Important and helpful Land and Environment Court rulings on s4.55/4.56 modification applications

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The Land and Environment Court’s very recent decisions in Realize Architecture (1) and (2) simplify the approach to modifying development consents, particularly when answering the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act, and provide support for ‘balanced’ assessments, allowing large changes to be approved via the s4.55/4.56 pathways

By Anthony Whealy, Partner and James Oldknow, Senior Associate

The Land and Environment Court of NSW (‘Court‘) has delivered a refreshing set of Judgments that ought to buck the trend of local Councils obsessively focusing on the ‘quantitative’ differences between a proposed modification application and the earlier, original development consent when answering the ‘substantially the same’ test in s.4.55/4.56 of the Environmental Planning and Assessment Act 1979 (‘EPA Act‘). Instead, the Chief Judge of the Court has this week clarified that a ‘balanced approach’ is required when answering the relevant test and in doing so, has approved a modification application which proposed an increase of 2,368m2 of gross floor area and an additional 2-storeys on top of an originally approved 9-storey mixed use development – representing the largest ‘quantitative’ differences that we have ever seen approved by the Court when determining a modification application.

Importantly, the Chief Judge has reminded the industry that the task of determining whether a development is ‘substantially the same’ as the original approval does not need to follow any complicated formulas (such as comparing ‘qualitative’ and ‘quantitative’ differences or identifying “essential elements” or “critical elements” or “material and essential features”), despite these having been traditionally used throughout the industry for the past three decades!  Instead, the approach can even be an ‘instinctive’ decision based upon a “balancing of” or “weighting of” the relevant facts. Ultimately this gives much more freedom to proponents and consent authorities to argue for or to support modifications, for whatever reasons they see as being relevant and important.

The Court decisions

We acted for the Applicant in the initial Class 1 Judgment known as Realize Architecture Pty Ltd v Canterbury-Bankstown Council [2023] NSWLEC 1437 (‘Realize Architecture (1)’) dated 9 August 2023 and we subsequently defended Canterbury-Bankstown Council’s (‘Council‘) appeal against that successful Class 1 Judgment pursuant to s.56A Land and Environment Court Act 1979 (‘LEC Act’) in Canterbury-Bankstown Council v Realize Architecture Pty Ltd [2024] NSWLEC 31 (‘Realize Architecture (2)’), dated 4 April 2024.

We report on each of those Judgments and their implications in our article below.

Background Facts

The relevant background facts in Realize Architecture (1) were as follows:

  • The subject site had:
    • a total area of approx. 7,800m2
    • ‘split’ zoning, including part B2 – Local Centre and part R4 – High Density Residential
    • ‘split’ maximum building height controls between 11-27m
    • ‘split’ FSR controls of 2.75:1 and 3:1
  • On 10 July 2014, development consent no. DA-503/2013 was granted for construction of 4x integrated buildings in a mixed use development (principally comprising residential flat buildings) at the subject site (‘Original Consent‘), which achieved:
    • maximum building heights of between 28.3-31m and up to 9-storeys (this already exceeded of the applicable maximum building height controls)
    • a ‘blended’ FSR of 3.08:1 (this already exceeded the applicable FSR control in the B2 zone)
    • 2 ground floor retail tenancies
    • 397 dwellings
    • 432 parking spaces
    • 2,085m2 of communal open space
  • On 21 December 2021, the relevant modification application was lodged by the Applicant seeking internal and external changes to all 4 buildings (‘Subject Modification‘).
  • The Applicant lodged a Class 1 appeal to the Court based on a ‘deemed refusal’ of the Subject Modification

Council’s position – Subject Modification was not ‘substantially the same’ as the Original Consent

In the initial Class 1 appeal, Council contended that the Subject Modification ought to have been refused because the proposed modified development was not “substantially the same” as the development approved by the Original Consent, therefore failing the applicable test in s.4.55(2)(a) of the EPA Act. Specifically, Council contended that its position was evidenced by large ‘quantitative’ differences between the Subject Modification and the Original Consent, including:

  • Removal of the ground floor visitor carpark entirely
  • Complete reconfiguration and relocation of the only driveway serving the 439 space carpark
  • More than doubling of the size of the communal open space and completely reconfiguring it
  • Adding 2 extra floors to the approved development (over 50% of the floor place)
  • Adding 2,368m2 (9.8%) of additional gross floor area (GFA)
  • Adding an additional 10 units (2.5%), with internal reconfiguration of all units and a significantly different unit mix

(Realize Architecture (1) at [27] and [43]).

After undertaking a comparison of the Subject Modification against the Original Consent, Council’s urban design and town planning experts went as far as saying “there’s not one wall in the same location when you compare what it [is] now to the original application” (at [50]), and that there had been a “redesign of almost all of the apartments” (at [51]).

The Court’s findings and approach to the ‘substantially the same’ test in Realize Architecture (1)

In Realize Architecture (1), Commissioner Espinosa of the Court ultimately held that the development proposed by the Subject Modification was ‘substantially the same’ as the development approved by the Original Consent. In reaching that conclusion, the Court made the following findings:

  • At [57]: “After considering the various opinions, I find that there are a number of quantitative differences between the two developments which on face value alone and without further consideration may otherwise lead to a conclusion that the two developments are not substantially the same. However, this is not the test and is not of itself conclusive for the purpose of s.4.55(2) of the EPA Act” (our emphasis)
  • At [62]: “I accept and adopt… [the] qualitative conclusion [of the Applicant’s town planning expert]… that:

the proposal as modified:

  1. Will not change the nature or the intensity of the use;
  2. Whilst improving the relationship to the public domain at ground level, this is similar with the intent established in the original approval;
  3. Will not change the relationship to surrounding developments as the modifications will maintain the character of the original approval;
  4. Where an increase in floor space and height is proposed on the upper levels, the development is consistent with the original approval as a whole, and the bulk and scale which establishes the streetscape character (from ground levels to levels 7/8) is unchanged per the original approval” (our emphasis)
  • At [64]: “I am not satisfied that any critical element… is being deleted from or even modified so significantly that it would render the two developments not substantially the same” (our emphasis)
  • At [66]: “I find that the quantitative and qualitative changes identified above cause me to form the finely balanced positive opinion that the modified development is substantially the same development as the originally approved development” (our emphasis)

As can be discerned from the above findings, the Court approached its interpretation of the ‘substantially the same’ test in the following ways (consistent with the guidance of earlier Court decisions quoted throughout the Judgment and reproduced further below in this article):

  • Comparing the quantitative differences between the proposed modified development against the original approved development
  • Comparing the qualitative differences between the proposed modified development against the original approved development
  • Comparing the critical elements of the proposed modified development against the original approved development
  • Most importantly, by then balancing the evidence in respect of all of those factual comparisons before forming a subjective opinion as to whether the proposed modified development was ‘substantially the same’ as the original approved development

In our opinion, what is most notable is that, as part of its final step to balancing the evidence in respect of each of the relevant comparisons, the Court acknowledged that although there were quantitative differences between the Subject Modification and the Original Consent that may appear in isolation to be significant, the focus of the test in s.4.55(2)(a) is on the whole and on an overall balancing of the two developments (at [65]). In this instance, the ‘qualitative’ similarities between the two schemes were enough to negate or override the large numerical (quantitative) differences described above. This is precisely the ‘balancing’ exercise that a consent authority is entitled to undertake, to then form its ultimate opinion.

Council’s position on s.56A appeal in Realize Architecture (2)

Shortly after the (positive) Judgment in Realize Architecture (1) was handed down, Council lodged an appeal pursuant to s.56A of the LEC Act, contending that the initial decision was infected by several errors of law, mainly:

  1. The chain of reasoning ground: Having made a ‘negative’ finding in Realize Architecture (1) at [57] that there were “a number of quantitative differences between the two developments which on face value alone and without further consideration may otherwise lead to a conclusion that the two developments are not substantially the same” and otherwise, ‘neutral’ findings in relation to the lack of qualitative differences between the two developments (at [62]) and the lack of change of any critical element of the two developments (at [64]), the Council argued that a comparison (in a mathematical sense) of the Court’s single ‘negative’ finding against its two ‘neutral’ findings could only ever result in an overall determination that the Subject Modification was not substantially the same development as Original Consent
  2. The critical elements ground: Council argued that the Subject Modification involved changing of critical elements of the Original Consent such that by reason of these changes, the Subject Modification could not remain substantially the same development
  3. The consequences ground: When comparing the qualitative differences between the Subject Modification against the Original Consent, Council argued that the Applicant’s town planning expert was not permitted to consider (and therefore the Court was not permitted to consider) the environmental consequences or impacts of the proposed modification, as that step arises at the stage of the merit assessment required by s.4.55(3) of the EPA Act, and not at the stage of determining the ‘substantially the same’ test in s.4.55(2)(a)

The Court’s findings and support for a balanced approach to the ‘substantially the same’ test in Realize Architecture (2)

In Realize Architecture (2), the Chief Judge of the Court held that the Council had not established any of the above grounds of appeal (at [6]) and ultimately dismissed the Council’s s.56A appeal – leaving the earlier Judgement of Realize Architecture (1) undisturbed.

In doing so, the Court expressly endorsed the ‘balanced’ approach that had been undertaken in Realize Architecture (1) to answer the ‘substantially the same’ test in s.4.55(2)(a) of the EPA Act, and went on to clarify that this balanced approach should be undertaken by consent authorities, with regard to the following simple 3 step formula (at [7]):

  1. Finding the primary facts: This first step involves identifying the respects in which the originally approved development is proposed to be modified. For example, these respects could include height, bulk, scale, floor space, open space and land use.
  2. Interpreting the law: This second step involves interpreting the words and phrases of the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act as to their meaning. In this sense, there is long established case law with respect to the earlier statutory provisions and the current statutory provision, that suggest ‘ways’ in which the relevant comparison might be The most commonly invoked ways have traditionally included the following:
  • Comparing the “quantitative” and “qualitative” differences between a proposed modified development against the original approved development (Moto Projects (No 2) Pty Ltd V North Sydney Council [1999] NSWLEC 280 (‘Moto Projects’) at [56]
  • Comparing the “material and essential features” (Moto Projects at [55] and [58] and Arrage v Inner West Council [2019] NSWLEC 85 (‘Arrage’) at [26]) or “critical elements” (The Satellite Group (Ultimo) Pty Ltd v Sydney City Council [1998] NSWLEC 244 (unreported 2 October 1998) at [29]) of the proposed modified development against the original approved development
  • Comparing the “consequences, such as the environmental impacts” (Moto Projects at [62] and Arrage at [28]) of carrying out the proposed modified development against the original approved development

Importantly – and we do wish to emphasise this for our readers – although the above ‘ways’ will often be instructive and helpful to identify the differences between a proposed modification application and the original development consent, they are not exhaustive, and they are certainly not mandatory. Chief Justice Preston expressly noted that s.4.55(2) of the EPA Actdoes not refer to “critical elements” or even “elements”, of the two developments” (at [38]) and that in relation to the task of identifying “the material and essential features of the originally approved and modified developments”, in fact s4.55(2) “does not demand such an enquiry” (at [41] and [42]).  This is because these traditional ways, even if helpful, do not displace the statutory test in s.4.55/4.56 of the EPA Act to consider whether the relevant developments are ‘substantially the same’ as one another, which does not demand that the comparison be undertaken in any particular way (Feldkirchen Pty Ltd v Development Implementation Pty Ltd [2022] NSWCA 227 at [112] and  Arrage at [27] and [28]).

  1. Categorising the facts found: This third (and final) step involves determining whether the facts found (determined as part of the first step) fall within or without the words and phrases of the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act (determined as part of the second step). Most critically, the Court described this final step at [30] as an “evaluative one” that “involves assigning relative significance or weight to the different facts and a balancing of the facts, as weighted. This categorisation can be an instinctive synthesis and not be articulated expressly” (our emphasis).

Implications – a ‘balanced’ approach to the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act

As mentioned at the outset of this article, we have noticed a trend in local Councils obsessively focusing on the ‘quantitative’ differences alone, between a proposed modification application and an original development consent when answering the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act. This hyper focus has most certainly resulted in refusals of modification applications with significantly less ‘differences’ than were supported and approved by the Court in Realize Architecture (1). The problem, it seems to us, is the failure to undertake a more holistic balancing of the relevant assessment criteria, as quantitative changes are only ever one piece of the proverbial puzzle.

We have also observed many local councils issuing early requests for modification applications to be withdrawn and instead for ‘fresh’ development applications to be lodged seeking consent for the totality of a development scheme, even though substantial parts of the originally approved development schemes are not proposed to be modified. This (bad) habit results in a more delays, more costs, and unnecessary duplication of assessment resources for both Applicants and local Councils, for example, local Councils are essentially asking themselves to re-assess the likely impacts of substantial parts of development schemes that have already been assessed and approved.

The Court’s decisions in Realize Architecture (1) and (2) are a refreshing reminder for local Councils that it is important not to get bogged down in the ‘quantitative’ (numerical) differences as they appear in isolation and that it is entirely acceptable for there to be large numeric differences approved through the modification pathways that exist in s.4.55/4.56 of the EPA Act upon taking a more holistic and balanced approach to the test.

Equally, the Court’s decisions in Realize Architecture (1) and (2) are a reminder that for the purpose of interpreting the words and phrases of the ‘substantially the same’ test in s.4.55/4.56 of the EPA Act as to their meaning, there is real freedom for Applicants / proponents and consent authorities to put forward whichever formula or test they consider to be most relevant and helpful. The decision is then one that can be an “instinctive” one, which “need not be articulated expressly” (Realize Architecture (2) at [30]).

The ways suggested by the historical authorities are without question excellent guidance and in most cases, they will be the most useful, however this leaves the door wide open for other creative ways that might also aid a consent authority to answer the substance of the question. For example, in Realize Architecture (1), the following creative ways were suggested by the Applicant to the Court to assist with approaching the ‘substantially the same’ test:

  • comparing the proposed modified building with the originally approved building by reference to side-by-side elevations (at [38] and [60])
  • adopting a ‘macro’ rather than ‘micro’ comparison noting the Court was considering a large scale development in contrast with a smaller scale development (e.g. dwelling house) (at [28], [39] and [42])
  • not undertaking a floor-by-floor comparison but instead going to a picture in 3 dimension to compare the proposed modified building with the originally approved building (at [59])
  • notionally picturing the development as originally approved and built and then notionally picturing the development as proposed to be modified as built – as if you were walking/driving around the site in the hypothetical sense and comparing the two (at [59])

Need further assistance?

If you need further assistance to determine whether your proposed development ought to be lodged as a modification application (or instead as a ‘fresh’ development application), we are ready and able to assist. We are very regularly asked to provide our opinion on this subject in a form that is suitable to be presented to local councils and various planning panels. Of course, we also specialise in development and modification appeals should any dispute arise on this topic needing resolution in the Court.

 

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

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    Planning & Environment

    Important and helpful Land and Environment Court rulings on s4.55/4.56 modification applications