The case of Blues Point Hotel Property Pty Ltd v North Sydney Council [2021] NSWLEC 27 concerned Class 4 proceedings in the New South Wales Land and Environment Court (Court) in which the Applicant sought a declaration that the use of an outdoor first-floor terrace (Outdoor Terrace) involved a continuance of an existing use so as to render invalid, void, and of no effect a development control order issued by the North Sydney Council (Council) ordering the Applicant to stop providing food, alcohol, and entertainment on the Outdoor Terrace. 

The Court ultimately held that the Applicant was not entitled to a declaration as it had failed to establish that its current use of the Outdoor Terrace was a continuation of an existing use under section 4.65 and section 4.66 of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act). 

The Applicant was the owner and operator of the Blues Point Hotel (Premises), a local pub in Sydney's lower north shore, which had been used as a hotel/pub since its construction in 1938. 

In 1963, upon the commencement of the North Sydney Planning Scheme Ordinance 1963 (NSPSO), hotels became prohibited in the relevant residential zone. However, existing uses were authorised to continue. 

The use of the Premises as a hotel continued to be prohibited, unless it was an existing use, under the various planning schemes as adopted from time-to-time.

The Court firstly considered whether the Premises benefitted from an existing use right. 

The Court held that because "hotel" was defined by reference to the Liquor Act 1912 (NSW) (Liquor Act), the question was whether relevantly the Premises (i.e. the building as a whole) met the definition of "hotel" being "any premises specified in a publican’s license issued under the Liquor Act 1912, as amended by subsequent Acts" (see [13] and [56]). 

The Court held based on the ordinary dictionary meaning of "premises", which was consistent with the provisions of the Liquor Act and the form of the license, that an inference could be drawn from the evidence that the "premises specified in [the] publican’s license" comprised the whole of the land and building that is at the address specified in the license (see [56] to [64]). 

The Court also held that the Premises was not being used for two separate and independent uses of hotel and accommodation and that the accommodation use either fell within the hotel use or was ancillary to it, as the uses were physically integrated within a single facility which was evidenced by factors including that there was no separate entrance for the accommodation or reception or booking area for accommodation guests (at [65]).

The continuance of an existing use is limited by section 4.66(2) of the EP&A Act, which relevantly states [emphasis added]:

"(2) Nothing in subsection (1) authorises—

(a) any alteration or extension to or rebuilding of a building or work, or
(b) any increase in the area of the use made of a building, work or land from the area actually physically and lawfully used immediately before the coming into operation of the instrument therein mentioned, or
(c) without affecting paragraph (a) or (b), any enlargement or expansion or intensification of an existing use, or
(d) the continuance of the use therein mentioned in breach of any consent in force under this Act in relation to that use or any condition imposed or applicable to that consent or in breach of any condition referred to in section 4.17(1)(b), or(e) the continuance of the use therein mentioned where that use is abandoned." 

The Court stated at [77] that subsection (b) [emphasis added]:

"…operates to limit the use of the building work or land to those areas actually lawfully used in a physical sense, notwithstanding that the use, prior to the date it became prohibited have anticipated that at some point in the future other areas of the building work or land would be physically used for the same purpose."

For the Outdoor Terrace to form part of the existing use of the Premises, it therefore needed to have been actually physically used for a purpose other than a roof enclosing the areas below it at the date immediately before the use became prohibited. 

The roof was marked on historical plans as a "flat roof or sun deck". Several factors suggested its use and accessibility went beyond merely being a roof, including the existence of a door, concrete awning, and parapet which prevented people from falling off the area. However, the Court held that a mere intention and capacity for the roof to be used for more than just a roof did not constitute an existing use right. This is because "capacity and intention" are concepts which are directly opposed to the statutory language of "actual physical use" (see [80] to [84]).

As there was no evidence that the roof was actually being used for any purpose other than as a roof immediately before the NSPSO commenced, the Court held that the Applicant "failed to establish that the contended existing use rights are enjoyed for the Outdoor Terrace as a floor and air space for hotel uses" (see [86] and [88]).

The reliance on an existing use right is therefore limited in a physical sense, even if the expansion or intensification had been anticipated before the prohibition of the use. It is therefore important that landowners maintain clear documentary evidence showing the precise use and areas of the use. 

The Council contended that the Outdoor Terrace comprised an unauthorised "enlargement, expansion or intensification of existing use" under section 4.66(2)(c) of the EP&A Act.

The Court determined this issue for completeness, although it was not strictly necessary since it had already concluded that the Outdoor Terrace did not benefit from an existing use right (at [90]).

The Court compared the use of the Premises immediately before the commencement in 1986 of the NSPSO with the use after that date, and determined whether "any change in that use can be properly characterised as an enlargement, expansion or intensification" (at [97]).

An adjoining neighbour and a prior employee each gave uncontested evidence that the Outdoor Terrace area was not being used by patrons or for food and alcohol consumption until about 2016 (see [101] to [103]).

Therefore, the Court held that the current use of the Outdoor Terrace constituted either or both an enlargement or expansion of the use in 1986. 

The Court dismissed the summons for a declaration that the use of the Outdoor Terrace involved the continuance of an existing use because there was no evidence of the actual physical use of the Outdoor Terrace as at the relevant date in 1986.

Whilst an existing use may be continued after it becomes prohibited, there are limits to this right. This case demonstrates the complexities involved in properly characterising the use at the relevant date, and the importance of historical evidence of the actual physical use, of the relevant part of the premises subject to the existing use. The absence of documentary evidence proving the actual physical use of the relevant part of the premises will prove fatal to the application of an existing use right to the relevant part of the premises. Landowners should therefore ensure they have documentary evidence of the actual physical use when seeking to rely on an existing use right. 

Importantly, development applications can be lodged to change an existing use such as enlarging, expanding, intensifying, extending, or altering the use (see section 4.66(2) of the EP&A Act and Part 5 of the Environmental Planning and Assessment Regulation 2000 (NSW)). If consent is granted, it provides protection for the alteration of the existing use. Records of any such consent should also be carefully maintained by landowners.