Tuscany Farm Holdings Pty Limited & Anor v Hawkesbury City Council

Background 8The DA was lodged by PGH Environmental Planning of Springwood ('PGH'), and was accompanied by a Statement of Environmental Effects ('SEE') prepared by PGH. 9The proponents obtained, and annexed to the SEE, an opinion from Mr C W McEwen SC ( Exhibit C1 , tab 2, fols 40ff) that the proposed new use was permissible with consent. Mr McEwen concluded that " the activity being carried out ... substantially involves the handling, treating, processing or packing of primary products (wheat, pulped egg, meat-meal and salt) and is therefore properly characterised as development for the purpose of 'rural industry' ". 10The DA followed a Notice of Intention to Issue an Order, given by Urban City Consulting Pty Ltd, as principal certifying authority for development under an earlier DA (1013/2004). The intended order would stipulate the grounds as non-compliance with conditions of consent, and would require the carrying out of works to bring the situation into compliance with the consent. 11The present DA sought approval to use the existing buildings containing the feed processing shed, cool rooms and store rooms for the manufacture, packaging, storage and wholesale delivery of dog biscuits. That use would be located in the north-west building on the property. 12The use is described (in the SEE at Exhibit C1 , tab 2, fol 23, par 4.1, and in the SAF at Exhibit C2 , par 19) as: The production of dog food products (dog biscuits) involves the conversion of wheat, raw pulped egg, and other minor ingredients (meat-meal, colouring, flavour additives and salt) into dog biscuits. The wheat comprises approximately 80% of the mixture and the pulped raw egg (comprising mixed yolk and egg white) makes up a further 10% of the mixture. Whole wheat is milled on site and is combined with the other ingredients to form dough, which is then sheet rolled, stamped and baked in an oven. After cooling and drying, the dog food product is packaged and dispatched from the site for sale elsewhere. 13The SEE concluded ( Exhibit C1 , tab 2, fol 38, par 8): " it is our view that the proposal is best described as a rural industry as it involves primary products ... and [is] therefore permitted in the zone ". 14In Mr McEwen's legal opinion dated 26 March 2008, he referred to three major authorities, all of which were referred to during argument on the preliminary question - Australian Native Landscapes Pty Ltd v Warringah Shire Council [1989] NSWLEC 3 (' ANL '), Domachuk v Baulkham Hills Shire Council (1992) 77 LGRA 395 (' Domachuk ' ) , and Mittagong Mushrooms v Narrambulla Action Group Inc (1998) 97 LGERA 333 (' Mittagong '). I will return to examine these cases in detail later in this judgment. 15In the undated assessment report (at Exhibit C1, tab 3), Council officers acted upon contrary legal advice. Council noted that the applicants sought to produce and package dog biscuits 24 hours per day, 7 days per week. In recommending refusal, the Council officers primarily relied upon Stein J's decision in Domachuk to prefer the categorisation " rural industry ", rather than " industry ". Council refused the application nine votes to three ( Exhibit C1 , tab 4), on the basis not only of that categorisation, but also on the basis of " unacceptable noise and odour impacts in the context of this rural locality ". The Notice of Determination was issued on 12 November 2010 ( Exhibit C1 , tab 5). 16The product specification of the intended dog biscuit as at the date 20 September 2010 ( Exhibit C1 , tab 6, fol 101) was as follows: " Ingredient Percentage (%) Wheat 80.6 Egg 10.0 Sugar 0.98 Vegetable Oil (Sunflower/Canola) 1.0 Meat Meal 1.0 Salt 0.72 Water 5.7 Total 100.00 17The area surrounding the subject site is broadly characterised by a mixture of rural-residential land uses consisting of grazing lands and crop growing. A relevant nearby use is the commercial production and wholesale distribution of potting mix. Part A of the SFC (as agreed) sets out the relevant zone objectives, etc, and the SFC notes that the development would be defined as industry under the draft LEP 2009 making it prohibited. 18The SFC indicates that, apart from the odour of the operation, there would also be noise generated by the operation of mechanical plant, and truck movements. It is also contended that the development should be refused as it would set an undesirable precedent for similar inappropriate development and is, therefore, not in the public interest.

Relevant terminology 19The term " industry " is defined in cl 5 of the LEP ( Exhibit C1, tab 7, p9 of 112) as follows: Industry means: (a) any manufacturing process within the meaning of the Factories, Shops and Industries Act 1962 , or (b) the breaking up or dismantling of any goods or any article for trade or sale or gain or as ancillary to any business, but in the Land Use Matrix at the end of clause 9 does not include an extractive industry, home industry, light industry or rural industry. 20That definition of " industry " requires reference to the following definition (subsequently repealed) contained in the Factories Shops and Industries Act 1962: ' Manufacturing process ' means any handicraft or process in or incidental to the making, assembling, altering, repairing, renovating, preparing, ornamenting, finishing, cleaning, washing, breaking up, or adopting of any goods or any articles or any part of an article for trade or sale or gain, or as ancillary to any business, and includes any handicraft or process declared by the Governor, pursuant to this Act, to be a manufacturing process. 21Whereas some other more specific terms such as " light industry " are defined in the LEP, the LEP contains no definition of " rural industry ", but cl 6 of the LEP adopts the 1980 Model Provisions, in which " rural industry " is defined as follows: rural industry means handling, treating, processing or packing of primary products and includes the servicing in a workshop of plant or equipment used for rural purposes in the locality . 22The term " primary products " as contained in that " model " definition of " rural industry " is not defined in either the LEP or the Model Provisions. 23A proper reading of the Zoning Table ( Exhibit C1 , tab 7 at pp 16-19) indicates the acceptability of " rural indu stry" uses within the Mixed Agriculture zone and several other zones. 24The following paragraphs in SAF are relevant: 14. If the proposed development is properly characterised as being for the purpose of a 'rural industry' as defined, it would be excluded from the definition of 'industry' for the purposes of the Land Use Matrix in Clause 9 of the HELP 1989 and would be permissible with consent on the Land. If the proposed development cannot be properly characterised as being for the purposes of a 'rural industry' as defined, it would be an 'industry' for the purposes of the Land Use Matrix in Clause 9 of the HELP 1989 and would be prohibited on the Land . ... 20. Whole wheat grain that has been harvested elsewhere is brought onto the Land in trucks and is stored in silos on the Land. The whole wheat grains are ground into flour through a milling process that is carried out on the Land. The flour that is produced is used in the dog biscuit mixture and comprises approximately 80.6% of the dog biscuit mixture. 21. The egg yolks and egg whites used in the dog biscuit mixture are obtained from the egg laying facility on the Land and comprise approximately 10% of the dog biscuit mixture. 22. The remaining 9.4% of the dog biscuit mixture comprises of the following, all of which is imported to the Land (except for water): Sugar 0.98% Vegetable Oil 1.0% Meat Meal 1.0% Salt 0.72% Water 5.7% 25Mr Seton, for the respondent Council, also referred to the Fourth Edition of Macquarie Dictionary for the following definitions: 'primary' (as an adjective) means:

1. first or highest in rank or importance; chief; principal
2. first in order in any series, sequence, etc.
3. first in time; earliest; primitive.
4. constituting, or belonging to, the first stage of any process.
5. of or relating to the production of naturally occurring foods as meat, grains, fish, etc., or of naturally occurring things as wool, cotton, etc: a primary industry ...
6. of the nature of the ultimate or simpler constituents of which something complex is made up.
7. original, not derived or subordinate; fundamental; basic.
8. immediate or direct or not involving intermediate agency ... primary industry ... any industry such as dairy farming, forestry, mining, etc., which is involved in the growing, producing, extracting, etc., of natural resources. product
9. a thing produced by any action or operation, or by labour; an effect or result.
10. something produced; a thing produced by nature or by a natural process.
11. Chemistry is a substance obtained from another substance through chemical change ... 26It is also to be noted that the LEP definition of " industry " excludes a rural industry. As the servicing of plant and equipment (an element of the definition of rural industry) is not relevant to the present case, the relevant question, rather than being that as characterised by Pain J in [3] above, is whether the proposed development may be taken to comprise " handling, treating, processing or packing of primary products " . 27The applicants submit that the definition of " rural industry ", as with other statutory definitions, must be considered in the light of the principles stated by the majority in the High Court in Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 at 635: The function of a definition clause in a statute is merely to indicate that when particular words or expressions the subject of definition, are found in the substantive part of the statute under consideration, they are to be understood in the defined sense - or are to be taken to include certain things which, but for the definition, they would not include. Such clauses are, therefore, no more than an aid to the construction of the statute and do not operate in any other way . 28Although each word in the definition of " rural industry " is capable of its own meaning, the definition as a whole, in the context in which it is to be read, namely the LEP, must give it the meaning and indicate its construction. 29This approach was discussed in Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 where five Judges of the High Court quoted Lord Hoffman in R v Brown [1996] 1 AC 543, at 561, as follows (at 397): The fallacy in the Crown's argument is, I think, one common among lawyers, namely to treat the words of an English sentence as building blocks whose meaning cannot be affected by the rest of the sentence ... This is not the way language works. The unit of communication by means of language is the sentence and not the part of which it is composed. The significance of individual words is affected by other words and the syntax of the whole. 30As McHugh J said in Kelly v R [2004] HCA 12; 218 CLR 216 (at [103]): As I earlier pointed out, the function of a definition is not to enact substantive law. It is to provide aid in construing the statute. Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment. There is, of course, always a question whether the definition is expressly or impliedly excluded. But once it is clear that the definition applies, the better - I think the only proper - course is to read the words of the definition into the substantive enactment and then construe the substantive enactment ... 31As the Court of Appeal said in Hastings Co-operative Ltd v Port Macquarie Hastings Council [2009] NSWCA 400; (2009) 171 LGERA 152 (at [27]): The construction of an environmental planning instrument, as with a statute, is not to be undertaken in isolation from the context 'internal to the legislative scheme, in which the words must be construe' . 32Mason J, as he then was, in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309, when examining conditions of carriage as regulated by the South Australian Motor Vehicles Act 1959, said (at 315): On its face s. 133, which is expressed in general terms, contains no limitation on the nature of the claim to damages or other remedy to which it refers. However, to read the section in isolation from the enactment of which it forms a part is to offend against the cardinal rule of statutory interpretation that requires the words of a statute to be read in their context: ... Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.

The key relevant authorities 33I now return to examine the authorities relied upon by Mr McEwen in his advice, to which I referred above (at [14]). It is necessary to quote from them more extensively than is generally desirable.

ANL 34ANL concerned a modification application in respect of a consent granted on 18 December 1979 " for the purposes of rural industry " at Terrey Hills, following Supreme Court proceedings brought by the Council against Mr Patrick Soars, apparently the principal of ANL, and determined by Kearney J in March 1979 ( Shire of Warringah Council v Soars (unreported, 1 March 1979) (' Soars ')). 35In the relevant planning scheme ordinance, the term " rural industry " was defined as " handling, treatment, processing or packing primary products... " . Again there was no definition of " primary products " in the ordinance, and both Kearney J in Soars and Bignold J in ANL , failed to find a relevant authority of assistance. 36Bignold J was referred in ANL , as I was in this case, to dictionary definitions of " primary " and of " products ", and he concluded " ultimately its meaning and connotation must be discovered from reading the words used in their grammatical and ordinary sense, paying respect to the context in which they appear in the Ordinance ". He noted that counsel had suggested a useful definition namely " products composed of natural matter or matter developed by natural means ", and he accepted that suggested meaning as " an apt and useful guide to the determination of these proceedings ". 37Mr Soars had indicated an intention to use the property for an amended list of purposes following Kearney J's decision. The amended list included the following:

1. To use the land for the purpose of the storage, processing, packing and distribution of bark.
2. To use the land for the storage and distribution of timber logs.
3. To use the land for the storage and distribution of chicken manure.
4. To use the land for the storage of sand, soil, sawdust and bark fines and the mixing and consequent distribution of those mixtures.
5. To use the land for the storage and distribution of mushroom compost.
6. To use the land for the mixing of sand, soil and mushroom compost and the distribution of such mixtures.
7. To erect machinery and buildings on the land to be used in conjunction with those uses. 38On 18 December 1979 the Council granted development consent for the land to be used " for the purposes of rural industry " subject to 28 conditions. The restriction on uses was as stipulated by the Supreme Court, namely: (a) The storage, processing, packing and distribution of bark; (b) The storage and distribution of timber logs; (c) The storage and distribution of chicken manure; (d) The storage of sawdust and bark fines and the mixing and distribution thereof; (e) The storage of sand, soil, sawdust and bark fines and the mixing and distribution thereof; (f) The storage and distribution of mushroom compost; (g) The storage of sand, soil and mushroom compost and the mixing and distribution thereof until a consent for the use of the said land or any part thereof for such purpose has been granted. 39The modification application referred to the condition calling up those uses (condition 25), and sought to amend it to read " uses on site to be restricted to the handling, treating, processing or packing of primary products in the nature of landscaping supplies and the storage and distribution of those products ". It was refused by Council, and, when the matter came on for hearing before Bignold J, the proposed amended form of condition 25 restricted the uses to " landscape supplies of the classes nominated in the Applicants Wholesale Price List as from 1 May, 1988 ", bush stone, and the storage and distribution of such products. 40(The other condition the applicant sought to modify concerned the hours and days of operation. The objectors were particularly concerned about the proposed trading hours. His Honour noted that the area concerned was no longer generally developed for rural residential purposes, as it once was, and he was not prepared to allow the trading hours amendment sought). 41Mr Soars gave evidence before Bignold J that he had been using the subject land continuously since 1972 for the purposes of his landscape supply business. The core range of supplies had remained much the same, and Bignold J found that Mr Soars had " reasonably sought to overcome neighbour complaints about his development activities ". 42The Council's evidence was guided by the opinion of its town planner that many of the products available at the Terrey Hills premises were not primary products as the term is employed in the statutory definition of " rural industry ". As the respondent Council had concluded that the proposed modification was legally impermissible, it did not proceed to consider the town planning merits of the proposal or its environmental impact. The Council's town planner opined that it was not possible to properly appraise the project because of the uncertainty inherent in the broadening of the range of permissible activity. 43The Council submitted that the modified consent could not be shown to be " substantially the same development " as that covered by the 1979 development consent because at least six new product lines not covered by that consent were proposed, namely: (a) sand and soil for separate distribution (rather than in mixtures); (b) blue metal and road base; (c) decorative gravels; (d) mulches and ground covers other than pine bark products; (e) bush rocks; (f) miscellaneous products; 44Council submitted that many of what were called quarry products (sand, soil, blue metal, decorative gravels, rock and cement) were not " primary products ", and hence could not be sanctioned as components of " rural ind ustry". 45Bignold J exercised his discretion to uphold the appeal subject to amending the proposed new condition 25 to " inject necessary certainty as to the scope and content of the permitted development " (i.e. to limit the classes or types of " primary product " to those described in the wholesale pricelist, and to exclude any new types or forms of treatment and processing). Any new products or processes would, therefore, require additional approval by either fresh consent, or further modification, if they were to be introduced to the Terrey Hills premises. 46His Honour, in explaining his reasoning, indicated that he was satisfied that the modification related to substantially the same development as that in the DC and that no prejudice would be caused to any person who objected to the original application. 47His Honour referred again to Kearney J's judgment, and concluded that it was: tolerably clear that ' the development ' to which the 1979 development consent related was that of the handling treating and processing of a range of primary products for distribution to, and use in, the landscape industry. So considered (and in my opinion, for present purposes, that description of the permitted development is appropriate) the fact that the present proposal involves additional products in the range of products so distributed and used does not change the essential character of the development . Accordingly though involving a wider range of specific products the proposed modified development consent relates to substantially the same development as did the original development consent. (his emphasis) 48His Honour then noted that the principal area of dispute between the parties concerned the question of whether various decorative gravels and quarry products specified in the exhibit were themselves primary products and the related question of whether, if they were primary products, they were handled, treated, processed, or packed, so as to fit the definition of rural industry. No demur was detected from the adoption by Kearney J of the form of words suggested by counsel in the Supreme Court proceedings. 49The Council submitted that the gravels, etc. were more aptly described as extractive materials than as primary products or, alternatively, that they would result from a primary industry, rather than from primary production. That distinction did not receive His Honour's endorsement, and he noted that the Macquarie Dictionary definition did not distinguish between dairy farming, forestry and mining. He concluded that those products were primary products satisfactory for the term rural industry, and continued: I also find that those primary products are " handled or processed " in the relevant sense whether, as in the case of the gravels and some quantities of sands, they are sold and distributed without further processing at the Applicant's premises (in which case they are nonetheless " handled " within the definition) or whether as in other cases, the various types of sands are mixed (in which case they are 'processed' within the definition). Similarly I hold that the 'Koppers' timber treated logs are relevantly 'primary products' and I find that they are relevantly "handled" at the Applicant's premises, though they are sold and distributed without further treating or processing by the Applicant. Finally in relation to a number of miscellaneous items which clearly are not primary products eg agricultural pipe, weed control mats, dog nails, dog spikes, hessian ties etc I find on the evidence of Mr. Soars (which was not challenged) that they constitute an extremely minor and insignificant element of the overall business activity and that they may properly be regarded as ancillary (in the sense of being incidental) to the landscape supplies business undertaken by the Applicant cf. Foodbarn Pty. Ltd. v. Solicitor General (1975) 32 LGRA 157 at p.161. (HH's emphasis) 50His Honour then went on to examine some other argument before making final orders in which condition 25 was amended to read as follows: Uses on site to be restricted to the handling, treating, processing or packing of primary products in the nature of landscape supplies as specified in the Applicant's Wholesale Price List (Exhibit 4) and bush stone and the storage and distribution of the said products PROVIDED THAT no new treatment or processing shall be undertaken additional to any treatment and processing being undertaken on the subject land as at 1st September, 1988. (HH's emphasis)

Domachuk 51In Domachuk , Stein J was faced with the definition of " rural industry " as " handling, treating, processing or packing of primary products " , in the absence of a definition of " primary products " . Again, in this matter, argument returned to the definition in the Factories, Shops and Industries Act. 52The Council refused development consent for several uses on the basis that they did not fit the definition. The headnote records (at 395): These uses included the growing of mushrooms on a small scale, the bagging of spent mushroom compost for sale, the mixing of numerous imported products with the spent compost to produce various bagged potting mixes for sale, and the sale of imported products such as peat moss, charcoal, leaf mould, pine bark and cow and poultry manure in their imported states . 53Stein J referred to an earlier decision he had made concerning the identical definition of " rural industry " ( Penrith City Council v HBH Manufacturing Pty Ltd (unreported, 5 June 1992)), but he was not taken to, or at least did not refer to, Bignold J's decision in ANL . 54In outlining the uses on the land, Stein J said (at 396): The growing of mushrooms has continued since 1972. The bagging of spent mushroom compost for sale has been occurring since around 1975. The importing of numerous products to mix with the spent compost to produce various bagged potting mixes has also probably been going on for a similar period, although the Council has never formally approved of such a use and has attempted to have it cease. Peat moss, in bags, is also from overseas. Some of the peat moss is used in mushroom growing, some is mixed with spent mushroom compost in the potting mixes and some is sold in the same condition as imported. The individual items produced for sale or brought onto the site are at least 27 in number. A number of them are merely imported to the site and sold without further processing or handling. These include Australian and imported peat moss, charcoal, leaf mould, perlite, pine bark, rice hulls, cotton seed hulls, sphagnum moss, tea tree bark, vermiculite, gypsum, ground limestone, wood chips, and cow and poultry manure. Spent mushroom compost is also bagged and sold without additives. Most of the manufactured potting mixes are a blend of spent mushroom compost and various other ingredients. These are usefully set out in annexure "A" to the applicant's statement of environmental effects lodged with the development application. They include African violet mix, bonsai mix, bulb fibre, camellia and azalea compost, orchid compost and special free draining potting mix. African violet mix includes 35% spent mushroom compost plus various unstated quantities of rice hulls, peat moss, sand, perlite, charcoal and sawdust. Orchid compost includes 45% mushroom compost mixed with rice hulls, pine bark, peat moss, sawdust and charcoal. Some products contain as little as 35% spent mushroom compost (when made up) and others up to 95% (e.g., seed raising mixture). 55There was no dispute that mushroom growing was an agricultural pursuit, but the Council submitted that the other activities constituted, essentially, a " manufacturing industry ", and were, therefore, prohibited. 56During a departmental investigation the Council advised that it raised no objection to the bagging of garden compost and animal manure, provided that such items had been used for the growing of mushrooms, but the fact remained that the mixing and bagging of the potting mixtures meant the importation of other products to the site, contrary to the Council's stated requirements. 57The evidence suggested that a number of products brought on to the site were used in the growing of mushrooms, but significant quantities of such products were imported for the purpose of being sold without any change in their constitution or their packaging. Also, 20% of the spent mushroom compost was made specifically for sale and not for mushroom growing on the land, and 20% of the stables straw brought onto the land was not used in mushroom growing. 58His Honour concluded that mushroom growing was a small and perhaps declining proportion of the business activity on the site. He rejected an estimate of 23%, preferring evidence that suggested that 10-20% of the income was derived from mushroom growing. He concluded that the principal business on the land was the mixing of various ingredients, including spent mushroom compost, to produce various potting mixes marketed under the brand name Bouquet Composts. In addition, a large part of the activities was the sale from the site of products brought on to the site, including peat moss from overseas. 59His Honour said (at 398): In my opinion 'primary' connotes being of the first order so, for example, a grain is a primary product. The handling, processing or packing of grain would therefore be a rural industry. Here a large number of products, which are brought onto the site, are claimed to be primary products, for example, rice hulls, peat moss, sawdust, sand, perlite, vermiculite, pine and other bark, wood chips and leaf mould. These come to the site in different containers, some in bags. They are mixed by various processes to manufacture the different types of potting mixes, which are then bagged and labelled for sale . 60His Honour then examined the nature of perlite and vermiculite, and noted (at 398-399 - emphasis mine) that: ... rice hulls are husks removed from the rice grain, that peat is a highly organic soil and peat moss or sphagnum moss is usually extracted from the ground, as is sand. Charcoal, sawdust, pine tree bark and tea tree bark all derive from timber. In the sense that they are derived ex-site (either grown, extracted or felled) and imported to the premises, do they comprise primary products which are handled, processed and packed? It may first be observed that the products have all been produced off site. They have undergone their primary production or harvesting and, in most cases, have already been handled, processed and packed. For example, the hulls of rice have been separated from the grain and packed. Perlite and vermiculite have been extracted and processed to produce the product brought to the site for mixing. The peat has already been extracted (in Germany, New Zealand and what was the USSR) and no doubt processed, packed and exported to Australia. The timber based products have all been separated, treated and packed before they are delivered to the subject site. Have they therefore ceased to be primary products and become merely the ingredients in the manufacture of the various potting mixes produced on the premises? In my view this is the correct position and the activities which are occurring on the premises are not a rural industry as defined in the LEP but more in the nature of an industry involving a manufacturing process as defined. The various products imported to the site are undergoing a secondary processing. The bagging of spent mushroom compost, without its mixing with other ingredients, may be argued to be a rural industry since it involves the handling and packing of a primary by- product of the growing of mushrooms on the land. However, once large numbers and quantities of other ingredients are imported to the site in order to mix with the spent compost to produce a variety of products, this cannot be properly classified as a "rural industry". I come to this conclusion having regard to the character, extent and other features of the uses of the land: Foodbarn v Solicitor General (1975) 32 LGRA 157. 61His Honour noted that in the HBH Manufacturing decision he had held that the assembly of wooden crates, boxes and palettes from timber baulks was not a " rural industry ". Rather, His Honour found that those activities were properly characterised as an " industry ", as it was not a processing of " primary products ", but a manufacturing of various products. 62His Honour then went on (at 399): Similarly here, a number of the products have probably ceased to be primary products by the time they are delivered to the premises at Kenthurst. In mixing and blending them with spent compost to produce various different products - the range of potting mixes - and bagging and selling them as such, the more appropriate classification to the circumstances is that of the process of manufacture of various goods for sale. In my opinion more than the mere processing or producing of primary products is involved. It follows that I am not satisfied that the development application is for a "rural industry" as defined and is therefore not permissible under this head. In the alternative the applicant relies on the definition of "landscape supply establishment". It is argued that a range of materials used for landscaping purposes are stored and sold from the premises. Indeed, this definition is relied on in any event where the "primary products" brought onto the land are not handled, treated, processed or packed but merely sold in the form and bags in which they arrive, e.g., imported peat moss. Again, this is an issue of the proper categorisation of the use. Although a number of the "products" manufactured, stored and sold from the land are materials used for landscaping purposes, one would hesitate to describe the use as a landscape supply establishment. It includes only part of the range of items usually available at such establishments. For example, it sells no sleepers, bush rocks or like products. In fact the "range" of materials is fairly limited. Indeed, the "range" of products is more likely to be retailed in a plant nursery than a landscape supply establishment. 63His Honour then dealt with the dilemma caused by the inter-relationship between the various uses and activities on the land, and found that the uses applied for in the development application were impermissible on the subject land. On balance, the application was refused, on merit.

Mittagong 64As distinct from ANL and Domachuk , both of which were class 1 proceedings, Mittagong was a class 4 judicial review proceeding, determined by Bannon J, whose decision was overturned on appeal. 65The subject land was zoned " Non-urban A " under the Mulwarree Planning Scheme Ordinance, in circumstances where " rural industry " was defined, but " primary products " was not. Bannon J held that the Council was manifestly wrong to classify a mushroom composting process as a " rural industry " whereby mushroom spore were introduced to a compost of water, stable straw, poultry manure, cotton seed husks, meal and natural gypsum. 66On appeal, Mason P affirmed the principles stated in Londish v Knox Grammar School & Uniting Church in Australia Property Trust (NSW) (1997) 97 LGERA 1 (' Londish ') as to the proper approach to judicial review in matters such as the present. He concluded that for the reasons given by Meagher JA, the Council's conclusion was reasonably open to it. 67Sheller JA took a different view from Meagher JA, but concurred in the orders allowing the appeal and setting aside the declaration and orders of Bannon J. While Sheller JA's decision was based on the conclusion of the Council being reasonably open to it and within its discretion, Meagher JA held (with Mason P agreeing, as noted above) that the respondents needed to demonstrate that the zoning by the Council was devoid of plausible justification and not just wrong, and this had not been proven. 68Meagher JA said (at 334-335): The end product, mushroom compost, consists of a mixture of water, stable straw (and therefore often mixed with horses' faeces and urine), poultry manure, cotton seed husks, cotton seed meal and natural gypsum. This mixture is allowed partially to decompose, and it is aerated and watered from time to time to achieve that result. At a later stage mushroom spore are introduced. The final product is laid out on a surface to allow the fungi to grow to the point where they are fit for human consumption. It is apparent that the Council considered that each ingredient in the mixture was a "primary product", and therefore the manufacture of the compost consisted of the "processing" of primary products. It was the unenviable task of the respondents to demonstrate that this view was "devoid of plausible justification" not merely that it was wrong: see Hope v Bathurst City Council (1980) 144 CLR I at 7-9; 41 LGRA 262 at 226-268. Despite the learned trial judge's expression of opinion, I do not think they discharged that task. In my view the Council's view was not only "justifiable", it was probably correct. Each individual item in the mixture seems to me to be classifiable as a "primary product": straw, for example, is simply part of a crop. The fact that the end result (the compost itself) is different from each of the ingredients - a point stressed heavily by Mr T Robertson - does not seem to me to alter this fact. Indeed, it may well be that the compost itself is a "primary product". Cheese is a different product from milk, and yet I should have thought that the manufacture of cheese was a rural industry. 69I respectfully observe that the last sentence of the above quotation is regrettable - His Honour obviously did not give detailed consideration to the process under which cheese is manufactured, but I have included the sentence in the extract, for completeness. 70Meagher JA went on to refer to Soars, and commented (at 335): " In my view if a conclusion is one which is reached by a Supreme Court judge after full argument, it can hardly be 'devoid of plausible justification' ". 71Sheller JA noted (at 335) that Bannon J had expressed the opinion " that the process of mushroom composting went beyond the handling, treating, processing or packing of primary products. He said that it involved the use of stable bedding, cotton seed hulls and other products which could not be called primary products ". He then quoted at some length from Stein JA's judgment in Londish. (That case is now the subject of serious doubt - see Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 136 LGERA 288 (' Pallas Newco' )).

Other Authorities 72During argument counsel took the court to two other, more recent, decisions of this court. 73Liauw v Gosford City Council [2004] NSWLEC 72; (2004) 136 LGERA 349 ('Liauw') was, like ANL and Domachuk , a class 1 case. It concerned preliminary questions of law regarding characterisation of a development the subject of a modification application. 74Consent has been granted for an industrial building to be used as a water bottling facility, with the water to be imported on to the site. The question before Lloyd J was whether the modification of that consent to include a bore and ancillary equipment, such that the water could be sourced from the site, would be classified as " rural industry " . 75Under the relevant LEP the use of the land for " industries (other than extractive industries and offensive or hazardous industries) " was permissible. The LEP also imported the definition of " rural industry " from the Model Provisions, and cl 9 of SEPP 30 provided that " a reference in an environmental planning instrument, whether made before or after the commencement of this clause, to industry does not include a reference to rural industry ". 76His Honour referred to ANL , and the Macquarie Dictionary, and stated (at [17]): a primary product is an original product. For example in forestry the cutting down of trees which may be naturally growing on the land is a primary industry... So too in my opinion can it be said that groundwater is a primary product . 77His Honour held (1) that cl 9 of SEPP 30 applied to the use of the word " industry " in the LEP; (2) that groundwater was a " primary product "; (3) that it followed that both the existing use, and the proposed use as modified, involved " primary products " and were for " rural industry ", which was a use prohibited by the LEP; and finally, (4) that even if the use fell within the definition of " industry ", consent could not be granted to a use having the character of a permissible purpose, if it also had the character of a prohibited purpose: CB Investments Pty Ltd v Colo Shire Council (1980) 41 LGRA 270 (' CB Investments '). His Honour concluded that there was no power to allow the modification, because the use sought by the modification application was prohibited in the zone. 78James Godfrey v Wollondilly Shire Council [2007] NSWLEC 33; (2006) 151 LGERA 207 (' Godfrey '), was a characterisation case decided by Jagot J involving " rural industry " under a different plan. Her Honour referred to Domachuk and Mittagong , but not to ANL . However, she did refer to an ' ANL' decision I had made - Australian Native Landscapes Pty Ltd v Baulkham Hills Shire Council [1998] NSWLEC 31, a s 56A appeal where an issue was the range of products handled in a landscape/plant sale business, and its compatibility with the zoning and character of a rural residential area. 79Her Honour dealt with the circumstance in which the zoning table is silent and the court is asked to read it as implicitly permitting some use as a result of " mere omission " . Her Honour referred to Mittagong, where the permissibility of rural industries was assumed on the basis of a zoning table similar to that in Godfrey .

Applicants' submissions 80Mr Wilson, counsel for the applicants, noted in his submissions (par 15) that most activities of man are covered by " handling, treating, processing or packing...(except perhaps, growing and extracting, each of which is the subject of a separate definition - 'extractive industry' in the Model Provisions and 'agriculture' in the HLEP) " . 81He also sought to distinguish between doing something to a primary product, and doing something with a primary product. For example, " treating " might denote subjecting a thing to a process or an agent, such as a chemical, biological or physical process, and " process " may include preparing something using a process. 82Mr Wilson sought to distinguish Domachuk (subs pars 33-34 and 37-38): 33. A "primary product" does not lose the characteristic of being a "primary product" because it has undergone a process. Therefore, a grain is a primary product even though it is the result of a process of de-husking. Blue metal gravel is a primary product even thought it is the result of a process of crushing. An egg is a primary product even though it is the result of a biological process in the chicken. Water is a primary product even though it has been handled by piping and pumping to reach its destination. A nut is a primary product even though it is removed by a process from its shell. Some examples are: Mittagong ... (cotton seed husks and cotton seed meal were primary products brought to the land); Australian Native Landscapes ... ("Koppers" logs and gravel and blue metal were primary products). 34. By the same token, for example, a nut, which is a primary product, would lose that characteristic as a "primary product" after it was processed and found in a jar of Crunchy Peanut Butter. That is because it has become an integral part of something else. It is Crunchy Peanut butter because it has nuts in it. It could truly be described as a composition pursuant to a process of primary products and other substances and chemicals to produce something, which can no longer be described as nuts. It is the handling and the processing of the "primary product" that produces the result, which is not a primary product. ... 37. The definition of "rural industry" in Domachuk , as it is in the present case, does not require the primary product to be, still, a primary product after it has been subjected to "handling, treating, processing or packing". The definition itself does not require it. The plan read in context does not require it. The composite phrase if read in the way it is submitted it should be read, does not require it. Finally, the ordinary dictionary meaning of the individual words in the definition, do not require it. (and see Mittagong ... per Meagher JA). 38. A question may be whether the addition of substances, which clearly are not primary products, to primary products takes it outside the definition of "rural industry" because it is not the primary products being processed but the primary products and other substances being processed. If that was a relevant question, it is submitted that the answer is in the definition of "rural industry". That is to say, the processing of the primary products may, consistently with the meaning of the words "process", include the addition of the substances, for example, in the small amounts in paragraph 22 of the agreed statement of facts. It is a part of the processing of primary products ... 83Mr Wilson went on to submit (pars 39ff) that, in the alternative, the small quantities of other ingredients are themselves primary products or, in the further alternative, they are ancillary in the sense used by Bignold J in ANL. Mr Wilson distinguished ANL (in par 25) on the basis that the primary products in that case were handled or processed on the site, but did not come from the site, and did not need to do so for them to be recognised as primary products. 84Mr Wilson traced the use of the Factories, Shops and Industries Act definition of " rural industry " back to the County of Cumberland Planning Scheme Ordinance of 1951. In cl 24 of that Scheme, " rural industry " was defined as " any industry handling treating processing or packing primary products grown, reared or produced in the locality, and a workshop servicing plant etc ". The LEP definition in the present case does not include the words " any industry " nor the words " grown reared or produced in the locality ". It follows, he submitted, that the " primary product " in the use under consideration need not come from the property on which the handling, treating, processing, or packing occurs. I agree with this submission. 85" Industry " and " manufacturing process " are familiar concepts across industrial laws as well as general laws, but the term " rural industry " appears to be unique to town planning law. It is irrelevant, Mr Wilson submits, to the definition of " rural industry " that " primary products " are brought to the site from elsewhere, or that they had undergone some change from their original state, e.g. the de-husking of wheat grains, the pulping of eggs, or the mixture of " primary products " with other substances to produce something that is not a " primary product ". He says (par 45): So long as primary products are being handled, processed, treated or packed, that is sufficient for the purposes of the definition. Whether a particular primary industry gets development consent is another matter altogether. 86Nothing in the LEP limits or qualifies the nature and extent of " rural industry " other than by reference to the two separate elements of the definition itself. Some particular industries are separately defined and included in " industry ", and some are not included. 87The LEP (cl 9A) requires that the Council form the opinion that the development is consistent with the objectives of the relevant zone. In this case the Council have taken no point that the proposed use is inconsistent with the objectives of the Mixed Agricultural zone. The zones in which " rural industry " is permitted do not include other " rural " zones such as Rural Living, Rural Village or Rural Housing. The elements common to each of the six zones where " rural industry " may be carried on include low density, open space land.

The Council's submissions 88In his submissions, Mr Seton took the Court to Liauw . On the facts of the present case, Mr Seton argued that whole-wheat grain is an " original element " in the dog biscuit process, as are eggs, and he likened these elements to water, or even groundwater, in Liauw . Mr Seton submitted that the majority of input products in this case could constitute " primary products ", but the use of the land would go beyond that required of " rural industry " . 89Eggs and water are produced or obtained on site, but the balance of the inputs are imported to the site. Mr Seton (in subs par 35) framed the definition of a " primary product " (in this case the whole wheat grain, the egg, and the water) by reference to ANL, where it was " handled, treated, processed or packed " . However, it was what was proposed to happen to the " original elements " that, in Mr Seton's submission, distinguished the present case from ANL, and resulted in the proposed use of the land falling outside the definition of " rural industry " . 90He also relied on Domachuk , and made his submissions on the basis of the dictionary definitions of these terms. He conceded that " whilst eggs may be that natural product or the original thing that is produced by nature or a natural process, the egg pulp, it being derived from eggs through some processing is not an original product " (T 01.04.11, p21, LL19-21). 91The vast majority of inputs are themselves " processed " before being used in the dog biscuit process - for example, de-husking wheat off-site and then milling it on-site, and pulping eggs on-site. 92When the de-husked wheat reaches the site it goes through another process, namely milling, which means that it is transformed successfully in two stages from the full grain to what is really a " tertiary " product (de-husked and milled wheat - see T01.04.11, p21, LL22-35). 93Egg pulping done on land, it was submitted, could be considered in itself, a " rural industry ", because it is a process imposed upon " primary product " (T01.04.11, p21, LL45-49). 94Mr Seton explained (pars 35-38) the process defined in par 4.1 of the SEE ([12] above) - the processed input products are then introduced into a separate process, comprising their mixing with additional ingredients, which are largely "introduced " to the site, to form a dough, which is then rolled and cut into shapes, which are then baked. Those stages are, essentially, " secondary processing " of at least the wheat and egg pulp inputs, both of which began as " primary products ". 95He submitted (par 40) that the separate process(es) of combining all the inputs, and cutting and baking the shapes, prior to packing and dispatch, is properly characterised as a " manufacturing process ", which goes well beyond the processing of " primary products ". 96In an alternative formulation of the Council's case, Mr Seton took the Court to the following passages of Domachuk (at 396, 397, and 398): The individual items produced for sale or brought onto the site are at least 27 in number. A number of them are merely imported to the site and sold without further processing or handling. These include Australian and imported peat moss, charcoal, leaf mould, perlite, pine bark, rice hulls, cotton seed hulls, sphagnum moss, tea tree bark, vermiculite, gypsum, ground limestone, wood chips, and cow and poultry manure. Spent mushroom compost is also bagged and sold without additives. ... Most of the manufactured potting mixes are a blend of spent mushroom compost and various other ingredients. These are usefully set out in annexure "A" to the applicant's statement of environmental effects lodged with the development application. They include African violet mix, bonsai mix, bulb fibre, camellia and azalea compost, orchid compost and special free draining potting mix. African violet mix includes 35% spent mushroom compost plus various unstated quantities of rice hulls, peat moss, sand, perlite, charcoal and sawdust. Orchid compost includes 45% mushroom compost mixed with rice hulls, pine bark, peat moss, sawdust and charcoal. Some products contain as little as 35% spent mushroom compost (when made up) and others up to 95% (e.g., seed raising mixture). ... Are the various items imported onto the site "primary products"? What is a "primary product" for the purposes of the definition in the LEP? In my opinion 'primary' connotes being of the first order so, for example, a grain is a primary product. 97Such dealings are " manufacturing " processes, in both Domachuk and this case. Here the " raw " wheat has been handled, processed and packed in the course of harvesting, and in its preparation for importation to the site. It follows that the milling of it on the land is properly characterised as at least " secondary processing " (i.e. a " manufacturing process ") of what was once a " primary product ". 98However, Mr Seton submitted, the proposed development goes further: " The grain which is the major component of this dog biscuit is then reprocessed to form a flour that is then, goes through another process in terms of mixing, baking, mixing into a dough, the rolling, the cutting, the baking, the cooling, and those matters that ultimately lead to the production of this composite product " (T01.04.2011, p23, LL27-31). 99On either formulation of the Council's submissions, what happens to the wheat on the site is at least secondary, if not tertiary processing. In any event, the degree of processing being undertaken not only of the " primary products " in their original form, but subsequently through their combination and their processing to form the biscuits, falls within Stein J's reasoning in Domachuk . It cannot be said that the resulting product is a necessary end product of the processing of any " primary products ". Rather, the end product is the result of a " manufacturing " activity undertaken, involving ingredients which, while at one stage in their evolution were " primary products ", are, at the time of their introduction into the dog biscuit process, processed, secondary products. " W hat is involved is more than the processing, handling, treating or packaging of primary products " (subs par 53, and T01.04.11, p24, LL17-18). 100Mr Seton submitted that Mittagong is irrelevant to the determination of the current case, because it applied the test in Londish, since overturned by Pallas Newco, and involved ingredients that were truly " primary products ", whereas the proposal in this case is for a " manufacturing " activity, which makes the proposed use of the land " industry ".

The Applicants' response 101In reply, Mr Wilson submitted that the definition of " rural industry " does not exclude " primary products " going through a series of steps or actions to achieve an end result. To " dissect the total process into its individual parts in order to identify some part of it as not being rural industry is in that context somewhat artificial " (T01.04.11, p27, LL25-27). Mr Wilson also submitted the definition of rural industry as the " handling, treating, processing or packaging of primary products " ought not be broken down into parts . The word " processing " can encompass the use of chemicals or industrial machinery.

Consideration 102As I identified in [26] above, the relevant question to be addressed in these proceedings is whether the proposed development comprises " handling, treating, processing or packing of primary products " . 103Mr Wilson's case is that, despite Domachuk , a " primary product " retains that character regardless of having been processed. Hence, he would argue that a wheat grain remains a " primary product " despite the de-husking and/or milling processes which precede its incorporation into the biscuit dough. 104I do not accept his submissions. To break down the elements of " handling, treating, processing or packing " , as he argued, goes against Kearney J's classic reasoning in Soars (see [34] - [38] above), in which His Honour stated " meaning and connotation must be discovered from reading the words used in their grammatical and ordinary sense, paying respect to the context in which they appear in the ordinance ". 105It is also contrary to Bignold J's reasoning in ANL (see [45] - [50] above), and can be distinguished also from the reasoning in Collector of Customs v Agfa-Gevaert Limited (at [29] above). Breaking sentences down such that words become " building blocks " and are " divorced from their context " is a serious error of construction. 106Mr Seton's primary argument is clearly to be preferred. The court is persuaded by the correctness of the reasoning in Domachuk, and will follow it. The major inputs in the proposed process are no longer " primary products " when they come to be mixed with the other ingredients, and then handled, treated, processed and packaged. 107Mr Seton's alternative submission that, even if the inputs to the dog biscuit process are truly " primary products " , the way in which they are handled, treated, processed and packaged to form a dog biscuit is a " manufacturing " activity, and the proposed development for the use of the land could, therefore, be more accurately characterised as " industry " , rather than " rural industry ", is also cogent, and would determine the matter if I am found to be in error on the primary argument . 108As at least one proposed use of the land goes beyond its permitted use for the purpose of handling, treating, processing and packaging primary products, the proposed use cannot be classified as " rural industry " .

Costs 109Having found for the respondent Council on the preliminary question, which is determinative of the proceedings, pursuant to r 3.7 of the Land and Environment Court Rules 2007 and r 42.1 of the Uniform Civil Procedure Rules 2005, it is appropriate to order the applicants to pay the respondent's costs of these proceedings.

Orders 110The court answers the preliminary/separate question by finding that the proposed development is not one of " rural industry ", and that it is, therefore, prohibited in the Mixed Agriculture zone in the HLEP 1996. 111Unless any of the parties applies for different orders by Notice of Motion filed within 21 days of the date of this judgment, the orders will be: (1)the proceedings are dismissed; and (2)the applicants are to pay the respondent's costs. 112Exhibit C1 may be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 November 2011