1. The permit applicant took me to the decision of Member Rickards and Member Read in Tauman v Wyndham City Council[5], which related to the characterisation of the proposed use of an almost identical facility in Hoppers Crossing.[6] The Tribunal determined to grant a permit for the proposed development and use, finding that the real and substantial purpose of the use was as a warehouse and distribution centre, with an ancillary shop that was permissible on this basis.
2. In its decision, the Tribunal outlined the proposal in detail, which is on all fours with the current application. The only difference is a marginal variation in the relative sizes of the front area (for sales and display) and back area (for picking, packing and distributing products). The responsible authority encouraged me to inspect the existing Hoppers Crossing facility at a time it was operational to inform my decision.
3. In essence, the application plans for the subject land propose a front product display/sales area of 302 square metres including a dispensary, with public access from the car park and a rear warehouse/distribution area of 451 square metres with an attached loading bay. The rear area will only be accessible to staff.
4. Following the hearing, I undertook an accompanied inspection of the Chemist Warehouse Distribution Centre in Hoppers Crossing during operating hours, which is the facility approved by the Tribunal in Tauman v Wyndham City Council.[7] Some notable features of the way this premises operates are:
   • The premises opens from 8am to 7pm Monday to Saturday and 10am to 4pm on Sunday - the hours are generally the same for both the retail component and the warehousing/distribution component;
   • Approximately 12-20 staff work in the warehousing/distribution activities, compared with 4-5 in the pharmaceutical dispensary (one pharmacist is 'shared' with the warehousing/distribution component) and a further 4-5 staff servicing the retail component;
   • The front of the premises appears as a normal Chemist Warehouse store (albeit with more demure signage and displays), with a dispensary counter at the rear. It offers a full line of stock expected of a modern pharmacy. I was advised that all stock available in the front section of the premises is able to be purchased via the online business, to be 'picked' off the shelves in the front area and then packed in and distributed from the rear of the premises;
   • The rear of the premises is set up in what can conveniently be described as four inter-related areas - the first is the working area for staff in the distribution operation - they receive orders online, 'pick' all stock from the front area of the premises using ordinary shopping trolleys and then consolidate and pack the order on tables in the rear area for distribution. The second area is used to store a small amount of excess stock for the front area, particularly bulkier items. The third area contains medical samples and packaging on racks and in fridges. The fourth area is the loading bay;
   • The operation at the rear of the premises also involves the distribution of a significant stock of medical samples, sourced from racks in the rear area that are not accessible to the public. This area of the business is projected to grow substantially;
   • The dispensary in the front area of the premises includes a machine that prepares mixed packages of medication for patients and nursing homes; and
   • The pharmacist on duty estimated that, at the time of my inspection, some 60% of scripts from the dispensary were filled for the online prescription service known as "epharmacy", with 40% filled for customers who come in off the street. However, he indicated that this pattern is normally closer to 75% versus 40%[8].

1. Clause 64.01 of the planning scheme provides that if land is used for more than one use and one is not ancillary to the other, each use must comply with the relevant planning provisions. In the current case, if the land was being used as a shop that was not ancillary to the warehousing use, it would be prohibited in the Industrial 3 Zone.
2. Warehouse is a land use term defined in the planning scheme at clause 74 as:

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

The responsible authority accepted that, viewed alone, the use of the rear of the premises would constitute the use of land as a warehouse. I note that the proposed method of operation would in fact involve a heavy emphasis on distribution activities occurring within the warehouse, but that this is an activity expressly included within the land use term "warehouse".

1. sell goods by retail, or by retail and wholesale;
2. sell services; or

Retail premises includes the use of shop and trade supplies.

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

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

1. The applicant submitted that the primary use of the land would be as a warehousing and distribution centre for pharmaceutical products to nursing homes and health care providers, doctors' surgeries (including sampling of new products), and to the public through the epharmacy service. The applicant anticipated, based on financial records for two similar facilities, that the distribution centre component of the use would result in approximately 80% of its business turnover for the premises.
2. The applicant clarified that the National Health Act and the requirements for a Licensed Pharmacy Premises require part of the building to be accessible to members of the general public for the provision of pharmaceutical goods and services (but not limited to a dispensary). On this basis, the applicant submitted that the retail component of the use was not the core business intended for the premises and that all of the stock displayed in this front area could also be accessed by staff within the rear area to prepare orders for dispatch.
3. The responsible authority submitted that the proposed use includes a separate use of the land as a shop because of its size (and proportion relative to the whole), appearance and anticipated levels of trade in the front area of the premises. It also considered that it was relevant that the front area could operate in its own right, separately from the distribution centre component of the business.[9]
4. The responsible authority submitted that:

. . . just because the Pharmacy Board of Victoria Guidelines require public access, this does not provide for a rubber stamp in planning terms for a use that might otherwise be prohibited within a particular zone. . .

The provision of a retail outlet of this size will always create confusion as to what is the dominant and what is the ancillary use, or whether or not there is in fact an ancillary use at all.

1. The principal issue for my determination is whether the land use should be characterised as:
   • a single use of the premises as a warehouse and distribution centre, with an ancillary shop/retail outlet; or
   • two separate uses of the premises - one as a warehouse and distribution centre, the other as a shop/retail outlet - notwithstanding that there may be some relationship between these two uses.
2. The case law principles pertaining to the characterisation of land use are well established and include Cascone v Whittlesea City Council[10] which formulated the "real and substantial purpose" test of characterisation. There is also a long line of Tribunal and court decisions that bear on whether a use of land is ancillary to another. The High Court in the case of Lizzio v Ryde MC[11] considered the issue of the use of land for more than one purpose, confirming that:

1. Where a part of land is used for a purpose which is subordinate to the purpose for which another part is used, the whole of the land is regarded as being used for the dominant purpose. The subordinate purpose is merely incidental or ancillary to the dominant purpose. 2. Where the whole of the land is used for more than one purpose, but the other uses are subordinate, the whole of the land is regarded as being used for the dominant purpose.

1. Where the whole of the land is used for more than one purpose, none of which subserves the others, it is irrelevant to ask which of the purposes is dominant. If any one of the purposes is operating in a way which is independent and not merely incidental to the others and it is prohibited, it is immaterial that it is overshadowed by others.

Clearly there is a question of fact and degree to be applied to the particular circumstances.

1. 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.
2. 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.
3. 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.
4. 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.
5. While the front area of the premises may be capable of operating as a separate economic unit[12] (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.
6. 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.

[1] By application under section 149A(1)(a) of the Planning and Environment Act 1987.

[2] It is also affected by a Development Contributions Plan Overlay (Schedule 2) but its provisions were not in issue in this application.

[3] The remainder of which are not directly relevant to this application.

[4] This principle derives from case law relating to the proper characterisation of land use.

[5] (Red Dot) [2005] VCAT 2444, a decision in the context of an application under section 82 of the Planning and Environment Act 1987.

[6] There is also a similar facility at Melton that was approved by the responsible authority but not the subject of a review by the Tribunal.

[7] I was advised by the applicant's representative that the proposed premises would operate in an identical way as this existing facility.

[8] Discounting Christmas and New Years trade.

[9] It referred to the reasoning in Porter v Brimbank City Council (1997) 18 AATR 128, a decision relating to a proposed medical centre and pharmacy within a single building.

[10] (1993) 11 AATR 175, a decision of Justice Ashley.

[11] (1983) 155 CLR 211.

[12] This was a relevant factor that lead to the Tribunal's decision in Porter v Brimbank City Council in different circumstances.