The proposed use primarily involves warehousing and distribution of pharmacy products to customers via internet order. A minor component of the use involves retail sales to the public from the premises. It is estimated that internet sales comprise 80% of the business, while retail sales constitute approximately 20%. Items offered for sale include prescription medications, scheduled medicines, health and beauty products, invalid aids and other merchandise.

The premises will accommodate a number of services, being Blue Cross, My Chemist, Samples Plus, Home Medication Review and My Home Health, as detailed below. The proposed use will be one of the internet distribution points for 'My Chemist' in metropolitan Melbourne. This component of the use involves the receipt of orders via the internet, and the picking and packing of products for distribution for locations in Victoria and elsewhere in Australia.

Blue Cross Healthcare services provide service for aged care and nursing homes. This component of the use involves robot picking and packing technology, where medication is dispensed and packaged into individual doses for patients. The service will distribute medication for various nursing homes, hospitals and hostels.

Samples Plus is an ordering system for samples offered to medical practitioners and health care professionals. Samples are ordered via internet, fax or post and distributed via Australia Post.

Home Medication Review involves reviewing medication for patients where they are required to take high level or numbers of prescription medicines. This part of the use is essentially office based.

My Home Health is a business that sells invalid aids. This part of the use requires a display area and storage, for distribution. Invalid aids, such as walkers, lifting devices and wheelchairs, require a larger display area than normally available at ordinary pharmacies.

Whilst internal layout plans have yet to be prepared for the proposed operation, the floor area will be divided in a similar manner to that of established distribution warehouses ie product display/storage and sales (40%) and warehouse (60%).

1. The existing building has a total net floor area of 860 sq m on two levels. Forty per cent of that floor area is 344 sq m.

1. In the context of the Industrial 1 zoning of the subject land, the following land use definitions are relevant:

Warehouse: Land used to store or display goods. It may include the distribution and the wholesale selling of the goods.

a) sell goods by retail, or by retail and wholesale;

Land used to sell both retail and wholesale, or to hire, materials, tools, equipment, machinery or other goods for use in

Shop: Land used to sell goods or services, or to hire goods. ... . It does not include ... trade supplies.

1. The planning scheme provides that '[i]f land is used for more than one use and one is not ancillary to the other, each use must comply with this scheme.'[2]
2. In the Industrial 1 Zone, a warehouse is a permitted use and a shop (including a pharmacy) is a prohibited use, and trade supplies is a permit required use.
3. The policies in the planning scheme are not directly relevant to the determination of the application. However, we have observed the local planning policies recognise that e-commerce is a major growth sector, and that the character of the area in which the subject land is located should express its commercial and industrial function.[3]

1. Section 103 of the Health Professions Registration Act 2005 provides that the Pharmacy Board of Victoria may approve the premises of a pharmacy business 'if the Board is satisfied that the premises ... are suitable for the provision of pharmacy services'. The Board's Guidelines for Good Pharmacy Practice provide that a pharmacy business 'must have at least one doorway opening from the premises to allow members of the public access to the premises from a public street, public walkway, mall or public foyer ...'.[4]

1. In Tauman v Wyndham CC,[5] the Tribunal considered a similar use in premises with a floor area of 1,200 sq m in an Industrial 3 Zone, of which 480 sq (or 40%) was proposed to be open to the public. The Tribunal found that the primary purpose of the use was for the storage and distribution of pharmaceuticals, based on the actual size of the premises, the goods to be stored and distributed, and the method of filling orders. The pharmacy (ie the area open to the public) was not a separate shop because goods were stored in both the pharmacy and the distribution centre (at the rear) for meeting internet orders, the proportion of value of sales from customers in the pharmacy was relatively low, and the non-pharmacy floor area was greater. The part of the business that might be considered trade supplies (ie the sample supply and bulk pharmaceutical dispensing) was also not a separate use, primarily having regard to sales volumes.
2. In Highpoint Commercial Property Group Pty Ltd v Maribyrnong CC,[6] the Tribunal also considered a similar use in premises with a floor area of 753 sq m in an Industrial 3 Zone, of which 302 sq m (or 40%) was proposed to be open to the public. The Tribunal found the pharmacy was not a separate use, emphasising that the pharmacy was inseparable from the distribution activity in that it stored goods being used to fill customer orders by staff in the distribution activities in the rear. The Tribunal made a declaration that the proposed use was 'a warehouse (including distribution) with an ancillary shop'.

1. This proceeding requires the Tribunal to characterise the proposed use. The Tribunal must identify the real and substantial purpose of the use, having regard to ordinary terminology.[7] This is necessarily a question of fact and degree in each case. If more than one activity is involved and if one is dominant and the other(s) are lesser or ancillary, there is only one purpose (ie the dominant purpose).[8] Alternatively, if there are two or more activities and each is seen as substantial in its own right, it can be held that multiple distinct uses are concurrently operating on the one site.
2. The Chemist Warehouse chain operates two main types of businesses. The first type is smaller retail stores of which many exist in the metropolitan area and regional centres. These would be normally characterised as shops. The second is warehouse distribution centres, currently located in Hoppers Crossing, Melton and, according to the Applicant, shortly in Maidstone. Two others are planned in Corio and Mornington.
3. The Council argued the pharmacy would be a separate shop use because, in summary, it would operate and appear like any other Chemist Warehouse shop, including offering for sale a wide range of non-pharmaceutical goods. The Council also drew attention to prominent above verandah signage at the Hoppers Crossing distribution centre stating the store was selling 'direct to the public' and to window advertising of non-pharmaceutical products.[9]
4. For reasons similar to those set out in the previous cases, we consider the pharmacy (shop) and trade supplies are ancillary to a dominant warehouse use. In particular, we rely on the following:

(a) Although the pharmacy may have a larger than average floor area, it will be used to store pharmaceutical goods for distribution to internet customers and store samples for distribution to the medical profession and store bulk medications for the aged. Hence, the pharmacy is a fundamental part of the distribution centre, and does not operate separately as a shop.

(b) The floor area of the pharmacy is only 40% of the distribution centre and the sales to the public at the pharmacy are estimated to constitute no more than 20% of the distribution business.

(c) The distribution centre has similar hours of operation to the pharmacy.

(d) There would be more staff in the distribution centre than the pharmacy and that staff would also work in the pharmacy from time to time when making up orders.

(e) The Pharmacy Board requires a pharmacy business to provide public access and expects that a range of non-pharmaceutical products be offered for sale in a pharmacy business.

(f) Although the signs at the Hoppers Crossing distribution centre boldly state 'direct to the public', the words 'distribution centre' appear above those words, and the business internet address is also prominent above the ground level windows. This underlines the importance of internet based sales.

(g) A main road location in an industrial zone primarily benefits deliveries to and from the distribution business.

1. In relation to ancillary trade supplies activities, we understand that the proposal is similar to those in the two Tribunal cases referred to above, and that the Tribunal in those cases did not formally find any ancillary trade supplies activities. To remove any confusion and out of completeness, we believe there are two ancillary activities - shop and trade supplies activities - and the declaration is made accordingly.
2. The Council also relied on statements by the permit applicant in 2005 in the Hoppers Crossing case that the Hoppers Crossing site 'will be the internet distribution point for My Chemist in metropolitan Melbourne'. In other words, the Council queried whether the Applicant truly requires multiple buildings to be operating an internet based distribution operation across Melbourne. While we are sympathetic to this line of thinking that there are only so many locations that can reasonably be justified as being required for distribution centre purposes, the number required will ultimately be determined by market forces and this site is the only one existing or proposed in the eastern and south eastern parts of the metropolitan area.
3. At the hearing the applicant provided no details of any buildings and works or signage to the existing building or car parking or loading or unloading arrangements. The applicant stated these would be addressed if the declaration was granted. The declaration we have granted does not address these matters and the applicant may need to seek permits from the Council for some of these matters.
4. We have based the declaration on the proposed use of the existing building. In the absence of plans for the proposed use, it would be too complicated to make a declaration on anything other than the existing building. However, it would be consistent with our thinking that, if the building was subsequently altered to either increase or decrease the current floor area, a chemist distribution warehouse use of the smaller or larger floor area would be similarly characterised if the shop activity was confined to no more than 40 per cent of the altered floor area. Of course, this indication of our thinking would depend on the relevant planning controls having the same effect at a relevant future date.
5. The declaration is therefore qualified so that no expansion of the pharmacy (shop and trade supplies) floor area may occur in the future unless these expanded activities remains ancillary.
6. The Tribunal's power to make a declaration under s 149A of the Planning and Environment Act 1987 must be exercised by a presidential member or a member who is an Australian lawyer within the meaning of the Legal Profession Act 2004. We are both Australian lawyers.

[1] [2005] VCAT 2444.

[3] Monash Planning Scheme, cl 21.05, 22.03.

[4] Pharmacy Board of Victoria, Guidelines for Good Pharmacy Practice (2010) at p 63.

[5] [2005] VCAT 2444.

[6] [2009] VCAT 16.

[7] Shire of Perth v O'Keefe [1964] HCA 37; (1964) 110 CLR 529, 534-5; Cascone v City of Whittlesea (No. 1) (1993) 11 AATR 175.

[8] Cascone v City of Whittlesea (No. 1) (1993) 11 AATR 175.

[9] No details of signage on the building formed part of the application for declaration, but the applicant indicated that similar signage was proposed to that at Hoppers Crossing.