Posted on June 28, 2012 by Stuart Simington
Uncertainty about ‘equivalent zones’ under the Affordable Rental Housing SEPP
In two recent cases, Commissioners Morris (Chehade v Bankstown City Council  NSWLEC 1122) and O’Neill (Chami v Bankstown City Council  NSWLEC 1120) decided that the Residential 2(a) zone in Bankstown is not equivalent (within the meaning of cl5(1)(a) State Environmental Planning Policy (Affordable Rental Housing) 2009 (Affordable Housing SEPP)) to any of Residential zones (R1, R2, R3 and R4) in the Standard Instrument.
This would be a surprise to many as it is directly contrary to Commissioner Tuor’s decision on that same question in Chami v Bankstown City Council  NSWLEC 1311. Commissioner Tuor decided that the Residential 2(a) zone in Bankstown is equivalent to the R2 Low Density Residential zone in the Standard Instrument.
Lindsay Taylor Lawyers acted for the Council the Chehade and second Chami matters. The Chehade decision is the subject of a pending appeal to a Judge of the Court.
The issue arises in relation to certain forms of affordable housing proposed under the Affordable Housing SEPP on land that is not yet covered by a Standard Instrument LEP. For example, the boarding houses provisions in the Affordable Housing SEPP only apply to development if carried out in the R1, R2, R3, R4, B1, B2 or B4 zones or in a zone that is ‘equivalent’.
Clause 5 of the Affordable Housing SEPP makes provision for determining whether a zone is equivalent.
5 Interpretation—references to equivalent land use zones
(1) A reference in this Policy to a land use zone that is equivalent to a named land use zone is a reference to a land use zone under an environmental planning instrument that is not made as provided by section 33A (2) of the Act:
(a) that the Director-General has determined under clause 1.6 of State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 is a land use zone in which equivalent land uses are permitted to those permitted in that named land use zone, or
(b) if no such determination has been made in respect of the particular zone, is a land use zone in which (in the opinion of the relevant authority) equivalent land uses are permitted to those permitted in that named land use zone.
(2) An assessment made by a relevant authority under subclause (1) (b) applies only in respect of the particular development that is proposed to be carried out and more than one such assessment may be made in respect of the same land use zone.
There have been no determinations made under cl5(1)(a).
Accordingly, the question in each of the cases before the Court was whether the Court was of the opinion that the Residential 2(a) zone in Bankstown is a zone in which equivalent land uses are permitted to those permitted in any of the named land use zones.
In the first Chami case, Commissioner Tuor approached the question by having regard to the zone objectives and permissible uses in each zone and held, in summary, that the effect of the R2 and 2(a) zones is generally for low density residential development. Also having regard to the beneficial purpose of the SEPP, the Commissioner considered that the zones were equivalent. This was the case, even though boarding houses are prohibited in the 2(a) zone but permitted in the Standard Instrument R2 zone.
In the second Chami case and the Chehade case, LTL argued that Commissioner Tuor’s approach was incorrect. In particular, zone objectives were irrelevant and the question to be asked was whether the uses permitted are the same or have the same effect.
Commissioner’s Morris and O’Neill agreed. They compared the actual land uses permitted in each zone. Using this approach, the court concluded that the zones were not equivelent. Commissioner Morris held at :
‘In considering the set of permissible uses in the 2(a) Residential Zone (BLEP) and the set of permissible uses in either the R1 or R2 Zones (Standard Instrument), there are significant differences, not only in the numerical tally of shared and exclusive uses, but also in terms of the nature of the uses permissible in the 2(a) Residential Zone, when compared to the permissible uses in either the R1 or R2 Zones. In my view, this is sufficient to conclude that the zones are not ‘equivalent’ for the purposes of SEPP ARH.’
The question whether the approach taken by Commissioners Morris and O’Neill is correct will be considered in the upcoming appeal.
The implications if correct are, however, quite significant. There will be many other cases in which it can be argued that local zones are not equivalent to the Standard Instrument zones.
The solution to the issue is also simple. The Director-General can make a determination under cl5(1)(a). It is not clear why this has not already occurred because the Department has previously prepared tables which identify its view on the issue.
The failure to make such a determination has created uncertainty for developers and decision makers alike. In circumstances where it is clear that boarding houses are intended to be permissible in all residential zones (at least once the subject of a Standard Instrument LEP), there is no apparent policy reason for there to be continuing uncertainty in relation to land that is not yet so zoned.