ADELAIDE CITY COUNCIL v FRANKHAM No. SCCIV-02-214 [2002] SASC 162

DOYLE CJ: This is an appeal from an order of the Environment Resources and Development Court ("the ERD Court") made on 23 January 2002. The ERD Court ordered that a direction in an enforcement notice issued by the appellant, Adelaide City Council ("the Council") pursuant to s 84 of the Development Act 1993 ("the Act") relating to premises at 137-139 Hindley Street Adelaide be quashed.

The ERD Court made that order because it decided that an alleged breach of the Act had not occurred. It apparently so decided because the notice alleged a change of use of land, without development approval, to use of the land as "adult products and services". That expression is a defined term in the City of Adelaide Development Plan. The ERD Court held the definition to be invalid, and so took the view that the notice was ineffective.

The appeal raises the soundness of that reasoning.

The respondent ("Mr Frankham") is the occupier of the ground floor of the premises. In the notice, which is dated 31 July 2001, the Council said that it believed that he had breached the Act by undertaking development at the premises without development approval, contrary to s 32 of the Act. The development was said to be changing the use of the premises from "restaurant" to "adult products and services". Each of these expressions appears in inverted commas. The notice directs Mr Frankham to cease "all activity which constitutes development and which is not approved development".

The hearing in the ERD Court proceeded on the basis of a statement of agreed facts and issues, supplemented by some oral evidence.

It was common ground that the land in question is situated in the CA3 Hindley Street Precinct as defined in the Council's Development Plan.

The ground floor of the building on the land, which constitutes the premises the subject of the enforcement notice, is occupied by and used by Mr Frankham for his business, being a shop, of the kind commonly known as a "sex shop", which he operates under the name "The Box".

Further agreed facts as set out in the statement of agreed facts and issues are as follows:

"5. The Ground Floor was previously used for the purposes of a restaurant, with the last operating restaurant being known as the 'Olympia Restaurant'. The Ground Floor was vacated by the Olympia Restaurant in or about 1997.

6. Before the use of the Ground Floor for the purposes of The Box, the use of those premises for the purposes of a restaurant had not been discontinued.

7. On 20 July 2001 following an inspection of the Ground Floor, the Council wrote to Mr Frankham confirming the meeting of 19 July 2001 and the requirement for a development application to be lodged for a change in the use of the Ground Floor.

8. On 31 July 2001 Mr Palumbo of the Council conducted an inspection of the Ground Floor. At that time the premises were being used for the sale by retail of goods, merchandise and materials including publications (restricted under the Classification (Publications, Films and Computer Games) Act 1995), video tapes and objects or devices designed to be used in connection with sexual behaviour or activities and the hire or exchange of video tapes and the following products:

8.1 clothing, imported lingerie, costumes, leather clothing;

8.3 novelty items including masquerade masks, women's stockings, perfumes, massage oils."

The issues for the determination of the ERD Court were defined in the statement of agreed facts and issues as follows:

11. Council regards the use being made of the Ground Floor as development as it involves change of use from restaurant to adult products and services premises or in the alternative a shop.

12. Mr Frankham submits that development has not taken place as there has been no change of use in that the previous use was as a restaurant (which is defined to be a shop pursuant to the Development Regulations) and that the current use remains as a shop (retail outlet).

13. The Court is asked to decide whether, on the statement of agreed facts and any additional evidence, development has taken place ie whether there has been a change of use."

In order to understand how the issues arose, it is necessary to have regard to the relevant statutory provisions.

In the s4 of the Act "development" is defined to mean, among other things, "a change in the use of land."

The words "to undertake development" are separately defined to mean "... to commence or proceed with development or to cause, suffer or permit development to be commenced or to proceed".

"The Governor may, by regulation, define a term used in a Development Plan, and such a definition, if inconsistent with a definition in this Part, operates to the exclusion of the latter."

A particular procedure is prescribed by the following provisions for the making of a regulation under subsection (2). It is not suggested the definitions of "restaurant" or "shop" (see below) alter any term used in Part 1 of the Act.

14. Regulations made pursuant to the Act known as the Development Regulations 1993, contain in Schedule 1 to the regulations a series of definitions, including definitions of "restaurant" and "shop".

15. "Restaurant" is defined to mean "... land used primarily for the consumption of meals on the site".

"(a) premises used primarily for the sale by retail, rental or display of goods, foodstuffs, merchandise or materials; or

(h) a plant nursery where there is no sale by retail; or

17. The regulations are made under the power given to the Governor to make regulations "for the purposes of this Act" (s 108(1)). Pursuant to s 108(2), the regulations may "... for example, be made with respect to any of the matters specified in the schedule".

18. The schedule identifies one of the matters for which regulations may be made as:

"13. The definition of words and expressions in a Development Plan (or Development Plans generally)."

"(1) In these regulations and in any Development Plan, the terms set out in schedule 1 have, unless inconsistent with the context, or unless the contrary intention appears, the respective meanings assigned by that schedule.

(2) Unless stated to the contrary, a term set out in schedule 1 which purports to define a form of land use will be taken to include a use which is ancillary and subordinate to that defined use.

(3) Where the Building Code defines a term which is also set out in schedule 1, then, to the extent of any inconsistency, the definition in the Building Code will prevail for the purposes of the Building Rules."

Schedule 1 to the City of Adelaide Development Plan contains a definition of "adult products and services premises". That definition is as follows:

"adult products and services premises: the use of land for a tattooist, or for any premises to which access by minors is restricted by law and which are used, or designed to be used, primarily for sale by retail or for the exchange, hire, exhibition, loan, delivery or display and offer of the following:

(a) any publication, the sale, delivery, exhibition, advertisement or display of which is restricted or prohibited under the Classification (Publications, Films & Computer Games) Act 1995;

(b) material compounds, objects or devices which are designed to be used primarily in or in connection with any form of sexual behaviour or activities; and/or

(c) films, video films or tapes, any other form of optical or electronic records from which a visual image may be produced or any other pictorial matter, the sale, delivery, exhibition, advertisement or display of which is restricted or prohibited under the Classification (Publications, Films & Computer Games) Act 1995.

It does not include premises used for prostitution."

While this definition has the capacity to affect the use of the term "shop" in the Development Plan, it does not affect the use of any term defined in this Act.

Central to the argument advanced by Mr Hayes QC of counsel for Mr Frankham in the ERD Court and repeated by him on the hearing of the appeal before this Court, is the contention that the definition which I have just quoted of "adult products and services premises" was "invalid and of no effect", because relevant definitions appear in the Development Regulations and the terms so defined cannot be changed by the provisions of the Development Plan.

Mr Hayes QC contended that to the extent that the definition of "adult products and services premises" in the Development Plan includes uses which fall within the definition of "shop" in the Development Regulations, the definition in the Development Plan is "invalid". Mr Hayes QC further contended:

(a) that it was not open to the Council to allege, as it purported to do in the enforcement notice, that the premises were being used for anything other than a "shop"; and

(b) that if the prior use and the changed use were both within the definition of a "shop", there was no "change of use".

It was common ground on appeal that the earlier use of the premises as a restaurant fell within the definition of "shop" in the Regulations, and that the alleged use of the premises as "adult products and services premises" was a use also capable of falling within the definition of "shop" in the Regulations.

The Judge took the view that the Act, by s 5, evinces an intention that when a term used in a Development Plan has been defined by regulation, the meaning of that term cannot be varied by a provision of a Development Plan. Accordingly, if reg 3(1) purported to enable the provisions of a Development Plan to modify the meaning of a term defined in Schedule 1 of the Regulations (by providing an inconsistent context), reg 3(1) was to that extent invalid. It followed that because the definition of "adult products and services premises" purported to modify the meaning of "shop" as defined in the Regulations, the former definition was invalid. The direction in the notice was invalid because it picked up the (invalidly) defined expression.

I respectfully disagree with the Judge's conclusion.

In Part CA3 Hindley Street Precinct of the Development Plan, Objectives and Principles of the usual kind appear. For example, Principle 1 provides as follows:

"A diverse range of leisure and entertainment facilities, shops and eating establishments are desired to sustain the attractions of the Precinct as a centre of entertainment and to support the surrounding offices, visitor accommodation and educational facilities. While existing legally established amusement machine centres, adult entertainment and adult products and services establishments are part of the character of the Precinct, further extension of these uses is inappropriate."

It can be seen that the expression "adult entertainment and adult products and services establishments" is used in such a way as to identify a particular type of premises as inappropriate. To the extent that this expression affects the defined term "shop", it does so by identifying a particular category of shop as being appropriately dealt with in a particular manner.

Principle 26 identifies kinds of development that are non-complying in the precinct. Non-complying development includes a change of use of premises to any one of a number of listed uses. Listed uses include "adult products and services" but do not include "shop". Once again, here the defined expression is used to identify a change of use of premises to use as a particular kind of shop as a non-complying use.

The provision of a definition of "shop" in the Regulations is not intended to make the drafter's task more difficult, by requiring that whenever a use of land that could fall within the definition of "shop" is to be dealt with or referred to in the Development Plan, it must be referred to and dealt with as a shop and only as a shop. The definition of "shop" simply provides a meaning for the word "shop" when it is encountered in the Plan. The definition is not intended to prevent the drafter from dealing with particular types of shops in a particular way, or from defining terms to identify a particular kind of shop.

It follows that the presence in the Regulations of a definition of "shop" for the purposes of the Development Plan, does not prevent the drafter of the Development Plan from dealing with different categories of shop in different ways. A common example is a provision dealing differently with shops with a greater than a specified floor area, and less than a specified floor area. To discriminate between the treatment to be accorded to each kind of shop is not inconsistent with the definition of "shop". Nor is it inconsistent with the provisions of the Act or of the Regulations more generally. The same must follow if the drafter chooses to use a definition to identify the particular type or category of shop that is to be singled out for treatment in a particular way in the Development Plan. The drafter of the Plan might define shops as large shops and small shops by reference to their floor area.

In short, the meaning of the defined term "shop" has not been modified or changed. When that term appears in the Development Plan, it is to be read in the usual way. As it happens, as I have noted, the term is not used in Principle 26. All that has happened here is that the drafter of the plan has used a defined term or expression to enable the drafter to deal in a particular way with a particular category of shop.

There is no inconsistency in what the drafter has done between the Development Plan and the provisions of the Act or of the Regulations.

Accordingly, reg 3(2) is valid, as is the definition of "adult products and services premises".

The next issue for the ERD Court was whether it was shown that there had been no change of use of the land. If that was shown, then a precondition for the issue of the notice did not exist: Sullivan v District Council of Riverton [1997] SASC 6271; (1997) 69 SASR 234 at 245-246, Duggan J.

The issue of whether it was shown that there was no change of use arises because s 32 of the Act prohibits development unless the development is an approved development, and that in turn means that a consent must have been granted under s 33 by the relevant authority for the development to be approved. In the present case the alleged development was a change of use of the land.

Mr Hayes argued that in deciding whether development had occurred, the Court should have regard to the provisions of the Development Plan, and when it did so the only proper conclusion was that the use of the land had been as a shop (when the premises were used as a restaurant) and the use still was as a shop, and so there had been no change of use.

If this submission rests on the invalidity of the definition of "adult products and services premises", it fails with the failure of the invalidity submission.

If the submission assumes that because "shop" is a defined term, and that because the use of the premises as a restaurant and the use as alleged in the notice is capable of falling within that definition, the submission again fails. It fails because there is no reason why, even if one is to have regard to the provisions of the Development Plan, a particular definition should control so rigidly the approach to the question of whether there has been a change of use. The reality is that if one looks to the relevant Development Plan one finds that a shop which happens to be "adult products and services premises" is dealt with differently from a shop that is not. There is simply no reason to give a particular definition such a controlling effect.

But the submission fails for a more fundamental reason. The submission fails because it wrongly assumes that the provisions of the Development Plan control the approach to the question of whether development has occurred. If the allegation is made that development, in the form of a change of use, has been undertaken contrary to s 32, the Court before which that allegation is made must decide whether development has occurred by examining the facts, and by reference to the case law that guides a court in determining whether or not a change of use has occurred. The issue that arises is one of fact and degree, requiring a careful assessment of the facts. The issue is not decided by reference to the provisions of a particular Development Plan, or of Development Plans generally, let alone by reference to the presence of definitions to be used when arriving at the meaning of a Development Plan. If the court concludes that a change of use has occurred, it then turns to consider, should it be relevant, what is required as a matter of procedure and as a matter of substance before a consent can be granted under s 33 of the Act. In that purpose it will have regard to the Development Regulations and to the Development Plan.

In other words, the question of whether development has occurred arises as an issue anterior to a consideration of the provisions of the appropriate Development Plan in their application to the development in question.

I should add that in so concluding I am not necessarily concluding that a consideration of the provisions of a Development Plan is wholly irrelevant to the question of whether a change of use has occurred. I make this point simply to ensure that what I have said is not given a broader effect than I intend. For the purposes of the present case it is necessary to do no more than to reject the submission that there can be no change of use of land if the use of the land before and after the relevant date is capable of falling within a single definition of land use to be found in Schedule 1 of the Regulations, and if references to that use can be found in the relevant Development Plan. That, in the end, is the proposition that Mr Hayes was advancing and that is the proposition that I intend to reject.

The Judge found that a change of use had occurred and, in my opinion, he was right to do so. As he said, it was a change of use even though the change of use did not take the use out of one category of use as defined in the Regulations and place it in another.

The effect of what I have said so far is that the notice issued by the appellant is valid, subject to any further issues that may arise.

Would the notice have been invalid if the definition of "adult products and services premises" had been invalid? It is not necessary to decide this question. But, for what it is worth, I doubt whether the notice would have been either invalid or ineffective. Admittedly the use of the defined expression suggests that the drafter of the notice had picked up the defined expression from the Development Plan. But the notice could be read as referring to such a use of land as a matter of fact by way of convenient description, even if the definition in the Development Plan were held to be invalid. In other words, it is arguable that the notice still sufficiently identified the use of land said to amount to a change of use. And even if the definition had been invalid, using the land in question for purposes sufficiently described as "adult products and services premises" would appear to be a change of use if the premises had previously been used for a restaurant. This conclusion would not depend upon the validity of the relevant definition in the Development Plan. If the definition was invalid, it would seem to follow that use of the land for "adult products and services premises" would not or might not be a use of premises for a non-complying use, but that is another issue, arising after a decision is made about change of use.

In my opinion the ERD Court erred. None of the suggested objections to the validity or effectiveness of the notice were made out.

The parties informed us that certain other objections to the validity of the notice, raised in par 4 of the Notice of Appeal filed in the ERD Court were yet to be determined.

Accordingly, the appeal should be allowed, the order quashing the direction should be set aside, and the matter should be remitted to the ERD Court for the outstanding issues to be dealt with by that Court.

PERRY J. In my opinion, the appeal should be allowed. I agree with the reasons for judgment of Doyle CJ and with the order which he proposes.

LANDER J: I agree that the appeal should be allowed for the reasons given by Doyle CJ.