By Aaron Gadiel, Partner

The Land and Environment Court has handed down a decision that will change the way many people have been calculating building height under local environmental plans (and their equivalents).

The Court gave its judgement in Mulpha Hotel (Sydney) Pty Ltd v Council of the City of Sydney [2026] NSWLEC 93.  The decision was handed down by Justice Robson on 31 July 2026.

The decision concerns the calculation of building height in a brownfield site where there is an existing basement.

Background

In standard instrument-compliant local environmental plans — when building height is measured in metres — the height is to be measured from ‘ground level (existing)’.  This is defined to mean ‘the existing level of a site at any point’.

Over the years there has been legal controversy as to what the ‘existing ground level’ is when there is already an existing building on a site with a basement.

In Bettar v Council of the City of Sydney [2014] NSWLEC 1070 a commissioner of the Court concluded that an extrapolated (hypothetical) ground plane should be applied — drawn from the edges of an excavated basement.

However, in Merman Investments Pty Ltd v Woollahra Municipal Council [2021] NSWLEC 1582 the same commissioner adopted a different approach and measured the building height from the excavated ground level beneath an existing building.

Since Merman Investments building height in the Land and Environment Court has generally been calculated by reference to the lowest excavated ground level of an existing basement.

For example, in Hayek v Randwick City Council [2024] NSWLEC 1631 a commissioner of the Court held (at [64]) that the existing ground level is the existing level of the site at any point — whether or not it has been modified from, what may have once been, the natural ground level.

In Hayek the subject building included a garage/basement that had been excavated into the site.  The applicant had sought to calculate the height of the proposed new building with reference to an extrapolated ground plane, measured from the edges of the excavated area — based on the Bettar decision.

In Hayek, the Court rejected (at [66]) the use of an extrapolated ground level.  The Court also rejected the proposition that the height could be measured from the finished floor level of the basement/garage floor (at [67]).  Rather, the Court accepted a 200mm estimate for the thickness of the slab and calculated building height from the level of the ground beneath that slab.

The new decision

The latest decision — in Mulpha Hotel (Sydney) Pty Ltd — would seem to suggest that the Hayek approach was incorrect.

Justice Robson reached the following conclusions (at [107]-[109]):

• The definition of ‘basement’ in the local environmental plan refers to space predominantly ‘below ground level (existing)’. The definition of ‘building height’ refers to the vertical distance from ‘ground level (existing)’ to the highest point of the building — where ‘ground level (existing)’ is defined as the ‘existing level of a site at any point’.
• A site has a ground level, but it may also have ‘below ground’ levels which would accord with the definition of a ‘basement’.
• The expression ‘ground level (existing)’ cannot mean the lowest excavated portion of a site, including a basement or the lowest basement level.
• In the case before the Court, ‘level’ meant the ground level, not a basement level.
• The words ‘existing level of a site’ can be interpreted by reference to the term that is being defined, which is ‘ground level (existing)’. As the definition refers to an existing level of a site, in some circumstances it is appropriate to interpolate (extrapolate) the existing ground level of the site.
• The definition of ‘basement’ provides further textual guidance as to the meaning of ‘ground level (existing)’ as it refers to a space ‘below ground level (existing)’.
• In the case before the Court, the existing building had five basement levels. There was no need to go to the bottom of the basement when calculating ‘ground level (existing)’.  In that case, the ‘extrapolation’ approach was appropriate.
• Determining the ground level of a site in some cases is an evaluative question – and in many cases it is obvious.

The Court did not address the apparent conflict with the decision in Hayek.  However, it did acknowledge the two earlier decisions of Merman Investments and Bettar.

Bettar was the decision that had favoured an extrapolated ground plane from the edges of an excavated basement. Merman was a later decision where a building had been constructed over excavated ground, but a formal basement had not been included. In that case, the building height was measured from the excavated ground level under the existing building, rather than an extrapolated ground plane taken from the edges of the excavated area.

The Court observed that there appeared to be different approaches adopted in Merman and Bettar. Justice Robson considered that the different approaches can be explained by the different factual circumstances in each case. His Honour observed that in Bettar, the relevant existing building had a basement, whereas in Merman, the existing building did not have a basement.

Hayek, Bettar and Merman were all decided by commissioners of the Court.  This is the first time this issue has been squarely addressed by a judge.  It can now be said that the extrapolated ground plane method should be used for the purposes of measuring height in appropriate circumstances.  Based on this judgement, it is appropriate to use an extrapolated ground plane to measure height where a development site already has excavated basement level(s). In that case, the ‘below ground’ levels should not be regarded as the ground level.

Going forward

The decision is helpful for development applicants.

The measurement of maximum building height controls from excavated basement levels has generally distorted the maximum height plane anticipated by strategic planners when formulating planning controls.

Whilst this issue has generally been managed through the use of clause 4.6 requests (which permit the contravention of development standards) — any clause 4.6 request carries risk.

The decision in Mulpha Hotel (Sydney) Pty Ltd reduces the need for clause 4.6 requests to achieve the height outcome generally intended by strategic planners when imposing building height controls.