By Anthony Whealy, Partner and Clare Collett, Special Counsel

The recent case of Big Property Pty Ltd v Randwick City Council [2021] (Big Property), followed swiftly by HPG Mosman Projects Pty Ltd v Mosman Municipal Council [2021] (HPG), both provide welcome guidance and flexibility in terms of how to properly assess the ‘desired future character’ of an area. Maintaining such ‘character’ is frequently referenced as an objective of development standards in LEPs, and is often cited by councils as a reason to refuse any cluse 4.6 variation request (for example to breach height or FSR controls). However the Big Property decision (together with other recent decisions referenced in this article)  is a strong reminder that exceedances of development standards such as height and FSR are often expressly permissible under clause 4.6, and that the desired future character of an area is subject to this – buildings can and will exceed planning controls, and so the ‘desired future character’ of an area is not as simple as slavishly pointing to development controls as being some absolute maximum envisaged for the entire future shape and form of an area.

The SJD Cases

The issue of desired future character and what this means for a development applications was considered in detail in the SJD cases by both Acting Commissioner Clay and Chief Justice Preston (SJD DB2 Pty Ltd v Woollahra Municipal Council [2020] NSWLEC 1112 and Woollahra Municipal Council v SJD DB2 Pty Limited [2020] NSWLEC 115 (SJD).  You can read our previous, detailed article on SJD here.

These cases involved an appeal against the refusal of development consent for the demolition of an existing building and construction of six-storey shoptop housing in Double Bay.  The proposal exceeded the height and FSR controls by approximately 40% and clause 4.6 variation requests were submitted with the development application.  An objective of both the height and FSR control was to ensure that buildings were compatible with the future desired character of the area.

A key issue in the proceedings was whether the proposal was consistent with the ‘desired future character’ of the area, a term which as undefined in the LEP itself (as is often the case).  The Applicant relied upon two recent approvals adjacent to the site which exceeded the current controls, to establish the desired future character of the part of Double Bay in which the Site sat.  Council’s position was that the approved adjacent developments did not reflect the desired future character.  Acting Commissioner Clay accepted the Applicant’s position and found that the adjacent buildings which also exceeded the height controls should be considered when determining desired future character.   Importantly, the Commissioner found that it is possible to meet the objectives of the height and FSR controls even if there is a breach of those controls.  Commissioner Clay also clearly supported the use of clause 4.6 requests and said as follows:

It should be noted cl4.6 of WLEP is as much a part of WLEP as the clauses with development standards.  Planning is not other than orderly simply because there is reliance on cl 4.6 for an appropriate planning outcome.

Council appealed against Commissioner Clay’s decision and Chief Justice Preston heard the appeal.  Council claimed that Commissioner Clay had erred in his construction of desired future character by failing to have regard to the relevant provisions of the Development Control Plan (DCP), taking into account the allegedly irrelevant consideration of adjacent developments that had been approved, and misconstruing the desired future character provisions in the DCP.

Chief Justice Preston considered in even more detail what desired future character means.  His Honour held that if the term ‘desired future character’ was limited to being strictly defined by and limited to numerical development standards (and the objectives of these standards) then it would be near impossible to find that a development which contravened a development standard was consistent with desired future character.  Clause 4.6 variation requests would inevitably be doomed to failure.  His Honour rejected such an approach.

Chief Justice Preston explicitly found that, in determining the desired future character, matters other than the development standard needed to be considered.  His Honour noted that other provisions of the local environmental plan and other approved development that contravenes the development standard are both relevant to determining desired future character.  His Honour disagreed with all of Council’s grounds of appeal in relation to desired future character.  Importantly, His Honour noted that Councils cannot define the future character that is referred to in a LEP by doing so in a DCP unless the LEP expressly refers to the DCP in the definition.  Therefore it is open to a developer to identify the desired future character in light of a range of factors, including other approved development, and the LEP provisions which of course allow variations to development standards, via clause 4.6.

The Big Property Case

The appropriate determination of desired future character was again in issue in the recent case of Big Property, a decision of Commissioner O’Neill which was handed down on 31 March 2021.  The Big Property case was an appeal against the refusal of a development application for alterations and additions to an approved residential flat building, including the provision of additional affordable rental housing units and the construction of an additional storey.

The proposal exceeded the height and floor space ratio development standards, and Council contended that the clause 4.6 request was not well founded because the proposal was incompatible with the local character of the area, primarily due to its bulk and scale.  In Big Property, the Applicant claimed that the height and FSR exceedances were a justified response to the provision of two additional affordable housing units.

In considering the clause 4.6 request and desired future character, Commissioner O’Neill held that the desired future character of an area is not determined solely by the development standards that control building envelopes for the area.  Commissioner O’Neill held that development standards for building envelopes are frequently generic standards which do not account for existing and approved development, site amalgamations, SEPP allowances, heritage issues or the nuances of an individual site.  The Commissioner expressly referenced SJD, and went on to hold that:

“The presumption that the development standards that control building envelopes determine the desired future character of an area is based upon a false notion that those building envelopes represent, or are derived from, a fixed three-dimensional masterplan of building envelopes for the area and the realisation of that masterplan will achieve the desired urban character. Although development standards for building envelopes are mostly based on comprehensive studies and strategic plans, they are frequently generic, as demonstrated by the large areas of a single colour representing a single standard on Local Environmental Plan maps, and they reflect the zoning map. As generic standards, they do not necessarily account for existing and approved development, site amalgamations, the location of heritage items or the nuances of an individual site. Nor can they account for provisions under other EPIs that incentivise particular development with GFA bonuses or other mechanisms that intensify development. All these factors push the ultimate contest for evaluating and determining a building envelope for a specific use on a site to the development application stage. The application of the compulsory provisions of cl 4.6 further erodes the relationship between numeric standards for building envelopes and the realised built character of a locality” [at44]

Commissioner O’Neill found that the exceedance of height/FSR standards due to the provision of affordable housing units was an environmental planning ground and thus the clause 4.6 request was a well-founded request.  Commissioner O’Neill also expressly referenced the fact that some State Environmental Planning Instruments, such as that for Affordable Rental Housing, ‘incentivise the provision by the private sector of in-fill affordable housing by providing additional GFA above the otherwise applicable development standards that determine the building envelope for a particular site’. This too must be factored into any consideration of what constitutes the ‘desired future character’ of an area.

The HPG decision

More recently, in May 2021, in the matter of HPG Mosman Projects Pty Ltd v Mosman Municipal Council [2021], judgement here. Commissioner O’Neill was required to determine an appeal relating to the partial retention of an existing contributory building in a heritage conservation area in Mosman, and the construction of a new four-storey shop top housing development. The Proposal exceeded the height development standard essentially by one storey (in part), principally to achieve the allowable gross floor area while retaining the important heritage fabric of the existing building.

The Council in this case again claimed that the clause 4.6 variation request must fail on the basis that the proposal could not meet the express objective for the height of buildings development standard to “ensure that buildings are compatible with the desired future character of the area in terms of building height and roof form and will produce a cohesive streetscape”.

In upholding the appeal, Commissioner O’Neill held at [57]:

“The desired future character of the locality can be evaluated by reference to matters other than the development standards that determine the building envelope for the site, including the existing development that forms the built context of the site (Woollahra Municipal Council v SJD DB2 Pty Limited [2020] NSWLEC 115 (SJD DB2) at [54]). The desired future character of an area is not determined and fixed by the applicable development standards for height and FSR, because they do not, alone, fix the realised building envelope for a site. The application of the compulsory provisions of cl 4.6 further erodes the relationship between numeric standards for building envelopes and the realised built character of a locality (SJD DB2 at [62]-[63]). Development standards that determine building envelopes can only contribute to shaping the character of the locality (SJD DB2 at [53]-[54] and [59]-[60]).

It was again also important that ‘desired future character’ was not defined in the LEP itself. Indeed, the Council sought to define the ‘desired future character’ by reference not even to a DCP, but to the ‘Mosman Local Housing Strategy’, a document which the Court noted ‘postdates’ the LEP, and could not therefore be relied upon to define terms used in the LEP.

What does this mean now?

Recent case law shows that ‘desired future character’ is determined by a range of factors including the LEP and the approved buildings neighbouring a development.  The fact that a development exceeds height and FSR standards cannot be used as a carte blanche for claiming that a development is inconsistent with the desired future character of the neighbourhood.  Applicants can clearly look at the surrounding site context to consider desired future character, and can assume that not all future development will comply with development standards.

What may change in the future?

The Department of Planning, Industry and Environment has developed a draft Local Character Clause which is proposed to be included in the Standard Instrument Local Environmental Plan.    The clause will allow councils to adopt a map overlay which identifies the boundaries of a local character area and requires councils to consider local character statements when addressing development applications.   The local character statement will address future desired character.  This standard clause was on exhibition from late 2020 until January 2021 but is not yet in force.  Furthermore, the preparation of a local character statement is optional and may not be a priority for some councils.

If a Council does adopt a local character statement, it is important this statement is considered when preparing a new development application as the proposed development will need to be consistent with the desired future character as outlined in that character statement.  Until such time as local character statements are commonplace, developers will have to make their own assessment of desired future local character based on the LEP and other approved developments.

In the meanwhile, town planners in particular (and those who prepare development application documents and clause 4.6 variation requests) should be familiar with and make reference to these important recent Land and Environment Court decisions.