Fabcot Pty Ltd v Latrobe CC [2007] VCAT 354

The decision of the Responsible Authority in permit application No 06166 is affirmed. Pursuant to the provisions of Section 85(1) (a) of the Planning and Environment Act 1987, it is directed that a permit must not be granted.

Mr Christopher Wren SC, of Counsel instructed by Eliza Bergin of Mallesons Stephen Jacques Solicitors. He called written and oral evidence from Ms Sarah Opperman, Town Planner of Urbis JHD Pty Ltd; Ms Maxine Cooper, Social Research Consultant of Urbis JHD Pty Ltd; Mr Ian Shimmin, Property Economist and Market Research Consultant of Urbis JHD Pty Ltd; Mr Tony Dimasi, Economic and Retail Consultant of MapInfo/Dimasi. Written evidence statements were also tabled from Mr David Graham, Traffic Engineer of GTA Consultants and from Mr Greg Hocking, Landscape Architect of Land Design Partnership Pty Ltd but with the agreement of parties they were not required to give oral evidence or be cross-examined.

Mr Terry Montebello, Solicitor of Maddocks Lawyers. He called written and oral evidence from Mr Rob Milner, Town Planner of Coomes Consulting Group Pty Ltd.

Mr Mark Bartley, of DLA Phillips Fox for Seventh Dectex Pty Ltd.

1 White elephant or Cinderella? Does this refusal by Council for a Safeway supermarket and small group of speciality shops condemn Churchill to a desolate future or does it recognise that the proposed location at the southern edge of the Business1 Zone does not provide the most desirable or acceptable built form outcome for the Churchill commercial centre? Would approval be the 'slipper' that turns Churchill into a vibrant and attractive 'princess' of a centre? Although we are only considering an approval for buildings and works and not use of the land, our consideration has taken into account the physical layout of the Business 1 Zone and how well the new proposal integrates within the central core. We have come to the view that building a Safeway supermarket and group of speciality stores at the extreme southern end of the commercial core is not a desirable planning outcome and that on balance will not provide a net community benefit in the terms set out in Clause 11 of the Latrobe Planning Scheme.

2 Fabcot Pty Ltd opposes Council's decision to refuse its application to construct a supermarket and group of speciality shops at the southern end of the Churchill commercial centre. The single storey building containing the supermarket and shops has an 'L' shape with the base of the 'L' containing the supermarket located close to the southern boundary of the Business 1 Zone. The speciality shops are located at right angles to the supermarket. The two legs of the building face onto a car park which contains parking for 162 cars, including 4 spaces for disabled people. The supermarket has an area of 2,800m2 and the area set aside for speciality shops has an area of 425m2. Proposed operating hours for the supermarket are 7am to midnight, 7 days per week. The building design is unremarkable and consistent with many similar small scale commercial developments across Victoria.

3 The core of the Churchill commercial centre is broadly rectangular in shape - the western side bounded by Monash Way, the northern by McDonald Way, the eastern by Phillip Parade and the southern by the southern boundary of the review site. The central core is bounded by Business 5 Zone on the south and east, by Business 2 Zone to the north and by Residential 1 Zone across the wide reservation of Monash Way. The Business 2 and 5 Zones are largely undeveloped while the Residential 1 Zone contains housing. Monash University is located to the east and is separated from the town centre by the Business 5 Zone and a waterway running north/south parallel with Phillip Parade.

4 The commercial core of Churchill within the Business 1 Zone can be conveniently divided into three parts. The northern part known as the Hazelwood Village Shopping Centre contains a Foodworks supermarket with a floor area of 2,000m2, a group of speciality shops, a medical centre, health facility and some office floor space. The central part is occupied by West Place, which because of the fall of the land has a lower level facing Phillip Parade with the main section at broadly the same level as Hazelwood Village. West Place is the original commercial complex at Churchill and is effectively a 'square' with tenancies facing both into the central plaza and outwards around the perimeter. Except for the group of businesses orientated outwards towards the Hazelwood Village Shopping Centre, a few other tenancies facing southwards towards the review site, and a Commonwealth Bank branch facing into the square, West Place has a desolate and underutilised appearance. The area between Hazelwood Village Shopping Centre and West Place is occupied by a car park serving both centres. A Shell Petrol station is located facing Monash Way about midway between West Place and Hazelwood Village Shopping Centre but because of the fall of the land from Monash Way, has no direct access to the carpark. The third part of the commercial core, separated from West Place by a large car park and Balfour Place, is the review site occupied by the now defunct Churchill Hotel. The Hotel occupies elevated land at the southern end of the Business 1 Zone and provides extensive views to the south east, and more restricted views eastward towards Monash University.

5 The site and land to the north is zoned Business 1 and forms part of the Churchill Commercial Centre. No overlays apply.[1] A number of state and local planning policies were highlighted for our consideration[2].

6 We visited Churchill and inspected the site and locality on Tuesday 19th December 2006. Documents and photos submitted at the hearing have been retained on Tribunal files.

Is the potential to fragment the centre relevant when considering a building and works application?

7 The use of the site for a supermarket and shops in a Business 1 zone does not require a permit. A permit is only required for buildings and works, signage and for a reduction in on-site car parking.

8 During the hearing Mr Montebello, Mr Bartley and Mr Wren made reference to previous decisions where 'use' issues were discussed in the context of a building and works approval and the scope of the issues for our consideration.[3] As is so often the case, most of these involved different circumstances and notably, all but two involved sites in a Mixed Use or Business 2 Zone and one of those in the Business 1 Zone (Glenwaye PL v Glen Eira CC) was affected by a site specific control requiring a permit to use land for a shop. The one therefore of most direct relevance is Burns Bridge Services Pty Ltd v Greater Bendigo CC; a decision by Senior Member Liston upheld after appeal to the Supreme Court of Victoria. Senior Member Liston was considering a buildings and works application for a supermarket, speciality shops and a convenience restaurant in a Business 1 Zone. The main issue in contention in that case was whether the proposed supermarket should be constructed within the Business 1 Zone preferred by the permit applicant or a site 700 metres away, also in the Business 1 Zone, preferred by the Responsible Authority. In his decision he refused a permit for buildings and works partly on the basis of strategic land use issues being a relevant consideration. The principal difference between the Burnt Bridge Services case and ours is that we are discussing development within a single Business 1 Zone rather than two different Business 1 Zones. While agreeing with much of what Senior Member Liston says about strategic planning issues, we note in particular his comments in paragraph 57:

57 I think it is worthwhile commenting on the approach I am adopting here and its relevance to the broader jurisdictional issues raised by this application for review:

• I am embarking upon what is a functional assessment of the proposed development. I consider that this is a relevant approach. Indeed, it is, for example, what we do when we assess applications for dwellings under ResCode, when we consider issues such as energy efficiency, solar access, the provision of private open space and its relationship to interior living areas, the provision of storage for future occupants etc etc etc.

• I think it is important to ask the question I pose in (ii) above, because in a market economy the important issue is not that a particular developer risks wasting his or her investment in a badly designed shopping centre, but whether or not that badly designed shopping centre has consequences for its users or the broader community. It is the goal of the Planning Policy Framework to manage the use and development of land to achieve a net community benefit.

• It occurs to me that this functional approach to the assessment of the proposed development is in a sense "bottom up" way of approaching the strategic land use issue. In essence one is asking how will this development function in its local or community context, and this in turn invites a broader strategic planning assessment. Clearly, the extent to which any development raises significant strategic issues, is highly dependent on the nature of the development itself.

9 We also note with approval the views expressed by Deputy President Gibson and Member Naylor in Doncaster Road Property Partnership v Manningham CC where they commented that:

84 ...It is not appropriate to attempt to divide the overall planning scheme vision/objectives for Doncaster Hill into neat and separate use and development categories and say that some are not relevant because this is a development only application. That is an excessively narrow approach and one which misinterprets the purpose of all the zones, overlays and various other provisions expressed throughout the planning scheme, which is:

To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

10 Having regard to our reading of these decisions and our own understanding of the issues at stake in this particular case, we have formed the view that while it is open to us to consider broader strategic land use issues, it is the locational and functional issues related to the Churchill town centre that have greatest import in this buildings and works application. In other words: How will this development function in its local community context?

The strategic context - can there be too much commercial floor space for Churchill?

11 Churchill was established in the mid 1960's to accommodate people relocated from areas being resumed for coal mining purposes. Its layout and character is clearly influenced by the British 'Newtowns' of the 1950's and 1960's and planned Australian cities and towns such as Yallourn, Canberra and Elizabeth. Superficially this is evidenced by the layout of the town centre, the layout of the older residential areas, pedestrian underpasses, and the location and provision of various community facilities. The vision and philosophy for Churchill was for it to be a comprehensively planned town providing homes for around 40,000 people with full range of support facilities. Part of this vision called for a commercial core with space to accommodate the retailing, service and office functions for a community of around 40,000 people. For a variety of reasons that vision has not been realised and Churchill forty years later has a population just one eighth (5000 people) of that planned. Despite the establishment of a Gippsland campus of Monash University at Churchill, the evidence of dreams unfulfilled is evident even on a brief visit to the town.

12 Within the commercial area the evidence is perhaps more obvious than anywhere else. Extensive areas of the fringe Business 2 and 5 Zones remain as vacant paddocks with few buildings or works. Within the core Business 1 Zone the land has been largely 'developed' but with the exception of the northern end around the Hazelwood Village Shopping Centre and the northern side of West Place, has a windswept and desolate air. The vacant and underutilised sites along Phillips Parade, the extensive and underutilised car park south of West Place, the vacancies and rundown appearance of West Place itself, the poor condition and appearance of most of the car park between Hazelwood Village Shopping Centre and West Place and finally, the desolate appearance of the now closed hotel on the review site all serve to create this impression of dreams unfulfilled.

13 We very much doubt that such large areas of Business Zones 1, 2 and 5 (or their predecessors) would have been set aside if Churchill was expected to have a population of just 5000 people. We question, given the changed circumstances which have been apparent for at least 15 years, why the Council has not sought to rationalise the Business Zones to more accurately reflect the realistic development opportunities. Failure to rationalise the zones means that development applications are being made which, while quite reasonable given the Business 1 zoning, potentially result in a continuation or exacerbation of the existing fragmentation of activities within the centre. While we have to accept the current zoning as we find it in the planning scheme, we strongly urge Council to re-assess the extent and appropriateness of the Business 1, 2 and 5 Zones at Churchill.

14 The Churchill Local Structure Plan included at Clause 21.04 seems, at least in terms of the commercial component, to be based more on wishful thinking than any rigorous and realistic analysis of what has and is happening on the ground at Churchill. Retention of the existing Structure Plan for the central area will do nothing to address the existing shortcomings in the physical layout and fragmentation of the centre.

15 In assessing this buildings and works application we face a conundrum. On the one hand we do not have power to decide whether or not additional floor space is warranted in Churchill, and yet evidence was called by the permit applicant justifying why additional floor space is warranted and why provision of an extra 3200m2 of retail floor space will not have undesirable consequences on the viability of existing businesses and hence on the overall physical character and functionality of the centre. Mr Dimasi was called by Mr Wren to give evidence about the economic impacts of constructing the new supermarket and shops. He drew on his surveys in other smaller centres and gave evidence to the effect that the opening of a new supermarket in such towns has positive benefits (such as increased employment, increased competition and increased shopping alternatives) and that the predicted dire consequences have not materialised. Although we do not dispute the survey findings or his analysis, we note that these examples do not replicate the circumstances of Churchill.

16 We also received expert evidence from Mr Shimmin about the economic impact of the supermarket and speciality shops. For the reason set out in the preceding paragraph, we face the same difficulty with the evidence of Mr Shimmin as we did with Mr Dimasi. We may or may not agree with Mr Shimmin's assessment of the need for additional retail floor space and the anticipated economic impacts for other centres and for other businesses with the Churchill centre. In principle we do not doubt that the provision of a new supermarket and additional shops would in most circumstances lead to a significant boost in the attractiveness (pulling power) of a centre with flow on benefits to existing and new businesses. However we are not convinced that Churchill is a Camperdown or a Gisborne or one of the centres surveyed by Mr Dimasi.

17 Local policy seems unsure about Churchill's role within the municipality which has adopted a networked city concept as the basis for its land use planning. In a 'network city' each centre provides for its own local needs but where each interacts to provide for wider community needs, particularly higher order community needs requiring a larger catchment population. Policy at Clause 21.03 identifies Churchill as one of the four main urban areas (Churchill, Moe, Morwell and Traralgon). Elsewhere Churchill is included in one of three corridors (Moe-Morwell, Morwell-Churchill and Morwell-Traralgon). Retail policy at Clause 21.04-6 identifies four main activity centres (Moe, Morwell, Mid-Valley Shopping Centre and Traralgon) and objectives and strategies focus on these four centres, save that Churchill (inexplicably given that it isn't mentioned elsewhere with the four main activity centres) rates a mention about preparation of town master plan. In Clause 21.01-9 (Retailing) Churchill is described as essentially a local convenience shopping centre. In reading the whole MSS, the reader gets the impression that Churchill is an 'orphan' - it isn't one of the major centres of Moe, Morwell or Traralgon but nor is it a smaller township such as Boolarra, Glengarry, Toongabbie, Tyers or Yinnar. Indeed in one place Churchill is separately described as a 'created town'.

18 We understand the concept of networked city and in relation to tertiary eduction facilities, Churchill clearly fulfils a higher order function. However from a retailing perspective we have no real sense of where Churchill sits in the order of things, except that in one place it is referred to as a local convenience shopping centre. We are not persuaded having regard to the policy frameworks and the evidence of Mr Dimasi and Mr Shimmin that from a retailing perspective there is any justification for additional floor space of 3200m2 in Churchill. Whereas the 'escape expenditure' referred to by Mr Shimmin may be of importance in a traditional analysis of how centres trade, in a networked city there is an expectation that centres are not self contained and that they depend on one another to provide various services and facilities. In such a model it is implicit that there is no imperative for each centre to fully cater for the retail needs of its residents. Indeed the opposite is the case and local policy identifies Moe, Morwell, Mid Valley and Traralgon as the four main activity nodes. An inspection of each of these centres demonstrates that they each provide a range and level of facilities catering for a much wider population than that living in or near each centre. Mid Valley Shopping Centre which we visited clearly fulfils a regional retailing role in terms of the types and sizes of businesses that exist at that location.

19 Ultimately however, the question of whether additional retail floorspace is warranted has not been determinative in our decision and we have instead focussed on the layout of the centre and whether locating a new supermarket and speciality shops at the southern end results an acceptable planning outcome and a net community benefit.

Movement around the centre - convenient and inviting, or difficult and discouraging?

20 We have already expressed our concerns about the extent of the Business 1, 2 and 5 Zones at Churchill and the existing dispersed and fragmented nature of activities within the Business 1 Zone. Opposing town planning/urban design evidence was provided by Mr Milner for the Council and by Ms Opperman for the permit applicant. We have already discussed broader strategic planning and zoning issues but now need to deal with the micro-planning and physical operation of the centre - how does it function and will that function be improved or worsened by locating the new supermarket and speciality shops at the opposite end of the centre from Hazelwood Village Shopping Centre?

21 It was acknowledged by all parties that the existing centre has significant problems as evidenced by the desolate and underutilised West Place, the closed hotel, the underutilised sites and car parks elsewhere in the centre and the generally poor amenity of the public spaces. The existing or now defunct activity nodes in the centre are widely dispersed and the distance and topography between them does not encourage easy movement (the exception being between Hazelwood Village Shopping Centre and the northern end of West Place). The day to day experiences of using the centre were explained to us by Ms Guthrie who is long term resident of Churchill. We walked from one end of the Business 1 Zone to the other and took different routes to gauge how easy and convenient such movement would be for pedestrians. It was neither easy nor convenient and we suspect that anyone wanting to visit both the north and south ends of the Business 1 Zone would drive, particularly if they had larger parcels, a loaded shopping trolley or were in a rush.

22 The situation is complicated by the position of the largely underutilised West Place complex in the middle of the Business 1 Zone. Unless the centre is redeveloped or demand for retail and commercial floorspace explodes, it remains a major impediment in overcoming the dispersed and fragmented nature of the centre. While we are not directly concerned about the demand for retail and other commercial floorspace, it is evident that unless demand increases dramatically then approval of the Safeway supermarket and speciality shops will result (assuming no movement of businesses from the Hazelwood Village Shopping Centre) in two major activity nodes at either end of the centre with an underutilised and unattractive building between them. In our view this is not an acceptable planning outcome. We received evidence from Mr Milner on the one hand and Ms Opperman and Ms Cooper on the other as to the significance of this fragmentation and the likelihood of it being a major impediment in the longer term assuming West Place is redeveloped. (We understand that a permit application including an application for review with VCAT is now underway).

23 While we agree with Ms Opperman that the current functionality of the centre is poor we do not agree with her that the proposed development succeeds in integrating with the town centre and surrounding residential areas as well as any one site can be expected to do. We have no doubt that in an area with a growing population that the position taken by Ms Opperman would be justified and that in the fullness of time one could expect the area between the two 'magnets' at either end of the Business 1 Zone to fill up with new activities. If that happened then locating the new Safeway supermarket and speciality shops as proposed would make a great deal of sense and result in a net community benefit in terms of the range of facilities and the vibrancy of the Churchill town centre. However in the absence of any significant population increase we cannot imagine that happening. Even a significant increase in the number of students attending or living near Monash University will not necessarily result in greater population growth for Churchill.

24 We found the evidence of Ms Cooper tendered to confirm the obvious and in that sense was unremarkable. Her conclusions based on surveys of local residents about poor pedestrian access around the centre and lack of public transport are not directly addressed by this proposal. Indeed in our opinion approval of this proposal would further fragment shopping trips and reinforce existing poor pedestrian movement around the centre. As to her findings that residents would prefer more choices and more competition closer to home, we cannot imagine any circumstances where residents would not seek more choice, closer to home.

25 The design of the building and the choice of materials and colours were not raised as matters of concern at the hearing, except the visual impact and functional relationship with vacant land to the south within the Business 5 Zone. The design and layout of the building is typical of smaller shopping centres with the supermarket and shops on two sides of a 'square' facing out onto the carpark. Outer walls are blank tilt concrete panels with the windows and entrances of the shops facing out to the car park. A loading bay for the supermarket is provided at the western end of the building away from the public car park. Access to the carpark is via a driveway broadly following the existing access way to the hotel. A pedestrian path is provided through the carpark and provides a means of walking north to the rest of the town centre. In our view the layout and design is acceptable. Advertising signs also require approval but as with the materials and colours, were not in contention between the parties.

26 Although inadequate car parking and the car park layout were initially raised as concerns by Mr Bartley, we indicated at the hearing that we would not refuse the application because of perceived shortcomings with the number of car spaces or the car park layout. We note that Mr Montebello specifically stated at the hearing that Council no longer wished to pursue car parking issues with the Tribunal. In any event, if we were granting a permit and were concerned about the car park layout then we could quite easily include conditional changes in any approval.

27 We have come to the view that building a Safeway supermarket and group of speciality stores at the extreme southern end of the commercial core is not a desirable planning outcome, that its construction would exacerbate the existing poor functionality of the centre and, in the absence of any significant population growth, condemn the Churchill Town Centre to remain a fragmented and dysfunctional centre. On balance we are not satisfied that approval will achieve a net community benefit and sustainable development as required in Clause 11.01 of the Latrobe Planning Scheme.

28 Having regard to the above, we will order that the decision of the Responsible Authority be affirmed and direct that no permit issue.

[1] Within the Business 1 Zone a permit is not required to use the land for a shop, however a permit is required for buildings and works. A permit is also required to reduce the on-site parking requirement.

[2] Other relevant Planning Scheme provisions include Clauses 11, 12, 14, 15.12, 17, 19.03, 21 (various), 52.05, 52.06 and 65.

[3] Countrywide Retail Management Pty Ltd v Yarra Ranges SC [21 AATR p 47), Azzure Investments Pty Ltd v Port Phillip CC [2004] VCAT 2027 (26 October 2004), Doncaster Road Property Partnership v Manningham CC [2004] VCAT 2445 (8 December 2004), Burns Bridge Services Pty Ltd v Greater Bendigo CC [2005] VCAT 1185 (17 June 2005), Glenwaye PL v Glen Eira CC (Red Dot) [2006] VCAT 300 (2 March 2006), Omni Property Group Pty Ltd v Port Phillip CC [2006] VCAT 907 (18 May 2006), Wilbow Corporation P/L v Bass Coast SC [2006] VCAT 976 (24 May 2006), Morgan & Griffin Pty Ltd v Bass Coast SC [2006] VCAT 1961 (26 September 2006).