Land and Environment Court New South Wales Medium Neutral Citation: Bardsley-Smith & Anor v Penrith City Council & Others [2012] NSWLEC 79 Hearing dates: 1-4 November 2010 and 13-14 January 2011 Decision date: 18 April 2012 Before: Sheahan J Decision: 1.The applicants' further amended summons dated 22 October 2010 is dismissed. 2.Unless a notice of motion for any further or different orders for costs is filed, by any party, within 14 days, the only order for costs will be that the applicants pay the second and third respondents' costs, on a party-party basis, as agreed or assessed. 3.All exhibits, including those to affidavits, may be returned. Catchwords: DEVELOPMENT CONSENT: validity, characterisation of proposal and subsequent use pursuant to the consent, correct principles to apply, interaction of national/state regulation of pharmacy and the relevant planning regime, validity of condition imposed, severability of condition Legislation Cited: Environmental Planning and Assessment Act 1979 Health Practitioner Regulation (Adoption of National Law) Act 2009 (NSW) Health Practitioner Regulation National Law Act 2009 (Qld) Interpretation Act 1987 Land and Environment Court Act 1979 National Health Act 1953 (Cth) National Health Amendment (Pharmaceutical Benefits) Act 2007 (Cth) Poisons and Therapeutic Goods Act 1966 Penrith Local Environmental Plan 1996 (Industrial Land) Penrith Local Environmental Plan 2010 Cases Cited: Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1 Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 Berowra RSL Community and Bowling Club Ltd v Hornsby Shire Council [2002] NSWLEC 243; (2000) 114 LGERA 345 Bob Blakemore Pty Ltd v The Anson Bay Company (Australia) Pty Ltd [1990] NSWCA 25 Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308; (2011) 183 LGERA 228 Botany Bay City Council v Ralansaab and 7 Ors [2010] NSWLEC 225; (2010) 178 LGERA 44 Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWLEC 50 Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWCA 189; (2010) 174 LGERA 446 Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400 Chan v Dainford Ltd [1985] HCA 15; (1985) 155 CLR 533 Collector of Customs v Chemark Services Pty Ltd (1993) 42 FCR 588; (1993) 114 ALR 531 Corporation of the City of Enfield v Development Assessment [2000] HCA 5; (2000) 199 CLR 135 Dogild v Warringah Council (2008) 158 LGERA 429 Dooralong Residents Action Group Pty Ltd v Wyong Shire Council [2011] NSWLEC 251 Egan v Hawkesbury City Council (1993) 79 LGERA 321 Foodbarn Pty Limited v Solicitor-General (1975) 32 LGRA 157 Gance v Monash CC [2010] VCAT 388 High Point Commercial Property Group Pty Ltd v Maribyrnong CC [2009] VCAT 16 Holzberger v Secretary, Department of Health & Ageing [2007] FCAFC 68; (2007) 158 FCR 586 House of Peace Pty Ltd v Bankstown City Council [2000] NSWCA 44; (2000) 48 NSWLR 498 Kang v Blue Mountains City Council [2011] NSWLEC 150 Lizzio v Ryde Municipal Council [1983] HCA 22; (1983) 155 CLR 211 Macquarie International Health Clinic Pty Ltd v University of Sydney (1998) 98 LGERA 218 Maitland City Council v Anambah Homes Pty Ltd [2005] NSWCA 455; (2005) 64 NSWLR 695 Maryland Development Co Pty Ltd v Penrith City Council & Anor [2001] NSWLEC 135; (2001) 115 LGERA 75 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 Newbury District Council v Secretary of State for the Environment [1981] AC 578 Penrith City Council v Waste Management Authority (1990) 71 LGRA 376 Powell Holdings Pty Limited v Hornsby Shire Council [1998] NSWLEC 111 Quarry Products (Newcastle) Pty Limited and Allendale Blue Metal Pty Limited v Roads and Maritime Services (No 3) [2012] NSWLEC 57 RCM Constructions Pty Limited & Maycot Pty Limited v Ryde City Council [2004] NSWLEC 266 Royal Agricultural Society of New South Wales v Sydney City Council (1987) 61 LGRA 305 Shire of Perth v O'Keefe [1964] HCA 37; (1964) 110 CLR 529 Sutherland Shire Council v Telope Pty Ltd (1993) 85 LGERA 103 Swansea RSL Club and Rosecorp Pty Limited v Council of the City of Lake Macquarie [2006] NSWLEC 381 Tauman v Wyndham CC [2005] VCAT 2444 Terry White Chemists Australia Fair v Secretary Department of Health and Ageing [2009] FCAFC 74; (2009) 178 FCR 161 University of Sydney v South Sydney City Council (1998) 97 LGERA 186 Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 Wechsler v Auburn Council (1997) 130 LGERA 134 Western Australian Planning Commission v Temwood Holdings Pty Limited [2004] HCA 63; (2004) 221 CLR 30 Winn v Director General of National Parks and Wildlife [2001] NSWCA 17; (2001) 130 LGERA 508 Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244 Woolworths Ltd v Pallas Newco Pty Ltd (2004) NSWCA 422; (2004) 61 NSWLR 707 Category: Principal judgment Parties: Janis Margaret Bardsley-Smith (1st Applicant) Ian Patrick Stubbs (3rd Applicant) Penrith City Council (1st Respondent) Administration and Marketing Solutions Pty Limited (2nd Respondent) Damien Michael Gance (3rd Respondent) Representation: Mr J Robson SC with Mr C Ireland (1st and 3rd Applicants) Submitting Appearance (1st Respondent) Mr P Tomasetti SC with Mr N Eastman (2nd and 3rd Respondents) McPhee Kelshaw (1st and 3rd Applicants) Gadens Lawyers (1st Respondent) Rotstein Lockwood Reddy Lawyers (2nd and 3rd Respondents) File Number(s): 40565 of 2009 Judgment A: Introduction 1These class 4 proceedings concern the use of premises known as Tenancy 230 in the "Penrith SupaCenta", at Jamisontown. 2The applicants challenge both the validity of the relevant development consent and the lawfulness of the current use, a pharmacy business known and registered as "Chemist Warehouse Distribution Centre Penrith" ('CWDCP'). 3The challenged consent (08/1288) was granted on 20 February 2009, to operate from 23 February 2009. It was relevantly modified in April 2009. Operations commenced at CWDCP in September 2009. The Parties 4Three applicants commenced the proceedings on 18 August 2009, but one original applicant (the second) discontinued on 1 November 2010. The two remaining applicants (Ms J M Bardsley-Smith and Mr Ian Stubbs) are involved in the local retail pharmacy industry and are, as entitled, clearly seeking to protect their commercial interests. 5The first respondent, Penrith City Council, filed a submitting appearance (save as to costs), and the two active respondents are the applicant for the relevant development consent, Administration and Marketing Solutions Pty Limited ('AMS'), and the lessee of Tenancy 230, Damien Michael Gance. References within this Judgment to the 'respondents' denote only the active respondents. References to 'Gance' will denote the respondent Damian Gance, rather than other members of his family. The Background to the Challenge 6Put shortly, pharmacy businesses must comply with licensing/approval requirements at both State and Federal levels, and must be developed and "used" in accordance with the planning regime administered at State and local levels. 7The challenge before the Court concerns the applicants' primary contention that the premises are used/operated as a "shop" - a use prohibited by the relevant planning instrument(s) at all relevant times. The respondents say that any retail elements of the multi-faceted use of the premises are ancillary to their primary use as a modern, appropriately licensed, distribution centre for products generally found in and procured from one's local pharmacy, or chemist shop, including, but not restricted to, prescription medicines. 8There is some tension between the respective planning and regulatory requirements in the circumstances of this case. The applicants submit that nothing in the State or Federal regulatory regimes requires, as part of a project incorporating a distribution centre, "a fully functional retail chemist shop", selling pharmaceuticals and other products/goods, but rather they require merely that the public have access to the distribution centre to obtain drugs which are "pharmaceutical benefits" (see [78] below). 9The applicants submit that the local Council as consent authority may have been misled in this respect, by the proponent of the development, when assessing the relevant development application, and the respondents contend that it is "unethical to prescribe (sic?) medication without the capacity to fulfil the obligation of a pharmacist to provide the full gamut of health care services that are expected or required". The Relief Sought 10The applicants' summons, as finally amended on 22 October 2010, seeks the following relief: The Applicants seek declarations that: 1.Consent DA08/1288 ('the Consent') granted by the first respondent to the second respondent on 20 February 2009 was granted contrary to s76B of the Environmental Planning and Assessment Act 1979 ('the Act'). 2.The Consent is void, invalid and of no force or effect. 3.The present use of the premises being Shop 230 at 13-23 Pattys Place, Jamisontown (Premises), is prohibited in the IN2 Light Industrial zone of the Penrith Local Environmental Plan 2010 (2010 LEP), being the use of the premises for the retail sale of pharmaceutical and related products. 4.The present use of the Premises is contrary to s76B of the Act, being a use of land for a purpose which is prohibited in the IN2 Light Industrial zone, being the retail sale of pharmaceutical and related products. The Applicants seek injunctive relief that: 5.The first respondent be restrained from taking any step pursuant to the Act which relies upon the validity and efficacy of the Consent. 6.The second and third respondents, their servants and agents be restrained from taking any further step pursuant to the Act which relies upon the validity and efficacy of the Consent. 7.The third respondent, his servants and agents be restrained from continuing the present use of the Premises for the retail sale of pharmaceutical and related products, being a purpose prohibited in the IN2 Light Industrial zone. And 8.Such further or other relief or order the nature of the case requires. 9.An order that the respondents pay the applicants' costs of the proceedings. 11Final versions of Points of Claim and Points of Defence were also filed, by leave, in late October 2010. B: The Parties' arguments, and the structure of this judgment 12The applicants say that their challenge, as framed, raised four substantive arguments, and they also made submissions on discretion and relief. Put shortly, as outlined by Mr Robson, senior counsel for the applicants, the four substantive questions they raised were: 1) Was the consent for Tenancy 230, even as amended, beyond Council's jurisdiction, because the subject use, being as a "shop", was prohibited by the then applicable Penrith Local Environmental Plan 1996 (Industrial Land) ('the 1996 LEP')? 2) Is the actual present use, as a "shop", regardless of how the consent is construed, prohibited by s 76B of the Environmental Planning and Assessment Act 1979 ('the EPA Act'), by virtue of the current LEP ('the 2010 LEP')? 3) Is that present use in breach of the terms of the consent, particularly condition 4, which, as amended, requires any retail sales to be no more than ancillary to the primary use of the premises as a distribution centre? 4) Is condition 4 valid, and, if it is not, is it severable from the consent, or does it render the whole consent invalid? 13The respondents addressed the four arguments and the questions of discretion and relief, but there is inevitably some overlap in the consideration of the questions. The respondents defended the consent, and the use, on the basis that the consent covered one multi-faceted, fully integrated use, comprising six activities, and cannot be segmented. 14I will now proceed to introduce, in turn, the "players" (section C, commencing at [15]); the premises (D, [33]); the planning regime (E, [54]); the regulation of the pharmacy industry (F, [67]); the subject development application ('DA') (G, [103]); and the consent in contention (H, [131]). I will then deal, in turn, with the evidence tendered about the pharmacy industry, and the retail sector (I, [151]), and with the evidence given by the key operator, Damian Gance (J, [206]), before turning to my reasoning (K, [228]). C: The Sources of Evidence, and the other non-party "players" 15Both sides relied on extensive affidavit, oral, and documentary evidence, much, but not all, of the latter being exhibits/annexures to major affidavits. There was also before the Court an extensive two-volume bundle of agreed documents (Exhibit A1), volume 1 of which contains documents relevant to planning considerations and approval, and volume 2 of which contains, largely, documents produced on subpoena. 16The applicant Ian Stubbs and the respondent Damien Gance both gave oral evidence, along with (a) two employees of either the active respondents or of interests associated with them, Minh Vu and Filomena Pannia, (b) pharmacists Peter Valastro (for the respondents) and Paul Mahoney (for the applicants), and (c) retail industry expert planner/analyst, Peter Leyshon (for the applicants). 17Stubbs is not himself a pharmacist, but the managing director of Lion Retail Management Group Pty Limited, a company he established in 1999 to provide specialist management and consultancy services to various businesses, including seven "community pharmacies" (i.e. traditional suburban "chemist's shops"), and some managed by receiver/managers. The pharmacies for which he acts are conducted by registered pharmacists holding approvals under the Commonwealth National Health Act 1953 ('National Health Act'). His company does not handle any stock, but negotiates deals with wholesalers, manufacturers or brokers. 18Gance is a registered pharmacist, and described himself as the "commercial manager" of the "group", "chain" or "network" of pharmacies which trade under the names "My Chemist" or "Chemist Warehouse". He had held that post for four years at the time of the hearing. He was residing in Kew, Victoria at that time. He is the lessee of Tenancy 230 and trades there as CWDCP under a licence with AMS, but is not engaged in the day-to-day operations. 19Despite his self-description as commercial manager of the Chemist Warehouse and/or My Chemist group(s), Gance sought, for no apparent reason, in his oral evidence, to reject any notion that there is such an entity as the "Chemist Warehouse Group", or that the various Chemist Warehouses are operated as a franchise. Whilst the Court accepts that those who operate "Chemist Warehouse" stores are often individuals who license the right to such naming, much of the documentary and affidavit evidence uses the terms "Chemist Warehouse Group" or "My Chemist Group". Various individuals at various stages purport to be working on behalf of different entities such as AMS or the "Chemist Warehouse Group", and sometimes interchangeably. 20In this judgment I will use the word "group" loosely, to refer to the "chain" or "network" of "My Chemist" or "Chemist Warehouse" businesses relevant to the particular business involved in these proceedings. Gance distinguishes between the two different brandings of the businesses in that group, as follows (pars 7 and 8 of his affidavit 4 June 2010): The 'My Chemist' format is a traditional retail chemist open to the public. It contains a dispensary for the distribution of restricted pharmaceutical products and also offers for sale ordinary non-restricted goods which are typically offered for sale in pharmacy premises. The 'Chemist Warehouse' format is a discount format which also includes a dispensary for the distribution of restricted pharmaceutical products, and which includes the sale of bulk, big boxed, grouped and discount items and 'specials' which fit within the types of goods found in pharmacies generally. 21The "group" of "My Chemist" and "Chemist Warehouse" businesses appears to at least operate somewhat in "affiliation" with, East Yarra Friendly Society Pty Ltd ('EYFS'). The group buys both prescription stock and "over the counter" ('OTC') stock from EYFS and/or its principal, Mario or Marcello Verrocchi. (See limited ASIC search at fol 049, registration dating from 20 October 1970). Verrocchi appears to have an interest in the operation of other entities as well as EYFS (such as "ePharmacy" operations), as well as some individual "Chemist Warehouse" stores. Various licences were issued in the names of EYFS trading under one of its former names, "East Yarra Friendly Society Ltd", and Verrocchi, and the business address for the licence holder was to be 274 Edwards Street, Reservoir, Victoria 3073. In various other documents that address is given for Damien Gance himself, "Chemist Warehouse", "My Chemist", "My Chemist Health and Beauty Distribution", and AMS. (Another key address now for the group and associated entities appears to be 40-44 Raglan Street, Preston, Victoria). 22AMS provides administrative, purchasing, and marketing services to the various enterprises in the "group", which comprised, at the time of hearing, a total of 174 "Chemist Warehouse" and "My Chemist" pharmacies, 33 of which operated in NSW/ACT. Among the services AMS provides is assistance with development applications. Individual pharmacy operators enter into service agreements with AMS and pay fixed monthly service fees. AMS's Senior Property Manager, Mr Tas (or Tass) Hatzis, is referred to in some documents as "Property Manager My Chemist", but Gance insists that Hatzis is employed by AMS, and is generally involved at the "start up" stage of group stores. Gance conceded that at certain times Hatzis could well be properly identified as his representative, as AMS might be seen by the general public as part of the group (Tpp238-9, and 260). 23Among the documentary evidence are (1) trademark searches (Exhibit A9), and (2) a copy of the non-exclusive licence agreement between Jack Gance (uncle of the respondent, Damian Gance) and Verrocchi on the one hand, as owners of the intellectual property in the brand names "Chemist Warehouse" and "My Chemist", and Damian Gance, trading as "CWDCP", on the other (at tab 1, vol 1 of Damian Gance's materials). That agreement (see fols 36 and 37) was executed by all three men and its schedule (fol 37) refers to the subject premises "or such other locations as the enterprise may relocate to". The commencement date is 21 September 2009 and the term is indefinite. 24The trademark for "Chemist Warehouse" is dated May 2002 (No. 913632), and was lodged by Jack Gance and Mario Verrocchi. The list of "goods and services" includes "online retailing" and "mail ordering" relating to pharmacies. A chimney was added to the trademark (No. 1197039) on 4 September 2007, but the two services were not carried forward into the list. In 2008 the words "discount chemist" were added to the chimneyed house image. 25Pannia is not a registered pharmacist, but has worked for the group since 1991. She described herself as the "NSW State Manager" responsible for 33 My Chemist/Chemist Warehouse stores operating in NSW and the ACT. Damian Gance, in his oral evidence (but not his affidavits), disputed that job specification, and it became a matter of some contention. He described her (Tp249) as "an area manager who works on behalf of AMS", managing the retail compliance of the stores. In later oral evidence she confirmed that she was the "State Manager" providing retail and management support to stores in the group, but employed by AMS. 26She testified that she set up the Penrith operation, and was very familiar with it, but was based at related Smithfield premises, which are said to be the distribution centre for EYFS/Verrocchi OTC products. She described the CWDCP operation thus: "the business is engaged in the storing, warehousing, picking, packing, distribution and sale of pharmaceutical products". 27She gave some evidence of the financial and dispatch records of CWDCP, including the relative value of the pharmaceuticals and OTC products which are distributed from Tenancy 230. She estimated the total value of OTC products distributed from the front of the premises to group stores in NSW/ACT between 2 October 2009 and 30 November 2010 at $103,583.05. Some exhibits are also relevant to the financial performance of CWDCP - Exhibits R1, A10, and A7/A11. 28Vu is a registered pharmacist employed by Gance and responsible for the day-to-day running of CWDCP, including checking scheduled medication dispatched from the centre to ensure no adverse interactions among the patient's various medications. 29He described picking and packing from shelves in the dispensary and in the front area, and he also described, in general terms, the layout of the rear section of the premises. He also noted (par 8 - emphasis mine): The pharmaceutical products delivered to the Centre are not delivered separately as stock for ePharmacy distribution and stock for the front of the Centre. They are delivered to the Centre in bulk. The staff at the centre separate them as the need arises. 30Valastro, called by the respondents as an expert on the pharmacy industry, has been a registered pharmacist practising in Victoria since 1975. He has conducted a registered training organisation business specialising in training pharmacy retail managers, but told the Court (Tp159, L23) that he had disposed of the organisation. He has been involved in Quality Management Systems. He has also run businesses of other types, e.g. security, photographic and marketing. 31Mahoney, called by the applicants as an expert on the pharmacy industry, has been a registered pharmacist since 1965, and has held many offices in the industry. 32Leyshon is a Town Planner, research analyst, and an acknowledged expert on the retail sector, and was called by the applicants. D: The Premises The SupaCenta 33The Penrith SupaCenta - sometimes referred to in the evidence as the "Penrith Super Centre" or similar variations - is located off Mulgoa Road at 13-23 Pattys Place, Jamisontown, and is owned by Pipven Pty Limited ('Pipven'). 34Consent was granted for its construction on 2 July 2001 (01/0231). It houses large "bulky goods" type retail operations, such as Spotlight, Bing Lee, Snooze, and various furniture outlets, and occupies more than 6.4ha of land, including extensive parking. Other "bulky goods" establishments, such as Bunnings, Harvey Norman, and Domayne, are located nearby, to constitute a precinct of bulky goods retailing. 35The land on which the SupaCenta stands was zoned 4(b) Special Industrial Zone under the 1996 LEP, and is now zoned IN2 Light Industrial under the 2010 LEP, which came into force on 22 September 2010. 36The SupaCenta building itself comprises 27,561m2 of floor space, in a single storey, but expansion (almost doubling the floor space) is proposed (in the modification assessment report, this expanded floor area is said to be 64,000m2). Council granted a further development consent on 9 November 2009 (09/0746) for "alterations and additions to existing Bulky Goods Retail Centre" (see Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWLEC 50, in which judicial review proceedings were dismissed by Biscoe J, and Calardu Penrith Pty Ltd v Penrith City Council [2010] NSWCA 189; (2010) 174 LGERA 446, where an appeal was dismissed by the Court of Appeal). The Lease of Tenancy 230 37Those responsible for leasing out Tenancy 230 on Pipven's behalf ('Ticor') issued a Tenancy Instruction document on 26 February 2009 (Exhibit A1, Vol 2, fols 181-2). 38The permitted use of the premises by the lessee was specified as: Retail sale of all generally accepted pharmacy products and services, including the sale of cosmetics, photographic services and products and opthalmological services. Warehouse and distribution services to be carried out from the premises in addition to the above. Trading as 'Chemist Warehouse'. (emphasis added). 39Pipven confirmed, on 4 June 2009 (Exhibit A1, Vol 2, fols 95-6), its entry into an agreement to lease the premises to Damien Gance from 14 August 2009. (The lease actually commenced on 21 September 2009 for 3 years, with provision for two 5 year extensions - see Exhibit A1, Vol 2, fols 183ff). Fit-out of the tenancy took place May-September 2009. The rent in year one was to be $150,000, year 2 $170,000, and year 3 $185,000, and trading commenced on 16 or 21 September 2009. The physical features of Tenancy 230, and their uses 40The pedestrian public gains access to Tenancy 230 from within the SupaCenta building, entering it through a doorway signed "Chemist Warehouse - Discount Chemist - Distribution Centre - Direct to the Public". Tenancy 230 occupies approximately 600m2 (variously 593-613m2), and presents - and the applicants argue, operates - as a large, discount "chemist shop", with a large storage area at the rear. The respondents complain that that "shop" presentation does not reflect the true nature of the business as a whole (Tp31, LL15-23). 41The physical premises of Tenancy 230, seen as a whole, can be divided into four separate areas, one of which relevantly sub-divides into two sections: (1) Entry from the public domain brings one into an open, densely stocked, shelved area, which, although presenting as a retail pharmacy, is seen by the third respondent as his "warehouse", and is so described on the floor plans. In that area, so-called OTC items are not only displayed for sale, but stored for distribution. (2)To the rear of that shelved, so-called "warehouse" area, in public view from the shelved area, but not publicly accessible, is what looks like a traditional pharmaceutical counter/dispensary area, where "pharmacists only" products are stored, largely owned by Gance. (3)Directly behind the rear wall of that dispensary area, in the rear portion of Tenancy 230, there is a table of computer screens for ePharmacy purposes, and for recording distribution of restricted products to other Chemist Warehouse/My Chemist stores in NSW/ACT, and a parcel packing area. A "Blue Cross" service was clearly planned for inclusion in the operation - it is mentioned in the Statement of Environmental Effects to which I will return (see [116]ff below) - and the service was to be supplied by a dispensing machine in that area. However, no such machine was in evidence when the Court carried out its view on 1 November 2010 (see Tp67, LL35-43, p69, LL24-25, and p70, LL11-13) and Gance said (Tp207, LL43-46) that, while he had had discussions with ePharmacy about a Blue Cross contract, he had reached no agreement on one (see also Exhibit A6). (4) Behind that computer/packing area is a large warehouse area, closed to the public. It is the respondents' case that this rear area of the premises is used for: (i)the warehousing, storage, packing and distribution of items ordered via "ePharmacy", (ii)the storage and distribution of pharmaceutical products to associated pharmacies, and to nursing homes, and (iii)to nursing homes, and for the storage and distribution of pharmaceutical samples provided to medical practitioners and other health care professionals. (4A) Some of area (4) is enclosed with a substantial steel fence, or "cage". Access to the "caged" area is restricted by a coded lock. Goods restricted under the NSW Poisons and Therapeutic Goods Act 1966 ('the PTG Act'), largely owned by Verrocchi/EYFS, are stored in the caged area. Outside the cage, drug samples, and non-restricted items (e.g. fragrances, baby care items, etc) are stored, the latter for eventual display and sale in the retail area out the front, and to fill "ePharmacy" orders. Pannia described the use of the caged area as follows (par 16): (a)Restricted pharmaceutical products are stocked; (b)Other non-restricted pharmaceutical products are stocked; (c)ePharmacy orders are processed; (d)ePharmacy orders are fulfilled by staff (the goods the subject of the orders are not boxed or packaged by the staff in the caged area. They are only loaded onto trolleys); (e)When live contracts for Samples Plus / Market Reach or nursing homes distribution exist, these orders are also processed and fulfilled from the caged area; (f)Restricted pharmaceutical products are stocked for, and picked and packed for distribution to, the Group's stores in NSW and in the ACT. (4B) The rest of the rear warehouse area (4) comprises a storage area for pallets etc, a staff amenity area, a parking spot for a forklift, an area for the keeping of larger items, including items such as wheelchairs, and a large roller door. All goods delivered to the premises come to that rear door. 42Outside the SupaCenta building, beyond that rear loading dock/receiving area, and to its north, is a large open-air carpark. Although the external rear wall of Tenancy 230 presents from the outside as a blank façade with a large roller door, external signage visible from the carpark advertises prescriptions available at a discount up to 50%, "distribution centre direct to the public", and the like. Distribution Agreements 43On or about the date trading commenced (circa 21 September 2009), Gance (trading as CWDCP) entered formal agreements with Verrocchi/EYFS (Supply and Distribution Agreement - tab 5 of Gance's materials), and with "ePharmacy", a business owned by ePharmacy Group Pty Limited (Fulfilment and Distribution Agreement - tab 6). 44Under the agreement reached with Verrocchi and EYFS (jointly trading as "My Chemist Health and Beauty Distribution"), CWDCP began warehousing and storing their goods, for distribution to other stores from Tenancy 230, on 10 December 2009. The distribution fee paid to CWDCP is two cents per item. Gance deposed that approximately 25% of goods offered for sale throughout the group are distributed through Verrocchi/EFYS, 65% are supplied directly by Sigma Pharmaceuticals Ltd (with whom the group has a wholesaling agreement under which individual stores obtain favourable buying terms), and 10% come directly from suppliers such as Revlon, L'Oreal, and the like. ePharmacy 45The ePharmacy company is owned by Mario Verrocchi, Brett Clark, Jeffrey Wasley, Gary Nipperess, Jack Gance, and Sam Gance (father of the respondent) (Exhibit A5). Damian Gance stressed that it was an independent entity in which he had no pecuniary interest, and he claimed at one stage not to know who the directors were. It works with the respondent AMS on projects, and about 95% of the products advertised on its website are kept in stores within the group. 46Under the relevant agreement, stores (such as CWDCP) wholesale any ordered goods to ePharmacy, and then distribute them to customers who have placed orders on-line, for 10% of the value of the order, plus any costs incurred. The agreement with CWDCP, as a distributor, clearly stipulates that the ePharmacy company owns the website. The customer has no relationship with the distributor, and pays only ePharmacy. CWDCP began fulfilling internet orders on 6 October 2009. 47ePharmacy markets and offers for sale OTC products that require no special licence to sell. It also markets and offers for sale products that are scheduled items and ethical products subsidised by the Federal Government under the PBS. These products may only be dispensed to customers by registered pharmacists from approved premises that have a PBS licence. Customers send the prescription to ePharmacy at Virginia, and it is express-posted to Penrith. Customers fill out the internet questionnaire. Any repeat prescription is sent back to the customer unless he/she has requested that it be held by ePharmacy, but it is not held by Chemist Warehouse (see Tp197, LL12-27). 48Gance believes that the ePharmacy transaction has two parts - a wholesale transaction between CWDCP and ePharmacy, and a distribution function discharged by CWDCP, involving the 10% commission, or "distribution fee", on the "retail value of the goods" (see Gance's direct quotation at Tp199, LL32-40). It is not an email transaction. The customer goes direct to the website, creates a user account, provides payment details, selects products and then proceeds to the electronic checkout from which ePharmacy coordinates distribution and dispatch from any one of its distribution centres around the country and the product is sent to the end customer (see Tp200, LL1-12). 49Gance deposed (29 October 2010) that it is his objective that, "with time", the business conducted in Tenancy 230 will "primarily distribute pharmaceuticals and related health care products transacted on the internet". He said (Tp203, LL26-29): I see the business being predominantly a distribution business and the prominence of that distribution is going to continue to increase as ePharmacy and Chemist Warehouse continue to throw more distribution towards the Penrith Distribution Centre. 50He hopes to achieve ePharmacy sales of approximately $100M per annum within five to ten years - it will represent 95% of the business, but continue to involve direct transactions between ePharmacy and the customer's bank account. The CWDCP business will need to maintain PBS approval, and, thus, direct access for the public. 51I will deal further with Gance's evidence later in this judgment (commencing at [206]). Staffing of CWDCP 52While there are some contradictions in the evidence about staff numbers and staffing levels, it would appear likely that there are 12 out of 16 present at any one time, with two staff members working exclusively on ePharmacy, and two on group distribution. All four work in the caged area, but the two working exclusively on ePharmacy also work outside the cage, as they are often required to "pick and pack" pharmaceutical products, particularly non-restricted pharmaceutical products stocked on shelves in the front area of the premises, in order to fulfil ePharmacy orders, as well as orders/requests from within the group. These staff frequently cross over between the front and back areas of the premises. 53There is one staff member working in the storage area of the premises which is not open or accessible to members of the public. This staff member performs tasks for the front area and for the ePharmacy component. There may be up to seven staff in the front public area, including three pharmacists (query "rotating"?) in the dispensary area (the supervising pharmacist, Vu, and two assistant/trainee pharmacists). E: The Planning Regime The 1996 LEP 54Clause 9 of the 1996 LEP (Exhibit A1, tab 1) provides the land use zoning and development control table. As already noted, at the time of the granting of the challenged consent, the subject land was zoned 4(b) Special Industry Zone under the 1996 LEP. 55No use was permissible without development consent (item (b)(i)). 56Uses permitted "only with development consent" (in item (b)(ii)) were: Shops trading principally in bulky goods which shops (a) have a gross floor area of not more than 1,000m2 and (b) do not have frontage to a road referred to in clause 20 And any land use other than those included in item (b)(iii). (Clause 20 has no direct relevance to the current proceedings) 57Several uses were specifically designated as prohibited in item (b)(iii), including "general stores", "office premises (other than those ancillary to, and used in conjunction with, another land use that is not prohibited in this zone)", and "shops (other than convenience stores, corner shops, fast food take-away restaurants, take-away food shops, shops trading principally in bulky goods included in paragraph (b)(ii) and shops trading principally in motor vehicle parts and accessories, including marine vessel parts and accessories)". 58The term "shop" was defined in Schedule 1 (at fol 34) to mean: ... a building or place used for the purpose of selling, exposing or offering for sale by retail goods, merchandise or materials but, in the development control table, does not include a building or place elsewhere specifically defined in this Schedule, or a building or place used for a land use elsewhere specifically defined in this Schedule. 59The words "sale" and "retail" are not defined, but have been held to have, as their ordinary meaning, that of a sale, as in transfer of property for money, to customers not themselves engaged in the retail trade, not wholesale. The volume or quantity must be not larger than is necessary to satisfy the requirements of "the ordinary man in the street". Defining a retail sale in terms of small quantities and ultimate consumers finds support in the recognised dictionaries. See Chan v Dainford Ltd [1985] HCA 15; (1985) 155 CLR 533, Collector of Customs v Chemark Services Pty Ltd (1993) 42 FCR 588; (1993) 114 ALR 531, and also Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244, in which (at 258-9) Cole JA discussed in some detail the differences between "wholesale" and "retail", and the concept of "warehouse". 60Other possibly relevant definitions in Schedule 1 of the 1996 LEP (at fols 25-36) included: bulky goods means large goods which are, in the opinion of the council, of such a size and shape as to necessitate: (a) a large area for handling, storage or display; and (b) easy and direct vehicular access so as to allow for their collection by customers, but does not include agricultural products, beverages, clothing, food, footwear, leisure goods, paper or stationery products, small electrical appliances, electronic goods or toys; business premises means a building or place in which there is carried on a light industry or trade (but does not include a brothel) which provides a service directly and regularly to the public but (in the development control table) does not include a building or place specifically defined elsewhere in this Schedule. convenience store means a building or place: (a) used for the purpose of selling, exposing or offering for sale by retail principally groceries, small goods and associated small items, and (b) used in conjunction with the sale by retail of petrol, oil and other petroleum products, and (c) that does not exceed 200m2 in gross floor area, but (in the development control table) does not include a building or place specifically defined elsewhere in this Schedule. corner shop means a building or place used for the purpose of selling foodstuffs, personal care products, and other small daily convenience goods (whether or not the facilities of a post office, bank, newsagency or dry cleaning agency are included) and which has a gross floor area not exceeding 100 square metres. general store means a shop: (a) used for the sale by retail of general merchandise and that may include the facilities of a post office, and (b) that does not exceed 200m2 in gross floor area, but (in the development control table) does not include a building or place specifically defined elsewhere in this Schedule. office premises means a building or place used for the purpose of carrying out professional, administrative, clerical or public duties but, for the purposes of the development control table, does not include an office used in conjunction with or ancillary to a landuse elsewhere specifically defined in this Schedule. warehouse or distribution centre means a building or place used mainly for storing or distribution of good or materials pending their distribution to the retail trade but does not include the retail sale of any of the goods or materials from that building or place. 61Just as the definition of "shop" requires interpretation of the words "sale" and "retail", the definition of "business premises" requires interpretation of the word "trade". Although House of Peace Pty Ltd v Bankstown City Council [2000] NSWCA 44; (2000) 48 NSWLR 498 urges caution in the use of dictionaries, clearly "trade" connotes "buying and selling", and/or conducting business (c.f. a profession) for a profit. The respondents pose the question of whether that interpretation could embrace the "picking, packing, and distributing" elements of the use of Tenancy 230. 62Accordingly, at the time of the relevant assessment and consent, the position was that, unless a use was expressly prohibited under 4(b)(iii), it was permissible with consent (being an innominate use). 63Clause 23A of the 1996 LEP (fol 22) dealt specifically with development of the subject land (namely Nos.13-23 Paddy's Place, Jamisontown). Clause 23A(2) provided that: despite any other provision of this plan, the Council may grant consent to the carrying out of development on the land to which this clause applies for the purposes of shops principally trading in bulky goods without any restriction as to the gross floor area of any such shops. The 2010 LEP 64The 2010 LEP (Exhibit A1, tab 3) was gazetted on 22 September 2010, and expressly repealed the 1996 LEP. The subject site was redesignated as IN2 Light Industrial, and the structure of the zoning table is effectively the reverse of that in the 1996 LEP (see fols 73-74), with innominate uses now prohibited. The only use permitted without consent is "roads". Relevant uses permitted with consent include "industrial retail outlets". Specifically prohibited are "schools". 65Relevant definitions in the 2010 dictionary (fols 149-182) were and are relevantly similar to (some exactly the same as) those in the 1996 LEP. While the 2010 LEP contains no definitions of "convenience store", "corner shop" or "general store", the following definitions are noted: bulky goods premises means a building or place used primarily for the sale by retail, wholesale or auction of (or of the hire or display of) bulky goods, being goods that are of such size or weight as to require: (a) a large area for handling, display or storage, or (b) direct vehicular access to the site of the building or place by members of the public for the purpose of loading or unloading such goods into or from their vehicles after purchase or hire, but does not include a building or place used for the sale of foodstuffs or clothing unless their sales is ancillary to the sale or hire or display of bulky goods. business premises means a building or place at or on which: (a) an occupation, profession or trade (other than an industry) is carried on for the provision of services directly to members of the public on a regular basis, or (b) a service is provided directly to members of the public on a regular basis, and may include, without limitation, premises such as banks, post offices, hairdressers, dry cleaners, travel agencies, internet access facilities, medical centres, betting agencies and the like, but does not include sex services premises. industrial retail outlet means a building or place that: (a) is used in conjunction with an industry (including a light industry) but not in conjunction with a warehouse or distribution centre, and (b) is situated on the land on which the industry is carried out, and (c) is used for the display or sale (whether by retail or wholesale) of only those goods that have been manufactured on the land on which the industry is carried out. neighbourhood shop means retail premises used for the purposes of selling small daily convenience goods such as foodstuffs, personal care products, newspapers and the like to provide for the day-to-day needs of people who live or work in the local area, and may include ancillary services such as a post office, bank or dry cleaning, but does not include restricted premises. office premises means a building or place used for the purpose of administrative, clerical, technical, professional or similar activities that do not include dealing with members of the public at the building or place on a direct and regular basis, except where such dealing is a minor activity (by appointment) that is ancillary to the main purpose for which the building or place is used. shop means retail premises that sell groceries, personal care products, clothing, music, homewares, stationery, electrical goods or other items of general merchandise, and may include a neighbourhood shop, but does not include food and drink premises or restricted premises. warehouse or distribution centre means a building or place used mainly or exclusively for storing or handling items (whether goods or materials) pending their sale, but from which no retail sales are made. 66These definitions, especially that of "warehouse or distribution centre", would appear to suggest that retail sales of any sort are now prohibited, regardless of whether they are in aid of the warehouse or distribution purpose. F: Regulatory Regimes for Pharmaceutical Businesses Generic v branded pharmaceuticals 67It is important to understand, at the outset of the following discussion, the distinction between "generic" and "branded" pharmaceuticals when considering a case such as the present. Valastro deposes as follows (pars 34-36 - emphasis mine): When a drug company develops a new drug and successfully brings it to the market, it normally applies for a patent on the drug, which gives it the exclusive right to market the drug for a specific number of years. The drug is named after its ingredient chemical or drug and the drug company would also develop a simpler trade name for marketing the drug. These types of drugs are known as branded pharmaceuticals and they are required to have both the trade name and the name of the ingredient drug (or drugs) on their container label. Once the patent on the drug expires, the drug is left without patent protection. The drug may then be produced and distributed by any drug company. A drug produced and distributed by any drug company after the patent on it has expired, is known as a generic drug. Generic drugs are required to be manufactured so as to have the same bioequivalence as, or so as to be therapeutically equivalent to, the original formulation. Different brands of such generic drugs can be interchanged without differences in clinical effect. When a prescriber writes a prescription for a branded pharmaceutical whose patent has expired and a generic equivalent is available the Pharmaceutical Benefits Scheme allows for (and encourages) a pharmacist to substitute a generic drug for the branded drug provided that the prescriber has not specifically stated 'no substitution' on the prescription form. Competition between drug companies producing generics results in more affordable pharmaceutical prices to the public. 68The Pharmacy Board of Australia publication "Guidelines for dispensing of medicines" (Exhibit A8) carries no date, but it does refer to a key statute - the Health Practitioner Regulation National Law Act 2009 (Qld). The document notes that as part of the COAG agreement for a national regulation system, the ownership of pharmacies, regulation of premises, inspections and related matters remain within the jurisdiction of the States and Territories. The focus of the Guidelines is on safe dispensing and labelling, and on the training and roles of dispensary assistance. 69Item 3 of the Guidelines enables the dispensing of a prescription transmitted by facsimile or scanned copy provided the pharmacist has taken reasonable steps to ensure the bona fides of the prescription, and arrangements are made to receive the original. 70Item 4 says "the Board views the indirect supply of medicines, such as internet and mail-order dispensing, as less than the optimal way of delivering a pharmacy service because communication may be compromised". 71There are detailed guidelines regarding labelling of dispensed medicines. Section 7.2 says that label content should "include the following: The brand and generic names of the medicine, the strength, the dose form and the quantity supplied; for extemporaneously prepared medicines and medicines not dispensed by count, the name and strength of each active ingredient, and the name and strength of any added preservatives or the name of the formula as described in a standard reference book Specific directions for use, including frequency and dose The patient's name or, in the case of an animal, the owner's name and the kind of animal The date of dispensing or supply The dispenser's (and if different, the checking pharmacist's) initials A unique identifying code The name, address and telephone number of the pharmacy or pharmacy department at which the prescription was dispensed Storage directions (where important) and expiry date (where applicable) The words 'Keep out of reach of children'. 72Section 8 of the guidelines deals with counselling patients about prescribed medicines. Licensing of premises and operations 73To conduct any broad-based operation in the pharmaceutical industry, various licences or approvals are needed, even if no manufacture is involved. Both State and Federal authorities are involved in regulating the industry. 74Maloney repeatedly referred to the Health Insurance Commission ('HIC'), and Valastro at no point in his documentary evidence, nor in their joint conference and the report thereof, took issue with that. (See Tpp184-188. According to the Medicare website the HIC was established in 1974 to run "Medibank" and later Medibank Private until the "universal care system" called Medicare was introduced in 1983. Medibank Private separated from the HIC by 1998, and the HIC was renamed Medicare Australia on 1 October 2005). 75Pharmacists need approval to open a new pharmacy, relocate an existing one, change the size of an existing one, change the address of an existing one, and change the ownership of an existing one. 76The Pharmacy Location Rules - Applicant's Handbook, dated March 2009 (annexure B to Valastro's affidavit, with various application forms in annexure C) provides information and guidance to pharmacists regarding applications for the establishment of a new pharmacy approval or the relocation of an existing pharmacy approval. 77Section 90 of the National Health Act provides for the Secretary of the Federal Health Department to approve a pharmacist if the Australian Community Pharmacy Authority ('ACPA') so recommends, and State law registers pharmacists and enables them to carry on business in a pharmacy. A change of pharmacy ownership or a change in the size of pharmacy premises does not require a recommendation from the ACPA. There are location-based criteria to be applied. 78Section 84 defines "approved pharmacist" as "a person for the time being approved under section 90 ...". It also clarifies that, contrary to a popular misconception, the term "pharmaceutical benefit" refers not to the subsidisation of the price of a drug by the Commonwealth, but to the actual drug or, in other circumstances, to a form of the drug and, on some occasions, to a brand of a "pharmaceutical item" that is the drug in that form with that manner of administration. These matters are dealt with in more detail in s 85, and s 84AB defines "pharmaceutical item". 79The approval of pharmacists is dealt with in s 90. Section 90(3D) provides that (emphasis added): The Secretary must not grant approval under this section to a pharmacist in respect of particular premises if the Secretary is satisfied that on or after the day the approval would otherwise be granted: (a) the pharmacist would be unable to supply pharmaceutical benefits at the premises; or (b)the premise would not be accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the Secretary, are reasonable. 80It was suggested in argument that this requirement was inserted in the Act to restrict pharmacists who wished to supply PBS medicines only by mail order. 81Section 90(4) provides that nothing in the "section authorises the Secretary to grant approval to a pharmacist in respect of premises at which that pharmacist is not permitted, under the law of the State or Territory in which the premises are situated, to carry on business". 82Across the States and Territories there is now a uniform national law, which New South Wales has adopted by enacting the Health Practitioner Regulation (Adoption of National Law) Act 2009 (NSW), and making regulations under it to lay down detailed standards for pharmaceutical premises. (See, e.g. cl 13 of the regulation) 83Section 94 of the National Health Act provides for the Minister exercising his discretion to approve a hospital authority for the purpose of its supplying pharmaceutical benefits to patients receiving treatment in or at the hospital. There was controversy during this case as to whether a "hole in the wall" would provide sufficient public access for a warehouse to comply with s 90(3D) of that Act, and cl 13 of the NSW regulation, but it may indeed satisfy any criteria for a hospital dispensary. 84Section 98(3) provides that: If the Secretary is satisfied that: (a)an approved pharmacist is not carrying on business as a pharmacist at premises in respect of which the pharmacist is approved; or (b)the premise are not accessible by members of the public for the purpose of receiving pharmaceutical benefits at times that, in the opinion of the Secretary, are reasonable; then the Secretary may (at his or her discretion), by notice in writing to the pharmacist, cancel the approval of the pharmacist under section 90. 85Valastro also attaches to his affidavit a detailed explanatory memorandum (annexure F) from which I glean the following: Section 90 involves approval to supply "at" or "from" particular premises. There must be both ACPA approval and State authority approval. The Pharmacy Location Rules include such things as the minimum distance between pharmacies and whether there is a community need for pharmaceutical services in a particular location. There are restrictions on connection to supermarkets. The purpose of the location rules is twofold - first to provide widespread community access to pharmaceutical services, and second to ensure the continued viability of existing pharmacies. The rules were introduced in 1991 and they have been somewhat controversial in terms of competition policies. Woolworths has pressed for approval of establishment of pharmacies in-store. At a minimum, members of the public must have access to pharmaceutical benefits "at" the approved premises at reasonable times. Pharmacists may also choose to supply, e.g. to aged care facilities or mail order customers, pharmaceutical benefits "from" their premises. Holzberger v Secretary, Department of Health & Ageing [2007] FCAFC 68; (2007) 158 FCR 586 concerned the cancellation of an approval on the basis that Holzberger was not dispensing pharmaceutical benefit medicines to the public at the specified location (A 3 x 3 space formerly used as a storeroom). He was dispensing "from" this location to another pharmacy not approved to supply pharmaceutical benefits 375m away. The full Federal Court held that the supply of pharmaceutical benefits need not necessarily occur "at" the approved premises. The Act was amended to close the loophole (see pp 5-8 of the Australian Parliamentary Library paper 11 September 2007). 86The applicants drew the Court's attention to a case in the Federal Court regarding s 90 of the National Health Act - Terry White Chemists Australia Fair v Secretary Department of Health and Ageing ("Terry White") [2009] FCAFC 74; (2009) 178 FCR 161 - which involved a challenge by a rival chemist to a Chemist Warehouse store in a shopping centre on the Gold Coast, adjacent to the building where the challenger had an outlet. The issue was whether the decision of the Secretary of the Department of Health to grant approval under s 90(1) of the National Health Act to supply pharmaceutical benefits exceeded the Secretary's power because of the provisions of s 90(4). 87The Court described s 90(4) as "a curiously worded provision". The Court commented that it would seem to amount to no more than an expression of intention that the Act not displace or override any State or Territory law in accordance with s 109 of the Constitution. The Secretary, however, apparently took the view that the sub-section operated as a limitation on power, and that an applicant must show that it is permitted under a law regulating pharmacies to carry on business at the premises in respect of which the relevant PBS approval is to be granted. The Secretary was considered by the Court to be "plainly correct" in this respect. 88The Full Federal Court said (at [17] and [20] - emphasis added): ... it is clearly open to the Minister to require the Authority to take into account the land use requirements of State, Territory and Local laws if the Minister should consider that to be appropriate. This is an altogether different proposition from the proposition that, when the Secretary comes to consider the recommendation of the Authority pursuant to s 90(3)B of the National Health Act she is obliged to consider the impact of those laws again.... ... The preferable construction is to regard s 90(4) of the National Health Act as not so much a limitation on the power of the Secretary to grant an approval pursuant to s 90(1), as a limitation on the extent of the approval that the Secretary grants. Viewed in this way, s 90(4) makes it clear that an approval granted by the Secretary pursuant to s 90(1) is not to be regarded as extending beyond the purposes of the scheme set up by Pt VII of the National Health Act, the Pharmaceutical Benefits Scheme. The approval is not to be regarded as overriding any provision of State or Territory laws under which the carrying on of the business of a pharmacy at the relevant premises by the particular pharmacist would not be permitted. On this construction, the Secretary would not be concerned with the operation of any laws of any State or Territory, but only with the granting or refusal of approval to a particular pharmacist to supply pharmaceutical benefits at particular premises, for the purposes of the Pharmaceutical Benefits Scheme. A pharmacist to whom such approval is granted would still need to be permitted by the laws of the relevant State or Territory to carry on the business of a pharmacist at the premises in respect of which the approval has been granted. The Secretary cannot grant the pharmacist an approval that would oust the effect of those State and Territory laws, but only an approval for the purposes of the Pharmaceutical Benefits Scheme. It would be for the authorities of the relevant State or Territory to apply and enforce the laws of that State or Territory. Accordingly, s 90(4) of the National Health Act is a declaratory provision that seeks to put beyond doubt that, although a pharmacist might be approved under s 90(1) for the purpose of supplying pharmaceutical benefits at or from particular premises, he or she being willing to do so on demand at particular premises, such an approval does not cover the field of all permits, licences or approvals a pharmacist may be required to obtain in order to comply with a law of a State or Territory in which the premises are situated, in order to carry on the business of a pharmacist. In that sense, s 90(4) of the National Health Act is not a limitation on the power of the Secretary, but explanatory of the content of the power. 89The Court concluded (at [22]): The adoption of a purposive construction of s 90(4) of the National Health Act leads to the conclusion that, when considering an application for approval under s 90(1), the Secretary is not concerned with provisions of State or Territory laws, but only with the functioning of the Pharmaceutical Benefits Scheme... 90Based on the clear dichotomy drawn in the above-quoted passage from Terry White, as between approval of operator and approval of use of relevant premises, the applicants submit (par 25 of final submissions) that a s 90 approval does not imply anything either way about the need to operate a "shop". Applications relevant to CWDCP 91Gance applied on 12 or 15 June 2009 to Medicare Australia for approval to relocate a pharmacy from Priceline at Fitzroy in Victoria to Tenancy 230, with opening scheduled, if approved, for 30 August 2009. Despite objections from the present applicants and 20-odd other pharmacists, Medicare informed Damien Gance in September 2009 (it would appear, twice) that his application to supply pharmaceutical benefits at the premises had been approved. Medicare approved the application to supply pharmaceutical benefits at the Tenancy 230 premises, with effect from 21 September 2009 (see fols 105-106). Formal approval for Damian Gance to trade as "CWDCP" is dated 18 September 2009 (fol 198). 92In September 2009, the NSW Pharmacy Board also approved Gance's application for a new pharmacy at the Tenancy 230 premises (fols 61-89). The subject pharmacy is registered as "CWDCP", and Gance is nominated as the sole registered owner. The lessor (Pipven) and the lessee Gance are named, and the expiry date of the lease is nominated as 13 August 2012. One Lance Vadala appears to have prepared the application, as a "junior" to Hatzis, and described himself on correspondence as Property Manager of AMS. It was dated and signed by Gance on 27 August 2009. In a statutory declaration dated 7 September (at fol 086) Gance indicated he expected to incur start up expenses of $800,000 which he would fund out of his own resources, including funds given by his father, Samuel Gance, without strings. There is an inspection report dated 14 September 2009 (at fols 87-88). 93Wholesaling of pharmaceutical products is also regulated by State legislation, the PTG Act. Supply by wholesale is defined as supply of a substance or goods for the purpose of resupply. Appendix C the 2008 regulation made under the Act authorises each person who is specified to possess and be supplied with wholesale quantities of specified substances - medical superintendents, optometrists, podiatrists, dental therapists or oral health therapists, dental hygienists, vaccination nurses, emergency ambulance officers, etc. "Restricted substance" is defined in s 4(1) of the PTG Act as any substance specified in schedule 4 of the poisons list, established by s 8. The holder of only a wholesaler's licence must not supply a restricted substance to a person who is not an authorised person, even if that person were to hold a valid written prescription. Regulations 160 and 161 regulate the licensing - the applicant must be a fit and proper person and the premises must be appropriate. Under regulation 134 a pharmacist can supply another pharmacist in certain specified circumstances. 94On or about either 24 or 29 September 2009, PTG Act applications were made to the NSW Department of Health, in respect of both a Smithfield site and the subject premises, for licences to "supply by wholesale poisons and/or restricted substances for therapeutic use". The name John Fulton Prendergast was deleted from the heading "Name of Licence Holder" in both cases. (He was apparently National Logistics Manager of My Chemist Health and Beauty Distribution, until made redundant about August 2010). 95The Smithfield application (see fol 006) was lodged in the names Mario Verrocchi, Jack Gance and EYFS "on behalf of Smithfield Distribution Centre", and the Penrith one in the name of Mario Verrocchi and Brett Clarke (on behalf of ePharmacy, and East Yarra Friendly Society Ltd & M Verrocchi) in respect of Shop 23 SuperCenta (sic) Penrith. 96Any applicant for such a licence is required to provide an overview of the activities in which the company is involved. In this case, both licence applications provided the following information (see fols 009 and 023): My Chemist / Chemist Warehouse Group own and operate 160 retail pharmacies throughout Australia including licensed Distribution Warehouses situated in Victoria and Queensland. In NSW there are currently 65 Chemist Warehouse Stores in metropolitan and regional areas, it is planned to increase this number over the next five years. These NSW stores are currently supplied through our Victorian Warehouse and it is our intention to open a NSW Distribution Warehouse to service these stores. The company sources product from local suppliers which are directly supplied to our own warehouses then distributed to our own stores these products are limited to schedule 2, 3 and 4 products. Chemist Warehouse stores also obtain scheduled products directly through state based pharmaceutical wholesalers. The type of products to be wholesaled is schedule 2, 3 and 4.... The My Chemist / Chemist Warehouse Group only operate within Australia therefore we do not export any schedule products. It is intended to supply and distribute only to Chemist Warehouse Retail Pharmacies throughout New South Wales. 97The departmental documents in evidence include an "Inspection Report/Checklist". Prendergast was interviewed on 10 November 2009 in respect of both Penrith and Smithfield. 98The inspecting officer, Phillip Bannon, noted, in his report of 19 November 2009 (fol 048), that the Chemist Warehouse group of pharmacies had applied for wholesale licences at the two sites in NSW, to supply scheduled substances to pharmacies within their group, and that they already had a wholesale business in Victoria and needed to set up two wholesale premises in NSW. He described the dichotomy of the Penrith premises, noting a separate distribution centre at the rear of the pharmacy to be used as a NSW supply centre for ethical stock for Chemist Warehouse pharmacies, "independent from the pharmacy both physically and operationally". He described the Smithfield premises as "a traditional wholesaling warehouse". (As Smithfield is not engaged in supplying pharmaceutical benefits to end users, it does not require National Health Act approval, merely a PTG Act licence to supply scheduled items). 99The principal pharmaceutical advisor, Martin Power, signed off on the applications on 30 November 2009 (fols 040 and 045). 100Bannon informed the Chief Financial Officer of AMS and/or the group, Vince Cardinale, that the accounting and invoicing must be in the name and address depicted on the licence. It was decided that the legal entity for both licences would be "East Yarra Friendly Society Ltd and M Verrocchi", and Bannon recommended licensing both sites with a condition that they "only supply to registered pharmacies in New South Wales". 101The licences were issued in the name EYFS, trading as East Yarra Friendly Society Ltd, and M Verrocchi, and the business address for the licence holder in respect of both premises was to be 274 Edwards Street Reservoir, Victoria 3073. This was finalised by agreement on 3 December 2009. The licences were granted/issued, and forwarded to Prendergast, on 8 December 2009 - Smithfield is licence No.4035, and Jamisontown No.4036 (see fols 057-058). Verrocchi applied to renew one of the licences (instead of two) on or about 15 September 2010 (see fols 59-60). 102Accordingly, the wholesale/distribution use of the rear of Tenancy 230 is licensed (4036), and the retail supply of pharmacists from the front is also licensed, at both State and Federal levels. (All three documents appear at tab 34 of the Gance materials). G: The Development Application Made Background to the proposal 103Despite having established, with limited (but all necessary) approvals, a warehouse and distribution centre at Smithfield, the group did not use it for restricted pharmaceutical products, and did not have a licence for it under the National Health Act. So-called "ethical products" were distributed to group stores in NSW/ACT either directly from supplier Sigma Pharmaceuticals Ltd, or from the group's distribution centres in Queensland and Victoria. 104In a study he conducted, Gance identified the group's need for an additional distribution centre in NSW, and deposed (affidavit sworn 4 June, and filed 11 June 2010, par 20 - emphasis added) as follows: The purpose of establishing the Penrith distribution centre was generally: a.To have a multi-faceted centre in New South Wales similar to the centres that exist in Victoria and in Queensland; b.To provide a distribution centre for ethical products (being generally Schedule 4, Schedule 5 and Schedule 8 products) which have come off patent (commonly referred to as 'generics') and consequently are able to be sold to the public at significantly lower prices than those brand products still under patent; c.To provide a distribution centre for brand ethical products as we do in other States and Territories in Australia; d.To have an operative centre, warehousing and distribution point in New South Wales for the ePharmacy on-line business which is affiliated with the Group; e.To have an operative centre, warehousing and distribution point in New South Wales for the Samples Plus group and for the Market Reach group; f.To provide a base for the operation of distribution of goods to nursing homes; g.To provide a base for the operation of the Home Medicines Review scheme; and h.To provide a base for the operation of distribution of goods under the My Home Health scheme. 105Before the Penrith centre was established (as he noted in par 23) "no other My Chemist or Chemist Warehouse store in New South Wales operated the ePharmacy, nursing homes distribution, Samples Plus/Market Reach and My Home Health components of the business". Gance was not, and says he is not now, involved in the Smithfield operation. 106Mr Robson asked Gance directly, who actually wanted to have two separate wholesaling premises in NSW, and the answer Gance gave (at Tp258, LL6-7) was: "Mario Verrocchi and East Yarra Friendly Society trading as My Chemist Health and Beauty Distribution". In terms of Penrith, specifically, he asserted (at Tp258, LL13-18): We established the business as a distribution centre with many facets. One of the facets was always intended to be a wholesaling distribution centre. It was always intentioned to be a market reach samples plus distribution centre. It was always our thought that we would run an ancillary retail out the front. So, no, it was not my intention to have a separate and independent business. The components of the use intended by the proponent(s) 107The items of intended business listed for the proposed project, in [104] above, require some elaboration. Gance testified that many of them operate by the taking and/or filling of orders, but not in the "traditional retail format" of a customer coming to a place, selecting a product on display, and purchasing it OTC. Many require "remote or on-line ordering", followed by dispatch from a warehousing/distribution centre. "Ethical products" require a PBS licence and, therefore, premises with a dispensary, and public access. 108"Samples Plus" and "Market Reach" are on-line ordering systems in which sample goods are offered free-of-charge to appropriate health professionals. The manufacturer/supplier contracts with the businesses (which operate websites, like ePharmacy, which I have described above). The nursing home business would operate in a similar way. 109Chemist Warehouse and ePharmacy are equity partners in Market Reach, which was formed in 2007. Market Reach Pty Ltd has an agreement with Alphapharm Pty Ltd, a large supplier of PBS medicines and Australia's leader in generic medicines, and has engaged Gance to assemble, collate and package samples of health care products at the Penrith premises and cause them to be delivered by Australia Post to health care professionals in NSW and the ACT. Market Reach owns the intellectual property and operates the business. On 22 October 2010, Gance entered a "Fulfilment and Distribution Agreement" with Market Reach (tab 2 of Gance's affidavit 29 October 2011). Remuneration for distribution is 7.50 cents per first unit of sample delivered to the delivery address the subject of the order and 10 cents for each additional unit. 110"Samples Plus" appears to be the only registered trademark owned by Market Reach (see fol 40). Mr Gance states that (par 46 First Affidavit) to service Market Reach, CWDCP is required to have both a licence under s 90 of the National Health Act and a "poisons" licence (under the PTG Act) to supply scheduled medications. 111In the "Samples Plus" business the property in the goods lies with the manufacturer of the pharmaceutical, and passes to the medical practitioner (Tp204-p205). Market Reach is responsible for promoting the manufacturer's goods to the doctor and CWDCP merely distributes for which it is remunerated. At Tp206, LL34-44 Gance said: There is no agreement between Chemist Warehouse Distribution Centre Penrith and the manufacturer or supplier of the pharmaceuticals. Market Reach, which is an independent entity, enters into an agreement with a pharmaceutical manufacturer or supplier as it's a function of marketing and the way that pharmaceutical manufacturers used to work whereby representatives would call a medical clinic and give them stock from the boot of their car is no longer allowed, permissible, so what happens is the medical representative will call upon the medical practice, the medical practitioner will order samples, those samples are then fulfilled by one of the Samples Plus distribution centres of which Chemist Warehouse Penrith distribution centre is one. They fulfil the orders which are specifically for Alphapharm products. 112By comparison, a "Samples Plus" transaction is "a cold call, so to speak, where the marketing company Samples Plus who is part of Market Reach will send a pro forma sampling sheet out to the doctor" (Tp207, LL6-16). 113The "My Home Health" component of the business involves the storage, display, testing and sale of large bulky medically related items such as wheelchairs, walkers, commodes, crutches, etc. These are not generally available in an ordinary My Chemist or Chemist Warehouse store due to the practicalities of accommodating their size. A larger integrated multi-faceted business location allows for these larger items to be stored and displayed as necessary (see Tp211, LL21-32). 114The "Home Medicines Review" is a customer service that can be undertaken by any pharmacist in cooperation with a person's general practitioner. It involves a home visit and a face-to-face interview in an appropriate space. Medication regime is reviewed and a report provided to the general practitioner who then agrees with the consumer on a medication management plan. A larger facility obviously can provide for office or other space to facilitate the face-to-face requirement. The Federal Government's information sheet on this review scheme appears at tab 16, commencing at fol 233. Medicare pays a prescribed fee for each review referred by a general practitioner. 115These details were reflected in materials provided to the Council in the DA process. The DA is submitted, with a Statement of Environmental Effects 116On 12 December 2008, on behalf of AMS, Restifa and Partners Pty Limited ('Restifa') lodged with the Council DA 08/1288, which sought consent for the fit out and use of Tenancy 230 to fulfil the identified need for an additional distribution centre for the group in NSW. 117The supporting Statement of Environmental Effects ('SEE') was prepared by David Ryan, Executive Director of City Plan Services Pty Ltd (later renamed City Plan Strategy and Development, but herein 'City Plan'). In his fee proposal (Exhibit A1, Vol 2, fols 153-158) dated 19 November 2008, he noted (at fol 153) that "an ordinary retail pharmacy would be prohibited on the site by reason of being defined as a shop" as distinct from bulky goods retailing or another permitted use. 118The City Plan SEE described the proposal thus (at fol 193): The proposed development involves the fit out and use of the subject tenancy for a Chemist Warehouse and Bulky Goods Distribution outlet. 119At the time of the submission of the DA and SEE, what became LEP 2010 was on display as a 2008 draft. Compliance of the proposal with the relevant provisions of that draft was asserted by the SEE (at p18, fol 206). The SEE 120The introduction of the SEE stated that the DA is for a "Chemist Warehouse", yet stated that it was prepared on behalf of "My Chemist" (fol 190). 121As depicted on the proposed floor plan (drawing SK2A - fol 266), the "despatch/packing" area at the rear comprised 331m2 (which appears to include the dispensary area), and the "warehouse" area at the front, 261.7m2. 122The SEE stated (fols 193-194): The use of the tenancy comprises several interrelated elements which are briefly described as follows: Elements of use Description One of Australia's largest internet pharmacy operators. Currently distribution is carried out from Townsville and Virginia but increased demands mean an additional distribution centre is required in NSW. The Penrith Distribution Centre shall become a key distribution point and responsible for fulfilment of internet orders for a large proportion of NSW. Epharmacy The internet service offers a full range of products ordinarily sold through pharmacies and requires larger floor areas and large uninterrupted clear spanning areas to be feasible and efficient. All products that can be purchased via the internet/mail order, must be available for picking, packing and distribution from the Centre (approximately 50,000 lines) Blue Cross Healthcare services is a subsidiary of Catholic Health Care Services. It is a not for profit organisation for aged care and community services. Blue Cross Using advanced robot picking and packing technology, patients' medications are dispensed and packed into a highly organised and easy to administer system. The distribution centre in Penrith will be responsible for the fulfilment of medications and other supplies for Blue Cross in the southern states. Samples Plus Samples Plus is an ordering system for 'samples' offered to qualified medical practitioners and other health care professionals. H.M.R. is the process of reviewing the medication Home Medication Review where patients are required to take high levels or numbers of prescription or pharmacy medication. The service is available to all patients/customers both in the general public or in nursing homes i.e. Blue Cross. The services will be conducted within an office environment at the Penrith Distribution Centre. My Home Health Storage, display, testing & sale of wheel chairs, walkers and other large items and ancillary smaller items such as bed pans. It offers other specialist equipment not ordinarily available from traditional pharmacies due to size constraints of a normal pharmacy. Retail pharmacy Pharmacy selling usual over-the-counter drugs and dispensing prescriptions. In order for premises to be a Licensed Pharmacy Premises by the National Health Act and enable all of the above uses to be licensed and operational, members of the public must also have access to the pharmacy, giving rise to an ancillary retail component within the site. Failure to have this ancillary component would result in a breach of the regulations. 123Hours of operation were proposed as 9am-5.30pm Monday to Saturday and 10am-2pm Sunday. Staff numbers were quoted as 13-17. There would be in-bound deliveries approximately 4-5 times daily, via vans or trucks up to 2 tonnes, and there would be daily distribution out-bound via Australia Post (fol 198). External signage was not part of the proposal. 124The proposed fit out was to be undertaken generally in accordance with drawing SK2A (fol 266). Mr Tomasetti's written opening submissions for the respondents (filed 29 October 2010) said (par 10) that "the business is engaged in storing, warehousing, picking, packing, distribution and sale of pharmaceutical products" from the premises depicted in that drawing, to which many references were made during the hearing. The shelved front "warehouse" or public area is "shaded" on the drawings, but the associated dispensary area, and the "despatch/packing" area in the rear, are not. Permissibility argued 125The SEE argued the permissibility of the proposal (at pp12-18 - fols 200-207 of Exhibit A1, vol 1, tab 6). It noted (at pp12f, fols 201f - emphasis in original): The proposed use is permissible with consent within Zone 4(b) in LEP 1996, as stated in section 4(b)(ii):- 'Shops trading principally in bulky goods which shops: have a gross floor area of not more than 1,000sqm, and do not have a frontage to a road referred to in clause 20.' With regard to land at 13-23 Pattys Place, Jamisontown, Clause 23A also states that:- '...(2) Despite any other provision of this plan, the Council may grant consent to the carrying out of development on the land to which this clause applies for the purpose of shops principally trading in bulky goods without any restriction as to the gross floor area of any such shops.' In the definitions to the LEP, 'bulky goods' means: 'large goods which are, in the opinion of the council, of such a size and shape as to necessitate: (a)a large area for handling, storage or display, and (b)easy and direct vehicular access so as to allow for their collection by customers, but does not include agricultural products, beverages, clothing, food, footwear, leisure goods, paper or stationery products, small electrical appliances, electronic goods or toys. The proposal satisfies the separate elements of this definition as follows: The floor area of the tenancy at almost 600m2 is significantly larger than most ordinary retail pharmacies operating in town centre locations. This size is necessary to accommodate the operational requirements of the Chemist Warehouse business. The goods available from the tenancy cover a range of different sizes from individually bulky items such as wheelchairs and large pallets of smaller items to small individual pill bottles and the like. In most cases, the nature of the business dictates the bulk handling of items for processing, packaging and distribution, which entails large areas for manoeuvring of pallets and other items by fork lift trucks which are themselves stored within the tenancy. The fact that there are individually smaller items available does not, in itself, disrupt the categorisation of the overall use as dealing in bulky goods, as was held in the judgment of Chief Justice Gleeson in the NSW Court of Appeal in Sutherland Shire Council v Telope Pty Limited (1994) 85 LGERA 103. Gleeson CJ stated: Where a trader has for sale a range of goods, varying in size from small to large, and having available such a range is an ordinary incident of the type of business in question, it is normally inappropriate for a purpose such as the present to regard the trader as carrying on two independent activities one of selling small items and one of selling large items: cf Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157... In such a case the carrying on of the business would dictate the keeping of a comprehensive range of goods, of all shapes and sizes, including a substantial number of large items, and the use of the premises would satisfy the definition for they would be used for the sale by retail of items of such a size, shape or weight, as to require (for example) direct vehicular access to the site by members of the public for the purpose of loading items into their vehicles after purchase. Provided a substantial number of such items were available for sale, so that their sale could not be regarded as merely incidental to the business, their availability would relevantly characterise the use of the premises. 126The SEE then noted (at p14, fol 202): The direct pharmaceutical sales from the premises are a direct result of the legislative requirements governing pharmacies. Approval to operate the overall use of the premises must be obtained from the Australian Community Pharmacy Authority, Medicare and the Pharmacy Board of New South Wales. In order to conduct the principal distribution services operating from the premise, the premises must be a Licensed Pharmacy Premises approved under the National Health Act. Such approval cannot be obtained unless members of the public have access to the pharmacy and retail component and the goods available from the pharmacy should not be restricted by any municipal planning restrictions. Therefore, for the overall pharmaceutical distribution use to legally operate from the site, a degree of direct retailing must be available. This requirement underlines the ancillary and incidental nature of the on-site retailing involved in the proposed use of the tenancy. (Emphasis added) 127The SEE went on to say (again p14, fol 202) that: [as] most of the distribution function occurs via postal and other delivery vehicles which require direct vehicular access which is readily available from the subject premises,... a town centre location [would be] far less suitable and practical. 128The SEE then set out some alternative sources of power, arguing permissibility on the basis of use of Tenancy 230 as "business premises". (That characterisation was again argued in the written submissions placed before me (pars 35-6)). It submitted that the proposed use might reasonably be categorised as a "shop trading principally in bulky goods", and then included the following chart, in case "there is any doubt as to the permissibility of any of the distinct elements" of the proposal (c.f. SEE descriptions of uses, at fol 194 - par [122] above): Description of elements of use Alternative categorization and source of permissibility in the zone Epharmacy - Storage and distribution of pharmaceuticals direct to clients (patients) "Business premises" and "Warehouse and distribution centre" Blue Cross - Storage and distribution of pharmaceuticals direct to clients (nursing homes etc); "Business premises" and "Warehouse and distribution centre" Sorting, assembly & packaging of orders Samples Plus - Storage and distribution of pharmaceuticals direct to clients (doctors) "Business premises" and "Warehouse and distribution centre" Home Medication Review - Consultancy service (phone and face to face) "Office premises (..... ancillary to, and used in conjunction with, another land use that is not prohibited in this zone)" My Home Health - Storage, display, "road testing" & sale of wheel chairs, walkers and other large items and ancillary smaller items such as bed pans "Shop principally trading in bulky goods" Retail pharmacy Retail sales ancillary to, and in conjunction with a land use that is permitted in the zone Other relevant planning documents? 129The SEE then (at pp19-20, fols 207-208) dealt with various other documents - Penrith DCP 2006, Draft Penrith DCP 2008, Riverlink Precinct Plan 2008. The SEE's conclusion 130A s 79C(1) exercise was undertaken (at pp 21-23, fols 209-211), and the following conclusion was reached in the SEE (at fol 212): The proposed internal fit out and use of the tenancy at the Supa Centa Penrith for a 'Chemist Warehouse' bulky goods retail outlet is considered to be an appropriate and acceptable development due to its community benefits and lack of environmental or other impacts. It is permitted in the zone and complies with the relevant objectives and provisions of the relevant Council plans and policies. H: The Consent granted and modified The Council's Assessment Process 131On 6 January 2009, the Council, which was said to be "concerned with the extent of smaller items available for over-the-counter sale", wrote to Restifa, seeking further particulars (at Exhibit A1, tab 7, fols 270ff) regarding the range of "products offered for sale", bulky or otherwise. City Plan responded on 20 January 2009 (fols 273-283), saying (fol 274) that they could not provide an "accurate or reliable breakdown", but going on to say (fol 275): Viewed in isolation, the front of house part of the proposed premises might conceivably have the appearance of a 'shop'. However, the task of categorising the use requires considering the totality of the use of the whole premises. This includes the assembly, packing and distribution activities, pharmacy preparations, sale of large items (wheel chairs etc) as well as the over the counter sale of smaller items. The accompanying images of another Chemist Warehouse distribution centre in Hoppers Crossing Victoria demonstrate the range of activities and the general nature of the use of the premises. As indicated in our SEE, this proposal does not involve a single traditional use (ie a traditional chemist shop or an office or a warehouse etc), but rather a number of interrelated activities. This interrelatedness makes it difficult to "untangle" elements of the various activities and differentiate amounts or ratios of items that may be related to any one of them (e g over the counter retail sales). The over the counter retail sales are a very good example of this. There may be significant numbers of smaller items displayed in the front of house area of the premises. It will indeed be possible for members of the public to purchase these items individually over the counter. However, these items, which are on display as individual items and also within sealed boxes, are also utilised for the off-site distribution part of the business. The front of house therefore also operates as a storage area and forms part of the 'warehouse and distribution' activities which we understand Council is not concerned with. The fact that the items are stored for distribution in the front of house rather than back of house does not change their nature or categorisation in planning terms. Therefore, providing a simple ratio of bulky to non-bulky items that may be on display in the front of the premises at any one time does not provide meaningful information upon which to categorise the use of the overall premises in the terms of the Penrith LEP. Whilst Chemist Warehouse has advised of the difficulty of providing stock breakdowns or turnover figures for individual elements of the business because of their variability over time, it has confirmed that from a business operational perspective: "the core activity of the business is as a distribution centre and the retail (over the counter component) is ancillary to this use." Based on the totality of the combined activities proposed to operate from the premises, we are satisfied that over the counter retail sale of small items is an ancillary and incidental part of the overall use. It does not constitute a separate use, as outlined in Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157, referred to in our SEE which accompanied this DA. 132City Plan went on to say (fol 276): ALTERNATIVE PERMISSIBLE CATEGORISATIONS The difficulty of the task of categorising this non-typical use was acknowledged in our SEE. For that reason, we indicated that should Council have any difficulty in accepting a categorisation (for the whole or separate elements of the use) as bulky goods retailing, we provided an alternative categorisation, principally as "business premises." We consider that business premises, as defined in the LEP, is a sufficiently broad definition to encompass the overall mix of activities proposed to be undertaken from the premises. In the context of this definition of the overall use of the premises, any retail sale of small goods would be clearly ancillary and incidental. We further noted in the SEE the presence of other uses approved by Council within the same zone in the Jamisontown locality (e.g. the Abcoe Centre) which allow for over the counter retailing of a considerable range of individually small items. 133Council wrote again on 5 February 2009 (fols 284-5) raising several issues on the question of permissibility, as an innominate use not capable of precise classification as bulky goods, business premises, or warehouse. City Plan responded on 9 February 2009 (fols 286-290), quoting and relying upon various legal precedents derived from VCAT decisions. There was a further email exchange on 20 February 2009 (fols 291-293). 134The Council officers prepared their assessment report in February 2009 (tab 8, fols 294-304). It dealt with detailed questions of "fact and degree" (Tp362, L10), and recommended approval of the application, subject to conditions. 135The Council report (at fol 295) described the proposal as for "an internal fit-out to create a distribution centre with ancillary pharmacy and retail sales", and as an innominate use permissible within the 4(b) zone only with consent. The description of the development (at fol 296) indicated its acceptance as, primarily, a "chemist warehouse distribution outlet", involving "picking, packing and distribution", and incorporating "a traditional retail pharmacy outlet, which is purported to be an ancillary component of the proposal". 136The proposal did not fit the LEP's definitions, for example, of "industry", "business premises", warehouse and distribution centre", or "shop trading principally in bulky goods" (fols 297-8), but the report noted (at fol 298) that the 1996 LEP definition of "warehouse or distribution centre" (see [60] above) "adequately conveys the overall categorisation of the proposed use, however it fails the definition as it involves the retail sale of goods from the premises". 137The report went on to note (fol 298) that "in defining the proposal against the LEP definitions", the Council is led "to the assumption of the proposal being considered an innominate use", and that "the applicant has provided a weight of evidence to suggest that the sale of goods by retail is an ancillary component of the use". The information was said to include the following factors: The front of house area is inseparable from the operation of the warehouse/distribution activity which relies on all of its stock, of which a significant portion is sourced from the front part of the premises. 80% of the business turnover would be derived from the warehouse/distribution operations. Staff levels were slanted towards the warehouse/distribution operation, in the order of 3 to 1. 138The Council officers concluded (at fol 299) that the sale of goods by retail was not the primary use of the proposal, so the DA did not satisfy the definition of "shop". The ancillary retail component was "inseparable" from the "primary use" as a distribution centre. 139In relation to the requirements of the National Health Act, the report noted (at p5 fol 299) that: Based on this information it is considered that the sale of goods by retail is not the primary use of the proposal and as such the proposal does not satisfy the definition of a shop. It is considered that the scale of the retail component is ancillary and incidental to the primary use of the premises as a distribution centre, and is inseparable from this primary use. The incorporation of a retail pharmacy is required to enable the premises to operate and be licensed in accordance with the National Health Act. Without this aspect the proposal cannot distribute any pharmaceutical goods/materials, as it in (sic) breach of the National Health Act. This pharmacy component is also considered ancillary to the primary use of the site as a distribution centre. Based on the discussion above, the proposal is deemed an innominate use and is permissible by virtue of the fact it is not captured by any of the definitions identified as a prohibited use in the 4(b) Special Industry Zone. The Determination of the DA, the Granting of Consent, and the Imposition of Conditions 140The recommendation that the application be approved subject to conditions, was accepted, and the approval was signed, by the Council's delegate, Mr Jonathon Wood, on 20 February 2009. A copy of the Council's determination was posted to the applicant on 24 February 2009 (tab 9, fols 305-311), and the consent operated from 23 February 2009 (see fols 305-307). It was subject to 12 conditions of consent (fols 308-311), the most relevant for these proceedings being those numbered 1 and 4 (on fol 308): 1.The development must be implemented substantially in accordance with the stamped approved plans, the application form and any supporting information received with the application, except as may be amended in red on the attached plans and by the following conditions. ... 4.Any retail sales are to be ancillary to the primary use of the premises as a distribution centre. To ensure consistency with the information provided in this application, the tenant is to retain product unit breakdowns of those items sold by retail from the tenancy and those items distributed from the dispatch area. This is to take the form of total unit sales. This information is to be made available for viewing by Council officers within 30 days of the date of request. The Consent is Modified by amendment of a key condition 141On 7 April 2009, AMS applied for the consent to be modified by the deletion of condition 4 (see tab 10, fols 312-315). The application to modify was accompanied by a report from City Plan dated 1 April 2009 (tab 11, fols 316-320) and a supporting letter from Pikes Lawyers dated 31 March 2009 (fols 321-326). 142City Plan explained the reasoning behind the requested modification was that the condition was "superfluous and unnecessary" (fol 317). It went on to argue that: It is clear and indisputable that if the premises were to consistently operates as principally a shop, it would be operating in breach of the Act, since shops are prohibited in the zone. 143The letter from Pikes Lawyers urged the deletion of condition 4, on the basis that it placed an unreasonable burden on the "My Chemist" Group, and was unnecessary, given the nature of the use of the site and the permissibility of that use in the zone, as an innominate use with several component parts. Pikes noted that the use was primarily as a distribution centre and warehouse, but it also had a bulky goods element as well, and some aspects of light industry. 144Pikes also noted ( fol 323, par 3) that, pursuant to s 90(3D) of the National Health Act: [a] licensed pharmacy, even if predominantly selling and distributing on a wholesale or mail order/internet basis, must be available and open to walk in retail customers. 145Pikes drew attention (fol 323, par 5) to the fact that: ...of the 593m2 floor space area of the tenancy, 100% of that floor area will be given over to the warehouse, distribution, bulky goods and light industrial aspects of the use. Only a portion of the floor space of the tenancy will be accessible to the public to meet the requirements of the National Health Act. The area accessible to the public will at all times remain in use as part of the warehouse, distribution, bulky goods and light industrial aspects of the use, as it will predominantly be used as part of the warehouse for the storage of items for sale through the distribution centre and internet business. Whilst only a limited part of the use, the National Health Act ensures that the retail component is integral to and inseparable from the use of the site for the distribution and internet sales of medicines and disability aids. 146Pikes concluded (fol 325, par 3-4) that: Council can be satisfied, from the breakdown of the component uses of the site, and the floor space attributed to the various components, that the retail sales component, whilst necessary, is a limited part of the approved use ... The condition should be deleted. 147On 21 April 2009, Council advised AMS, regarding its preliminary assessment of the application to delete condition 4, in these terms (Gance tab 31): Council is hesitant to entirely remove condition 4 - as it is considered essential in informing the party acting upon the consent, either now or at some point in the future, that retail sales were approved on the basis that they were ancillary and incidental to the predominant use as a distribution centre. It is considered more appropriate to retain the first sentence of condition 4, being 'any retail sales are to be ancillary to the primary use of the premises as a distribution centre'. You are requested to confirm whether you would be accepting of this amendment. 148City Plan replied on AMS's behalf on 28 April (tab 32) indicating acceptance of the proposed modification, and the original Council decision was formally amended, and notified to AMS on 28 April 2009. 149Condition 4 thereafter provided simply that "any retail sales are to be ancillary to the primary use of the premises as a distribution centre" (see tabs 12 and 13, with the notice of determination at tab 14). Council explains the consent to the Pharmacy Regulator 150To assist the respondents' in their dealings with the Australian Community Pharmacy Authority, the Council, at the request of City Plan, issued a letter on 14 May 2009 (tab 15, fol 342), confirming Council's consent to the use of Tenancy 230 for "retail activity that is ancillary and incidental to the warehousing and distribution activities to operate from the premises". I: Evidence about the Pharmacy Industry and the Retail Sector The applicant Stubbs 151Stubbs told the Court (at Tp85, L32) that he relied upon Pharmacy Guild data, and in his affidavit he adopted the concept of "an ordinary stand-alone community pharmacy". Some pharmacies are in group buying arrangements less complex than the Chemist Warehouse group. 152He classified community pharmacies as having an annual turnover of approximately $2M. Community pharmacies secure approximately 65%-70% of their individual turnover from the sale of items scheduled under the PTG Act, which may be dispensed or sold only under the supervision of a registered pharmacist. The balance of OTC sales (30%-35%) will be generated by the sale of fragrances, dressings, toiletries, cough and cold medicines, pain medication and many miscellaneous items which are available through other retail outlets, including supermarkets. "A larger well managed community pharmacy, which is owner operated" may have an annual turnover of approximately $3.5M. A "top line community pharmacy, which is very well managed and enjoys excellent client support" may have an annual turnover in the order of $5M. 153Stubbs's conclusion is that the subject business, CWDCP, turns over in excess of $5M per annum, which is "an excellent result" making it "a first class retail outlet" and "extremely profitable". 154Stubbs drew attention to the fact that the development consent refers to the subject development as "class 6" (par 31), but that term is drawn from the BCA, and the class is defined as "a shop or other building for the sale of goods by retail or the supply of services direct to the public including ... (d) market or sale room, show room or service station". 155Stubbs calculated that the rent of the Penrith premises for the first year of the lease 2009-2010 was $253 per square metre per annum (Leyshon calculated $244 per square metre per annum), whereas the Smithfield premises are leased (by Verrocchi and EYFS) at $90 per square metre. 156He would expect the retail store component of the ordinary stand-alone community pharmacy to be in the order of 90% of the floor space with 10% for lunchroom, storeroom, toilet facilities, and "back of office" generally. He would not expect to see any warehousing area in an ordinary community pharmacy, but those that do work for nursing homes, etc. would need floor space to cater for that. Occasionally pharmacies do have a forklift and pallet storage area, but a pharmacy doing only $2M turnover would not take pallets. 157In cross-examination, Stubbs was prepared to acknowledge a difference between wholesaling and retailing transactions on one hand, and a distribution transaction on the other (see Tpp97-101). He is of the view that any sale by the internet is a retail sale, but his own retail experience is "shop front" (Tp104, L31). The Parties' Expert Pharmaceutical Evidence 158Expert evidence on the pharmacy industry and its regulatory requirements was given by Paul Mahoney (for the applicants) and Peter Valastro (for the respondents). 159Valastro drew attention to the Parliamentary Library's paper on the National Health Amendment (Pharmaceutical Benefits) Bill 2007, which was subsequently enacted. (His document 'F') 160On inspection of CWDCP, he found significantly more activity in the distribution area, as compared with the front. The computer work stations were being used with specialised software to prepare and dispatch internet based customer orders and stock deliveries to Chemist Warehouse pharmacies. He says he viewed documentary evidence which indicated a high volume of internet-based orders being prepared and dispatched. 161He thinks the front area of the CWDCP is similar to the retail trading area of most other Chemist Warehouse pharmacies he has seen, but the distribution area is certainly not typical of any other community pharmacy. Most pharmacies do not have caged areas to store scheduled stock, nor computer workstations for dispatching bulk stock to other pharmacies. Forklifts and automated work platforms, etc. are also not common. 162Internet-based orders are becoming more common in pharmacy than previously, but are still comparatively rare in community pharmacies. He has observed another internet-based pharmacy distribution system at Pharmacy Direct in Silverwater. "Given the cost of renting retail trading space and the need for large areas for storage, dispensing and dispatch of internet-based orders, this type of warehouse accommodation is the only viable way to conduct such an operation" (par 7(h)). 163Valastro expressed the view that Chemist Warehouse Penrith does not operate "as a traditional community or retail pharmacy". He stated (at par 39(b)): It is not possible for me to apportion significance to the various elements of the operation of the Distribution Centre but it is possible for me to state that a significant bulk distribution operation and fulfilment of Internet based orders is taking place at the premises. 164Item 3 of the Pharmacy Board "Guidelines" (Exhibit A8) allows the dispensing of a prescription transmitted by facsimile or scanned copy provided the pharmacist has taken reasonable steps to ensure the bona fides of the prescription and arrangements are made to receive the original. Item 4 says "the Board views the indirect supply of medicines, such as internet and mail-order dispensing, as less than the optimal way of delivering a pharmacy service because communication may be compromised". 165Valastro also gave evidence about "distance dispensing" and "internet pharmacy", pointing out that the pharmacist's duties when dispensing (sight the paper prescription, put questions to the patient, properly label the product) are still applicable in such commerce. 166Mahoney noted that his inspection revealed a "range of goods and services ... consistent with the normal range of goods and services offered in a community pharmacy in a more conventional retail setting". In-store signage is generally of a price-promotion nature, and he found goods "attractively displayed". Distribution activity was completely undetectable by an inspection of the publicly accessible areas, and, in his opinion, would be ancillary and subordinate to the use of the premises as a shop or retail pharmacy. 167In Mahoney's experience, the vast majority of items dispensed by registered pharmacists working in community pharmacies are items listed in schedule 4. The majority of those items are also listed on PBS as a result of which, sale may also involve the supply of pharmaceutical benefits. Schedule 4 drugs are the most valuable category of goods in a community pharmacy because they are sold in high volumes and are "protected" by the need for them to be sold by registered pharmacists. 168Mahoney says that Gance is incorrect when he says (in par 23(e)) that "ethical distribution to end users can only be done with a PBS licence". The true position is that pharmaceutical benefits can only be supplied to a purchaser of items listed on the PBS (a class of items narrower than the entire class of "ethical products"), if the items concerned are sold by a pharmacist approved under s 90. 169In Mahoney's experience, it is common for community pharmacies to supply customers with both PBS listed items and non-listed items, including vitamin supplements, and common non-prescription medications, such as aspirin and panadol. 170Prior to their joint expert conference, Valastro expressed general agreement with what Mahoney said, but he disagreed with Mahoney's comment that "... the size and nature of the retail pharmacy operation would indicate that even if some kind of distribution were occasionally taking place from the rear of the premises, it would be ancillary and subordinate to the use of the premises as a shop or retail pharmacy". He went on to comment (in par 42) that, on the basis of his observation, he could not accept the description of the distribution activities as "occasional". He did express the view that the activities occurring on the whole of the premises are not characteristic of a typical or traditional community pharmacy. In their joint report, Mahoney and Valastro agreed to add to that comment "we agree that it is not possible to apportion the significance of either area of activity". 171Their joint report (Exhibit A2) analysed the affidavit material each had provided on affidavit. 172Normally community pharmacies would generate approximately 70% of their turnover from the sale of scheduled or restricted pharmaceutical items, but a pharmacy located in a Westfield-type mall might have only 25% of its total store turnover representing PTG Act substances. 173The term "ethical products" is used to define any potent substance. Within the pharmaceutical profession the term is usually used in relation to a product accepted as having a "beneficial" effect on the person who uses that product, whether therapeutic or otherwise. 174Community pharmacies regularly dispense PBS items in response to email and fax orders, but the pharmacist must obtain a hard copy of the prescription (Tp169, LL27-49) to submit to Medicare, and comply with the poisons regulations. Such an operation is not "mail order" or internet pharmacy. "Mail order" requires a third party contracted to deliver items, and in Gance's case, this role is undertaken by Australia Post. 175The experts agreed that the determination of issues relating to "use" and "ancillary or subordinate use" are properly matters to be determined by the Court. 176Mahoney and Valastro also gave concurrent oral evidence, during which it was made clear that the handwritten prescription of the doctor "must make its way to the pharmacist" (Tp160, L30). The pharmacist must offer, but not necessarily supply "consumer medicine information". (Tp161, LL15-21). They explained the duties of pharmacists to establish the identity of the patient, and the fact that the prescription is written by a registered medical practitioner. They ask the customer for Medicare and/or Centrelink details, and particulars of any allergies, etc. 177In the ePharmacy scenario that personal contact is missing, but information is sought on the screen. Valastro said internet pharmacy was actually referred to as "distance dispensing", but none of the requirements on the pharmacy are relaxed in that situation. The series of questions has to be asked even over the internet, and the information is collected in writing, rather than verbally. Pharmacists will communicate with the doctor if there is anything on the prescription that he feels is not safe for the patient - query an incorrect dosage or something along those lines (Tp164, LL1-11). 178There was quite a lot of discussion about labelling and what was required to be on the label attached to the prescription medication. Name of product, drug name, quantity, full directions, patient's name, how to take it, identification number of the prescription, date of dispensing, name and address of the pharmacy dispensing it, initials of the pharmacy, and a warning to "keep out of reach of children" (See Exhibit A4). 179Prescription items are ordinarily kept within the dispensary and the pharmacist in normal circumstances is required to be involved only in the provision of those goods that require prescription. They would normally not be on the shelves in front of the counter, but securely stored elsewhere (see Tp170). 180There was discussion about the acceptability of a "hole in the wall" situation for the required "public access". Valastro gave evidence that pharmacies were very regulated in things like the sizes of the dispensary, the counselling area, or professional services area (Tp172). You must have public access to deal with PBS drugs, and there are minimum requirements, not maximum requirements, in terms of floor areas etc (e.g. cl 13 of the regulation, in [82] above). The privacy of a consultation with a customer is paramount (Tpp174-175). Evidence about the Retail Industry - Peter Leyshon 181Leyshon correctly observed that the overtly retail component of the CWDCP business opens into an internal mall within the bulky goods shopping centre. The pharmacy component of the store contained the full range of products likely to be found in a traditional pharmacy, and he thought the business had a decidedly "discount" feel to it, as the result of the use of reasonably closely-placed semi-industrial style racking approximately 1.8m in height, and extensive use of internal signage to point shoppers to particular discounts. Leyshon would regard what is occurring as "a relatively intense retail function". 182He considered the SEE, Council's development assessment report, and Pikes' letter of 31 March 2009, which expressed the opinion that condition 4 was superfluous and unnecessary, and he opined that the retail pharmacy component of the business, taken in isolation, constitutes a "shop" under LEP 1996. 183In s 3.2 (p10), Leyshon expresses the opinion that "selling by retail" means the transfer of goods to purchasers or customers who are not themselves engaged in on-selling the products, or otherwise in the retail trade. Selling by retail essentially involves a transaction and the delivery of goods to the customer. 184It follows from his opinion that even if part of the premises is used for the distribution of goods purchased by customers over the internet or by mail order, it would nevertheless be still involved in selling goods by retail. The mere fact that goods might be ordered on the internet by ordinary customers, does not change their status as retail transactions. The Australian Bureau of Statistics classifies sales by organisations via the internet as retail transactions, a type of "non-store retailing". Hence, any purchases made by customers from CWDCP, via the internet, is a retail activity, because it involves the delivery of goods to customers, and, if the internet orders processed by CWDCP are registered on a computer server in the premises, it is involved in both components of a retail transaction. He acknowledged that it was commonplace for a wholesaler to sell a product manufactured by another and direct the manufacturer to supply the product directly to the retail customer. "In a sense the wholesaler is acting as an agent for the manufacturer" (Tp120, LL4-5). 185The LEP definition of "shop" does not describe the physical building, but the function performed in it. The existence of mail-based ordering services and internet purchasing does not automatically mean that the premises are not operating as a "shop", as traditionally understood in town planning (s 3.3, p12). 186In respect of internet transactions, he accepted that Australia and New Zealand have adopted a standard classification system for business, which would classify such transactions as "retail" (Tp127, LL22-29, and Exhibit A3). Customers make their purchases via the internet, but the goods are delivered by CWDCP. It is a common situation that a purchased good comes directly from a manufacturer, rather than a retailer, but it still closes the retail purchase "circle". Australia Post, used by CWDCP, is purely a facilitator, earning a fee for transportation. The retail "circle" must be completed by having the goods delivered to the customer. Leyshon's definition of "selling" is a transaction followed by an exchange of goods (Tp132, LL11-14). 187Leyshon explained (Tp136, LL11-18): ...wherever ePharmacy has their server located it generates an order electronically which comes to those screens we saw, or the other people saw when they went on the view, to the four terminals which sit behind the dispensary area. I am assuming, and perhaps you can say this is not correct, that it is somehow electronically linked to the server so that orders generated which are relevant to the Penrith store are transmitted electronically to those screens so that the staff can pick the goods off the shelves, put them in boxes and post them out. 188For the record, Exhibit A3, to which I referred above (in [186]), is an extract ("Division G - Retail Trade") from the "Australian and New Zealand Standard Industrial Classification 2006", a document issued by the Australian Bureau of Statistics classifying business for reporting purposes. 189The document states: The Retail Trade Division includes units mainly engaged in the purchase and/or onselling, the commission based buying, and the commission based selling of goods, without significant transformation, to the general public. The Retail Trade Division also includes units that purchase and onsell goods to the general public using non-traditional means, including the internet. Units are classified to the Retail Trade Division in the first instance if they buy finished goods and then onsell them (including on a commission basis) to the general public. Retail units generally operate from premises located and designed to attract a high volume of walk-in customers, have an extensive display of goods, and/or use mass media advertising designed to attract customers. The display and advertising of goods may be physical or electronic. ... While non-store retailers, by definition, do not possess the physical characteristics of traditional retail units with a physical shop-front location, these units share the requisite function of the purchasing and onselling of goods to the general public, and are therefore included in this division. A unit which sells to both businesses and the general public will be classified to the Retail Trade Division if it operates from shop-front premises, arranges and displays stock to attract a high proportion of walk-in customers and utilises mass media advertising to attract customers. 190The document goes on to distinguish wholesale units and manufacturing units. At p2 it says: wholesale units also engage in the buying of goods for resale, but typically operate from a warehouse or office and neither the design nor the location of these premises is intended to solicit a high volume of walk-in traffic. In general, wholesale units have large storage facilities and small display area, while the reverse is true for retail units. 191Turning his attention, next, to the other operations housed at, or contemplated for, CWDCP, Leyshon observed that: (1)"Blue Cross" manages residential communities in Victoria, with some 1,500 residents living in various forms of care. Unless Chemist Warehouse provided medications to the Blue Cross Group at wholesale prices, that distribution activity would also be retailing in nature. "Even if Blue Cross charges residents a 'handling fee' or is able to negotiate a discount from Chemist Warehouse for bulk orders, the transactions are, in my opinion, still likely to be retail in nature" (s 3.4, p12). He noted that there is no suggestion in the SEE that Blue Cross is purchasing medications and on-selling them at a margin. (2) the "Samples Plus" service would be in the nature of a "warehouse", as defined by the LEP. (3) the "Home Medication Review" service would be in the nature of "office premises" (or a "professional services" activity), as defined and contemplated by the LEP, and (4) the "My Home Health" service could be classified as "bulky goods" under the LEP (see [60] above). 192Leyshon says that, apart from defining principal c.f. ancillary uses on the basis of sales data, it can be done by analysis of floor area. 193He studied Plan SK2A, which showed the "warehouse" area at the front as having an area of 261.7m2, and the "distribution" area 331m2. He opined that the latter appeared to include the dispensary which he understood to occupy approximately 39.14m2. The dispensary and the warehouse areas are directly engaged in pure retailing, and represent 50.7% of total floorspace. Taking the public, or retail pharmacy section as excluding the dispensary, and, therefore, having an area of 261.7m2, or 44.2% of total floorspace, Leyshon says that that area is "patently greater than a mere token provision of retail space designed to meet the licensing requirements of the Commonwealth Government". 194He respectfully disagrees with the conclusion of the Council officers that the proposed use is "innominate", and, therefore, permissible. It is his firm opinion, based on the information available to him, that the use of the premises should be correctly classified as a "shop". 195Gance said (at par 61 of his affidavit 4 June 2010) that, when deciding on the location of the development of a Chemist Warehouse, he took into account "workability considerations in regards to logistics and roadways access". Leyshon infers this to mean a focus on distribution, rather than retail. The fact is, however, that the premises ultimately occupied is a retail premises located in a major retail precinct in the Penrith Local Government Area. The SupaCenta is surrounded by major retail traders, and contains itself a range of bulky goods tenants, with further expansion proposed. A large amount of retailing is conducted from the SupaCenta - "a very prominent retail destination in Penrith" (Tp142, LL25-26) - so it is a major shopping centre in which to locate a distribution business. If logistics and road access were major considerations, there are other industrial areas of Penrith which would provide equal, if not better, accessibility, and probably at lower rental. Other locations within the Sydney region would have been more suitable than Penrith, in Leyshon's opinion, for distributing to the group's stores. 196Prior to the establishment of Tenancy 230, the group did not have a retail operation in Penrith, or in Sydney west region, generally, and Leyshon refutes the submission that Gance's business case envisaged the development which has become the subject of these proceedings. The business case described a distribution centre with a floorspace of 1,000-1,200m2 , and no retail function was mentioned. It proposed a rental figure typical of a light industrial sub-region of Sydney. It concluded that even larger premises than Tenancy 230 (say 1,500-1,750m2) should be sought. Leyshon concluded that what has been developed in Tenancy 230 to date is quite different from the traditional distribution centre described in the business case. 197In his second affidavit, Leyshon dealt with the trading figures and their segmentation, and concluded (par 48) that: the existing shopfront component of the Penrith business is not commercially dependent for its success on the operation of either the epharmacy business (which is effectively a retail internet shop) or the distribution business conducted by Mr Gance from the same premises. That is, it is capable of operating as a shop in its own right. 198In his oral evidence, Leyshon maintained his scepticism about the Gance-projected growth of internet sales to $100M per annum. "It becomes mathematically more difficult every year to sustain such growth rates" (Tp111, LL34-35). This retail group is within the top twenty retailers in Australia, and he would expect that "a group with that sophistication should be able to relatively straight forwardly produce a split between retail sales, ePharmacy transactions, and distribution activity" (see Tp112, LL15-30). 199In cross-examination, Leyshon said (at Tp120, LL18-24): my point is that in terms of a retail transaction there is essentially three steps to it, the offering of goods at a price, the closing of the deal as it were, that is, some sort of monetary transaction, and then the closing of the circle which is handing the goods to the customer and that's why I said a component of the business is directly involved in selling, offering for sale by retail goods as set out, they are not a traditional shop and I've recognised that but they are involved in the retail transaction. 200The cross-examination continued (at Tp122, LL17-39): Q. ... the assumption that you've made ... is that there is a commercial transaction between the end customer and Chemist Warehouse Penrith isn't it? A. No I don't think so. What I was really saying was, I suppose I go back a step here, customers, as I think Mr Stubbs said, don't know really when they purchase things over the internet who they're actually dealing with, they see the banner headline ePharmacy so they assume they're dealing with ePharmacy. What I was trying to get across here was that the Penrith facility is a retail activity because it is an essential part of closing that transaction. Just let me clarify. I'm not assuming that people out there think they are dealing with the Penrith facility because I don't think they know who they're dealing with, but what I'm saying is, in practice at a practical level this facility is involved in closing the retail transaction. Q. But so was the wholesaler in the manufacturer/wholesaler/retailer chain isn't he? He's involved in closing the transaction? A. No not really because a traditional wholesaler is simply involved in placing goods on the retailer shelves. The real transaction then becomes, if you think about a traditional model, the wholesaler sells goods to a pharmacist based in Blaxland or Katoomba or somewhere else, they put it on the shelf, a customer comes in, sees the price, is happy, pays the money, takes the goods away from the shop. So the role of the wholesaler really comes before, in my opinion, that retail transaction. 201Leyshon's overall conclusion was that the CWDCP operation is "primarily engaged in retail activities" (Tp141, L21), including ePharmacy, the distribution component, and the warehouse and dispensary operations. 202After the conclusion of Gance's evidence, Leyshon was recalled (see Tp307-315). He declined to defer to Gance's expertise on the retail sector, but he acknowledged that "he's obviously part of a very successful operation" (Tp314, LL11-26). Leyshon said that he was not diverted from any of the opinions that he had earlier expressed, but, in the end analysis he accepted Mr Tomasetti's analysis of the ePharmacy distribution arrangements as separate from the retail elements of ePharmacy. 203He was also asked a number of questions about the trading results and projections. He opined that, to get a proper picture, one would need "a full year's sequential supply of data to calculate some sort of moving average over that period" (Tp308, LL22-23). Such an analysis would "smooth out the peculiarities that might have occurred in a particular week such as a flu outbreak, and people stocking up on sunscreen for summer or things like that. There are always seasonal variations" (Tp308, LL40-44). In any event, growth rates of 400% or 600%, such as the respondents suggested, are "very difficult to accept" (Tp308, L49). 204Returning to Gance's projected growth of internet sales to $100M per annum, out of Penrith over the next 5-10 years, Leyshon adhered to his view that that projection was "very optimistic" (Tp312, L17) as it involves an annual compound growth rate of over 60%. Mr Leyshon said (at Tp312, LL23-40): Not necessarily, having regard to the partial data I've been shown today. The criticism I had was or the issue that I raised is I know statistically it is very difficult to maintain growth rates as the base grows so when you get to $50 million a year in sales it's a huge ask to be adding 25, $26 million a year in sales to a base that high in what is now becoming a more mature industry. I'm not saying it's a mature industry but Australia has a very high penetration of home - you know, compared to OECD countries of people who are connected to the internet at home so it's not like we're a country with - you know, that is very low down the world rankings. We have the sophisticated banking system etcetera so I think all of those indicators suggest to me that it's going to be hard to maintain very very high levels of the growth of the kind that you would need. In Australia in 2009 the ABS reckoned or estimated that 62 per cent of Australian households had broadband internet which placed us well up - there's only countries like Korea, Iceland, Norway, Sweden and Finland above us in terms of internet access to the home so as internet costs come down and service providers get more slick you know you would expect that somewhere along the line it's going to be very hard I suggest to maintain growth rates of the order that are required to get to $100 million a year sales out of the Penrith facility. 205When questioned regarding a press release dated 17 December 2008, concerning the operations of "Australia Pharmacy Online" (Exhibit R2), which quoted a growth rate of 66% per annum for three years, Leyshon said he would not be surprised by that sort of growth in the early start-up stages, but it "will be difficult to sustain" (Tp313, LL14-15). He observed that Australia Pharmacy Online had not suggested a growth of 60% per annum continuously since its establishment in 1998. J: The Respondent Gance's Evidence 206I return now to evidence given by the respondent Damian Gance, counterpointing it to the evidence of others, summarised above, and, on occasions, to the apparently inconsistent (or, at least, poorly expressed) assertions in some of his written materials. The relevant commercial arrangements at CWDCP are somewhat complex, but have also been rather obfuscated by Gance's affidavits and his dismissive and rather belligerent approach to legitimate, if aggressive, questioning by counsel. He also showed an off-handed lack of familiarity with the evidence given by Pannia and Vu, and for much of his time in the witness box he even disputed clear evidence that he was the lessee of Tenancy 230. 207In the final version of their written submissions (at p3), counsel for the applicants submitted that there was a serious question regarding Gance's credit and the reliability of his affidavit materials, which he admitted (at Tpp295-297) had been put together by his solicitors and, simply signed off by him, largely unchecked. Counsel for the applicants submitted that the affidavit evidence of Pannia and Vu is to be preferred to any of Gance's evidence. While I make no adverse formal finding about him, the way he presented his case and his arguments made the Court's task far more complex than it should have been. 208Gance relied on the publication by the Australian Bureau of Statistics of a number of materials that indicate the commercial advantages and growth potential of an on-line business (tab 11, commencing at folio 147, dating back to 2001). While, in 2009, internet sales in Australia totalled approximately $20M, the internet sales of prescription medication in the United States totalled US$61.8billion. Between September 2009 and September 2010 the value of total sales distributed by the ePharmacy website and the Chemist Warehouse website increased by 80.1%. He asserts that between July 2007 and June 2010 the value of the total sales distributed by those two sites increased at an annual compound rate of over 60%. 209He deposed in his first affidavit (in par 83) that the relative value of the business generated each month by each component of the Penrith business was as follows - ePharmacy 7%, Chemist Warehouse 33% and distribution to group stores 60%. As at the date of his second affidavit (15 October 2010), the figures were ePharmacy 6.3%, Chemist Warehouse 29.1%, and Group Distribution 64.6%. 210His Senior Counsel, Mr Tomasetti, asked him why he described the front area of the premises (the alleged "shop") as "warehouse" on the plan which went forward to the Council, and he replied (Tp211, L47-Tp212, L23): A. That was the area in which we would do an over the counter, nonprescription product, picking and packing for the distribution to ePharmacy customers, chemistwarehouse.com customers and also to the other stores within the My Chemist, Chemist Warehouse store network. Q. So that's where goods are stored for private distribution, is that right? A. Correct. Q. It's also an area which is freely available to the public where they can purchase in retail transaction? A. Correct. Q. Is it your intent that the retail component of the business is the - become the main and dominant part of the business? A... it is the, the beast which I continually evolve in order to make it a profitable enterprise. But primarily the reason it's there is in order to distribute prescription products and related health care products to consumers as a distribution business, to GPs as a distribution business and to other stores within the My Chemist, Chemist Warehouse network as a distribution business. The fact that we perform retail is just another one of those many tentacles to this beast which is an octopus. 211When questioned by Mr Robson on whether monthly figures easily translate to annual figures, Gance would not concede that a monthly figure of $471,525 necessarily translated to an annual figure of $5,658M (Tp213, LL46-49) and (Tp215, LL12-13): Retail isn't a linear beast, one month doesn't correlate to another, January is a terrible retail month, April and May are fantastic ... so I wouldn't say that you can take any month on its own and multiply it by 12 and annualise a figure. I'd say that'd be a furphy. Gross turnover in 12 months time will be - I assume will be 10% higher than it was in May of this year. 212He also did not agree with Stubbs that a top line community pharmacy would have an annual turnover of $5M. While Stubbs's figures come from a Guild Survey, Gance says that most major pharmacy groups do not contribute to that survey. He believes that CWDCP is in the lower echelons of the Chemist Warehouse empire, indeed "in the very bottom echelon" (Tp216, LL19-23). "Others may believe that a pharmacy turning over $5 million is a top line community pharmacy, in my world, it is not". (Tp216, LL32-34 - Chemist Warehouse Bondi was said to have a turnover in excess of $18M p.a). 213Mr Robson put to him that if one divided annual turnover of $5.6M by 300m2 of space, one would get an average of $18,000 per metre square per annum, an "extremely high average rate of sales". Gance responded: "not for a Chemist Warehouse store" (Tp216, L44-p217, L2). He declined to compare CWDCP with any of the specialty pharmacy stores at Westfield Penrith Plaza. He said they "are probably full margin retailers but Chemist Warehouse is a discounter. It is an entirely different beast" (Tp217, LL17-24). 214Mr Robson probed the "affiliation" or "relationship" between CWDCP, and/or the group, and ePharmacy as an internet retailer (see [43]ff above). Gance said (at Tp236, LL35-36) that he used the word "affiliated" in its vernacular sense, in that he has an "affiliation" with AMS because of the services AMS rendered, and an "affiliation" with Blackmores because they provide stock. He professed no knowledge of the use or meaning of the word "related" (in respect of "entities") in corporations law. He repeated that he personally has no interest in the "affiliated" AMS, which "took the initiative to endeavour to secure the site in Penrith and the consent" (Tp228, LL32-38), and says he gives no direction to AMS, nor does he oversee its work, but "they provide services to me which I ensure are in keeping with my expectations" (Tp237, LL1-2). 215He conceded (at Tp223) that nothing in the State or National regulations "requires or demands a shop the size" of the current Penrith premises in order to distribute pharmaceutical benefits. He agreed that one could have a significantly smaller area than CWDCP has for the required "public access". 216He denied that he was "intimately involved" with the establishment of the CWDCP premises, but admitted that he funded it with $800,000 which was either "a gift or a non-recourse loan". He made the necessary applications to the pharmacy authorities. He adhered (at Tp226, LL1-7) to his claim that the development application was responsive to the business plan he had worked on a year or two before, but he accepted that the business plan he prepared was not specifically for the establishment of premises in Penrith - it specified no location, and was designed to establish the necessity for the group's stores in NSW to have their own distribution centre, and reduce logistic fees caused by sending up supplies from Victoria. That could have been achieved at Smithfield, but he says there was an issue there about security of stock, especially prescription stock (see generally Tp229). Smithfield had no practising pharmacist, so an alternate site was sought (Tp230). 217Later in his evidence (at Tp276), Gance explained that CWDCP keeps "physically separated" goods owned by him from goods owned by others, including, especially, EYFS/Verrocchi. Stores in the group may order "anything they want" from CWDCP, and they will presumably be dispatched together. 218When cross-examined on the ownership of the goods involved in the operation of CWDCP, the following exchange took place (Tp277, LL19-34): Q. The goods which are supplied which are non ethical and the like the greater portion of those goods are supplied through Smithfield aren't they to Chemist Warehouse and My Chemist stores in New South Wales? A. The distribution centre in Smithfield maintains only a very small percentage of the overall stock held by Chemist Warehouse store. If stock is unavailable through the primary wholesaler there at Sigma the stores have the capacity to order from Chemist Warehouse Penrith. Q. Indeed when you prepared your business case, and you've said in your more recent affidavits, you determined that the best way to achieve the distribution was to use the Penrith business centre to distribute ethical pharmaceutical goods and not over the counter pharmaceutical products? A. That's its primacy purpose but again in order to assist the stores with their stock should they not be able to get it elsewhere Chemist Warehouse Penrith will distribute the stock to them. They can order anything they like. The vast majority of orders would be for the ethical stuff. 219He added the following (Tp278, LL15-18): ... the vast majority of stock held in Chemist Warehouse stores is purchased through Sigma Pharmaceuticals. Now if Sigma Pharmaceuticals is out of stock of the line, the stores have the capacity to order that from Penrith. The OTC product referred to in Smithfield, is actually distinct and never ordered from Sigma. 220Under serious challenge, he maintained the correctness of the statement in par 7(c) of his affidavit that the Penrith premises would "distribute ethical pharmaceutical products and not over the counter pharmaceutical products", and again acknowledged that his affidavits did not make clear that stock from the front of the store is transferred to other stores in the chain by the activities of the distribution centre (Tpp278-281). 221He testified (Tp282, L43 - p283, L4): The Verrocchi warehouse, even the OTC part, doesn't keep the full gamut of stock that a Chemist Warehouse store may require. The vast majority of the stock required for a Chemist Warehouse comes from Sigma Pharmaceuticals. On many occasions Sigma Pharmaceuticals will be out of stock on which case because there is a distribution coming from Penrith to that store on a regular basis they will regularly order OTC product, which isn't maintained at Smithfield, which they usually get from Sigma, from Penrith. There is also the chance that we have exclusive product, or the stores have exclusive product which has been bought from overseas and there is no alternate supplier. Once the store has run out call (sic) at Chemist Warehouse Bondi, they have nowhere else to order it other than from Penrith. 222He added (at Tp283, LL14-15) "I am selling my goods to other pharmacies within the group and distributing them from the Chemist Warehouse in Penrith". He continued (at LL32-37): We've always done it, it's actually being done wherever and a day from most pharmacies, I think your expert pharmacist will tell you that other pharmacies do similar. It's a provision of service. The fact that we have a distribution centre and a regular dispatch from those premises means that it is more common to purchase stock from Chemists Warehouse Distribution Centre Penrith than others. 223As the transfer of stock at cost to another store generates no net profit, he had not sought to clarify, in his affidavit evidence, any distinction between Verrocchi/EYFS owned goods, pharmacy orders and retail sales in-store to make up 100% of the business (Tp283). 224On the relative use made of the Smithfield and CWDCP premises, Gance explained (Tp288, LL36-41): The distribution centre for OTC product or the product which is purchased by Mario Verrocchi and East Yarra Friendly Society is Smithfield. The distribution centre for ethical product purchased by Mario Verrocchi and East Yarra Friendly Society is Penrith. The distribution centre for product - not through Mario Verrocchi and East Yarra Friendly Society but called upon by the stores is Chemist Warehouse Distribution Centre Penrith. 225The next phase of Gance's oral evidence dealt with aspects of the business case for a "fully integrated distribution centre". When the questioning turned to the need to provide "public access", as distinct from a "chemist shop", the following exchange took place between Gance and Robson (at Tp289, LL20-47): Q. You were always going to have a pharmacy, a chemist shop there, weren't you? A. We were always going to have the capacity to dispense to the public. It was required under the PBS. Q. You know that which is there is not required? A. Sorry, the question being? Q. You know that which is there at the moment is not in its form, size and presentation required pursuant to the legislation, don't you? A. I understand that we have to have access to the public - the capacity to reach the dispensary to get the pharmaceutical benefits. The fact that we have goods available for sale which are primarily there for distribution which the public is able to purchase is the case. Q. I think you agreed with me yesterday, you certainly don't need anywhere near the size of the premises or the shop that's there at the moment, the chemist shop? A. I believe we require that size shop in order to fulfil our obligations under our contract to ePharmacy. Q. You don't agree with business cases recommending premises as were established in Smithfield as opposed to Penrith? A. I agree entirely that the business case was more consistent with the premises at Smithfield only to find that the principles involved in establishing that warehouse were no longer satisfied and decided that they wanted to change the business case, as you, I think, have mentioned that business case is fairly antiquated and business is an evolving beast. 226Towards the end of his oral evidence, during re-examination by Mr Tomasetti, Gance explained the co-mingling of various products in CWDCP packages (at Tp303, LL28-45): Q. You were asked a question about the picking and packing that occurs at the Penrith premises and the court observed that during the view picking and packing of nonscheduled goods was observed to be taking place and I think you said words to the effect that packing is commingled, do you recall that answer? A. Not as careful with my words as people of your profession but I may have used those words. Sounds like my language. Q. When you say "commingled" what did you mean by that? A. I mean that when they're putting together packages for ePharmacy there is potentially going to be in there product from all areas within the premises. There will be packages from the ethical warehouse distribution, packages from the dispensary and potentially packages from the rest of the distribution area also. Q. So the packing area shown on the floor plan is used for packing of all the products of the business? A. Yes, you optimise the space you have. 227Lastly, and for completeness, I need to record Gance's evidence on the questions of hardship and relief. He stated that if the Penrith business ceased to be available to members of the public, the approval number issued by Medicare for Gance to supply pharmaceutical benefits from the Penrith business "would be cancelled by the secretary" of the department, and Gance's "right to supply pharmaceutical benefits pursuant to the approval number could not be relocated to alternative premises". The Penrith business relies upon the various revenue streams to offset its overheads. Closing any one or more of those revenue streams would effectively jeopardise the entire business. He detailed a list of fees, penalties and liabilities (at par 20 of his third affidavit), should the CWDCP cease operations. The closure of the Penrith business to members of the public would, therefore, cost the respondents in excess of $1M (par 21). K: Consideration 228The two primary questions raised by the applicants - the validity of the enabling consent, and the legality of the present use - require the Court to "characterise" the proposal and the operation, respectively. The General Principles of Characterisation 229The relevant principles have frequently been analysed, considered, and applied by this Court and the Court of Appeal. See, for example, Pearlman J's decision in Powell Holdings Pty Limited v Hornsby Shire Council [1998] NSWLEC 111, my decision in Maryland Development Co Pty Ltd v Penrith City Council & Anor [2001] NSWLEC 135; (2001) 115 LGERA 75, Lloyd J's decision in RCM Constructions Pty Limited & Maycot Pty Limited v Ryde City Council [2004] NSWLEC 266, Talbot J's decision in Swansea RSL Club and Rosecorp Pty Limited v Council of the City of Lake Macquarie [2006] NSWLEC 381, Craig J's decision in Kang v Blue Mountains City Council [2011] NSWLEC 150, and Pain J's decision in Dooralong Residents Action Group Pty Ltd v Wyong Shire Council [2011] NSWLEC 251. I could cite many more. 230In planning law, use must be for a purpose, and the nature of the use must be distinguished from its purpose. Uses of different natures could still be seen to serve the same purpose. The purpose is the end which land is seen to serve. It describes the character which is imparted to the land at which the use is pursued. The task involves asking what, according to ordinary terminology, is the appropriate designation of the purpose being served by the use of the premises at the material date: Shire of Perth v O'Keefe ('O'Keefe') [1964] HCA 37; (1964) 110 CLR 529, at 534-535 (adopted in Woolworths Ltd v Pallas Newco Pty Ltd ('Pallas Newco') (2004) 61 NSWLR 707). 231The characterisation of development for the purpose of determining its permissibility in accordance with an environmental planning instrument is an essential task to be undertaken when considering any proposal for development. The task needs to be undertaken in a commonsense and practical way and almost always involves questions of fact and degree: Chamwell Pty Ltd v Strathfield Council ("Chamwell") [2007] NSWLEC 114; (2007) 151 LGERA 400, at [45] and [57]. It may also involve questions of law, including determining the proper interpretation of relevant instruments and of the nominated purposes. 232The characterisation of the purpose of a use of land should be done at a level of generality which is necessary and sufficient to cover the individual activities, transactions or processes carried on, not in terms of the detailed activities, transactions or processes: See Chamwell, and Royal Agricultural Society of New South Wales v Sydney City Council (1987) 61 LGRA 305, in which McHugh JA said (at 312): If the activities, processes of transactions are capable as being treated as all or the majority of the species of a genus, then that genus may properly be regarded as describing the purpose of the use of the land. If they are not, then it may be that the only conclusion is that the land has been used for more than one purpose. 233Undertaking the task by applying the elements of a proposed activity to a particular form of development defined in an environmental planning instrument can often yield a result about which minds may reasonably differ: Penrith City Council v Waste Management Authority (1990) 71 LGRA 376, at 384. 234In Chamwell, the use of the carpark driveways, accessways and landscape forecourt were designed to serve the end of enabling the supermarket to be conducted. That purpose imparted to the land on which those uses were pursued, the character of a shop, including the supermarket. The uses of part of one of the buildings for vehicular and pedestrian access were subordinate to the purposes of a shop/supermarket, and multi unit housing. They were not, by reason of their character, extent and other features, capable of being an independent use for the purpose of roads. They served the main purpose. Parts of the proposed development were properly characterised as shop, namely supermarket, and development for the purpose of shop was prohibited in the zone, accordingly, the proposed development in its current form was not able to be approved. 235Characterisation at the time of the grant of consent is a matter of jurisdictional fact to be determined by the Court on all the documentary and expert evidence: Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135. In that case, the High Court discussed the concept of jurisdictional fact and the use by the Untied States authorities of the doctrine of "deference". The Court said (at [42]): An undesirable consequence of the Chevron doctrine may be its encouragement to decision-makers to adopt one of several competing reasonable interpretations of the statute in question, so as to fit the facts to the desired result. In a situation such as the present, the undesirable consequence would be that the decision-maker might be tempted to mould the facts and to express findings about them so as to establish jurisdiction and thus to insulate that finding of jurisdiction from judicial examination. 236The High Court concluded that principles as stated in Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1, are not the result of the application of any doctrine of deference, but an application of the basic principles of administrative law respecting the exercise of discretionary powers. See also Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24. 237In the seminal decision in Foodbarn Pty Limited v Solicitor-General ("Foodbarn") (1976) 32 LGRA 157, already referred to in material quoted in [125] and [131] above, Glass JA (Samuels and Hutley JJA concurring) said (at 161): It may be deduced that where a part of the premises is used for a purpose which is subordinate to the purpose which inspires the use of another part, it is legitimate to disregard the former and to treat the dominant purpose as that for which the whole is being used. Doubtless the same principle would apply where the dominant and servient purposes both relate to the whole and not to separate parts. .... Where the whole of the premises is used for two or more purposes none of which subserves the others, it is, in my opinion, irrelevant to inquire which of the multiple purposes is dominant. If any one purpose operating in a way which is independent and not merely incidental to other purposes is prohibited, it is immaterial that it may be overshadowed by the others whether in terms of income generated, space occupied or ratio of staff engaged. The ordinance is nonetheless being disobeyed. 238This passage was cited with approval by the Court of Appeal in Bob Blakemore Pty Ltd v The Anson Bay Company (Australia) Pty Ltd [1990] NSWCA 25. Clarke JA (Priestley and Meagher JJA concurring) added this: Where there are two uses of property the question whether there are one or two existing uses is resolved upon a consideration whether both are independent uses, in which case they are both treated as existing uses, or whether one is ancillary to, or subserves, the other in which case the latter constitutes the sole existing use. It may be a nice question in a given case whether one use subserves the other. The question will always be one of fact and degree. 239In Lizzio v Ryde Municipal Council ("Lizzio") [1983] HCA 22; (1983) 155 CLR 211, the High Court specifically adopted and applied the principles stated by Glass JA in Foodbarn (as quoted above). Gibbs CJ summarised them in the following terms (at 216-217): The first argument, that the land was used for the purposes of a dwelling-house and nothing more, takes as its starting point the judgment of the Court of Appeal in [Foodbarn] ... Obviously a person who is entitled to use land for the purpose of a dwelling-house may use it for incidental purposes, such as garaging his car or housing his boat. No doubt in some circumstances a householder who on an isolated occasion used his land for the purpose of making sales from a stall might be held to be doing no more than using his land for the purposes of a dwelling-house. For instance, if a householder allowed his land to be used annually as the site for a fete to raise money for some charitable purpose, the use of the land in that way might be regarded as simply incidental to its use for the purposes of a dwelling-house. The question is one of fact and degree. Having regard to the regularity and extent of the activities involved in selling the flowers, and to the fact that some of the flowers were grown on other land, there is no reason to disagree with the decision reached in the courts below that the use of the land in the present case could not be regarded as merely incidental to its use for the purposes of a dwelling-house. 240A use which is ancillary to another use may, nevertheless, be an independent use. It is a question of fact and degree in all the circumstances of the case: See the Court of Appeal's decision in Baulkham Hills Shire Council v O'Donnell (1990) ('O'Donnell) 69 LGRA 404, where Meagher JA said, at 409-410: Notwithstanding the principles laid down in Foodbarn, it does not follow that a use which can be said to be ancillary to another use is thereby automatically precluded from being an independent use of the land. It is a question of fact and degree in all the circumstances of the case whether such a result ensues or not. When a resident uses his land to park his motor car at his house, he is no doubt not conducting an independent use of car parking; when an employer installs at his factory a canteen for his workers, no doubt he is not conducting an independent use of running a restaurant; when the Clarks grew vegetables for their table they were not conducting an independent use of vegetable growing. But when one use of the land is by reason of its nature and extent capable of being an independent use it is not deprived of that quality because it is 'ancillary to', or related to, or interdependent with, another use. If a book publisher opens a sales room at his publishing house to sell his products, the selling of books is an independent use although ancillary to the use of publishing. The series of cases dealing with dual uses ... illustrate the point: they show that a 'convenience store' and a petrol station are two independent uses, although the former is clearly ancillary to the latter. 241Consent can be given to the proscribed use when it falls within a permitted use if there is, in the relevant LEP and the context, "some appropriately compelling consideration for the departure from the ordinary and natural meaning of the terms": Egan v Hawkesbury City Council (1993) 79 LGERA 321, at 328-329, per Mahoney JA; Berowra RSL Community and Bowling Club Ltd v Hornsby Shire Council [2002] NSWLEC 243; (2000) 114 LGERA 345, at [29]-[30]. 242In University of Sydney v South Sydney City Council (1998) 97 LGERA 186 (known as the Macquarie Private Hospital Case - herein 'Macquarie Hospital'), the University of Sydney sought approval of a development application for the construction of a private teaching hospital partly on land owned by the University and partly on land owned by the Central Sydney Area Health Service. South Sydney Council refused the application on the basis that it had no power to approve the proposal which straddled the boundary between education and hospital special purpose zones, in one of which the alternative secondary ancillary use was prohibited. 243Applying the usual authorities, I held that the proposed development was permissible as it was a single multi-purpose building straddling two zones and the dominant purpose was for a teaching hospital, part of the education function performed by the University in its medical faculty precinct within the education zone. The hospital use was not severable from the development. I held that the proposal complied simultaneously with all the requirements of the relevant LEP. I pointed out that the purpose had to be construed broadly and liberally as a question of fact and degree. Force fitting into a predetermined category should be avoided and "the court should not characterise the proposal simply on some comparative analysis of income, space or staffing". 244In my conclusion (at 215) I said: It is certainly possible, and sometimes even desirable, according to the unchalIenged evidence in this case, for the proposed teaching hospital to deliver patient services but suspend student services, when either an emergency situation demands it or a patient withholds consent. However, on Professor Young's uncontradicted evidence it is neither possible nor desirable to provide adequate training to health professionals without exposing them to "real" patients in a "clinical" setting. The University wants not just a hospital but a "state-of-the-art" teaching hospital. Its use is inextricably part of the education function performed by the University in the relevant medical faculty precinct within the education zone. It cannot be severed, or seen as "independent", so as to become impermissible within that zone under the test laid down by O'Donnell. I, therefore, have come to the conclusion that the University is correct in submitting that its proposal can and does comply simultaneously with all the requirements of the special use zone in LEP 66. 245The Macquarie Health Clinic company, which was the second respondent in one appeal, and the applicant in another, appealed to the Court of Appeal challenging my decision. Macquarie had an arrangement with the Central Sydney Area Health Service to lease a surplus carpark on the other side of Missenden Road, and had a consent from Council to erect on that land a private hospital. It was expected that the two private hospitals would be competitors, but Macquarie's would not be a teaching hospital. The competitor's appeal is reported under the name Macquarie International Health Clinic Pty Ltd v University of Sydney (1998) 98 LGERA 218. Stein JA delivered the major judgment. Meagher JA agreed with no additional comment, and Mason P also agreed (at 219), but stressed: ... the importance to me of the unchallenged finding that the proposal can be characterised as a 'teaching hospital'. This finding turns upon detailed factual bases, including the contiguity of the site to the University campus, the University's involvement in establishing the hospital, and aspects of the design of the hospital such as the location of the medical faculty library. I lay emphasis upon these facts. The mere addition of educational activities to an enterprise will not enlarge its character. Thus, an office that takes in students for work experience or a factory whose work force includes apprentices would be unlikely to be characterised as devoted to educational purposes in the normal course. 246Stein JA rejected many of the criticisms made of my judgment, including a submission that the twin purposes of a teaching hospital were mutually exclusive. I had found that the use involved two purposes which were inextricably bound up and not two independent uses. Stein JA said a teaching hospital was necessarily a mixed purpose which cannot be severed. "In my opinion there is but one use as a teaching hospital, with two purposes as its end. These by their very nature cannot be severed into two independent uses" (at 222). 247Although Stein JA upheld my decision on its primary basis, he considered the alternative submission that the hospital could not be seen to be ancillary to the education use in the education zone, the major use of the building being as a hospital. He said (at 223): However, an ancillary use does not necessarily need to be a subordinate or subservient one. It may be more than a minor use. It seems to me that an ancillary or incidental use is not capable of being reduced to a mathematical formula. It may also be noted that among the relevant dictionary meanings of 'ancillary' are auxiliary and accessory. 248In O'Donnell the ancillary use was prohibited, whereas in the Macquarie Hospital case the ancillary use was permissible. As might be expected, the applicants argue that this case is an O'Donnell situation, and the respondents a Macquarie Hospital situation. 249I must now review some decisions of the Victorian Civil and Administrative Tribunal ('VCAT'), drawn to my attention by the respondents (and found in Gance's materials at tab 13), as they explore situations comparable to that now before the Court. VCAT cases 250In Tauman v Wyndham CC ("Tauman") [2005] VCAT 2444, the relevant development involved warehousing and distribution, with ancillary retailing. It was estimated that the internet sales comprised 80% of the business, and retail approximately 20%. Items offered for sale included prescription medications, scheduled medicines, health and beauty products, disability aids and other merchandise, and the premises accommodated a number of services including Blue Cross, My Chemist, Samples Plus, Home Medication Review and My Home Health. The business, at Hoppers Crossing, was to be the internet distribution point for My Chemist in metropolitan Melbourne - "the receipt of orders via the internet, and the picking and packing of products for distribution for locations in Victoria, South Australia and Tasmania". 251Approximately 480 square metres of the premises were to be open to the public (40% of 1200m2 gross area). Non-medicinal and non-prescription pharmacy items, including disability aids, were to be offered for sale, as well as "health and beauty products ... and other merchandise". The Home Medication Review Service would also be available to the public. There was compliance with the requirements and guidelines of the Pharmacy Board of Victoria. A considerable increase in ePharmacy sales was expected over the next three to five years, while walk-in sales would only marginally increase. 252The Tribunal said: 16. It is therefore expected that whether the premises are located in an industrial area or some other zone that an approved pharmacy would be set out in a similar fashion given the requirements of the Pharmacy Board... 17. In terms of size this pharmacy will be large, but if as we were advised, it is to be used to store pharmaceutical goods for distribution to internet customers, as well as samples to the medical profession and medication for the aged, no doubt a large area is required to allow for the storage of sufficient stock to meet the needs of the customers with respect to these services. 253The Tribunal concluded (at [20]) that the primary purpose of the site was its use for the storage and distribution of pharmaceutical goods. This conclusion was based on the actual size of the premises, and the goods to be stored and distributed with the ability to easily retrieve stored items to fulfil customers' orders. 254The Tribunal concluded (at [30]) that the proposed use was: ... not a shop and is therefore not prohibited within the Industrial zone. Any retail sales to the public are likely to be minor and are considered ancillary to the proposed use. The use as a warehouse and distribution centre is appropriately located given the other surrounding activities and the site's proximity to major freeways. 255In High Point Commercial Property Group Pty Ltd v Maribyrnong CC ("High Point") [2009] VCAT 16, the shop component of the land use would be prohibited on the subject land if it were a separate and distinct use from the warehouse distribution centre use. The front area was to be 302m2 including a dispensary, and the warehouse/distribution area 451m2. Only the front area would be accessible to the public, again 40% of the gross area. 60% of the prescription dispensary operation was ePharmacy. The applicant anticipated that the distribution centre component would generate 80% of the business turnover. 256The Tribunal made the point that the requirement of public access did not require planning approval of something that might otherwise be prohibited in a particular zone. It referred to the High Court's decision in Lizzio, characterised the use by its dominant purpose, and found that the use of part of the operation as a shop was inseparable from the other activity. That part of the front of the premises which was to operate as a shop was also to be a storage area for the distribution activity, which would operate seamlessly across both areas of the premises. The Tribunal said (at [20]-[25]): 20. Considered alone, the front area of the premises has the potential to be regarded as the use of the land for a shop. However, I do not regard this as the relevant test. Ultimately, the interrelationship between the retail part of the premises and the use of the remainder of the premises is central to my determination. 21. I take the same view of this application as did Member Rickards for an almost identical facility in Tauman's case. I am influenced most by the fact that the operation of the shop is inseparable from the operation of the warehousing/ distribution activity which relies on all of its stock, including dispensed pharmaceuticals sourced from the front part of the premises. In this way, despite its appearance, it is deceptive to regard the front part of the premises as just a shop, since it is fundamentally also a storage area for the distribution activity which operates seamlessly across both areas of the premises. This is the essence of what I regard as the subservience of the shop use to the warehousing/distribution activity. 22. In this way, I do not make much of the fact that the front area is similar in size to the back area, since the front area is used equally to serve the operations of the back area by filling customer orders, with the exception of the small counter sales area. This is also evidenced by the almost identical hours of the retail use and the warehousing/ distribution activities. 23. Other factors influencing my decision include: the fact that some 80% of the business turnover would be derived from the warehousing and distribution operations at the rear of the premises. It is reasonable to expect that the online business would, if anything, strengthen over time; the generally far higher proportion of transactions anticipated from the warehousing/distribution business compared with off-the-street retail sales; and the relative staffing requirements of each part of the business on the land, with a bent towards the warehousing and distribution operation. 24. While the front area of the premises may be capable of operating as a separate economic unit (although no evidence was presented either way), I consider that applying the real and substantial purpose test to the subject land requires me to have regard to the operation of the premises as a whole. In this context, even if substantiated, I do not regard this factor as determinative. 25. Therefore, I find that the real and substantial use of the premises is for the storage and distribution of pharmaceutical goods. To the extent that retail sales occur at the front of the premises and this area is laid out and appears to function as a shop, it is ancillary to the dominant use of the land as described. 257Both Tauman and High Point were followed in Gance v Monash CC [2010] VCAT 388. Submissions on Issue 1 - Possible invalidity of the consent 258The applicants contend that, on a proper construction of the development consent, it includes approval of a retail/shop use, which is an independent and prohibited use, and not correctly seen as ancillary to the warehouse/distribution operation proposed. 259Both sides rely on the Foodbarn principles (see [237] above). 260The applicants submitted (par 5) that, if the Council "...purported to give consent to [a] prohibited development, this was a jurisdictional error". The applicants relied principally on Pallas Newco, in which Spigelman CJ stated (at [88]) that, where characterisation involved a jurisdictional fact, as it did in that case, the Court had to determine the case on the evidence before it, rather than being confined to the evidence which was before the Council when it granted the consent. 261The question of whether there has been a jurisdictional error, that is, whether the Council had jurisdiction to grant the consent, requires an examination of how the Council characterised the use of the premises when granting that consent. Often the difficulty in construing what a consent means is the threshold issue of what, if any, documents, apart from the instrument of consent itself, are "incorporated" into the consent. See Quarry Products (Newcastle) Pty Ltd and Allendale Blue Metal Pty Limited v Roads and Maritime Services (No 3) [2012] NSWLEC 57. In this case, condition 1 is quite clear on the question of incorporation, and the SEE and plans are, by that condition, incorporated in the consent, to the extent they are not clearly excluded by either markings on the plans, or any of the conditions. 262The applicants submit (par 8) that Council was "misled" by the second respondent in relation to the necessity for a retail outlet to be established in premises, where a pharmacist has been approved to distribute pharmaceutical benefits. They say that there was a misunderstanding, or a misconstruction, of what was proposed, and, indeed, of what was required under the National Health Act . Mr Robson says that "there is nothing in the legislation that says you need a fully functional retail chemist shop with thousands of items at all to run any other business" (Tp6, LL9-11). The pharmaceutical benefits licence is granted to a person, but it relates to particular premises. It does not require a full-scale retail pharmacy, selling not only PBS drugs, but also non-PBS products. "All it requires is a publicly accessible dispensing window" (Tp13, LL46-47 - in a clear transcription error, the transcript mistakenly records the word as "assessable"). 263Valastro agreed that the only reason that public access is needed in premises such as these is for the sale of pharmaceutical benefits (Tp173, LL38-41), as well as non-pharmaceutical benefits drugs dispensed otherwise than over the internet (Tp174, LL6-7). Hence, the applicants submit (par 32) that a full retail pharmacy ancillary to the main purpose of a distribution centre is an independent use which contravenes the 4(b) zone, and, therefore, also s 76B of the EPA Act. Terry White makes clear that pharmacies must comply with State planning laws. The information provided to Council indicated that the core activity of the business was as a distribution centre, and that retail OTC was ancillary to it. The applicants contend that the Council erroneously accepted the representations made by the respondents, as to the alleged dominance of the distribution centre use, and that the Council noted in its report (at p299) that the incorporation of a retail pharmacy was required, to enable the premises to operate and be licensed. 264The respondents agree that a "permissible" characterisation was an "essential pre-condition" to the grant of consent by the Council, and, if incorrect, the consent would be invalid (pars 4-5). They submit that the jurisdictional question can be answered in terms of the Council's characterisation of the use of the premises (par 4). Council was empowered to grant consent by determining that the premises would have an "innominate use" (par 7), that is, the land could have any use, other than that prohibited under cl 9, such as a "shop". Rather than the proposal that the premises be used for the purpose of trading in bulky goods, "the use being made of the subject premises is not prohibited, is not specifically defined and is thus a land use which is permitted with development consent as an innominate use" (T01.11.10, p 17, LL 22-24). The onus, therefore, falls on the applicants to prove that the premises are a "shop". 265The respondents contend that the use of Tenancy 230 is not as a "chemist shop", but for a range of inter-related uses - "the use of the premises contains co-mingling of activities comprising a single business" (Tp17, LL45-46) - which seek to take advantage of the changes occurring in the pharmacy industry, largely brought about by the advances of the internet (Tp18, LL6-7). In so far as there is a use of the tenancy for what is now known as "ePharmacy", the respondents contend that it is not retail selling (Tp21, L42-p23, L7), and they also contend that any truly retail components of the co-mingled use are "ancillary" (Tp34, LL8-10) - as they had always put, frankly, to Council. They rely on Chamwell, and submit that there is a single use of the premises, i.e. the distribution of pharmaceutical goods and health care products, and that this purpose requires ancillary public access, under the National Health Act. 266The applicants argue that, in particular, the ePharmacy use of the premises is a "sale" where stock is taken directly from the front of the store, where it is "exposed" and "offered", and may be used for ePharmacy when it is "picked from the shelves" for that purpose (par 62). As noted above, Leyshon suggested that ePharmacy goods are "sold under the banner of ePharmacy but are products belonging to Mr Gance and the Penrith distribution facility" (Tp130, LL16-17) - he says it is a retail transaction, so the applicants argue that the Council acted beyond its power, and, in granting the consent, breached the zoning requirements of the land. Consideration of Issue 1 267The Court must undertake an objective analysis of the purposes of the application, and its components, at a level of generality. As I noted in Macquarie Hospital, the exercise is not susceptible to purely mathematical analysis. 268Although Gance asserts that all of the stock available for public view is his, distribution of non-ethicals being primarily done from Smithfield, and that it is being stored at the front for group distribution, and ePharmacy purposes, it is obvious, from the presentation of that public area, that the stock is also being offered for sale by a retail transaction, to members of the public visiting the SupaCenta. 269Such co-mingling of both goods and purposes was clearly foreshadowed to Council in the DA documents as the proponent's intention for the operation. While the SEE asserted that the proposed use was a "shop trading principally in bulky goods", it referred to the "usual range of pharmaceuticals and cosmetics", putting the Council on notice of commerce beyond PBS products. The City Plan letter of 20 January 2009 ([131]-[132] above) expanded on this aspect of the application. 270Accordingly, when considering the application and deciding to grant conditional consent, Council was aware that an ancillary retail facility was included in the proposal. The National Health Act requirement for "public access" is mandatory, and obviously means there must inevitably be some elements of "shop" incorporated in the proposed warehouse/distribution project, for the ePharmacy component, and for any on-site sales of such products. If there is to be a pharmaceutical warehouse/distribution facility, an ancillary retail function must be accepted. 271There is some inaccuracy in the assertion in the SEE table of "elements of use" (in [122] above), where it says, in respect of the "retail pharmacy" element, that such a pharmacy must be "an ancillary retail component within the site", inferring that, to satisfy the licensing requirements of the National Health Act, it must be a traditional full-service "chemist shop". 272On the other hand, the community has come to expect that providers of pharmaceutical benefits to customers invariably offer for sale, as well, a wide variety of the other goods, of the range and type seen in CWDCP during the Court's inspection. 273The LEPs envisage that "shops" are more broadly based enterprises than some "hole in the wall" access point for PBS products, and they proscribe them as independent uses in the relevant zone(s). The necessary public access is achieved by providing public access not only to PBS products, but to a full range of goods usually available to the public, including PBS stocks, in a traditional chemist shop conducting retail sales. The DA documents clearly proposed some such element of retail sales, beyond PBS products, in the proposed use for which consent was sought. 274In its assessment of the DA, Council accepted the propositions put by City Plan on behalf of AMS, to the effect that a full "retail component" was required for a licensed pharmacy operation, and that such a "shop" use would be incidental or ancillary to the primary use as a distribution centre, and Council then approved the DA on that basis - emphasising the limitation by imposing the relevant condition. 275While a full-service traditional retail pharmacy is clearly not required by the National Health Act, such a pharmacy certainly ensures compliance with the "public access" requirement, and s 90 (4) states that any approval under s 90(1), requiring such public access, does not obviate the need for the project to comply simultaneously with state planning laws. The mere presence of some retail elements does not make the proposal, as a whole, one for a "shop". 276As I conclude my determination of these proceedings, I remain more than a little troubled by two aspects of the matter: (1)that the proponent did not substantiate why, and that the Council did not properly check that, such a fully stocked "shop" was required for the proposed integrated pharmaceutical warehouse to be properly licensed, and (2) that goods are freely available in a range going far beyond what might be seen to be "incidental" to the provision of PBS products (e.g. measuring glasses, "droppers", pill dispensers, tablet cutters) into what Mr Robson described (Tp6, LL36 - 38) as "other paraphernalia". 277Mr Tomasetti submitted (Tp369, LL16-17) that from "droppers", cutters etc: ... it is only a short extension to sale of nappies and other general health care related products. 278The challenge for the Court is to settle on whether one can really "draw a line" on what is acceptable as incidental or ancillary to the provision of public access to pharmaceutical benefits, and, if so, where such a line should be drawn. 279Once you accept that compliance with the National Health Act requires some sort of "shop" use, where is the line to be drawn between, at one extreme, a "hole in the wall" set-up, where the public can purchase, on prescription, PBS items only, and, at the other extreme, a full pharmaceutical "supermarket", which might stock, display, and sell a wider range of ethical products, along with cosmetics, fragrances, nappies, and other products such as toys, sun hats, tissues, confectionery, and so on? 280A patient/customer needing a prescription medication included in the PBS, and the necessary equipment to administer it, might also equally need a freely available painkiller, a vitamin supplement, or the like, to deal with the medical problem being treated. Is that person required by any law to go also to another shop (pharmacy or otherwise) to obtain all that he/she needs? 281There is nothing before the Court to show that such a limitation is required, or was intended, by any pharmacy legislation. Hence, the Court must examine the implications of the planning regime for the limitation of the "access" component of the project. That task involves characterisation, according to the principles outlined above. 282In the SupaCenta context, I venture to suggest that, for example, a retailer of "bulky" electrical goods, such as major household appliances, would be expected to carry and sell, not only facultative non-bulky products like batteries, power boards, extension cords, and the like, but also, probably at the check-out or cash register, general magazines, confectionery items, bottled water etc. 283I tried unsuccessfully to engage Mr Robson on this question of accurately "drawing the line" (see, especially, Tpp382-3), so the Court has had to come to a decision without any assistance from the applicants. 284The Court's discretion in class 4 challenges such as this extends only to declining to grant relief when a breach of the law is established, and does not extend to declining, for some reason asserted to be in the interests of justice, to make any findings of such a breach, when dictated by the evidence. Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335. 285I am satisfied that the "troubling" aspects I mentioned above do not invalidate the characterisation exercise carried out by the Council, with which the Court agrees. In the end analysis it does not matter where a line is drawn regarding products, the retail use will be ancillary, and inextricably bound, to the warehouse/distribution use. 286I believe that I should follow the reasoning of the VCAT in the three cases quoted above ([250]-[257]), and I, therefore, find no jurisdictional error in the grant of the subject consent. Issue 2 - Is the present use prohibited? 287The submissions made, and the characterisation and other analysis required, for the resolution of this second question - involving current use, as distinct from proposed use - are very much the same as applied for Issue 1. Intentions, hopes or expectations regarding the project are rarely relevant, and never the determinative test of the use - the Court must look at the actual operation: O'Keefe, Pallas Newco, and Chamwell. 288Again, however, the Court must not focus too heavily on straight mathematical analysis, but some such analysis can illuminate the question of characterisation, once satisfied that definitional questions are clearly answered. Some of those questions - e.g. is a certain activity "retail" or not? - are complex. 289The applicants contend that the present use of the premises is overwhelmingly "retail" in character, in terms of use of shelf space, revenue, and staffing, making the primary present use, rather than an ancillary use, a "shop", clearly prohibited in the IN2 zone. "Shop" was defined in the two LEPs as follows: 1996 ... a building or place used for the purpose of selling, exposing or offering for sale by retail goods, merchandise or materials but, in the development control table, does not include a building or place elsewhere specifically defined in this Schedule, or a building or place used for a land use elsewhere specifically defined in this Schedule. 2010 ... retail premises that sell groceries, personal care products, clothing, music, homewares, stationery, electrical goods or other items of general merchandise, and may include a neighbourhood shop, but does not include food and drink premises or restricted premises. 290The applicants contend that the evidence establishes the following elements of present use at CWDCP: 1.Distribution of the EYFS/Verrocchi goods. 2.Samples Plus/Market Reach. 3.Home medication review. 4.My Home Health. 5.Retail pharmacy comprising the following components: (a)Dispensing of medicines listed on PBS; (b)Dispensing of medicines not listed on PBS; (c)Sale of items scheduled under the PTG Act and not listed on PBS; (d)Sale of OTC goods, including fragrances, toiletries and general "grocery type" supplies; (e)Sale of generic health products such as vitamin supplements, etc. 6.ePharmacy involving the sale of goods from the front of the store, in addition to PBS listed medicines which must be dispensed by a qualified pharmacist. 7.Sale of items to nursing home patients (proposed, but not presently undertaken through Penrith). 291Only the dispensing/distribution of PBS-listed items requires a s 90 approval, and such an approval would be needed for some goods or transactions embraced by elements 5 to 7 in the above list, and not needed at all for elements 1 to 4 and other components of elements 5 to 7. 292The parties are in dispute about which of these elements, and to what extent, involve "retail". The primary group distribution element (No 1 above) accounts for 60% or more of the value of the business, and involves no retail. 293For my part, while ePharmacy involves a sale, and is the element of the present use which is expected to grow exponentially in the years ahead, the actual sale of the item does not involve CWDCP, whose role is its distribution. In this respect I do not accept Leyshon's evidence. 294Off-the-shelf, OTC, and disability aid sales, in or through the front of the premises, are clearly "retail" in character, but the "Samples Plus" and Market Reach operations are clearly not, and not all services provided to nursing homes will necessarily involve retail. There is a service "sold" in Home Medication Reviews, but the consideration comes from Medicare to CWDCP, it is really a minor element, and it may not meet the relevant tests or definitions of sale/retail (in [59] above) anyway. 295At the end of the analysis of the CWDCP business, I find myself accepting the respondents' description of the present use as six "co-mingled" activities (par 46): (a) Distribution for ePharmacy. (b) Distribution for nursing homes. (c) Distribution for 'Samples Plus'. (d) Distribution of both ethical and OTC products for and within the group. (e) Sales of ethical products. (f) Sales of OTC products. 296The respondents are correct to invoke the Macquarie Hospital example, rather than O'Donnell. The evidence suggests that much (if not most) of the stock shelved in the front section of the premises currently supplies the ePharmacy element, among others, and, on the other hand, stock for the distribution tasks is stored throughout the whole premises. The extent of the overlaps in use of space for the elements of present use is clearly shown in the marked-up floor plans at pp58-62 of the respondents' submissions of 14 January 2011. 297Having upheld the consent for Tenancy 230 as valid, because it is a multi-faceted single use, of which such "shop" aspects are both minor and genuinely ancillary, on the one hand, and required by the National Health Act, on the other, as well as being "inextricably bound" to the overall use of the premises, I am satisfied by the evidence before the Court that the use is being carried out in accordance with that consent, and I can find no breach of the law. Issue 3 - Is there a breach of Condition 4 298Condition 4, as amended, and put in simple terms, requires that any retail sales from Tenancy 230 are to be ancillary to the primary use of the premises as a distribution centre. 299As the elements of use about which the applicants complain have been found, on the totality of the evidence before me, to be ancillary to the primary warehouse and distribution centre use, I find that the premises operate in accordance with the limitation imposed by condition 4. Issue 4 - Validity and/or severability of Condition 4 300For completeness, I will address this last issue, although it may seem superfluous in light of my conclusions on Issues 1 to 3. 301Council's power to impose conditions on a consent flows from s 80A(1) of the EPA Act, read with s 79C(1). 302Section 80A(1)(a) relevantly provides: A condition of development consent may be imposed if: (a) it relates to any matter referred to in section 79C (1) of relevance to the development the subject of the consent... 303Section 79C(1) provides: (1) Matters for consideration-generalIn determining a development application, a consent authority is to take into consideration such of the following matters as are of relevance to the development the subject of the development application: (a) the provisions of: (i) any environmental planning instrument, and (ii) any proposed instrument that is or has been the subject of public consultation under this Act and that has been notified to the consent authority (unless the Director-General has notified the consent authority that the making of the proposed instrument has been deferred indefinitely or has not been approved), and (iii) any development control plan, and (iiia) any planning agreement that has been entered into under section 93F, or any draft planning agreement that a developer has offered to enter into under section 93F, and (iv) the regulations (to the extent that they prescribe matters for the purposes of this paragraph), and (v) any coastal zone management plan (within the meaning of the Coastal Protection Act 1979), that apply to the land to which the development application relates, (b) the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality, (c) the suitability of the site for the development, (d) any submissions made in accordance with this Act or the regulations, (e) the public interest. 304The power of Council to impose conditions is broad. The test of the validity of a condition attached to a consent originates from Newbury District Council v Secretary of State for the Environment [1981] AC 578, and was set out by McHugh J in Western Australian Planning Commission v Temwood Holdings Pty Limited [2004] HCA 63; (2004) 221 CLR 30, at [57], as follows: (1)The condition is for a planning purpose and not for any ulterior purpose. A planning purpose is one that implements a planning policy whose scope is ascertained by reference to the legislation that confers planning functions on the authority, not by reference to some preconceived general notion of what constitutes planning. (2)The condition reasonably and fairly relates to the development permitted. (3)The condition is not so unreasonable that no reasonable planning authority could have imposed it. 305I discussed the Newbury/Temwood principles in my first instance judgment in Botany Bay City Council v Ralansaab and 7 Ors [2010] NSWLEC 225, at [171]-[186]. When my decision in that case was reviewed by the Court of Appeal - in Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308; (2011) 183 LGERA 228 - Basten JA said: In Australia the question is not so much whether the "Newbury test" has been adopted by the High Court, or courts of intermediate appeal, but rather what it requires. Labels are frequently adopted without sufficient reference to the specific statutory and factual context in which they are to be applied. 306There is a valuable discussion of these issues also in Biscoe J's judgment in Dogild v Warringah Council (2008) 158 LGERA 429, at [37]-[68]. His Honour there referred to pre-Newbury Australian authority and other relevant decisions. 307The applicants in the present case submit that the presence of a retail pharmacy on the premises was based on a "misconception" by Council of the extent of the requirements of the National Health Act (par 89). As a result of this misconception, condition 4 was then amended, "radically" changing and confining the effect of condition 1 that permits the use of the premises as a "bulky goods retail outlet" (par 90). 308The applicants, therefore, submit that condition 4 is "impermissibly uncertain", because there is a possibility that the premises will be used for a purpose significantly different from the purpose for which the consent was granted (par 91). They further submit that, because condition 4 is invalid, the whole development consent is invalid, as condition 4 is not severable from the rest of the consent (par 94). See Wechsler v Auburn Council (1997) 130 LGERA 134, and its application of s 32 of the Interpretation Act 1987 (NSW). 309The respondents submit that the Council imposed condition 4 on the sole basis that the retail use of the premises was only ancillary to, rather than possibly independent of, the use of the premises for distribution purposes (par 84). They further submit that condition 4 was not so uncertain as to alter the effect of the consent. 310I see condition 4 as fundamental to the consent and the development, as it goes to the root of the planning permission granted by Council. I accept the applicants' submission that the Council would appear unlikely to have granted consent without the agreement on condition 4, and its qualification on the use of the premises. However, I reject their submission that it is relevantly uncertain. 311In my view condition 4 meets the Newbury/Temwood test - it is for a planning purpose; it reasonably and fairly relates to the development; and it is a reasonable condition to impose in the circumstances of the consent. 312I am also satisfied that it is not severable in any event. See Maitland City Council v Anambah Homes Pty Ltd [2005] NSWCA 455; (2005) 64 NSWLR 695. See also Winn v Director General of National Parks and Wildlife (2001) 130 LGERA 508. L: Conclusion and Orders 313The applicants' challenges have all failed, so no questions of relief and/or discretion arise. The summons should be dismissed with costs. All exhibits, including both those formally tendered, and those to affidavits, may be returned. 314The formal orders of the Court will be: 1.The applicants' further amended summons dated 22 October 2010 is dismissed. 2.Unless a notice of motion for any further or different orders for costs is filed, by any party, within 14 days, the only order for costs will be that the applicants pay the second and third respondents' costs, on a party-party basis, as agreed or assessed. 3.All exhibits, including those to affidavits, may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 April 2012