By Anthony Whealy, Partner and James Oldknow, Associate

A number of more recent, and equally important Land and Environment Court (Court) decisions have emerged which refine and clarify whether and to what extent the floor areas within building envelopes (and basements) are to be included or excluded for the purposes of calculating floor space ratio (FSR) under the NSW planning system.

We are pleased that our initial article generated such extensive interest. Our intent was always to assist in clarifying another complex topic in the NSW Planning System on the basis that it was becoming (and certainly continues to be) a cause for common confusion. So, at the outset we thank our readers for their support and of course encourage you to reach out in the event you might require specialist legal advice in respect of your proposed development application in order to optimise gross floor area (GFA).

Without revisiting the background to the topic, or the definition of GFA as defined by the Standard Instrument Principal Local Environmental Plan, it is sufficient to observe that the ability to exclude certain areas from the calculation of GFA in a development obviously enhances the ability to appropriately (i.e. lawfully) maximise the amount of floor space that can then be achieved under the applicable FSR controls for a site. We now jump straight into our observations on the key Court decisions over the past year which assist to further understand the multiple inclusions and exclusions of GFA, and how they might be applied.

Corridors, breezeways and terraces

In C & J Corporation Pty Ltd v Canterbury-Bankstown Council [2020] NSWLEC 1431
(C & J Corporation), the Court was asked to consider an application for a child care facility and in doing so, accepted that outdoor play areas located on the ground, first and second floors, albeit set within large balconies that projected from the primary built form were excluded from the calculation of GFA. It is to be remembered that the definition of GFA expressly excludes “terraces and balconies with outer walls less than 1.4 metres high”, however in this case the walls surrounding the outdoor terraces were largely of a greater height (for more than 50% of their perimeter) and the first floor area was enclosed by a roof. Nevertheless, the Court held (at [35]) that:

1. the external play area on the ground floor was bounded by a 1800mm high brick fence with horizontal timber slat infill panels, which was not considered to be an external wall;
2. the external play areas on the first and second floors were bounded partly by a 1800mm high solid fence and a 1350mm high solid fence, which were not, at any point, considered to be something that constituted an external wall.

Against that background, the Court ultimately held that none of the 3 outdoor play areas were floor area within “the internal face of external walls” for the purpose of the standard definition of GFA. They were instead all areas that were outside of the external face of the external walls.

Importantly, the Council had made a fairly typical argument that “as FSR is used by the Council to assess bulk and scale, it should include elements that add to the bulk of the proposal.”  The Court rejected that submission, indeed holding that “There is no substance to the Council’s submissions” (at [33]). The Court instead emphasised that general notions about bulk and scale are irrelevant. What is critical is to focus on the text in the definition of GFA, which is highly specific, and to remain faithful to that text, which is binding on councils and on the Court. Notions of what ought to be included, to capture a building’s size, bulk and scale, are “entirely irrelevant to whether it falls within the definition of gross floor area”.

In HPG Mosman Projects Pty Ltd v Mosman Municipal Council [2021] NSWLEC 1243
(HPG Mosman), which was an appeal that we acted in on behalf of the applicant (and made reference to in our recent article ‘Important Court decision on desired future character’, and its interplay with clause 4.6’), the Court made an important clarifying decision relating to corridors or breezeways. Here, the Court was asked to consider whether internal corridors were to be included as GFA, in circumstances where “the corridors are long, each with an opening on one side less than half the length of the corridor, which includes a planter 1m high as a barrier”. The corridors were also covered by the levels above, and further shielded by a roof that projected more than 2m from the outer edge of the opening.  The single opening to the corridors was nevertheless to a large external garden landscaped area. The Court held that these corridors were excluded from the calculation of the GFA (at [39]), noting:

1. remarkably similarly to the C & J Corporation case referenced above, the Court agreed with Council’s broad “sentiment that the GFA of the breezeways contributes to the volume of the building envelope”, but again emphasized that this is irrelevant to the question of what areas are to be counted as GFA, stating “the calculation of GFA must be consistent with the definition of GFA in the Dictionary of LEP 2012. Floor space ratio is an inexact measure of a building’s volume, because it excludes all the volumes of all areas identified in the definition of gross floor area” (at [33]);
2. for the same reason as the explanation given at [31] in GGD Danks Street P/L and CR Danks Street P/L v Council of the City of Sydney [2015] NSWLEC 1521
   (GGD Danks) – a case we made reference to in our initial article, the walls of the corridors on Levels 1 and 2 of the proposal were external walls (at [36]). Importantly, the Court explained its definition of outer walls by reference to the National Construction Code (NCC), holding:
   “The definition of “external wall” in the NCC is “an outer wall of a building which is not a common wall” (Sch 3 to Vol 1 of the NCC). I adopt this meaning of “external wall” as the ordinary meaning of the term in the absence of a definition of the phrase in LEP 2012. Although the definitions of the NCC are not referenced by LEP 2012 or by the EPA Act, the Building Code of Australia (Vols 1 and 2 of the NCC) is referred to by Pt 6 of the EPA Act. An outer wall of a building is either the façade that forms the building envelope or an external wall that is the threshold between an internal room and an external space” (at [35]);
3. the corridors were external spaces because the walls lining the corridors would have to be external walls in order to make the units adjoining the corridors habitable space (at [36]). In other words, the necessity for weatherproofing was again a critical consideration in defining what constitutes an external space:
   “The extent of the roof overhangs over the planters “may keep the corridors dry during inclement weather but they do not render the corridors internal spaces. The communal corridors on Levels 1 and 2 are external spaces and the walls lining the corridors will have to be external walls in order to make the units adjoining the corridor habitable space”.

Of critical importance is that the Court also felt the need to take this issue a step further to expressly disagree with the findings in Landmark Group Australia Pty Ltd v Sutherland Shire Council [2016] NSWLEC 1577 (Landmark Group) at [37], which was a decision that never sat comfortably with us or the extensive body of case law relating to breezeways, including GGD Danks, but was often relied upon by Councils in order to try to include corridors and breezeways in the calculation of GFA.

We had touched on this tension in our initial article. Specifically, we noted that in the Landmark Group decision, the Commissioner had included the proposed corridors (which had openings on both ends) as calculable GFA, based on their specific design and location (i.e. through the centre of the building), which obviously added bulk to the buildings. Nevertheless, those areas were obviously designed and would be constructed as external, weatherproofed areas, consistent with the GGD Danks reasoning.

However, in HPG Mosman, the Court expressly disagreed with that finding in the earlier Landmark Group decision, saying:

“I understand the Council’s cynicism in relation to the practice of creating horizontal circulation spaces in multi-residential developments which are external spaces by dint of the deletion of a window in an opening or an open ended corridor, in order that the spaces do not contribute to the calculation of the GFA, however, the calculation of GFA has to be consistent with the LEP definition” (at [38]): and

“I respectfully disagree with the finding in Landmark Group because the corridor was unenclosed and was an external space. The test is not the “prospect of rain entering the breezeway” or whether the external space is identified as a breezeway or a corridor (at [36]). For the units adjoining the corridor to each be a dwelling, they must be enclosed on all sides by external walls or common walls. As the corridor was open at each end, the side walls of the corridor had to be external walls to the units on either side of the corridor (at [37]).

It was certainly pleasing to receive the Court’s reasons in HPG Mosman, which we hope will provide consistency to assessment of corridors, breezeways and terraces and put an end to any further attempts by Councils to rely on the decision in Landmark Group.

Vertical circulation (Dwelling Houses)

In Rzepecki v Central Coast Council [2020] NSWLEC 1421 the Court accepted that an enclosed area on the upper most level (i.e. third storey) of an attached dual occupancy proposal, which included the lift and stairs, was excluded from the calculation of GFA
(at [30]) on the basis that:

1. the area fell within the common vertical circulation exclusion at (d) of the standard definition of GFA (i.e. excluding “any area for common vertical circulation, such as lifts and stairs”); and
2. noting the area of the lift shaft and stairs had already been included once in the calculation of GFA on the ground floor and therefore did not need to be counted again.

In respect of finding a) above, we caution that we were not involved in this appeal, nor have we had an opportunity to cite the relevant plans to understand whether there was in fact a ‘common’ element to the relevant ‘lift and stairs’ area (which we would consider unusual (but not impossible) in respect of an attached dual occupancy development). In our initial article, we had referred to the Court’s findings in Chami v Lane Cove Council [2015] NSWLEC 1003 (Chami) where the Court accepted that on a proper construction of the exclusion at (d), the word ‘common’ has work to do (at [273]- [276]). In other words, ‘common’ is a reference to common property areas within multi dwelling developments. To our knowledge, that finding in Chami is yet to be distinguished by the Court.

In Nicola v Waverley Council [2020] NSWLEC 1599, another appeal that we acted in on behalf of the applicant, the Court was asked to consider a modification application in respect of an existing dwelling to allow a new rooftop terrace and access thereto. In its decision, the Court found that the new staircase was excluded from the calculation of GFA (at [63]), accepting the applicant’s submission (at [61]) that:

1. the new stairwell was within a void space above the existing stair, and
2. voids are expressly excluded from the standard definition of GFA.

In reaching those findings, the Court had regard to the decision in Connoisseur Investments Pty Ltd v Sutherland Shire Council [2020] NSWLEC 1181 (Connoisseur Investments) (at [63]), which we referred to in our initial advice, and further held that the “purpose of the void space, whether it be to provide an internal spatial volume, to allow light penetration or to allow for movement between levels via a stair, as in this case, is not relevant to the application of´ the void exclusion at (j) of the standard definition of GFA (i.e. excluding “voids above a floor at the level of a storey or storey above”).

In CMH Design Pty Ltd t/a CM Hairis Architects v Randwick City Council [2021] NSWLEC 1117, the Court was asked to consider an application for alterations and additions to a residential dwelling, including a new loft and roof terrace. In its consideration, the Court held that the new stairs to the roof terrace were correctly excluded from the calculation of GFA (at [46]) on the basis they were:

1. not roofed;
2. contained by an external door at the base of the stairs; and
3. surrounded by external walls.

In reaching those findings, the Court accepted the applicant’s position (at [44]) that:

1. at a level of 1.4m above the floor of the highest habitable level, there was no floor in the location of the stairs, but a void;
2. similarly, at 1.4m above the floor of the roof, there was also a void over the stairs,

and therefore, by applying the standard definition of GFA, the Court was satisfied there was no “internal face of external walls” from which GFA could be measured at a height of 1.4m.

Non-habitable rooms within a basement

In Britely Property Pty Ltd v Randwick City Council (No 2) [2020] NSWLEC 1389 the Court held that bicycle storage areas located in a basement were excluded from the calculation of GFA (at [58]) because:

1. consistent with the decision in Connoisseur Investments, only habitable spaces (or shops, auditoriums or cinemas and the like) in the basement contribute to GFA; and
2. the bike cages fell within the storage exclusion at (e)(i) of the standard definition of GFA (i.e. excluding “any basement storage”).

It is important to keep in mind that this exclusion of bike storage spaces would not apply if the bike spaces were contained within the “internal face of external walls“ at a level other than the basement (for example at ground floor).

Loading or unloading of goods

In Buyozo Pty Limited v Ku-ring-gai Council [2021] NSWLEC 2, the Court held that corridors leading from a carpark to the entrance of storage units were excluded from the calculation of GFA (at [32]) on the basis that those areas fell within the loading or unloading of goods exclusion at (h) of the standard definition of GFA (i.e. excluding “any space used for the loading or unloading of goods (including access to it)”.

Summary

As we mentioned in our first article, and as evidenced by this update, the case law on this topic is ever rapidly evolving and hopefully with the passing of time, we can achieve a point of consistent application and interpretation of GFA across NSW.

In the meantime, we will continue to provide regular updates in respect of the guidance received from the Courts.

Need further assistance?

If you need further assistance to determine whether a floor area should be included or

excluded from the calculation of GFA we are ready able to assist. We are often asked to provide our opinion on this subject in a format suitable to be presented to councils and various planning panels. Of course, we also specialise in development application appeals, should any dispute arise with consent authorities on this topic.

For further information, please do not hesitate to contact us.