Re S11a of the City Area Leases Ordinance 1936 (As Amended) and Re Applications By Morpath Pty Limited To Vary the Covenants In the Crown Lease of Blocks 8 and 9 of Section 43 Division of Turner [1987] ACTSC 76 (27 November 1987)

SUPREME COURT OF THE ACT

IN THE MATTER OF S.11A OF THE CITY AREA LEASES ORDINANCE 1936 (AS AMENDED) AND
IN THE MATTER OF APPLICATIONS BY MORPATH PTY. LIMITED TO VARY THE COVENANTS IN
THE CROWN LEASE OF BLOCKS 8 AND 9 OF SECTION 43 DIVISION OF TURNER
S.C. No. 1298 of 1984
S.C. No. 1299 of 1984
Town and Country Planning

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Morling J.(1)

CATCHWORDS

Town and Country Planning - Crown leases - applications to vary purpose clauses - s.11A City Area Leases Ordinance 1936 (A.C.T.) - private objectors - application supported by National Capital Development Commission - planning history of land - society's interest in the fullest use of the land - applications granted.

City Area Leases Ordinance 1936 (A.C.T.); s.11A

National Capital Development Commission Act 1957 (Cth); s.11, s.12

Morpath Pty. Limited v. A.C.T. Youth Accommodation Group Inc. & Ors.; Minister for Territories v. A.C.T. Youth Accommodation Group Inc. & Ors. (1987) 74 CLR 121

HEARING

CANBERRA
27:11:1987

Counsel for the applicant: Mr Tamberlin Q.C. with Mr Lunney instructed by Barker and Barker

Counsel for the Minister for Territories: Mr Simos Q.C. with Mr Curlewis instructed by The Australian Government Solicitor

Counsel for the A.C.T. Youth Accommodation Group Incorporated: Mr Nash instructed by Mr G. Masri

Counsel for the remaining objectors: Mr Hull instructed by Macphillamy Cummins & Gibson

ORDER

Applications granted.

Costs reserved.

DECISION

These are two applications by Morpath Pty Limited ("the applicant") which have been brought pursuant to s.11A of the City Area Leases Ordinance 1936 to vary the purposes clauses in Crown leases of Blocks 8 and 9, Section 43, Division of Turner. The leases presently restrict the use of the land "for residential purposes". The applications seek a variation of the purposes clauses so that the land may be used for one or more of the following purposes:

"(i) offices;

(ii) professional suites;

(iii) carparking;

(iv) single unit caretakers flat not exceeding
150 square metres in area;

PROVIDED ALWAYS THAT:

(v) the gross floor area of the building or
buildings on the said land shall not exceed
plot ratio of one to one. For the purpose
of this sub-clause gross floor area means the
gross area of the floor or floors of the
building or buildings measured from the
external faces of the external walls
excluding rooftop plantrooms and basements
used for carparking and housing mechanical
plant;

(vi) the lessee shall provide and maintain on site
carparking for sufficient cars to provide one
space for every 33 square metres of gross
floor area;

(vii) the building or buildings shall be three
storeys above ground level."

2. The applications initially were heard by Gallop J. who made orders dismissing them on 1 August 1986. An appeal against this decision was allowed by the Federal Court on 26 June 1987 (see 74 ALR 121) and the applications were remitted to this Court for rehearing.

3. Provision is made in the City Area Leases Ordinance for purpose clauses in leases to be changed. Section 11A of the Ordinance provides, in part, as follows:

"11A. (1) Notwithstanding anything contained
in this Ordinance, the Supreme Court of the Australian
Capital Territory may, subject to this section, on the
application of the lessee (in this section referred to
as the 'application for variation'), vary any
provision, covenant or condition of a lease in relation
to the purpose for which the land subject to the lease
may be used.

(2) No such variation shall be made -

(a) unless the Court is satisfied that there are such
circumstances existing as in the opinion of the
Court make it desirable to vary the provision,
covenant or condition in order that the reasonable
user of the land should not be impeded; or

(b) if, not later than seven days before the day for
hearing named in the notice of motion filed by the
applicant in pursuance of this section, a
certificate is filed by the Minister with the
Registrar of the Court station that, in his
opinion, the variation sought would be repugnant
to the principles for the time being governing the
construction and development of the City of
Canberra."

4. The Minister has not filed a statutory certificate pursuant to s.11A(2) (b) of the Ordinance relating to the proposed variation and it is common ground between all the parties that all the formalities required by the Ordinance have been complied with.

5. On the hearing of the applications the Minister for Territories appeared by counsel to support the orders sought by the applicant. A number of objectors, who had earlier been granted leave to be heard in opposition to the applications, appeared by counsel to oppose the making of the orders. In the result, I have been greatly assisted by counsel for all the parties in considering the issues which arise for consideration and in assessing the merits of the applications.

6. Block 9 is situated at the north-western corner of Northbourne Avenue and Gould Street, Turner, and Block 8 is the adjoining block to the north. Northbourne Avenue is the main highway giving access to the centre of Canberra from the north. The applicant has been the registered proprietor of the Crown leases of Lots 8 and 9 for some years. The history of the applicant's ownership of the blocks appears in the reasons given by Gallop J. and I need not further refer to it. Although it was the applicant's original intention to use the building which it wishes to erect on the land as a medical centre, it presently has no precise use of the building in mind. Present indications are that companies engaged in the computer industry are likely to be attracted as tenants to the proposed building, but the applications must be considered on the basis that the building, if erected, could be used for any one or more of a wide variety of office or professional purposes. The applications were heard on the basis that it was uncertain whether, if they succeeded, a single building would be erected on Blocks 8 and 9 or separate buildings would be erected on each block.

7. The development in the vicinity of the subject land is mixed. Immediately to the north of it and fronting Northbourne Avenue are three substantial three storey commercial buildings which have only just been completed. Further to the north of these buildings there is a mixture of medium and low density residential development. The opposite, or eastern side, of Northbourne Avenue is occupied by a variety of substantial commercial buildings including offices and motels. The area to the west of the subject land is occupied by good quality low density residential development. The houses in this area are well maintained and are set in pleasant gardens. To the south of the subject land is a very large parcel of land owned by the Commonwealth. Erected on this land is a complex of buildings known as "Havelock House". Until recent times this building has been used, on a temporary basis, by the police authorities. It is currently being converted into low cost residential accommodation for over 100 persons.

8. The subject land, in common with other land in Turner, has been the subject of planning proposals by the National Capital Development Commission ("the Commission"). The statutory functions of the Commission are "to undertake and carry out the planning, development and construction of the City of Canberra as the National Capital of the Commonwealth" (National Capital Development Commission Act 1957, s.11 (1). In February 1982 the Commission published, as a draft for discussion, a document entitled "Civic Centre. Policy Plan. Development Plan." ("the 1982 Turner Plan"). The subject land was included within Residential Area 2 in this plan. Residential Area 2 encompassed the land bounded by Northbourne Avenue, Gould Street, Moore Street and Girrahween Street. The objectives of the Commission's policy for this area were stated to be:

"To encourage the intensification of residential
densities in the vicinity of Civic, providing increased
opportunities for living in close proximity to the
employment nodes in Civic;

"To ensure that the redevelopment of this area for
multi-unit dwellings is consistent with the maintenance
of an acceptable standard of residential amenity for
existing residential development."

9. The 1982 Turner Plan stated that the Commission would normally support an application for the change of use of lands within the area to residential flat buildings. Included under a list of purposes for which an application for change of use would be assessed on individual merit were "boarding house, hotel, motel, public utility."

10. In February 1984 the Commission published a document entitled "Civic Centre Canberra". The purpose of the document was stated to be "to record the Commission's Policy Plan and Development Plan for Canberra's Civic Centre". This document was issued after a consideration of the public comment and discussion which had followed publication of the 1982 Turner Plan. The Civic Centre Canberra document referred to some areas of land, including the subject land, in the following terms:

"During the public consultation phase of the Draft
Policy Plan, suggestions were made that these areas
would be suitable for small-scale offices and
residential intensification.

"The Commission has considered these suggestions and has
released a draft proposal for public comment. Comments
will be considered and a policy determined."

11. The reference to the draft proposal was a reference to a document issued by the Commission in November 1983. This document was styled "Draft Policy Plan. Draft Development Plan" for a number of Sections in Turner. The subject land was designated in this document as being within Area 2 and it was stated that office/professional suites was a purpose for which a proposal for development or change of use would be supported. With respect to Area 2 it was stated:

"The main design objective is to provide a strong, low
rise built form edge to Northbourne Avenue similar in
design character to the low rise commercial buildings
on the opposite side of the Avenue. Buildings shall be
three storeys in height with external materials in the
white to light buff colour range. The set-back from
the front property boundary shall be ten metres."

12. In July 1984 the Commission published a document entitled "Metropolitan Canberra. Policy Plan. Development Plan." ("The 1984 Metropolitan Policy Plan"). The document was described in evidence by Mr John Gilchrist, who was the Director of Town Planning of the Commission 1983-1986, as "essentially the NCDC's Strategic Plan for Canberra". He said it provided an indication of the objective and principles underlying the policies of the Plan along with the environmental and town planning standards to be met. He also described the document as ". . . long range, providing a policy and development framework to guide the preparation of short-term, more detailed plans." The 1984 Metropolitan Policy Plan appears to deal with general planning issues and does not contain any provisions applying specifically to the subject land.

13. After public consultation and discussion of the November 1983 draft policy plan, the Commission in October 1984 published its policy plan ("the 1984 Turner Policy Plan") for part of Turner, including Lots 1-9. The 1984 Turner Policy Plan included the following statement:

"The main objective is to provide opportunities for the
development close to Civic of small-medium scale
offices while ensuring that new development on
Blocks 1-9 of Section 43 is related in form and
function to the existing medium scale commercial nature
of Northbourne Avenue.

Proposals for a change of use to "Office/Professional
Suite" will normally be supported subject to compliance
with the following criteria:

. Buildings in Section 43 Blocks 1-9 shall be
three storeys above ground level, while
buildings in Section 24 shall be a maximum of
three storeys above ground level.

. The maximum plot ratio shall be 1 : 1, subject
to all car parking generated by the development
being accommodated on-site, in conformity with
the Commission's prevailing standard. (Some
encroachment of basement car parking into the
front landscape zone may be considered.)

. All buildings shall be constructed of materials
in the white to light buff colour range.

. Continuous building facades shall not generally
occupy more than two blocks. Proposals to use
more than two blocks will be considered on
their merits.

. Buildings shall be set back ten metres from the
front street property boundary at Northbourne
Avenue, Moore Street and Barry Drive.

ACCESS AND PARKING

No vehicular access to Barry Drive will be permitted
from developments on Section 24.

Full car parking demand generated by a change of use
and/or redevelopment shall be accommodated on site
in confirmity with the Commission's prevailing
standard. The rate which represents this standard
may vary from time to time. The current rate is
specified in the Development Plan."

14. After making specific provision for a number of matters, the document went on to provide, in part, as follows:

"Car Parking shall be provided on-site in the ratio of
1 space per 33m2 of gross floor area.

Section 43:

. The third storey of buildings on Blocks 1-9
Section 43 shall be set back at least five
metres from the rear building line to prevent
the overlooking of adjacent houses.

. Plant rooms shall be set back at least five
metres from the front parapet.

. No amalgamation of blocks fronting Northbourne
Avenue with those fronting Moore Street will be
permitted. The lessee will be required to
construct a brick wall 1.8m high on the rear
boundary to the satisfaction of the Commission.

. In the rear landscape zone in Section 43,
eucalypt trees will be required that will
provide year round screening along the entire
width of the block . . ."

15. The 1984 Turner Policy Plan embodies the latest planning decisions made by the Commission affecting the subject land. This is not to say that the planning of Metropolitan Canberra has not been the subject of much discussion since October 1984. At the risk of over-simplification, it might be said that the discussion (so far as it directly affects the question whether the subject land should be used for commercial purposes) has centred around two issues; first, whether a policy of urban consolidation should be adopted so as to increase the residential density in existing suburbs; and secondly, whether the future increase in the work force of Civic will create public transport and traffic problems which are as yet unresolved. As late as May 1987 the Parliamentary Joint Committee on the Australian Capital Territory published a report on Metropolitan Canberra. The Committee proposed that the Commission and the Department of Territories implement an urban consolidation strategy with community consultation for the purpose of increasing residential density in existing suburbs. The Committee, at p. 56 of its report, expressed the view that a major way of achieving consolidation in existing areas would be through policies of redevelopment and provision of high quality medium density accommodation in inner areas of Canberra. It is plain that the subject area would qualify as being, in the Committee's view, suitable for medium density accommodation.

16. The Parliamentary Joint Committee's report does not have legislative status. As Mr Campbell, the Chief Planner of the Commission said in evidence, the report does not constitute or embody any policy adopted by the Commission or by the Minister. By way of contrast, the 1984 Turner Policy Plan embodies the Commission's views as to the proper planning of the subject land. It is relevant in this respect, to refer to s.12 of the National Capital Development Commission Act, which is in the following terms:

"12. (1) The Commission shall keep the Minister
informed of the decisions of the Commission with
respect to matters of policy in relation to the
performance of its functions.

(2) In the event of a difference of opinion
between the Minister and the Commission as to the
policy which should be followed by the Commission in
relation to any matter, the Minister and the Commission
shall endeavour to reach agreement.

(3) If the Minister and the Commission are unable
to reach agreement, the Governor-General may, by order,
determine the policy to be adopted by the Commission in
relation to the matter.

(4) The Commission shall thereupon give effect to
the policy determined by the order and shall, if the
order so requires, continue to give effect to that
policy while the order remains in operation."

17. The 1984 Turner Policy Plan is not the subject of any difference of opinion between the Minister and the Commission.

18. Before I turn to consider the merits of the subject applications it is desirable to refer to some of the observations made in the reasons given in the Federal Court for allowing the appeal against Gallop J.'s decision. Those observations provide valuable guidance in determining the approach which should be taken to the town planning proposals for the subject land. At 74 ALR 121 at p.139-140 Beaumont J. (with whom Fisher and Davies JJ. concurred) said:

"The structure of s.11A requires the Court to proceed in
two stages. The first stage is to inquire whether the
grounds for jurisdiction described in s.11A(2) are
satisfied. The Court must be satisfied that it is
desirable to vary the provision in order that the
reasonable user of the land should not be impeded. As
has been said, this inquiry will involve an inquiry
into the town planning aspects of the proposed new
user. Where, as here, the proposal accords with the
Commission's current plans for the land, it will
ordinarily follow that what is proposed should be
regarded as a reasonable use. If so, the grounds for
jurisdiction in s.11A(2) (a) will be made out."

And at p.140, his Honour said:

"Assuming the grounds for jurisdiction specified in
s.11A(2) are made out positively, in the case of
para.(a) and negatively in the case of para.(b), the
Court then proceeds to the second stage, i.e., the
question of the exercise of the wide statutory
discretion conferred by s.11A(1). As has been said,
this discretion should be exercised in the public
interest, balancing society's interest in the fullest
use of land against the interests of local occupants in
their amenities. Ordinarily, town planning
considerations will be prominent in any such inquiry.
Of course, the Court is not a planning authority. But
this is not to say that in the exercise of a judicial
discretion the Court should disregard town planning
considerations. On the contrary, any consideration of
the public interest requires that significant weight be
given to the current plans of the Commission as the
public body charged with that responsibility."

19. It is apparent from these dicta that the 1984 Turner Policy Plan is of central importance in determining whether the present restrictions in the leases of the subject land are impeding its reasonable development. Further, the plan should be given considerable weight in considering whether, in the public interest, the discretion conferred by s.11A(1) of the Ordinance should be exercised in favour of the applicant.

20. It is relevant to note that no firm decisions have as yet been made by the applicant as to the size or design of the building or buildings that would be erected on the land if the applications succeed. Thus, it is not possible to say whether one large building would be erected on both blocks, or a separate building on each block. Accordingly, the merits of the applications must be considered against the background of possible future development of the land. Even if the Court had before it plans of a specific building, it could not be sure that that building would be erected were the applications to succeed. Once the purpose clauses in the leases are varied, any building or buildings conforming with the clauses as varied could be erected on the land at any time during the balance of the terms of the leases. I therefore propose to consider the merits of the applications on the assumption that the applicant will seek to maximise use of the land by erecting a building or buildings to the maximum plot ratio permissible under the Commission's latest policy plan for Turner. The assumption that the land will be developed to the maximum extent permissible under that policy plan seems justified by the fact that the owners of Blocks 5, 6 and 7 in Section 43 have all erected buildings which take advantage of the maximum plot ratio.

21. Having considered all the evidence called by the parties and the submissions put to me I am satisfied that there are circumstances that make it desirable to vary the covenants in the leases in order that the reasonable user of Blocks 8 and 9 is not impeded. I am further of the opinion that the discretion conferred on this Court by s.11A(1) of the Ordinance should be exercised in the applicant's favour and that, accordingly, the applications should be approved. Since much of the evidence and argument is relevant to the separate questions which arise for consideration under both s.11A(1) and s.11(2)(a) it is convenient to consider both questions together.

22. The applications conform with the Commission's current planning proposals for the subject land. Those proposals contemplate that the land will be used for commercial purposes and that any buildings erected on it will be of three storeys. Moreover, the applicant's proposals for the land comply with the standards adopted by the Commission for the provision of off-street parking spaces for vehicles and for the maximum plot ratio of any building or buildings to be erected.

23. Further, the Commission's planning proposals for Blocks 1-9 in Section 43 have already been acted upon to a significant degree. The recent erection of the three substantial commercial buildings on Blocks 5, 6 and 7 have had a significant effect on the character of the western side of Northbourne Avenue in the vicinity of the subject land.

24. Whatever may have been the position prior to October 1984, when the final policy plan for Turner was adopted, there is now a very strong case indeed for permitting the subject land to be used as the site of three storey commercial buildings. Commercial buildings on the land would conform with the existing commercial buildings recently erected to the north and would not be out of character with the commercial buildings on the opposite side of Northbourne Avenue. Moreover, the erection of a well designed three storey commercial building on the subject land would conform with the Commission's proposal that Northbourne Avenue should become a prestigious boulevard giving access to the city.

25. The objectors raised a number of objections to the applications. It was submitted that to permit the use of the land for commercial purposes would not accord with sound town planning principles and would not be consistent with the 1984 Metropolitan Policy Plan. It was argued that commercial development of the land should not be permitted until such time as measures have been taken to solve the traffic and car parking problems being experienced in Civic. These problems, so it was said, are becoming worse. It was put that if commercial buildings are built on the subject site, this will result in the movement of more vehicles into and through Civic with consequent worsening of the existing traffic problems.

26. There is considerable evidence that the Commission is aware of, and implementing proposals to alleviate, these problems. Substantial provision is being made to meet the need for additional car parking facilities in the area. It is unnecessary to refer to this evidence in any detail. I am satisfied from the evidence of Mr Campbell who is currently the Commission's chief planner, that the Commission does not propose to allow a situation to develop in which there will be a substantial increase in the Civic work force without the provision of the necessary infra-structure of public works and transport facilities to serve the needs of such an increased work force. This is not to say that there may be some time lag in the provision of such services. Indeed, Mr Campbell said that it was commonly the case that public facilities are not provided by public authorities until the need for them actually arises.

27. I do not think that there is anything in the 1984 Metropolitan Policy Plan which is inconsistent with the development of the subject land for commercial purposes. It is true, as Mr Gilchrist said, that this plan is a strategic plan for Canberra. But it is plain from its terms that it does not purport to determine the planning of the subject land. It contemplates the preparation of more detailed development plans for parts of the metropolitan area. It is not to be assumed that the Commission did not have in mind the Draft Development Plan for Turner which it issued in November 1983 and its Civic Centre Canberra document which it issued in February 1984 when, in July 1984, it published the Metropolitan Policy Plan. I think it would be quite wrong to assume that the Commission intended the Metropolitan Plan to negate the more specific planning proposals which it had issued for Turner. The 1984 Turner Policy Plan is complementary to, and not inconsistent with, the Metropolitan Policy Plan.

28. In my opinion a very strong case now exists for permitting the use of the land for commercial purposes. Northbourne Avenue has an annual average daily traffic flow of about 33,000 vehicles. The noise and other environmental effects of such traffic make the subject land far less attractive for residential development than other land which is not similarly affected. Land with frontage to a major traffic artery is commonly zoned for commercial purposes, no doubt because of its unsuitability for many other forms of development, including residential. Having regard to the existing commercial development on both sides of Northbourne Avenue, the Commission's proposal that the subject land be developed for commercial purposes has a great deal of merit.

29. It was argued that the erection of commercial buildings on the land would not be in conformity with the urban consolidation strategy proposed by the Parliamentary Joint Committee. As I have already observed, the Committee's report does not have any legislative status. Even if it had, there would be no basis for rejecting the applications because of any apprehension that the Joint Committee's proposals would thereby be thwarted. There is much land in Canberra which could be redeveloped with medium or high density residential buildings. The subject land is not required for the implementation of the Committee's proposals, although it does have some characteristics which would make it suitable for some form of residential development. But there is much other land which has the same characteristics and whose residential amenity is not adversely affected by the commercial development and heavy traffic flow along Northbourne Avenue.

30. It was further submitted that there is much on-street parking of vehicles in the vicinity of the subject land and that the erection of further commercial buildings will worsen the existing situation. There is no doubt that Gould, Moore and other streets in the area are severely affected by the on-street parking of vehicles owned by persons who work in Civic. However, I agree with the opinion expressed by Mr Campbell that this is a problem which can only be overcome if steps are taken by the appropriate authorities to prohibit long term parking in these streets. He expressed the opinion, with which I also agree, that the erection of commercial buildings on the subject land would not of itself worsen the existing situation.

31. The applications conform with the Commission's standards for the provision of on-site car parking facilities. Nevertheless, it was submitted on behalf of the objectors that, if the applications are granted, a condition should be imposed that only vehicles belonging to tenants or occupants of the buildings on the land should be permitted to park on it. It was said that there is a tendency for tenants not to acquire parking rights for all their employees, with the consequence that the owners of buildings sometimes grant parking rights to persons other than tenants or their employees.

32. I have given serious consideration to imposing a condition of the kind sought by the objectors, but I have come to the conclusion that there is insufficient warrant for doing so. It is not a condition which the Commission has imposed on any other developer. More importantly, I do not think that imposition of the condition would achieve any useful purpose. I think it is likely that parking spaces on the subject land would be occupied by tenants or occupants of buildings erected on the land itself. But even if some of the parking spaces are occupied by cars belonging to persons working in adjoining buildings, this would not necessarily be a bad thing, since such cars would presumably otherwise be parked in the surrounding streets. In the unlikely event of all the car parking spaces not being utilized by persons working in buildings on the land, I can see no real objection to permission being granted for other vehicles to be parked in the unused spaces.

33. Counsel for the A.C.T. Youth Accommodation Group also submitted that the need for further residential accommodation in the Australian Capital Territory demanded that society's interest in the fullest use of the land be met by retaining its use for residential purposes. In particular, it was argued that there was a shortage of low cost accommodation which would be exacerbated if the applications were granted. He submitted that if the subject land were used for medium cost and density residential accommodation, this would tend to free up the lower end of the market via what he described as a "trickle down" effect.

34. There is no evidence to suggest that a public authority has any interest in acquiring the land for public housing. Even if a private residential building were erected on the land, the consequential effect on the availability of low cost housing in the Territory would be so tenuous and minimal as not to justify rejection of the application on such grounds.

35. Not unnaturally the objectors who live in Moore Street would prefer that commercial buildings be not erected on the subject land. They do not wish their homes to be overlooked by persons working in such buildings. I understand their attitude and sympathize with it. Nevertheless it seems almost inevitable that if the present applications fail, multi-storey buildings of some kind, probably residential, would be erected on the land. Although the objectors said that they would prefer to be overlooked by persons living in residential buildings than by workers in commercial buildings, this view would not be shared by many people. I would have thought that the objectors' loss of privacy would be greater, particularly at weekends, if a three (or even two) storey residential building were to be erected on the land. Giving full weight to the interests of the local residents I do not think they outweigh the public interest in the fullest use of the land consistent with the Commission's planning proposals.

36. I have dealt only with the more substantial of the objections raised against the applications. Neither they nor a number of other less significant objections which I have considered justify the rejection of the applications. In my opinion, both applications should be granted. I will hear the parties on the question of costs and on the form of the orders which should be made.