By Anthony Whealy, Partner, and Clare Collett, Special Counsel
NSW Court of Appeal holds for shop top housing:
A recent decision of the NSW Court of Appeal (subsequently upheld by the High Court) gives welcome clarity on what will lawfully be considered ‘shop top housing’. Councils often claim that the entire ground floor of a development must be retail or business in order for a development to be ‘shop top housing’. The Court of Appeal in Lahoud v Willoughby City Council [2024] NWCA 163 (a case in which we acted for the developer of the site) found this to be incorrect and held that a development at Northbridge which included resident’s parking on the ground floor was a form of ‘shop top housing’.
The Lahoud case involved ‘shop top housing’, which was defined in the planning controls at the time as “one or more dwellings located above ground floor retail premises or business premises”. Councils often assert that a development is not shop top housing as some part of the ground floor is used for another purpose such as car parking or residential communal rooms, for example. Shop top housing is often permissible in areas where residential flat buildings are not so it can be important to correctly classify a development as shop top housing.
In the Lahoud case, the development included internal parking on the ground floor. Some of the car parking spaces were to be used by residents of the building and only some were for use by the business premises on the ground floor. Mr Lahoud challenged the validity of a development consent granted for shop top housing. Mr Lahoud argued that the existence of ground floor parking for residents meant that the residential dwellings were not located above ground floor retail or business premises so that the development was not a form of shop top housing.
Three judges of the Court of Appeal unanimously held that Mr Lahoud’s argument was incorrect. The Court of Appeal held that it is not necessary for the entire ground floor of a building to be a retail or business use in order for a building to be shop top housing. That is, there can be some residential use on the ground floor and a building could still be classified as shop top housing. The Court of Appeal held that there was nothing in the phrase “ground floor retail premises or business premises” (in the definition of shop to housing) which required that all of the ground floor be for a retail or business use.
The Court went even further and found that there is no requirement that the majority of the ground floor be for retail or business uses. The Court held that shop top housing only requires that “there be retail premises or business premises on the ground floor of the building”. In this case, there were two business premises on the ground floor so the development was one of shop top housing. The Court noted that the business premises accounted for 40% of the length of one street frontage and that the proportion of the ground floor used for business premises was not ‘de minimis’.
The Court also considered the residential car parking spaces and noted that these car spaces should not be classified as “dwellings”. The Court found that a residential use is different to a “dwelling” and a carpark used by residents is not a “dwelling”. As the parking spaces were not dwellings, the development could lawfully be classified as a shop top housing development as there were no dwellings on the ground floor.
Mr Lahoud sought to appeal against the decision of the NSW Court of Appeal by filing a special leave application in the High Court of Australia. On 7 November 2024, the High Court unanimously refused to grant special leave, finding that that the application did not give rise to questions of general importance and lacked sufficient prospects of success. The High Court ordered Mr Lahoud to pay the applicants costs.
We note that the current definition of shop-top housing in planning controls refers to “at least” the ground floor being used for commercial premises or health services facilities. In our view, this does not change the applicability or reasoning in the Lahoud case as the addition of “at least” seems clearly intended to show that there can be commercial premises above the ground floor.
Mills Oakley acted for the developer in this case.
A link to the published decision can be found here: https://www.caselaw.nsw.gov.au/decision/19094b0072244f8954c750da
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