Re of Section 11a of the City Area Leases Ordinance 1936; and Re An Application By Pongara Holdings Pty Limited To Vary the Convent In Crown Lease of Block [1988] ACTSC 45 (26 July 1988)

SUPREME COURT OF THE ACT

IN THE MATTER OF of Section 11A of the City Area leases Ordinance 1936; AND IN
THE MATTER of an Application by PONGARA HOLDINGS PTY. LIMITED to vary the
convent in Crown Lease of Block 5 Section 21 Division of Braddon in relation
to the purpose for which the said Block may be used
S.C. No. 1522 of 1987
Town and Country Planning

COURT

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

CATCHWORDS

Town and Country Planning - City Area Leases Ordinance 1936 - application for variation of purpose clause of lease from Commonwealth under s.11A - principles applicable - whether proposed change of use to commercial use is a reasonable use - exercise of court's discretion conferred by s.11A - whether amenity of local residents adversely affected - question of "planning bliqht" - weight to be given to fact that current use supported by recent NCDC policy plans.

Morpath Pty. Ltd. v. ACT Youth Accommodation Group Inc. and Others (1987) 74 ALR 121

HEARING

CANBERRA
26:7:1988

ORDER

Provisionally the Crown Lease of Block 5 Section 21 ,

Division of Braddon being the whole of the land
contained in Certificate of Title Volume 697 Folio 90
(formerly Crown Lease Volume 24 Folio 2324) be varied
by the deletion of Clause l(e) of the said Crown Lease
in relation to the purpose for which the land subject
to the lease may be used and the substitution of the
following clause:

"To use the said land for one or more of the following
purposes:

(a) offices

(b) professional suites

(c) carparking

PROVIDED ALWAYS THAT

1. The gross floor area of the building or buildings
on the land shall not exceed 460 square metres.

2. Carparking shall be provided and maintained
sufficient to accommodate one vehicle per 26
square metres of gross floor area.

3. The maximum height of the building or buildings
shall be two storeys."

2. There be no order as to costs.

DECISION

In this application Pongara Holdings Pty. Ltd. (the applicant) applies for an order under s.11A of the City Area Leases Ordinance 1936 (the Ordinance) approving the variation of the purposes clause of a lease to the applicant from the Commonwealth of land situated at block 5 section 21 Braddon. The lease was granted by the Commonwealth for a period of ninety-nine years from 23 August 1951. The applicant became the registered proprietor of the remainder of the term on 3 November 1987. The existing purposes clause is "for residential purposes only". The change sought is "for the purposes of offices/professional suites/carparking". The land is situated in Torrens Street, Braddon on the western side and about half way between Girrahween and Elouera Streets. Those two latter streets run roughly east and west. Torrens Street extends from Cooyona Street in the south and proceeding north intersects with Elouera Street, then with Girrahween Street, before bisectinq Haig Park. The western side of Torrens Street between Girrahween Street and Cooyong Street, including section 21 blocks 1-12 is located on the edge of what is termed by the planners as the "frame" of the "core" commercial centre of Civic. The commercial centre is taken to be the area roughly hexagonal in shape, deriving from the original Burley Griffin design and bounded, running clockwise, by Cooyong Street, Ballumbir Street, Coranderrk Street, Parkes Way, Acton and Barry Drive.

2. The Minister has not filed a certificate pursuant to s.11A(2)(b) stating that in his opinion the variation sought is repuqnant to the principles governing the construction and development of Canberra. Counsel appearing for the Minister indicated that he did not wish to be heard and withdrew from the hearing. Leave was granted pursuant to s.11A(6) to Mr John McMillan to object to the application. A number of local residents furnished affidavits in support of Mr McMillan's objection, but did not seek to be heard in their own right.

3. On the land in question there is a single storey, red brick detached house, erected some time in the 1920s. The rest of the buildings erected in section 21 blocks 1-12 are detached residential buildings of a similar age and style. Those block numbers run from north to south. In Torrens Street there are twelve blocks in section 21 and eleven blocks in section 29. Those blocks in section 29 are between Elouera Street and Cooyong Street. The subject land is divided at the rear from land which fronts Lonsdale Street. Blocks 13-21 of section 21 are in Lonsdale Street and the rear of those blocks join the rear of blocks 1-12. Lonsdale Street is described as a mixed service trade and industrial area. One building immediately behind the land in question and with a Lonsdale Street frontage is used for the purposes of a bicycle shop. Another contains a nightclub. Lot 4 of section 21, which joins the subject site on the northern side, has been the subject of an order to vary the purposes clause to provide "for office and professional suite purposes". The application was made by a company called Spy-glass (No. 9) Pty. Ltd. No objections were raised and the application was granted by provisional order of Gallon J. on 4 December 1987. However, the building on that land appears still to be subject to residential use only.

4. Block 6, which is immediately to the south of the subject land, has been the subject of an approval under s.10 of the Ordinance and is currently used both for the purpose of a residence and the carrying on of the business of valuer by the resident. That resident is a director of the applicant company and, not surprisingly, does not oppose the application. Block 7, which is immediately south again, is the subject of an application similar to the one currently before the Court but which has been delayed pending the outcome of the present proceedings.

5. On the eastern side of Torrens Street between Girrahween Street and Elouera Street is section 22. Mr. McMillan, the objector, has been the lessee from the Commonwealth of block 3 in section 22 since 1979. He resides there with his family.

6. It is the intention of the applicant if the proposed variation is approved, to demolish the existing building and to replace it with a larger two-storey building from which the applicant can carry out its business of providing financial and investment advice to the public. At the present time the applicant carries on that business from other premises in the Civic area.

7. It is necessary to say something about the history and nature of section 21. These matters are the subject of published proposals of the National Capital Development Commission (NCDC) and in particular the Policy Plan Development Plan for Civic Centre, Canberra, of February 1984 (the Green Book) and the further draft Policy Plan Implementation Plan for the Civic Centre, Canberra, of November 1987 (the Grey Book), both of which relate to the Civic Centre generally. There is also the draft Policy Plan Draft Development Plan of November 1983 and the Policy Plan Development Plan of September 1986 both of which relate particularly to section 21 blocks 1-12.

8. In the draft Policy Plan Development Plan for the Civic Centre of February 1982 the area taken up by section 21 blocks 1-12 was clearly regarded by the NCDC as within but on the edge of the Civic Centre. The NCDC's objective was stated to be the maintenance of acceptable standards of residential amenity. The policy was stated to be development through a mix of dwelling houses and medium density dwellings of one or two storeys. By November 1983 a change of attitude appears to have occurred. Public comments were invited on a new draft Policy Plan Development Plan confined to section 21 blocks 1-12 which gave reasons for permitting those blocks "also to be developed for small I-scale office purposes"

9. In February 1984 the Green Book stated that the policy for section 21 blocks 1-12 was to confirm the current use until consideration had been given to public comment made in response to the draft Policy Plan Development Plan. The Civic Centre Policy Plan appearing on p 12 of the Green Book on the face of it appears to show that section 21 blocks 1-12 was left out of consideration for the purposes of that Plan. Section 21 blocks 1-12 may be seen to have been treated at that stage of its history as an exceptional area, neither part of the Civic Centre, nor quite out of it.

10. After receiving public comments on the November 1983 proposals and publishing a response, the NCDC brought down its Policy Plan Development Plan of September 1986. These proposals specified the purposes for which approval for development or a change of use would normally be supported by the NCDC. These proposals were as follows:

"LAND USE

The land uses for the area are to be as follows:
Medium Density or Standard Residential Dwellings

Redevelopment of one or any number of amalqamated blocks will be

permitted.

Offices and Professional Suites

This will be permitted in two forms, i.e.:

(a) Use of the existing standard residential
dwelling for office purposes;

(b) Redevelopment of the site, or

(c) Any combination of these.

The maximum permitted blot ratio for offices and
standard residentials shall be 0.4:1. No
amalgamation of blocks shall he permitted."

11. It was further stated that "the overall design objective is to retain the existing quality of the streetscape of Torrens Street, which is characterised by the mature Pin Oaks in the landscaped areas of the verge and the front gardens of the existing houses". Further guidelines were land down relating to landscaping, driveways, carparking and the like. It was also stated that a lessee who wished to develop the land would be required to construct a brick wall 1.8 metres high on the rear boundary to the satisfaction of the Commission and no access of any kind would be allowed across that boundary to adjoining service trades uses fronting Lonsdale Street.

12. The matter of proposed future uses for section 21 blocks 1-12 was taken up in the Grey Book of November 1987:

"The main objective of the land use policies for
Torrens Street, section 29 blocks 1-8 and 10 and
11 and section 21 blocks 1-12 is to allow small
scale offices and residential development in
close proximity to the central business
district."

13. The Grey Book confirmed that the Prior Policy Plan Development Plan of September 1986 remained the authoritative statement of land use policy and that in summary the land use activities permitted in each area were "offices/professional suites" and "residential".

14. In its discussion of Major Issues and Policy Directions, the Grey Book makes specific reference to the part of Braddon bounded by Northbourne Avenue, Haig park, Torrens Street and Cooyong Street ("the frame"). The area is stated to have "functional and physical links with the CBD (central business district) and has three distinct components, namely the mixed use area, Northbourne Avenue and Torrens Street". In relation to the mixed use area (Lonsdale Street) the Grey Book raises the question whether the mixed development should include residential development and whether the commercial areas of Braddon can be successfully interrelated with adjacent residential areas In relation to Torrens Street and specifically section 21 blocks 1-12 and section 29 the Grey Book repeats that policy plans have already been published to permit small scale offices and/or residential intensification and that those policies are effective in allowing small scale office developments close to the CBD and it is not intended to change them.

15. The diagrams of the Civic area both in the Green Book and the Grey Book indicate the way in which the concept of the Civic Centre of Canberra has undergone change over the years. Basic to the concept, however, is the Burley Griffin hexagon to which I have already made reference and which constitutes the core. In the 1984 policy clan in the Green Book, however, there is superimposed on to the core the frame adjacent to the core on the northeast. Significantly, the frame includes the whole of the area bounded by Girrahween Street, Torrens Street, Cooyong Street and Northborne Avenue but at that stage with the sole and outstanding exception of section 21 blocks 1-12. By November 1987 the Civic Centre Draft Policy Plan shown in the Grey Book at p77 shows a substantial enlarged frame. It now extends from both sides of Northbourne Avenue in an east west direction. It is still bounded at the north by Girrahween street and the natural barrier of Haig Park. It extends westward from Northbourne Avenue until it is bounded on the west by Watson Street in Turner. It is still bounded on the east by Torrens Street, Braddon, but significantly includes section 21 blocks 1-12. The land in question is now regarded by the NCDC as being on the very edge of the Civic Centre but within it. It is Torrens Street itself which now marks the boundary between the Civic Centre and the residential areas in Braddon. One of the basic objections raised by Mr McMillan is the shifting, in effect, of the Civic area boundary from the rear of section 21 blocks 1-12 to Torrens Street itself. Conversely, the applicant contends that the shifting of the boundary is one of the planning virtues of the present NCDC proposals.

16. Section 22, where Mr. McMillan resides, is not directly the subject of the November 1987 plans which are set out in the Grey Book. It is, however, the subject of a separate Policy Plan which was published in December 1984. That Policy Plan designates the area as being for standard residential use only.

17. To the south of the subject block and also facing Torrens Street is part of section 29, an area also designated by the NCDC as being "for small scale offices and residential development" Block 1, which is on the south western corner of the intersection of Elouera Street, and block 2 adjoining immediately south, remain detached dwellings. Block 1 sold recently for a very high price. All other blocks in Torrens Street in section 29 have been developed for commercial purposes and are occupied by recently erected two-storey buildings. None has been the subject of residential development Block 3 is occupied by a computer company, block 4 by a firm of solicitors. Government organizations occupy blocks 5 and k as well as blocks 7, 8 and 11. The new buildings, with the exception of one, are said to have been designed to suggest the former residential character of section 29 and are "constructed of materials compatible in appearance with existing houses and have pitched and tiled roofs" as laid down by the NCDC policy plan. The reference to "existing houses" is ironic, because there are only two left.

18. In Turner in the areas west of Northbourne Avenue and south of Girrahween Street there has been substantial commercial development. What has happened in that area and is likely to happen there was the subject of attention in the hearing of the present application, it being contended that the Turner experience would shed some light upon what is likely to happen in Torrens Street and Braddon.

19. The case falls to be decided upon the principles laid down in the majority judgment in the decision of the Full Court of the Federal Court of Australia in Morpath Pty. Ltd. v. ACT Youth Accommodation Group Inc. and Others (1987) 74 ALR 121. According to Beaumont J. (with whom Fisher and Davies JJ agreed) the correct procedure and approach is as follows (p 139):

"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. Where the Commission has no current
clan or where what is proposed does not conform
with the Commission's plan, the question still
remains for the Court to decide whether the
proposal is "reasonable" in the sense previously
explained. The next inquiry is whether a
certificate of the kind described in s.11A(2)(b)
has been filed. This is a simple question of
fact as to the existence or not of the statutory
certificate. It does not permit or require the
Court to embark upon an inquiry as to whether the
proposal would be "repugnant to the principles
for the time being governing the construction and
development of the City of Canberra".

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,
l.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. There is a
clear distinction between, on the one hand,
asking the Court to act as a planning authority
and, on the other, entitling or requiring the
Court to take planning material into account in
the exercise of its judicial functions under
s.11A (see Preston and Newsom op. cit. at
p 212). Moreover, in balancing the public
interest in the full use of land against the
local interest in the amenities, it will be
appropriate for the Court to consider whether it
is proper to permit the variation to proceed but
upon the condition that compensation is paid to
those injuriously affected (see s.11A(8)(b)."

20. I think it is necessary to deal only briefly with what Beaumont J. has called the jurisdictional question under s.11A(2). At pages 137-138 of Morpath, his Honour states that it is not necessary for the application to have to show that the land would be sterilized unless the restriction were lifted and that the ground for jurisdiction stipulated in s.11A(2)(a) will be made out where the applicant can joint to the existence of a reasonable use of the land which is prohibited fly the restrictive provision. Furthermore, his Honour indicated at p 139 that the fact that the proposed development and change of use conforms with the published plans of the NCDC, is a powerful consideration in favour of the conclusion that the present restriction is impeding that reasonable or proper development. The proposed change of use to "offices/professional suites/ carparking" is within the variety of uses supported by the NCDC plans and policies and is hence a reasonable use. The Minister has not filed a certificate under s.11A(2)(b). The Court therefore has jurisdiction to make the order sought.

21. I turn now to whether the Court should exercise its discretion under s.11A(1 ) in favour of the applicant. As Beaumont J. has remarked, that discretion is conferred in unlimited terms, it is unconfined except insofar as it is affected by limitations to be derived from the context and scope and purpose of the Ordinance, and the Ordinance requires the discretion to be exercised having due regard to the public interest in the fullest use of land weighed against the interests of adjoining occupants in the local amenities.

22. In order to decide the ultimate discretionary question I shall refer to some of the evidence. I have already referred to some of the evidence contained in the published policies and plans of the NCDC.

23. The main witness called in support of the application was Sonja Svetlana Lyneham, a town planner, of Vaucluse New South Wales. Her approach appeared to be based upon the proposition that, in the long term, development should follow the demands of the commercial market, subject to that development taking place within prescribed town planning guidelines designed to protect the amenity of the neighbourhood. In summary, Ms. Lyneham accepted that there was a demand for small scale business and professional office space in the Civic area. The demand is such that, unless the supply increases, the cost of such accommodation will increase to the extent that such activities will not be able to be pursued profitably in the Civic area. Ms. Lyneham further saw the effect of such development, and in particular of the precise proposal of the applicant if carried out within the parameters of the NCDC Policy Plan Development Plan, as having minimal deleterious effect on the residential amenity of the rest of the Braddon area, including the eastern side of Torrens Street. She took into account that the projection of the NCDC is that there will be a virtual doubling of office floor space within the city area from 260,000m2 in 1986 to 470,000m2 by 1995. She regarded the development that has already taken place in section 29 as reflective of the vigourous demand for office space in the Braddon area. She considered that allowing such development in section 21 blocks 1-12 would provide space for small scale business and professional enterprises which were not able to afford the higher rents in the central business district. I interpolate that in this regard the development in section 29 further south in Torrens Street has, with one exception, not been taken up by small scale business concerns. Most blocks are occupied by government departments on sub-leases, the head lease in all cases being from the Commonwealth to limited companies The exception is the building occupied by a firm of solicitors.

24. Ms Lyneham was also of the opinion that an important factor in the present case is the need to shift the boundary of the frame area of Braddon in order to accommodate the expansion of small scale commercial activity. She stated that the difficult question of land uses along the boundary edges and in transitional zones does not arise to the same degree in other major metropolitan or urban areas throughout Australia. Presumably because of historical factors, frame areas are typified in other Australian cities by a mixture of urban land uses which highlight the transitional nature of such areas. Ms Lyneham said that the notion of transitional and border zones which permit both office and residential development is considered to have substantial town planning merit, the chief reason being that the impact upon adjoining residential areas is lessened.

25. Ms Lyneham further stated that the November 1983 draft Policy Plan Development Plan recognized, amongst other things, the ability of small scale office development to co-exist within one locality with medium density townhouse, residential flat and standard residential accommodation. She concludes as follows:

"The juxtapositioning of such uses does not
generate significant adverse third party effects
in a surrounding locality if such developments
are governed by appropriate bulk, height,
density, carparking and other provisions as is
the case in solely residential areas. Hence, the
policy to allow a mix of small-scale office with
medium density townhouse, residential flat and
standard residential development accords with
sound planning practice."

26. Ms Lyneham went on to examine the factors in the present case which relate to height, carparking and so forth and concluded that the adverse impact on the residential areas adjoining section 21 blocks 1-12, if any, was so slight as not to be outweighed by the capacity of commercial market forces (within planning guidelines) to determine what she called "the highest and best use of subject sites within that locality".

27. Ms Lyneham concludes that the NCDC proposals resolve a difficult issue relating to uses to he permitted in a dynamic transitional zone close to Civic Centre adjoining mixed service industrial and residential land and across the road from an exclusively residential area. Furthermore she concludes that the use and development proposed by the applicant for small scale professional offices with its attendant carparking and landscaping enhances rather than detracts from the amenity in the locality.

28. Mr Stephen Edward Wilkinson, a qualified valuer, supplied a report and gave evidence dealing with some joints raised in Mr McMillan's grounds of objection. One of those contentions was that a financial incentive will be provided to persons to purchase properties across the road in section 22 with a view to future development of those properties for commercial purposes. As I understand his evidence, Mr. Wilkinson did not disagree with this contention. He furnished some figures indicating the sort of increases which rate payers have had to pay in Braddon over recent years. Increases in rates appear to have been in the order of one quarter to one third in that period whereas the increases in unimproved value appear to have been in the order of two to three times. Mr Wilkinson disagreed with the suggestion that the market value of the houses on the eastern side of Torrens Street would be likely to fall in the event of commercial development taking place. He compared similar developments in Turner and Griffith where residential values have increased on sites adjacent to or very close to areas which were formerly residential but on which commercial development has been permitted.

29. I shall return to this aspect of the evidence in a moment.

30. Mr Peter Twiney, a consultant traffic engineer, gave evidence as to the likely effect of the applicant's proposals upon the traffic in Torrens Street. During the morning peak hour Torrens Street carries 620 vehicles and in the evening peak hour 650 vehicles. According to Mr Twiney the leak hour vehicle trip volume generated by proposed development would be 25 vehicles per hour, representing a four percent increase. He concluded that the environmental effects of the increased traffic flow would be negligible. That evidence has not been effectively challenged.

31. The applicant also relied upon the evidence of Mr Phillip Henry McMaster, an architect, who designed the proposed building. Mr McMaster said that the design meets NCDC requirements regarding parking, landscaping, plot ratio and the like. Mr McMaster also said that the design of the building is in accordance with the character of the buildings in the neighbourhood. However, I tend to think that, from the point of view of the lay observer, the architectural style is similar not so much to the 1920s building intended to be replaced and the other houses in Torrens Street but to the newly constructed buildings (with the exception of one) further south in Torrens Street in section 29.

32. Mr Peter Doust Graham, a director of the applicant company, gave evidence as to the nature of the company s business and of the activities to be conducted on the developed site. At the present time the existing house is sublet for residential purposes. The company is in the business of providing financial advice and services, and carries on that business at the present time in the Law Society Building in London Circuit. About twenty-two or twenty-three persons would be expected to be employed on the developed site. Space is to be provided for seventeen car parking spaces. The proposed building is two storeys, but is unlikely to cast appreciable shadow upon the adjoining premises. Mr Graham was somewhat uncertain as to the exact identity of the intended occupant It is possible that the premises would be sublet to an associated company. Nevertheless, I am satisfied that the application is a bona fide one and that the applicant either directly or through an associated company, intends to carry out the development proposed, by the construction of the building designed for it and for the purposes already described.

33. I turn now to the evidence given on behalf of the objector.

34. Mr McMillan's house is at block 3 section 22 immediately opposite block 9 of section 21 and about one hundred metres from the subject premises, block S. He and his wife are both lessees from the Commonwealth and have been so since about February 1979. He entered into the lease with the expectation that the house, which appears to have been erected at about the same time as the house on the subject land, could be occupied for residential purposes indefinitely. He and his wife have carried out substantial renovations and sympathetic extensions to the house and the latter would, I think, be regarded by most people as most attractive. In his affidavit of 12 January 1988, Mr McMillan raises a number of objections to the application, not all of which have to be dealt with in detail. Some of them beg the question, for instance, the contention that the application will create an undesirable and incompatible mixture of commercial and residential properties in the same street and in close proximity to each other. Others such as the objection to the likely increase in traffic have to dive way to the expert evidence to which I have already referred. Others, such as the argument that the "visual amenity" will be impaired are based on factors so subjective that it is very difficult to assess them, although they have to be taken into account.

35. Mr McMillan also has an understandable apprehension that once commercial development is permitted in section 21, blocks 1-12 the commercial activities that actually take place may not be kept within NCDC guidelines or indeed within the terms of the head lease from the Commonwealth. He cites an example in 1983-1984 when block 9, which is opposite his house, was used for the purposes of a car yard carrying on business in Lonsdale Street on premises immediately adjoining. It appears that the relevant authority took no steps to curb this illegal activity, or that, whatever stems were taken, they were ineffective. In the end the matter was the subject of a complaint to the Ombudsman, who concluded that the selection by the Department of the Capital Territory of cases for prosecution for breach of lease purposes clause was haphazard. The Ombudsman made various recommendations, including a recommendation that the Department establish clear objective and well justified criteria for determining priorities for investigation into breaches of purposes clauses and for selecting cases in which to take legal proceedings.

36. Another objection raised by Mr McMillan was that the security of the residential buildings in Torrens Street would be jeopardised by commercial development. I do not think that this objection has been made out. Ms Lyneham gave evidence that the security of the area would in fact be enhanced, but I doubt whether her qualifications as a town planner would enable her to speak with any great authority on this aspect. In any event, her experience on this aspect seems to be confined to activities in the eastern suburbs of Sydney.

37. The substantial objections made by Mr McMillan are summarised in the following paragraphs taken from paragraph 4 of his affidavit.

"(e)By endangering the residential character of
section 22 Braddon, by providing a financial
incentive to people to purchase properties
in section 22 with a view to future
redevelopment of those properties for
commercial purposes;

(f) By endangering the residential quality of
section 22 Braddon, by reason of the
circumstance that the lessees of properties
in section 22 Braddon who are not resident
in those properties are likely to allow
those properties to fall into a state of
dilapidation in the belief that future
redevelopment of those properties for
commercial purposes may thereby be more
likely to occur;"

38. It was submitted by Mr McMillan that these expectations, based on a phenomenon he called "creeping blight" or "planning blight", were reasonable having regard to what has already taken place in sections 21, 22 and 29, but he did not call any expert evidence in support of the argument The argument was but to Ms. Lyneham in cross- examination and she seemed disinclined to accept it in any way. In fact she took a stand joint which appears to be directly contrary, namely that an owner resident in a residential area where land values are increasing because of commercial development in adjacent or nearby areas is "in the happy position of being able to stay there and argue on the one hand that his value or amenity will be adversely affected and at the same time argue that he will have to pay higher rates". Ms Lyneham seemed unwilling to accept the idea that the attractiveness of land for residential purposes could fall whilst at the same time its commercial value was increasing. She said, "unless you are very liquid, a philosophy of holding land without having a reasonable rate of return on it, for the sake of holding it, and the long term capital gain does not make economic sense"

39. On the other hand, the answers given by Mr Wilkinson, the valuer, to questions but in cross-examination went a long way to conceding Mr McMillan's argument. On this aspect I accept the evidence of Mr. Wilkinson in preference to that of Ms Lyneham. It is borne out by events which have occurred in Turner and Griffith. Where commercial development has been permitted to take place in those areas, there has been a steep increase in land values in residential properties nearby. Generally speaking, the closer to the commercial development, the greater the increase. Mr Wilkinson agreed that such increase in value is not explained by an increase in residential amenity, but by the tendency of investors to purchase in the expectation or hope that at some stage the residential land may be developed for commercial purposes. Insofar as such investors are not residents, they are not expected to have the same commitment to maintaining the residential amenity of the neighbourhood, and may indeed have an interest in allowing the residential amenity to deteriorate in order to increase the likelihood that a change to commercial development may be permitted. The greater the shortage of commercial premises in the area and the closer the proximity of any particular residential block to the new commercial development, the more likely there will be such a tendency. Indeed, this has already happened to some extent in section 22 Braddon. The house immediately north to that occupied by Mr Martin James Attridge is no longer in use as a single dwelling but has been converted to flats. Much of the former garden and front lawn area has been covered with concrete and is used as a parking area for numerous vehicles and a caravan. The nature strip is also used as a parking area. The residential amenity undoubtedly suffers but the value of the land for investment probably increases.

40. Mr. Kevin Glover gave evidence that he and his family have been the tenants of the ACT Housing Trust at 36 Torrens Street, Braddon which is block 6 section 22. They have lived at the premises since March 1984 and enjoy the amenity of living in a residential area close to the Civic area of Canberra. His concern is not only that the amenity of the neighbourhood will be affected by increased traffic and activity, but that his tenure as a tenant from month to month from the Housing Trust may be jeopardized. There was no evidence, however, as to the attitude or intention of the Housing Trust.

41. Mr. Martin James Attridge, also a public servant, lives at 34 Torrens Street, Braddon, block 5 section 22. He is a tenant holding over from month to month after the expiry of a twelve month sublease on those premises. What Mr Attridge said in a sense sums up much of the case for the objector in the following terms:

"What I would say is that if the western side of
Torrens Street is developed in a commercial
manner, then you erode the viability of the eastern
side being retained in a residential state.
The pressure will grow on that area by
speculators and others, to develop further back
into that suburb, and you will have the process
which has happened at the moment, where there is
a lot of absentee landlords, who have let those
buildings run down, who have let the area significantly
deteriorate, on the basis that if you
destroy its residential capability, then you
enhance the chances of making windfall gains by
property development."

42. The objector also relied upon affidavits furnished by two of the remaining four individual lessees from the Commonwealth of land in section 21 blocks 1-12. One was Mrs Sheila James of 23 Torrens Street, Braddon (block 12). She has lived in her house for approximately sixty years and is the widow of the late Dr John James. Ironically, the premises were originally used as a combined surgery and residence, that is to say, for both professional and residential purposes. Mrs Valmer Doran, who lives at 25 Torrens Street, Braddon, block 11, has lived there for approximately forty years. Each of those residents raised similar objections to the application. Neither of them wishes to take advantage of any opportunity to seek a variation of the lease purposes clause of her land in order to increase its market value. They want to live there as they have done for so long. They fear a loss of privacy and of security and are concerned at the prospect of having as neighbours not people like themselves but commercial enterprises.

43. Mr McMillan summarized his objection toward the close of his evidence when he stated that he feared that in effect section 22 would go the way of section 21. What he described as the intrusions in section 21 were of three kinds. Firstly, there was unauthorised use of land outside the existing purposes clause which in itself degraded the residential character of the area. Then there was the purchase of the majority of the blocks in section 21 by commercial interests, even though the residential purposes clause remained unaltered. That latter trend of itself, according to Mr McMillan, was likely to discourage any people who had a genuine residential interest in the area from ever purchasing properties in the area and to lead to the result that the area was no longer regarded as a desirable residential area. Thirdly, when such commercial interests purchased premises, even though subject to a residential purposes clause, they permitted the premises to deteriorate to the point where they could proclaim that the residential character of the area had already been lost and it was no longer appropriate to seek to retain it, particularly in the face of the insistent demand for commercial space.

44. I think that there is considerable force in this argument. It is not enough to say as, I think, Ms Lyneham does in effect that if the residents do not like it they can take the money and go somewhere else. Furthermore, there is an aspect which the case for the applicant overlooks almost entirely. It is to be observed that the present application is for changing the purposes clause to "offices/professional suites/carparking". The NCDC Policy Plan Development Plan of September 1986 designates the uses for the area to be "medium density or standard residential dwellings" as well as "offices and professional suites". To disallow the present application is not to frustrate the NCDC proposals which clearly recognize "standard residential dwellings" as a permitted use and not only as an existing use but for the purpose of redevelopment.

45. It should be recognized for what it is worth that there is a significant difference between the facts of the present case and the facts presented to Morling J. in the Morpath case when it was remitted to the Supreme Court from the decision of the Full Court of the Federal Court of Australia. In the Morpath case the land in question was subject to the 1984 Turner Policy Plan of the NCDC. The policy 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.

46. The clan also contained a statement that proposals for a change of use from residential to "office/professional suites" would normally be supported subject to compliance with specified criteria relating to heights, blot ratios and the like.

47. After referring to the 1984 Turner policy plan and to the judgment of Beaumont J. in the Morpath decision in the Federal Court, Morling J. went on to say:

"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 (p 12 of
unreported decision, dated 27 November 1987).

48. In the Morpath case the land in question was subject to an existing purposes clause "for residential purposes" only. Hence the NCDC would not have supported an application for development of the Morpath site for residential purposes, whether medium density or standard. That was in strong contrast to the present case where, in addition to the purpose for which the applicant contends, the NCDC has indicated that it will support development for medium density or standard residential dwellings. The continued use of the premises for a standard residential dwelling, accordingly, does not frustrate the policy of the NCDC. Indeed, as I understand the evidence of Ms Lyneham, like the proposed use for office and professional suites, the existing use is not contrary to town planning principles.

49. The NCDC proposals support development for medium density residential dwellings. Ms Lyneham has explained how the proposed mixed development of medium density residential and small scale commercial use would act as a desirable transitional zone between the mixed industrial uses in Lonsdale Street and the solely residential use in section 22. But the development that is taking place is not a mixture. The fact of the matter is that all the recent developments and applications for development in section 21 blocks 1-12 as in section 29 are not for standard residential dwellings or for medium density residential dwellings. All developments and applications for development have been and are for commercial use, although commercial use restricted to office and professional suites. In other words, investors see that the property market is such that residential development in section 21 is simply not attractive compared with permitted and anticipated commercial development. This trend is not likely to cease. The development proposals by the new owners in section 21 blocks 1-12 will not contribute to mixed development at all, but to restricted use for business and professional purposes.

50. As far as section 21 blocks 1-12 itself is concerned, the subject site at block 5 is not adjacent to the property occupied by Mrs Doran or that occupied by Mrs James and their fears that they are soon to be overshadowed by undesirable commercial neighbours will not be immediately realised as a consequence of the present application being granted. The argument has to be, and it is an argument that has some validity based on a sort of domino theory, that once the present application is granted, it is the more likely that others will be granted.

51. Similarly, Mr McMillan's substantial objection is grounded not directly on what is happening or likely to happen at section 21 but the effect of development on section 21 as it is likely to affect section 22. Mr McMillan's fears are, in my view, readily understandable and there is a real possibility, on the evidence, that what he fears will come about. Nevertheless, the history of section 21 blocks 1-12 and section 22 show significant differences. Looking back over the history of the area, and being wise after the event, it is somewhat surprising that block 21 sections 1-12 was not regarded as cart of the frame long ago. The diagrams in evidence showing the history of use over the years, and the two aerial photographs, depict clearly that the line of demarcation between the mixed industrial and commercial uses of Lonsdale Street and the adjoining residential area of Braddon is the rear fence line dividing the properties facing Lonsdale Street from the properties facing Torrens Street. That this may not have been the original intention of planners in Canberra, is reflected in the fact that when the present property was first made available for lease in the early 1920s the designated use was "for the main purpose of an industry (other than a noxious trade) employing not more than twenty-five employees and for any purpose subsidiary thereto such as a residence or shop". However, the block was not sold at auction, nor apparently were any of the other blocks in the section. It seems that the land came under the control of the Department of the Interior of the time and that the house was subsequently constructed as a part of a public housing project and occupied as such until it became available for lease under the Ordinance in 1951.

52. Mr McMillan's prophecy that there will be a repetition on the east side of Torrens Street of what has occurred on the western side, rests to a large extent on the assumption that there will be a repetition in section 22 of events which are seen as causes of the situation across the road. The first is that there will be a repeated failure by the relevant authority to enforce the existing lease conditions. The second is that commercial developers will purchase the properties, although continuing to allow them to be used for residential purposes for the time being. Neither of these conditions need necessarily be fulfilled in the future as far as section 22 is concerned. I have already made reference to the decision of the Ombudsman recommending to the then lease enforcement body, the Department of the Capital Territory, that there be consistent and insistent enforcement of purposes clauses in leases.

53. Commercial developers are likely to purchase residential properties in Torrens Street only in the expectation that a change of use will be permitted at some time in the future. I have already made reference to the somewhat unusual history of section 21 blocks 1-12. From the time the NCDC first started to consider the question of land use in section 21 blocks 1-12 the character and future of the area was somewhat indeterminate until the Policy Plan Development Plan of September 1986. It is to be observed that that is not a provisional plan, although it is always omen to the NCDC to vary the plan; at least as far as I understand it, there is no prohibition against the NCDC varying a plan. The Grey Book which relates to the city area as a whole, contains only a draft policy plan and a draft implementation plan, but it recognizes the permanence of the September 1986 clan for section 21 blocks 1-12 and incorporates section 21 blocks 1-12 into the city area. Of course, nothing in the future can be guaranteed, not even the continued existence of the NCDC. If the NCDC clan is adhered to and purpose clauses in leases over land in Torrens Street are enforced, then there is at least a good chance that Mr McMillan's fears will not be realised. Only time will tell.

54. In the draft Policy Plan Development Plan of November 1983, which was essentially what was adopted in September 1986, the NCDC stated that the proposals were "designed to permit change of use and redevelopment to occur in a manner which retains the existing visual quality of Torrens Street and which safeguards the amenity of existing residents in Torrens Street". Whether the then existing visual quality of Torrens Street has been retained is a matter of opinion, determined by subjective factors of taste and aesthetics. There is at least room for the view that the development in section 29 has severely impaired the visual quality of Torrens Street as a whole and that similar developments in section 21 blocks 1-12 will continue the trend. As to safeguarding the amenity of the then existing residents in Torrens Street, there can be little doubt that this has not occurred. The exclusively commercial development in section 29 has driven the residents out. Whether developments in section 21 blocks 1-12 will have the same effect, again, only time will tell. But that is clearly not what the NCDC had in mind when it published its plans and proposals for the area in September 1986.

55. In Morpath Beaumont J. said that the discretion conferred by section 11A(1) was to 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".

56. In my view, there is a real possibility in this case that the interest of the local occupants in their amenity will be adversely affected if the present application is granted. It is, however, only a possibility and it defends partly upon similar applications in respect of other blocks in section 21 being granted. The relevant factors in similar applications, however, may not be identical. For instance, I have already mentioned the special position of Mrs James and Mrs Doran. The matters raised on behalf of Mrs James and Mrs Doran would be the stronger if the present application were to develop land adjoining the property of one of those persons. My decision is based on the likelihood, not the certainty, that the successor to the Department of the Capital Territory will enforce purposes clauses in leases over properties in section 22 (and section 21 and section 29) and that the present policies of the NCDC, particularly those set out in the Policy Plan Development Plan for section 21 blocks 1-12 in September 1986, will be implemented. How then does the real but uncertain possibility that the interests of the local occupants in their amenities are being jeopardized weigh against "society's interest in the fullest use of land"? The term "the fullest use of land" is capable of a variety of meanings. If it means that singular use of land which maximises its commercial potential, then the present use of the land is not in society's interest. I doubt whether that is what was meant. If what is meant is that land capable of use or any part of it should not be left lying idle, then the land in question is at the present time being fully used. Apart from the house there is a front yard and a back yard and a driveway, all of which is on the evidence being used. I doubt whether that is what was meant. Again, the term may be used to indicate the maximum variety of uses to which a particular piece of land may be put, subject to such constraints as legal prohibitions and town planning principles. I think that that is the probable meaning. Town planning principles as contained in the NCDC Policy Plan Development Plan support the use of the land for medium density or standard residential purposes or for office and professional purposes. The plan does not choose between them. The Minister has not appeared to support one use or the other. The scales are almost evenly balanced between the present standard residential use and the proposed use as offices. In the end I am not convinced that the public interest lies in preventing the lessee from choosing which of these purposes it wishes to carry out in its occupation of the land. In my view, the effect on residents in section 21 such as Mrs Doran and Mrs James, is not sufficiently substantial and the effect on residents such as Mr McMillan and others in section 22, is not sufficiently probable or proximate to stand in the way of granting the application.

57. Accordingly, I make the order as set out in paragraph 1 of the amended notice of motion of 18 February 1988. I will hear the parties on the question of costs.