the 2012 LEP.

20 The use ought be classified by reference to activities authorised by the relevant consent. The respondent rejects, in the circumstances of the present case, the so called species/genus test.

21 As the applicant proceeds on the basis that the existing use in the present case arises under s 106 of the EPA Act by reason of the consent, the respondent is content to adopt the same approach.

22 However, the parties disagree as to whether the existing use rights extend to more than "2 flats in a building".

23 Sections 106 and 107 provide:

106. In this Division, existing use means:

(a) the use of a building, work or land for a lawful purpose immediately before the coming into force of an environmental planning instrument which would, but for Division 4 of this Part, have the effect of prohibiting that use, and

(b) the use of a building, work or land:

(i) for which development consent was granted before the commencement of a provision of an environmental planning instrument having the effect of prohibiting the use, and

(ii) that has been carried out, within one year after the date on which that provision commenced, in accordance with the terms of the consent and to such an extent as to ensure (apart from that provision) that the development consent would not lapse.

107. (1) Except where expressly provided in this Act, nothing in this Act or an environmental planning instrument prevents the continuance of an existing use.

(2) Nothing in subsection (1) authorises:

(a) any alteration or extension to or rebuilding of a building or work, or

(b) any increase in the area of the use made of a building, work or land from the area actually physically and lawfully used immediately before the coming into operation of the instrument therein mentioned, or

(c) without affecting paragraph (a) or (b), any enlargement or expansion or intensification of an existing use, or

(d) the continuance of the use therein mentioned in breach of any consent in force under this Act in relation to that use or any condition imposed or applicable to that consent or in breach of any condition referred to in section 80A (1) (b), or

(e) the continuance of the use therein mentioned where that use is abandoned.

(3) Without limiting the generality of subsection (2) (e), a use is to be presumed, unless the contrary is established, to be abandoned if it ceases to be actually so used for a continuous period of 12 months.

24 The species/genus test was articulated by McHugh J in Royal Agricultural Society v Sydney City Council (1987) 61 LGRA 305 who said (at 310 - 311):

Accordingly, a test has been devised which requires the purpose of the use of land to be described only at that level of generality which is necessary and sufficient to cover the individual activities, transactions or processes carried on at the relevant date. Thus the test is not so narrow that it requires characterisation of purpose in terms of the detailed activities, transactions or processes which have taken place. But it is not so general that the characterisation can embrace activities, transactions or processes which differ in kind from the use which the activities etc as a class have made of the land.

...

The foregoing cases were concerned with the activities of a particular business or industry or with activities of a common kind. But I see no reason why the principle upon which those decisions were based is not also applicable to a case where land is used for activities, processes or transactions of widely differing kinds. If the activities, processes or transactions are capable of being treated as all or the majority of the species of a genus, then that genus may properly be regarded as describing the purpose of the use of the land. If they are not, then it may be that the only conclusion is that the land has been used for more than one purpose. If that conclusion is drawn, then each purpose is to be characterised in accordance with the principles set out earlier in this judgment.

Submissions

Applicant's Submissions

25 Although the 1933 approval itself is not available, the applicant relied on the secondary documents before the Court to submit that that 1933 approval was for "flats", and that, accordingly, the "existing use" is for "flats" generally. (See the approved plans in Exhibit R2, the building register in Exhibit A1, tab 1, and frequent references in Council and Valuer-General records, eg in Exhibit A2).

26 As recently as 1983, a Council assessment report described the building as "Class II" (which is a RFB), and the Council imposed on that approval the standard conditions applicable to a RFB (subs par 15).

27 For the respondent to characterise and limit the existing use to only two flats focuses inappropriately on the physical characteristics of the building, and on the precise manner in which the use was carried out, i.e. on the nature of the use rather than the purpose of the use (see Tp19, LL3 - 11), which would, contrary to authority, elide "the distinction between use and building": Ashfield Municipal Council v Armstrong ("Armstrong") [2002] NSWCA 269; (2002) 122 LGERA 105, at [11]. See also Abret v Wingecarribee Shire Council [2011] NSWCA 107; (2011) 180 LGERA 343; Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400, and El Boustani v The Minister administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198.

28 The applicant relied on the following passage of Kitto J in Shire of Perth v O'Keefe ("O'Keefe") [1964] HCA 37; (1964) 110 CLR 529; (1964) 10 LGRA 147, at 535, 150 (Tp18, LL11 - 19):

... the provision is made that the land may continue to be used for that purpose: not the precise manner of use for that purpose may alone continue but that use generally for that purpose may continue. The application of the by law in a particular case has therefore not to be approached through a meticulous examination of the details of processes or activities, or through a precise cataloguing of individual items of goods dealt in, but by asking what, according to ordinary terminology, is the appropriate designation of the purpose being served by the use at the material date.

and submitted (at Tp19, LL3 - 11):

What we say cannot be done, and it's the error that the, in our submission, the respondent falls into, is rather than focus upon the purpose of the use, which is the character that the use imparts to the land, and in our submission that's residential flats in a building, they focus incorrectly upon the detail to say, no it's not residential flats in a building. It's two residential flats and that, in our submission is focussing upon the building and not focussing upon the rights of use, not focussing upon the purpose of use, not focussing upon the town planning purpose that the authorities recognise this approach to interpretation must take.

Respondent's Submissions

29 Although the parties agree that the existing use is not to be characterised by the species/genus test because that use originates from a development consent - Botany Bay City Council v Workmate Abrasives Pty Ltd ("Workmate") (2004) 138 LGERA 120 - the applicant's reliance on the test in O'Keefe, concentrating on the level of purpose, and ignoring the specific uses authorised by the consent, is an example of the genus test "par excellence" (Tp27, L20).

30 Counsel for the respondent says (at Tp29, LL7 - 18):

Purpose has nothing to do with it. You don't look at the purpose of the use and characterise it more broadly than the activities or uses of land which are authorised by the consent. You just construe the consent, that's all.

...

We say there is a development consent, therefore Workmate Abrasives applies, the genus test doesn't. Shire of Perth v O'Keefe is irrelevant and your Honour simply construes the consent.

31 In Workmate, the owner had development consent for the use of the premises for the manufacture and reconditioning of industrial machinery, but that use was later prohibited, and the land was being put to a wider variety of industrial and commercial uses, including, the conversion of abrasive materials into various items, a warehouse/distribution centre, and commercial offices (subs par 19). The trial judge applied the genus test, and found that the premises enjoyed existing use rights.

32 The Court of Appeal found that the uses to which the land was being put were not protected by existing use rights, as they extended beyond the use for which development consent was granted. In reaching this decision, Stein AJA (with whom Spigelman CJ and Cripps AJA agreed), said at [12] - [14]:

12. ... the only [consent] that matters is the 1974 consent ... for the purpose of manufacturing and reconditioning of industrial machinery. That, it seems to me, was the only "lawful purpose" that could become an existing use under s 106(a) of the EPA Act.

13. It is plain that the use to which the premises are being presently put, and was being put at the time of the hearing before the Land and Environment Court, is not the use that was granted consent in 1974. It follows ... that the present use is not a lawful purpose and, therefore, the existing use rights under the EPA Act do not pertain to the present use of the premises.

14. His Honour seems to have been diverted into exploring the genus test. In my opinion, counsel for the appellant is correct to suggest that the test is irrelevant to a situation where the existing use is claimed to flow from an existing development consent. The genus test would be relevant for characterisation, if there was no consent, but there was in this case. It was the rights of use under the 1974 consent which were protected by s 106. At the date of the prohibition coming into force, the first respondent had no rights to use the land for the purposes of steel fabrication.

33 Accordingly, the "lawful purpose" which enjoys the benefit of existing use rights in the present case, is only that use for which consent was granted. Properly construed, the consent was for use of a dwelling-house for two flats only, the numerical limitation being an essential element of the permissible development, and its characterisation must be limited in this way.

34 If the genus test were to apply, it would result in the characterisation of the use at a level of generality that would have enabled the expansion of the use to any number of flats so long as they were comprised in a RFB. That approach was rejected in Workmate, and is contrary to the approach adopted by the High Court in Weston Aluminium Pty Ltd v Environment Protection Authority [2007] HCA 50; (2007) 156 LGERA 283.

Consideration

35 In Workmate, it was clearly established that the genus test ought not be applied when one is characterising an existing use, the lawful purpose of which stems from a development consent.

36 Reliance on O'Keefe is, therefore, inappropriate to the present case, as it was in Botany Bay City Council v Parangool Pty Ltd ("Parangool") [2009] NSWLEC 198.

37 In Parangool, development consent was granted for a warehouse for the storage and distribution of alcohol, a use which was subsequently prohibited. Approval was then sought for the "occupation of an existing warehouse building for general warehouse use". Lloyd J found that such a use was not protected by existing use rights, and was, therefore, prohibited. His Honour said (at [16] - emphasis mine):

The commissioner correctly set out the factual and legal position at pars [45] and [46]. The commissioner, however, applied at pars [49] and [52], the genus test explained in Shire of O'Keefe [sic] in arriving at her conclusion that she had the power to consent to the application. But since the existing use in the present case was dependent upon the express and limiting terms of the development consent, that test - as explained in the Workmate Abrasives case - is irrelevant.

38 Thus, the approach to characterisation in O'keefe does not apply in these circumstances.

39 Likewise, in MM & SW Enterprises Pty Ltd v Strathfield Council [2010] NSWLEC 8; (2010) 172 LGERA 125, Pepper J held that a development consent granted for "commercial offices" did not authorise use of the premises as a "brothel" as an existing use under ss 106 and 107 of the EPA Act. Her Honour said (at [81] - [83] - some citations omitted):

81. In circumstances where premises are subject to a development consent, the terms of the consent become the "lawful purpose" from which an existing use can arise pursuant to s 106(b)(i) of the EPAA ...

82. Only the "lawful purpose", that is, the terms and conditions stipulated in the development consent, can be relied upon by the applicant to secure existing use rights. Any other "use" - such as an unlawful use or an actual use that is different from the consenting use - is not a lawful use, and cannot be relied upon to gain existing use rights (ACR Trading Pty Ltd v Fat-Sel Pty Ltd (1987) 11 NSWLR 67 at 80).

83. In order to determine what the lawful purpose is, the Court must look to the ambit of the language in the development consent to determine whether the use is lawful under planning law and therefore protected.

40 It is appropriate for the Court to rely, in the present case, on secondary materials, to shed light on exactly what was approved.

41 The approved plans (Exhibit R2) show approval for the conversion of a dwelling house into two flats, often known as a "duplex". Approval was not given for "flats" generally, or for a RFB, as defined and understood (see [3] above).

42 The lawful purpose is, therefore, for two flats, and this is the purpose that is preserved under the EPA Act.

Conclusion

43 Accordingly, the applicant cannot achieve the declaration sought in its summons.

44 The respondent sought (par 25, as amended in argument at Tpp4, LL42 - 43, and p38, LL8 -10) a declaration that the existing use right is limited to "two flats in a ... house", and, as that would succinctly reflect these reasons, I am content to adopt that form of words.

45 The parties agreed (Tp48) that the question of costs should be reserved.

Orders

46 The Orders of the Court will, therefore, be:

(1) The Court declares that the property known as 7 Arbutus St, Mosman, has the benefit of existing use rights as two flats in a house.

(2) The applicant's summons is otherwise dismissed.

(3) The question of costs is reserved.

(4) The exhibits may be returned, including those in Mr Lovell's affidavit.

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Decision last updated: 08 August 2014