Dustday Investments applied last year for a demolition permit to knock down the warehouse.

Dustday Investments applied last year for a demolition permit to knock down the warehouse. Photo: Joe Armao

Is this 1956 former wool warehouse part of Melbourne's heritage, worthy of permanent protection - or a bombsite that would cost a fortune to restore and should be knocked down?

For businessman Solomon Lew, it's the latter.

Solomon Lew.

Solomon Lew. Photo: Pam Williams

A company that Mr Lew controls owns the North Melbourne warehouse and the land around it - bought for $800,000 in 1985 and now on one estimate worth more than $30 million.

The company, Dustday Investments, applied last year for a demolition permit to knock down the Sutton Street warehouse and build an open-air car park on the site.

But, with temporary heritage protection over the building now in place and Planning Minister Matthew Guy considering a permanent heritage listing, Dustday Investments has taken its fight to the courts.

Last Friday, the firm lodged a writ in the Supreme Court against Mr Guy and Melbourne City Council seeking an injunction against the minister stopping him changing Melbourne's planning rules to prevent the building being bulldozed.

The writ, co-authored by former Victorian planning tribunal boss Stuart Morris QC, also seeks costs from the government and the council.

Neither Dustday Investment's solicitors nor Mr Guy's spokeswoman responded to requests from Fairfax Media for comment on the writ, which also accused the city council of having made legal mistakes in its recommendation to support a heritage listing for the warehouse.

The writ says the government panel that recommended to Mr Guy the property be heritage listed erred by failing "to consider the social and economic effects flowing from imposing a heritage overlay on the building, when the evidence showed that it was in very poor condition".

The company wants "fresh consideration of the issues affected by error".

Councillor Ken Ong is chair of the council's planning committee. He said planning studies showed the building should be protected and that consideration of financial impacts were secondary to protecting the city's heritage.

"When that property was purchased for whatever reason, there is always the possibility of certain controls being put in place," he said.

Cr Ong said owners who sat on large tracts of land in prime locations took a risk. "There are a lot of holdings in the city that have been landbanked for a long time; if you don't sell it," Cr Ong said, "something like this will happen."

The area around the 8000-square-metre warehouse has been defined by the council as the Arden-Macaulay renewal precinct and the government's planning panel said it expected the warehouse area to ultimately be developed for housing.

The land - currently zoned industrial  - sits alongside CityLink and the proposed path of the new East West Link elevated roadway, and is also next to the Upfield railway line.

Agent CBRE's Mark Wizel, director of city sales, estimated the site as presently zoned was worth $30 million to $35 million. But he said if the land was rezoned for other uses, it "could be valued at as much as $80 million".

Title searches for the two large blocks of land and buildings owned by Dustday Investments show they were purchased for $800,000 in 1985 from the Victorian Producers Co-operative.

The co-operative built the warehouse – known as the Number Five Wool Store – from 1956. The building is now heavily defaced by graffiti and has some broken windows. It also has a large billboard on it that one property expert thought could bring in $1 million a year in ad rental income.

At a panel hearing to decide on wider plans for the area, a heritage report into the building said it was of a "Modernist design character", had a vast floor space with a sawtooth roof, and was "historically and aesthetically" significant.

But experts for Dustday Investments argued the facade of the building was in an advanced stage of deterioration and that "extensive reconstruction would be required to meet current day building requirements" – at a cost of up to $10 million.

Even a lesser retention of parts of the warehouse's facade would cost $2 million if the rest of the building was demolished, they said.