21 Dec 2007

From takeaway to café: the limits of existing use in NSW

by Nick Thomas

When characterising an existing use, courts will take a liberal approach, allowing some "evolution" of the use over time. At the same time, however, they will look carefully at the character of the use and, in doing so, emphasise the land use planning purposes behind the legislative provisions.

As land use planning in a particular area evolves, uses which once were allowed on a site may become prohibited. Existing use provisions allow otherwise prohibited uses of land to continue on a site despite the change in zoning for that site. But how do you determine an existing use? The NSW Court of Appeal's recent decision in Grace v Thomas Street Café Pty Ltd [2007] NSWCA 359 gives some useful guidance.

Corner store or café?

In one of the back streets of the Sydney harbourside suburb of McMahons Pt you'll find an old building which was used as a workshop until the late 1930s, when it was converted into retail premises.

For many years it was the local milk bar and corner store selling sandwiches to the local boatyards and small grocery items on credit to its neighbours, but it has slowly gentrified along with the suburb. Nowadays it is the Thomas Street Café, which has a shaded outdoor seating area, and good coffee.

Up until 1963, Thomas Street was zoned light industrial; it was then rezoned "Residential special redevelopment – shops and refreshment rooms prohibited". The local council took the view that the existing use for the site was as a refreshment room in which food was sold and consumed, and that it could therefore continue to operate as a café despite the rezoning . Was this right?

How do you determine an "existing use"?

In order to identify an existing use, it's necessary to "characterise" the use at the time it became prohibited by the rezoning. The "character" of a use determines what the existing use rights cover.

Determining an existing use requires striking a balance between fairness to current land users and the needs of the community as reflected in town planning instruments.

How does a court strike that balance? The NSW Court of Appeal said that it had to consider four different principles when characterising an existing use:

  • it should adopt a liberal approach, describing the purpose of the land only at that level of generality which is necessary and sufficient to cover the individual activities and transactions at the relevant date
  • it can't be so general that it embraces activities or transactions which differ in kind from the use which the activities as a class have made of the land
  • the court must recognise that existing use can naturally evolve over time. A change in the method of operation of a particular category of use doesn't necessarily mean there are no longer existing use rights
  • the "town planning" (or land use planning) purposes behind the legislative provisions are to be emphasised when characterising an existing use.

In this case, the town planning perspective proved to be the crucial element. While food has been sold from the building for nearly 70 years, it has been sold in quite different ways. From a town planning perspective, a milk bar with takeaway food is a different use from a café. In a takeaway, people come, buy their food, and walk away. In cafés, people might park their cars for long periods, sit down and congregate in the café, and generate more noise and traffic.

In this case, the court held that the existing use at the time of the change in zoning was for a takeaway and not a café. Consequently, the use could not "evolve" into a café after the zoning changed and the existing use rights crystallised.

Since the existing use didn't include a café, the café use was prohibited.

Consent to a change of use?

There was another argument raised by the Café. It had sought and obtained development consent to erect an awning over the courtyard for the café use in the 1990s. Did that amount to Council's consent to a change of use to a café or restaurant?

The Café argued that development application specified it was seeking consent for "cover for outside café seating", and therefore this was an application for two purposes: the first was for the erection of a cover for the courtyard area; the second was an application for use as a café.

The Court considered and then rejected this argument. The application was predicated upon the fact that the use of the premises was already a café. This could only have been advanced if the Café was relying upon existing use rights. There were however no such existing use rights.

Lessons learnt

This case provides a valuable analysis of a complex but important area of the law. Many commercial operations today rely on existing use rights for their continuation and, sometimes, expansion. The Minister for Planning curtailed existing use rights last year, by preventing changes from one form of (now) prohibited use to another.

This case serves as a reminder of the care which we must exercise when evaluating the nature and scope of our existing use rights.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.