Warehouse Group (Australia) Pty Ltd v Woolworths Ltd [2003] NSWCA 270

Reported Decision : 137 LGERA 115

New South Wales Court of Appeal

CITATION : Warehouse Group (Australia) Pty Ltd v Woolworths Ltd [2003] NSWCA 270 HEARING DATE(S) : 19/09/2003 JUDGMENT DATE : 19 November 2003

JUDGMENT OF : Mason P at 1; Santow JA at 2; Foster AJA at 3-51 DECISION : 1. That the Appeal be dismissed.; 2. That the Orders of Lloyd J be confirmed.; 3. That the Appellant to pay the respondent's costs of the appeal.

CATCHWORDS : Appeal against two decisions made and declarations and orders made re stock available for sale in warehouse which was in breach of EPA Act. LEGISLATION CITED : Environmental Planning & Assessment Act CASES CITED : Sutherland Shire Council v Telope Pty Ltd (1993) 85 LGERA 103. Council of Sutherland Shire v Michael Bassett Tijuana (No. 15) Pty Ltd, unreported, 22/2/1994. PARTIES : Warehouse Group (Australia) Pty Ltd Woolworths Ltd FILE NUMBER(S) : CA 40303/03 COUNSEL : Mr S Rares SC with M. Wright - Appellant Mr J. Gleeson SC with J. Jagot - Respondent SOLICITORS : Deacons - Appellant Mallesons Stephen Jaques - Respondent

LOWER COURT Land & Environment Court JURISDICTION : LOWER COURT LE 40243/01 FILE NUMBER(S) : LOWER COURT Lloyd J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40303/03 LE 40243/01 MASON P SANTOW JA FOSTER AJA

WEDNESDAY, 19 NOVEMBER 2003 THE WAREHOUSE GROUP (AUSTRALIA) PTY LTD v WOOLWORTHS LIMITED & ANOR Judgment 1 MASON P: I agree with Foster AJA. 2 SANTOW JA: I agree with Foster AJA. 3 FOSTER AJA: This is an appeal from orders made by Lloyd J on 28 March 2003, in the Land and Environment Court of New South Wales. His Honour gave two decisions in the proceedings, the first, on 17 February 2003, and the second, on 28 March 2003. At the conclusion of the latter decision his Honour made the following declarations and orders:- "(1) A declaration that the respondent, The Warehouse Group (Australia) Pty Ltd, is using the property being lot 3 in deposited plan 877672,known as Nos. 824-850 Woodville Road, Villawood ("the property") for the purpose of a shop in breach of section 76B of the Environmental Planning and Assessment Act 1979. (2) A declaration that the respondent, The Warehouse Group (Australia) Pty Ltd, is using the property in breach of condition 10 of development consent No. 992/2000 granted by Fairfield City Council on 24 July 2000, contrary to s 76A(1) of the Environmental Planning and Assessment Act 1979. (3) An order that the respondent, The Warehouse Group (Australia Pty Ltd, its servants and agents abstain from carrying out, causing, permitting or suffering the use of the property for the purpose of a shop (as defined in the Fairfield Local Environmental Plan 1994). (4) An order that the respondent, The Warehouse Group (Australia) Pty Ltd, abstain from using the property in breach of condition 10 of development consent No. 992/2000 granted by Fairfield City Council on 24 July 2000. (5) An order that orders (3) and (4) above be postponed for a period of twenty eight (28) days from today. (6) An order that the respondent pay the applicant's costs." 4 In the proceedings before his Honour the present respondent, Woolworths Limited ("Woolworths"), as applicant, sought declarations and orders against the present appellant, The Warehouse Group (Australia) Pty Limited ("Warehouse"), resulting from its occupancy and use of certain premises known as "The Warehouse", being Units 5, 6 and 7 of a building at Nos. 824-850 Woodville Road, Villawood, being the land described as Lot 3 in DP 877672. These were situated near Villawood Railway Station and were part of a group of newly built buildings, in an industrial/warehousing development. Warehouse was purporting to use these premises in accordance with a development consent granted to it by Fairfield City Council ("the Council"), on 24 July 2000. It was the contention of Woolworths that Warehouse's use of the premises constituted a contravention of condition 10 of the development consent, so granted by the Council, and also constituted a use which was prohibited under the relevant environmental planning instrument, the Fairfield Local Environment Plan 1994 ("the LEP"). Consequential relief, by way of appropriate injunctions and costs, was also sought. 5 His Honour approached the resolution of the case by posing and answering the following questions: (1) whether the respondent's current use of the premises was permitted by the zoning, and (2) whether the respondent's current use of the premises was contrary to the development consent. As his Honour indicated, the resolution of these questions depended upon a determination by him as to the actual nature or type of the respondent's business, as it was, in fact, being carried on in the premises. 6 His Honour considered, first, the zoning question. The premises, being situated within Zone 4(c) Special Industrial under the LEP, were subject to the development control table for that zone, as follows:- " Zone 4(c) Special Industrial 1. What are the objectives of the zone? The objectives of the zone are: (a) to encourage the establishment of a broad range of light industrial and warehouse activities and a limited range of business and retail activities compatible with nearby residential areas to generate employment and contribute to the economic development of the City of Fairfield, (b) to allow community uses to serve the needs of the nearby industrial workforce, and (c) to allow retail development only: (i) where associated with, and ancillary to, light industrial purposes on the same land, (ii) for the display and sale of bulky goods, (iii) where it primarily serves the daily convenience needs of the local industrial workforce, or (iv) for motor orientated activities, and only if the proposed development will not detrimentally affect the viability of any nearby business centre. 2. What is permitted without development consent? Nil. 3. What is permitted only with development consent? Any purpose other than a purpose included in item 4. 4. What is prohibited? Abattoirs, aged and disabled persons' housing, amusement parks, animal establishments, brothels, business premises, camping grounds and caravan parks, dwelling houses (except caretakers' dwelling houses), entertainment facilities, extractive industry, forestry, gaming taverns, generating works, group homes, hazardous industry, hazardous storage establishments, health consulting rooms, helicopter landing sites, heliports, home businesses, hospitals, hostels, hotels, industry, institutions, intensive agriculture, junkyards, medical centres, mines, multi-unit housing, offensive industry, offensive storage establishments, residential flat buildings, roadside stalls, sawmills, serviced apartments, shops (except take-away food shops), stock and sales yards, transport depots." 7 As will be seen, a major question in the case was whether Warehouse was using the premises as a "shop", in which case it would have been engaging in a prohibited use, or whether it was engaging in a retail operation in the premises "for the display and sale of bulky goods", which use could be permitted through Council's grant of development consent. 8 The development consent, as set out in his Honour's judgment, granted by the Council on 24 July 2000, for the use of the premises, therein described as "Clint's Warehouse Outlet", was subject to certain conditions. Condition 1 required that "Development shall take place in accordance with the approved plans excepting as modified by the following conditions". The relevant condition was condition 10, which provided as follows:- " 10. RESTRICTION ON USE The facility shall be operated in accordance with the following definition contained in Fairfield Local Environmental Plan 1994 :- " Bulky goods salesroom or showroom " means a building or place used for the sale by retail or auction or the hire or display of items (whether goods or materials) which are of such a size, shape or weight as to require: (a) a large area for handling, storage or display; or (b) direct vehicular access to the site of the building or place by members of the public for the purpose of loading items into their vehicles after purchase or hire, but does not include a building or place used for the sale of foodstuffs or clothing." 9 His Honour then referred to the "approved plans" which had been attached to the Notice of Development Consent. His Honour summarised the contents of the plans, in respect of which consent had been given, as follows:- "They show an area of about 2.667 square metres within the three warehouse units to be used for the development. A floor plan shows the proposed layout within the premises, including the proposed placement of racking, shelving, tables and checkout counters on the floor. The floor plan shows what goods will be placed on or in particular racks, shelves, crates and tables. The goods thus identified are described as "furniture:, "lamps", "manchester", "soft furnishings", "personal care" ( which I understand to be shampoos etc), "sound and vision", "cards", "giftware", "clothing", "footwear", "confectionary", "grocery", "household", "kitchen", "electrical", "read and write" (which I understand to be stationary), "seasonal" (which I understand to be, for example, Easter eggs or Christmas decorations and the like, depending upon the time of the year), "craft", "flowers", "toys", "sporting goods", "camping outdoors", "auto", "hardware", "garden", "gallery" (which I understand to be pictures and frames) and "a tall watch showcase". There are nine checkout counters." 10 His Honour remarked that "the connection between many of the goods identified on the floor plan and the display and sale of bulky goods seemed to be somewhat tenuous." However, Council's consent to those plans was expressly subject to condition 10, which required that the premises be operated as a "bulky goods sales room or showroom, as defined in the LEP." I comment, at this stage, that, obviously enough, this cast upon Warehouse the obligation of operating the business in the premises in a manner which conformed to this definition, even though the approved plan indicated that it was intended to sell, retail, from the premises some items of merchandise which were not in themselves bulky goods and which, as a general proposition, would more readily be found in a "shop" business. Her Honour stated that it followed from condition 10:- "..that the floor plan is modified by, relevantly, condition 10, which restricts the use to a bulky goods salesroom and showroom as defined in the Fairfield LEP." 11 His Honour then considered the actual use being made of the premises. Obviously, this consideration was fundamental to a determination whether the zoning was being infringed and also whether condition 10 of the consent was being complied with. His Honour had, with the consent of the parties, an extensive view of the premises, which was accepted as forming part of the evidentiary material in the case. In this regard he made the following findings of fact:- "The evidence shows that there is a wide range of products and goods on display for sale, generally of the type identified in the floor plan attached to the Notice of Development Consent. The amount of space occupied by the various categories of goods does not, however, correspond to that shown on the floor plan. Many of the goods are small and easily portable and do not require a large area for handling, storage or display. Neither do such goods require direct vehicular access to the premises by members of the public for the purpose of loading items into their vehicles after purchase. The evidence, confirmed by a view of the premises taken with representatives of the parties, shows that such goods comprise the vast majority of goods on display. The total percentage of linear shelving occupied by truly bulky goods is only about 32 per cent. Almost 40 per cent of the display space is occupied by goods that could never be considered bulky. The remaining about 30 per cent of the display space is occupied by categories of goods of which some may be considered as bulky, such as sporting goods and camping goods. Apart from the furniture, however, most items of the latter category which were seen on display were not bulky. Furniture, which may be considered truly bulky, occupies only about 9.9 per cent of the display space." 12 His Honour also noted that Mr L M Fletcher, a town planner, who gave the only evidence on behalf of Warehouse, "said that the vast majority of products on display are not bulky". It was also noted that the non-bulky goods included "many convenience items of a kind that one would find in places such as Villawood Shopping Centre". 13 In light of this evidence, his Honour made the following further findings:- "..the respondent's business is the selling of general merchandise, of which the sale of bulky goods is to be regarded as merely incidental. Although the respondent is displaying and selling bulk quantities of small products, that does not constitute the display or sale of bulky goods. The respondent's business seems to me to be the retailing of a range of general merchandise which involves the display of items in a bulk manner, where the goods require the convenience of a warehouse building to be handled, stored and displayed. The storage and display of goods in a bulk manner, however, does not come within the definition of " bulky goods salesroom or showroom". In another way, it seems clear to me that the vast majority of the goods are clearly not bulky goods, and those which are bulky goods comprise such a small proportion of the total merchandise on display for sale as to be merely incidental to the respondent's business, being the selling of general merchandise. At its highest the respondent's use of the premises might be described as a form of small discount department store." 14 His Honour then considered the judgment of Gleeson CJ in Sutherland Shire Council v Telope Pty Ltd (1993) 85 LGERA 103, in which Mahoney and Clarke JJA concurred, where there was discussion of the definition of "bulky goods, sales room or show room," comprised in a similar environmental planning instrument. I shall refer to the judgment later in these reasons. 15 After setting out and considering the relevant portions of this judgment, his Honour noted that it was necessary to "focus…on the nature or type of business in question." The findings that he had already made, in this regard, indicated that "the number of items that could be described as bulky goods were such that their sale must be regarded as merely incidental to the business and their availability would not relevantly characterise the use of the premises." He held that the nature of the business, being in the "form of a small discount department store", required a finding that the premises were being used as a "shop", which use was prohibited in the zone and was also a breach of condition 10 of the development consent. 16 Under the heading of "Discretionary Considerations" his Honour went on to consider whether and what consequential relief should be granted. It is convenient to defer discussion of this aspect of his Honour's judgment and consider, at this stage, the appeal in relation to his Honour's primary findings of breach of the zoning requirements and consent conditions. This will involve, in the first place, the construction of the relevant provisions of the LEP and of the development consent.