Shellharbour City Council v Altz Pty Ltd

EX TEMPORE Judgment 1By a notice of motion filed on 15 April 2014, Altz Pty Limited (Altz), the respondent in these proceedings, seeks an adjournment of the proceedings until 4 July 2014. It also seeks to vacate orders made on 14 February last that directed the preparation and service of points of defence and evidence directed to the preparation of the matter for hearing. The present notice of motion is opposed by the applicant, Shellharbour City Council (the Council). 2In order to understand the competing positions of the parties it is necessary to notice the background to the proceedings. By a summons filed on 15 January 2014 the Council seeks a declaration and injunction directed to the activities of the defendant at premises known as Unit 2, 9-11 Princes Highway, Albion Park Rail NSW. In short, the Council's claim is that the use presently being made of the premises by Altz is a use which is either prohibited or is a use for which development consent is required and has not been obtained. It alleges breaches of either s 76A or s 76B of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). 3The premises presently occupied by Altz have some history. The building in which they are located was erected pursuant to a consent given by the Council on 22 January 2001. The consent authorised the erection of the building for use as a bulky goods facility. The consent described the building as a bulky goods retail building. 4On 22 November 2001 the Council granted development consent for the use of Unit 2 in that building for "retail of paints and wallpaper and associated signage". It would seem that the use so authorised continued until some time in 2009 when the premises were leased and used by a furniture retailer. The lease of the premises for that purpose commenced on 20 May 2009. By that time, State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (the Exempt and Complying Development SEPP) had been made with the consequence that the use of the premises for the sale and display of furniture was considered to be bulky goods retail for which no further development consent was required. 5The furniture user of the premises ceased sometime prior to early 2011. On 29 April 2011 consultants acting for Altz wrote to the Council seeking advice as to whether development consent was required to use the premises for a different form of bulky goods retailing which could compendiously be described as a chemist style warehouse. In seeking that advice, the history of the use of the premises was recounted and the proposed use described as being a use as a form of bulky goods retailing "specifically for the display and sale of bulky goods, home health care equipment and accessories, ancillary medical and surgical supplies with ancillary pharmacy (dispensary)". 6Attached to that letter were images of the type of equipment that would be displayed and sold as home health care equipment. Photographs of these items indicated a range of goods including wheelchairs, motorised chairs or scooters available for the disabled, walking frames both with and without wheels, commodes and the like. The letter indicated that the premises were intended to be an innovative one-stop store to service the needs of aged, chronically and acutely disabled members of the community. It was suggested that all products sold from the premises would be directly associated with and related to home help care. 7A schematic floor plan was enclosed with the letter which identified the floor areas within the premises that would be devoted to different components of the retail activity intended for the premises. Without reciting all of the detail, some 45% of the area or 264m² was said to be for the display and sale of bulky goods. There were other areas identified as being "ancillary restricted access areas" for bulky goods storage, packaging and the like, together with areas described as being for the display and storage of ancillary medical and surgical supplies and personal care items. 8The response from the Council was by letter dated 6 May 2011. The letter is cryptic in its expression but indicates that the proposed use, described as being "Good Price Home Health Care Supplies", was a use for which development consent was not required as it was for a "type of continuing use." It was also indicated in the Council's letter that development consent may be required before erecting any structure or carrying out any work in respect of the premises. 9Subsequently, a complying development certificate was issued for the premises by a private certifier on 5 September 2011. That certificate appears to have been received by the Council on 7 September 2011. The development described in that complying development certificate is for "Bulky Goods Retail (Home Healthcare & Medical Supplies) Fit Out of Existing". Attached to that certificate was a copy of the application for the certificate together with plans, including floor plans, indicating the manner in which spaces within the building were proposed to be used. 10That complying development certificate was modified, again by the private certifier, on 6 October 2011. The certificate was modified to confine its operation to Unit 2. Again, plans demonstrated the manner in which the elements of the proposed use would be distributed within the available floor space. On 26 October 2011, the private certifier issued an occupation certificate for the premises. 11It is not in contention that since either the end of October or beginning of November 2011, Altz has been in occupation of the premises trading as "Good Price Pharmacy Warehouse" and generally displaying and selling goods of the kind or in the categories of goods that were identified in the letter sent to the Council by the consultant to Altz on 29 April 2011. However, quantities of goods in various categories that were to be offered for sale and the manner in which they were to be displayed was not stated with any precision in that letter or on the plan attached to it. 12Subsequently, complaints were received by the Council from solicitors acting for pharmacists who were competitors of Altz. Their complaints were confined to economic impact. Those complaints were first received in 2011 and repeated in February 2012. The second of those solicitor's letters was provided to the Council on 13 February 2012. 13On 19 June 2012 the Council wrote to Altz indicating that it was investigating a complaint as to an alleged unauthorised activity being conducted on the premises and that it wished to enter the premises for the purpose of carrying out an inspection. An inspection was conducted on or about 25 June by Craig Nolan, an investigation officer employed by the Council. In his written report of that inspection, Mr Nolan stated "it could be concluded that the use of Unit 2, 9-11 Princes Highway Albion Park Rail is now operating as a shop which is not permitted within the zone." 14Thereafter matters seemed to proceed at a fairly leisurely pace. There was an exchange of correspondence in July and August 2012 between the Council and Altz concerning the manner in which the premises were being used. As a result of the Council's request, Altz supplied details to the Council of the kind of goods that were being sold and also provided other information that was sought from it in order to assist the Council with its investigations. 15In August 2012 the Council wrote both to Altz, who was the lessee of the premises, and the owner of the premises, indicating an intention to issue an order under s 121B of the EPA Act claiming that the use being made of the premises was prohibited within the Light Industrial zone which applied to the land under the then local environmental planning instrument, being Shellharbour Local Environmental Plan 2000 (LEP 2000). Each of the owner and Altz were invited to respond to the Council's letter indicating its intention to issue such a notice. As it happened, no such notice was ever issued. 16There was a further exchange of correspondence between the solicitors then retained by Altz and the Council concerning the use of the premises. In a lengthy letter dated 29 October 2012, the solicitors acting for Altz made a detailed submission as to why it was that the manner in which the premises were being used by Altz did not offend the provisions of LEP 2000 and therefore did not breach the EPA Act. 17Further correspondence then ensued between the solicitors for Altz and the Council and its solicitors concerning the use of the premises. In a letter dated 21 June 2013, the Council's solicitors indicated that, having reviewed the material that had been supplied to the Council on behalf of Altz, the Council nonetheless maintained that the conduct of business within the premises was not authorised and was in breach of the EPA Act. The letter stated that unless the current use of the premises ceased, the Council would commence proceedings in this Court to restrain the use. I should say that the use said to be in breach of the EPA Act was use of the premises other than for the display and sale of bulky goods. 18Further correspondence was exchanged until the commencement of proceedings in January of this year. In the course of that correspondence, particularly at the end of 2013, it was stated on behalf of Altz that, while maintaining the lawfulness of its present use, in an endeavour to avoid further debate, it was prepared to lodge a development application with the Council seeking consent to use part of the premises as a "neighbourhood shop", while also maintaining the balance of the premises as a bulky goods retail establishment. That proposal requires explanation by reference to the applicable planning instrument. 19The former planning instrument, namely LEP 2000 was repealed upon commencement of the Shellharbour Local Environmental Plan 2013 (LEP 2013) on 5 April 2013. Under LEP 2013 the land was zoned "IN2 Light Industrial". In respect of land so zoned, development for the purpose of "neighbourhood shops" was permissible. So also were "bulky goods premises". Beyond those permissible uses, commercial premises were prohibited. Commercial premises are defined in the planning instrument in such a way that they would comprehend shops. However, as I have said, the form of use identified as being "neighbourhood shops" was a permissible form of development. 20A "neighbourhood shop" is defined in LEP 2013 such as to comprehend premises "used for the purposes of selling general merchandise 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 drycleaning, but does not include restricted premises." Where neighbourhood shops are permissible, "the retail floor area" must not exceed 80m²: cl 5.4(7), LEP 2013. 21As I have indicated it was the expressed intention of Altz to seek consent for such a "shop" within Unit 2 in order to address the debate as to the permissibility of the activities currently being conducted by it. 22The notice of motion seeking the adjournment of the proceedings was, as the supporting material indicates, initially intended to engage the provisions of s 124(3) of the EPA Act. However, when the matter was argued before me today, Mr Withers, who appeared for Altz, indicated that reliance upon that section may be inappropriate because it required a determination or concession that there had been a breach of the Act in order to engage its provisions. Altz maintains its position that no such breach has been demonstrated and certainly none has been admitted. The application for adjournment, as Mr Withers articulated it, seeks to engage the provisions of the Civil Procedure Act 2005 (NSW) by which the Court, in case management of the proceedings, is able to address the exigencies of the case by reference to the provisions of Pt 6 of that Act. 23In particular, he identified s 66 which enables the Court, subject to its rules, to grant an adjournment and under s 67 to stay proceedings. The exercise of the discretion afforded by those sections is in turn informed by the provisions of ss 56 and 57 of the Civil Procedure Act. Reliance was placed upon those provisions as the purpose of the adjournment was to enable time to be given for the lodgement and determination of a development application for a "neighbourhood shop" within the existing premises. Lodgement of that application was foreshadowed in the affidavit supporting the notice of motion which was filed, as I have said, on 15 April 2014. 24As it happened, the development application was not lodged with the Council until yesterday, 12 May 2014. That application identifies by plans and description the general manner in which the proposed neighbourhood shop would be conducted within the subject premises. However, as Ms Irish, who appeared for the Council indicated, such is the detail contained in the development application that one cannot be confident that the disposition of goods within the new premises will necessarily satisfy the requirements of a neighbourhood shop. If that be a deficiency in the application that has been lodged, then undoubtedly it is curable or potentially curable by the provision of further information sought by the Council in accordance with the Regulation made under the EPA Act. 25The essence of the argument advanced on behalf of Altz is really this. There is a discretion to afford an adjournment in order to enable the development application to be determined. It is in the interests of justice that this should be done, whether one refers to the provisions of ss 56 to 60 of the Civil Procedure Act or whether, contrary to the submissions it makes, one relies upon the exercise of discretion under s 124(3) of the EPA Act. 26I have determined, having regard to the background to the proceedings which I have but briefly outlined, that it is appropriate to grant the adjournment sought by Altz. It seems to me there are three reasons that justify the adjournment. First, it is clear that there is a serious question to be determined as to whether or not the manner in which the premises are presently being conducted by Altz do offend the provisions of LEP 2013 and therefore the Act. In so saying I am not suggesting for one moment that the Council does not have a proper case to make. However, it is clear that there are a number of provisions of the EPA Act, of LEP 2013 and of the Exempt and Complying Development SEPP that require consideration in order to determine whether there is a breach that should be remedied. 27Secondly, it is clearly accepted by the Council that there are aspects of the business being conducted by Altz that fall within the "bulky goods store" definition in LEP 2013 and hence those aspects of the activity would be lawful. So much is apparent from the April 2011 referral of the proposal to the Council and the latter's response of 6 May 2011. Whether the detail as then understood by the Council is reflected "on the ground" is a matter yet to be determined. But the point upon which I rely is the circumstance that conduct of the activity generally conforming with the intent of a " Good Price Home Health Care Supplies" establishment is capable of complying with LEP 2013. Added to that, it should be noticed that the complying development certificate that was granted and of which the Council was given notice late in 2011, is not the subject of any challenge in these proceedings. 28Section 76A of the EPA Act requires that if an environmental planning instrument provides that specified development may not be carried out except with consent, a person must not carry out such development without that consent, being a consent that is in force. By subsection (2) of the same section, it is provided that in the case of complying development, a consent may be obtained by the issue of a complying development certificate. There is a complying development certificate that appears to be current in respect of the subject premises. I identify that circumstance as being one demonstrating the capacity for development that conforms with the intention of the application for that certificate to comply with the provisions of s 76A. 29The third factor that causes me to conclude that an adjournment should be granted is delay. I can accept that both parties have not acted with the expedition that might have been expected, given the circumstances of the case. However, the position of Altz, so it seems to me, is somewhat different to that of the Council. It is the Council who complains that a breach of the Act is and has been occurring, an allegation in respect of which it has been aware since late 2011. 30It will be remembered that the complaint from a competitor or competitors about the current manner of conduct at the premises was first notified to the Council in late 2011. The complaint was investigated in mid 2012 and yet proceedings were not commenced until January 2014. The Council has not sought, understandably in the circumstances, an interlocutory injunction to restrain the activities that are presently being conducted. 31In those circumstances it seems to me that the delay in commencing proceedings to restrain the activity said to be unlawful is such that, if not the letter, then the purpose of the EPA Act, as reflected in s 124(3), should be implemented. There should be an opportunity afforded to Altz to obtain the consent for which it has now applied without incurring further cost in defending the present proceedings pending determination of its application. 32The course that I have taken is a course that is not without precedent. In Sahade v The Owners - Strata Plan No. 62022 & Ors [2006] NSWLEC 770 Jagot J reflected upon the purpose of s 124(3) of the EPA Act. At [10] her Honour said: "In my view, s 124(3) of the Environmental Planning and Assessment Act 1979 is an important provision disclosing part of the legislative scheme that underlies the statute. That is, there is a clear intention disclosed by s 124(3) that, where the relevant breach of this Act is the carrying out of development without development consent, in circumstances where development consent can be obtained for the development, there should be an opportunity for prospective respondents to proceedings or actual respondents to proceedings to make application to adjourn proceedings to enable a development application to be made and determined under Pt 4. I consider that s 124(3) has an important role to play in achieving the objects of the Act, as set out in s 5, because it is through a process of assessment and determination of a development application that all relevant matters under s 79C of the Act can be weighed, assessed and determined." 33By referring to that passage I do not determine that s 124(3) is the provision under which the adjournment is granted. In light of the argument earlier advanced on behalf of Altz I leave that question open. Nonetheless, in my opinion the provision does reflect a legislative intention, in circumstances like the present, that an opportunity be afforded to obtain a development consent. The subsection therefore reflects a basis upon which a discretion can properly be exercised in accordance with the provisions of Pt 6 of the Civil Procedure Act. I also note the observations of Pepper J in Council of the City of Sydney v Samadi [2010] NSWLEC 125 where her Honour said at [51]: "Ordinarily the Court would be loath to insist on the continuation of the preparation of proceedings where costs may be thrown away by reason of an outcome in another matter. This would not facilitate the overriding purpose set out in s 56 of the CPA." 34There is no doubt that if the present Class 4 proceedings are prosecuted to their conclusion, they will raise complex issues of law and of fact of the kind that were addressed in litigation both in this Court and in the Court of Appeal in Bardsley-Smith v Penrith City Council [2013] NSWCA 200. In contrast, by adjourning the proceedings for a relatively short period and allowing what on its face would appear to be a fairly straight-forward application to be considered and determined by the Council and, if necessary, by this Court on appeal, there is a more expeditious and less costly means of addressing the issue between the parties than the conduct of protracted Class 4 litigation. 35For all those reasons I propose to grant the order sought in the notice of motion. The orders that I make are therefore as follows: (1)Vacate the directions hearing listed for Friday next 16 May 2014. (2)Adjourn the proceedings to Friday 4 July 2014 for directions. (3)Costs of the motion to be costs in the proceedings. (4)Set aside Orders 2 and 3 made on 14 February 2014. (5)Note the undertakings given to the Court by the respondent through its counsel that: (i) it will diligently and actively pursue the development application lodged with the Council on 12 May 2014 and the grant of consent by the Council, including by lodging an appeal to this Court against the deemed refusal of the development application if the need arises; and (ii) if the Council or the Court grants consent to the development application, the respondent will implement the consent as expeditiously as practicable.