Posted on May 30, 2013 by Stuart Simington

Use of a dwelling house for holiday rentals – a few queries

In Dobrohotoff v Bennic [2013] NSWLEC 61, the Land and Environment Court held  that a dwelling-house in the 2(a) zone in Gosford could not be used for holiday rentals. The primary reason, in Pepper J’s judgment, was that the use would not be ‘for the purpose‘ of a dwelling-house because it was not being occupied in the way a family or other household group would do.

Facts

The background to the case was fairly straight forward. Ms Bennic owned a property at Terrigal located in the 2(a) zone under the Gosford Planning Scheme Ordinance (GPSO).  The property was used exclusively for a short-term holiday rentals, typically for up to a week at a time. The property contained six (6) bedrooms and could accommodate 12 or 13 renters. The neighbours, Dr and Mrs Dobrohotoff, complained that the use for holiday rentals was not as a dwelling-house and was prohibited.

A dwelling-house  is defined in GPSO as ‘a building containing 1, but not more than 1, dwelling‘. Development, and therefore ‘use’ for such purposes is permissible with consent in the 2(a) zone.

The definition of a ‘dwelling‘ in GPSO has two alternate limbs:

• a room or number of rooms occupied or used as a separate domicile; or

• a room or number of rooms so constructed or adapted as to be capable of being occupied or used, as a separate domicile.

Ms Bennic raised a number of arguments about why holiday rentals were lawful.

However, of most interest was the argument based on the second limb of the definition, namely that the holiday rental use was for the purpose of a building containing a number of rooms constructed or adapted as to be capable of being occupied or used as a separate domicile.

The second limb , arguably at least, does not require the actual use to be as a separate domicile provided that the building is relevantly constructed so as so to be capable of such use.

Analysis

Pepper J held that the use was not as a dwelling house at [44] because:

‘[I]t could not be fairly said, looking at its use as a whole as short term holiday accommodation, that, as a matter of fact, the property was being occupied in the same way that a family or other household group in the ordinary way of life would occupy it.  A tenancy granted to persons who are residing in a group situation for periods of a week or less for the purpose of bucks and hens nights, parties or for the use of escorts or strippers, is, in my opinion, not consistent with a use or occupation by a family or household group in the ordinary way of life, and therefore, not consistent with the use of the property as that of a “dwelling-house” (Blacktown City Council v Haddad [2012] NSWLEC 224 at [35])’.

The question however, is why does the dwelling need to be occupied ‘in the same way that a family or other household group in the ordinary way of life would occupy it’ when the second limb seems to refer to the physical structure rather than how it is occupied?

The decision in Haddad is not of great assistance in resolving the issue as it is simply an earlier decision of Pepper J.

However, that case derived its support for the proposition from  the decision of the Court of Appeal in South Sydney Municipal Council v James (1979) 35 LGRA 432 as well as the decision in Ashfield Municipal Council v Australian College of Physical Education Ltd (1992) 76 LGRA 151.

In Ashfield, Pearlman J had described the decision in James as a ‘useful guide‘ in determining whether a proposed building alleged to be a dwelling house was in fact a boarding house.

The decision in James is, however, a questionable basis for the proposition. The Council had objected to consent being granted to the erection of a dwelling house on the basis that the purpose of the use of the building would be to house persons who did not fall within the description of a single family. However, the definition of ‘dwelling-house‘ was defined in the relevant planning instrument by reference (akin to the second limb in GPSO) to its ‘design’ rather than ‘use’:

‘a building designed for use as a dwelling for a single family…‘

In considering whether the development was permissible, one of the appeal judges, Reynolds JA, considered that adopting the definition of dwelling house set out in the instrument ‘did not make good sense‘ because ‘the definition points to a type of building rather than to its use or intended use‘. The judge was therefore concerned that when a dwelling house was to be occupied otherwise than by a single family, that a planning consent would be required. Reynolds JA thought that this could not have been intended. Therefore, rather than applying the actual definition of ‘dwelling house’, Reynolds JA simply chose a different meaning that ‘without doing violence to the language, would seem to accord with town planning considerations and commonsense‘. Therefore Reynolds JA said at p440:

‘So far as the use of a building as a dwelling house under cl. 23 is concerned, I would conclude that the context in which the words ‘dwelling-house’ are found and the subject matter dealt with indicate an intention that the statutory definition does not apply. In my opinion a building is used as a dwelling house within the meaning of cl. 23 if its use is such that it can fairly be said as a matter of fact that it is occupied in much the same way as it might be occupied by a family group in the ordinary way of life and that it is not a use and occupation  more appropriately described in other categories of residential buildings.’

Samuels JA took a different and more orthodox legal approach at pp444-445 in holding that the definition of ‘dwelling house‘ did not impose restrictions on how the building was used but rather referred only to the physical structure:

‘Once the correct meaning of ‘designed’ is applied, it follows that ‘dwelling-house’ is defined not in terms of use or intended use, but by reference to the character or structure of the building. The definition points to a building of a particular physical identity, rather than to the use to which it may, or must, be put. The inclusion of the words ‘designed for use as a dwelling for a single family’ requires the building to demonstrate a particular physical character. Once that requirement is satisfied its function is complete and its influence exhausted; it cannot then be made to determine the manner in which such a building must be used ….[T]he scheme in this aspect has regard to the ordinary town planning criterion of suitability of physical structures to the character of the area in which they will be erected and used. Structural comformity is obtained by requiring a dwellinghouse to be of a particular design. It may still be be capable of a number of different uses; but conformity of use is ensured by imposing restrictions, i.e. the necessity to obtain consent, framed in terms of use. A dwelling house as defined may be capable of use as a boardinghouse or lodginghouse, or, as … ‘professional consulting rooms’.  But the use or intended use for any of these purposes requires consent.

In my opinion, therefore, these premises may be used, without consent for any purpose appropriate to or consistent with the physical character of a dwelling for a single family, not being a use for which consent is necessary under cl. IV, or a prohibited use under col. V. …. I can see no basis for the argument that the proposed use involves the use of the building as a boardinghouse, lodginghouse or hostel. Accordingly, consent is not required.’ [my emphasis]

Returning to the second limb in Bennic, Pepper J dismissed the Applicant’s ‘second limb’ argument:

‘…because it ignores the actual use of the property, which I have determined is not “as a separate domicile”, and therefore, not as a “dwelling-house”….

Pepper J also distinguished other authorities consistent with Samuels JA’s approach in holding that that interpretation would mean that such a  building could be used for any purpose which could not have been the intention:

‘…logically, any building having the physical characteristics of a “dwelling-house” could be used, albeit with consent, for any form of development. Such a result defies commonsense, would undermine the GPSO and is therefore unlikely to have been the intention of the council when drafting item 2 of the 2(a) Residential Zone.’

However, Pepper J did not refer to Samuels JA’s comments directed to this very issue. If the actual use of the physical structure is otherwise proscribed by the zoning table, then this will apply to limit the use of the dwelling house.

In the case of the use of a property for holiday rentals under GPSO, it seems that the relevant question should have been whether the holiday rental use was otherwise proscribed for example as ‘commercial premises’. It seems that the result would have been the same, but for different and more convincing reasons which do not ignore the second limb.