Direct Factory Outlets Homebush v Strathfield Municipal Council

[2006] NSWLEC 318

Land and Environment Court

of New South Wales

CITATION:

Direct Factory Outlets Homebush v Strathfield Municipal Council [2006] NSWLEC 318
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES:

Applicant:
Direct Factory Outlets Homebush Pty Ltd

First Respondent:
Strathfield Muncipal Council

Second Respondent:
Westfield Management Ltd

FILE NUMBER(S):

10009 of 2006

CORAM:

Roseth SC

KEY ISSUES:

Development Application :- whether direct factory outlet;s are appropriate in and industrial area; planning principle: the role of non-statutory regional planning policies vs statutory local plans; meaning of "locality", impact on the viability of business centres.

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979

CASES CITED:

Kanne Pty Ltd v Botany Bay CC [2001} NSWLEC 163;
Boutros v Strathfield MC [2005] NSWLEC 605;
Randall Pty Ltd v Willoughby CC [2005] NSWCA205;
Cartier Holdings Pty Ltd v Newcasele CC [2001] 115 LGERA 407;
Terrace Tower Holdings Pty Ltd v Sutherland SC [2003] 129 LGERA 195;
Lake Macquarie CC v Hammersmith Management Pty Ltd [2003] 132 LGERA 225;
Kindimindi Investments Pty Ltd v Lane Cove Council [2006] NSWCA 23;
Lewiac Pty Ltd and ING Real Estate Joondalup BV v Gold Coast CC [2002] QPEC 80;
AMP Investments Ltd v Newcastle CC [1999] NSWLEC 164;
Gazcorp Pty Ltd v Westfield Managment Pty Ltd & Anor [2004] NSWCA 63;
Kentucky Fried Chicken v Gantidis [1979] 140 CLR 675;
Fabcot Pty Ltd v Hawkesbury CC [1997] 93 LGERA 373;
Westfield Management Ltd & Ors v DFO Homebush P/L & Ors [2005] NSWCA 403

DATES OF HEARING:

08/05/2006, 09/05/2006, 10/05/2006 and 02/06/2006

 
DATE OF JUDGMENT: 

06/09/2006

LEGAL REPRESENTATIVES:

Applicant:
Mr J Robson, SC with Mr R Lancaster, barrister
Solicitors: Gilbert + Tobin

First Respondent:
Mr T Hale SC
Solicitors: Houston Dearn O'Connor

Second Respondent:
Mr C Birch SC with Ms A Pearman, barrister
Solicitors: Speed and Stacey

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Roseth SC

9 June 2006

10009 of 2006 Direct Factory Outlets Homebush Pty Ltd v Strathfield Municipal Council (First Respondent)
Westfield Management Limited (Second Respondent)

JUDGMENT

1 Senior Commissioner: This is an appeal against the refusal by Strathfield Municipal Council of a development application to expand the existing Direct Factory Outlet Centre (the DFO centre), provide additional parking and adjustments to road works, on lot 100 DP 1042833, known as 3-5 Underwood Road, Homebush.

The site

2 The site is an existing building in which level 3 is already occupied by the existing DFO centre. The location is at the intersection of Homebush Bay Road and Underwood Road, opposite the Sydney Olympic Park. Apart from these roads, the site adjoins other industrial sites.

The proposal and its history

3 The existing DFO centre is on level 3 of the building and has a gross retail area of about 16,000m2. The applicant proposes to convert level 2 (currently used for warehousing) for DFOs. Following the expansion, the DFO centre would have a gross retail area of 30,600m2. The indicative layout suggests an additional 60 shops, which would almost double the existing number. (However, the applicant suggests a condition limiting the number of shops to 70.) Additional parking and associated road works are also proposed.

4 The application characterises the proposed DFOs as follows:

The expanded outlet centre will operate in the same way as the existing centre being a building the primary function of which is used for the discounted sale of surplus stock, out-of-season stock, factory seconds and the like, with ancillary or associated facilities such as food courts and automatic teller machines. Stock will mostly comprise of fashion and home wares sold from various separate retail outlets.

5 In order to satisfy the council (and the Court) that the DFOs will not operate as ordinary shops, the applicant proposes the following condition:

That the shops located within the DFO building on level 2 shall operate and comply at all times with the following criteria:
(a) Each shop on level 2 (excluding food and beverage outlets and ATM machines) shall operate and shall indicate (by highly visible signage) that it operates as a discount outlet and that over 75% of the stock offered for sale in the outlet is discounted from its ordinary retail price or recommended retail price by reason of being out-of-season stock, seconds, samples, discontinued and surplus stock.
(b) The lessor of the shops on level 2 shall ensure that each lease of a shop on level 2 (excluding food and beverage outlets and ATM machines) contains a provision to the effect that the lessee of the shop is to comply at all times with the criteria set out in paragraph (a) above.

(c) No shop(s) shall be used for the purposes of a supermarket, discount department store, bank (other than by an ATM), insurance institution, real estate agency, travel agency or place for the provision of personal services (such as a barber, hairdresser or beauty salon.

6 The applicant lodged the development application in December 2004. Following notification, the council received six submissions. In December 2005 the council considered a report by its planning staff recommending refusal. The council accepted the recommendation. The applicant lodged the appeal in January 2006.

Relevant planning controls and policies

7 The Strathfield Planning Scheme Ordinance (the SPSO) zones this site Industrial 4. Included in the list of prohibited uses in this zone are:

“Commercial premises” and shops (other than those ordinarily incidental or subsidiary to industry, or which are primarily intended to serve persons occupied or employed in a land use otherwise permitted in this zone, or which by virtue of their nature, the services provided, or the products produced, distributed or sold, are in the opinion of the council, appropriately located in this zone).

8 In addition, cl 61GB(3) applies to land within the Industrial 4 zone. The clause stipulates that council shall not grant consent to development for the purposes of a shop or commercial premises unless it is satisfied that:

a. The development will not detrimentally affect the viability of any business centre in the locality;
b. Where the development may otherwise have occurred within a business centre in the locality, suitable land for the development is not available in that business centre; and
c. The development is of a type, appropriate to an Industrial zone or to the general character of existing development within the Industrial zone.

9 The council adopted draft Local Environmental Plan 2003 (the draft LEP) in December 2003. The draft LEP prohibits shops in the industrial zone, though in cl 27 it makes exception for newsagents, chemists, take-away food bars, fruit shops, or shops that provide services primarily to employees or workers of the industrial area, provided those shops have a gross floor area of 100m2 or less. Since the proposal does not fit these exceptions, it appears that the draft LEP, if made in its present form, will prohibit the proposal and others like it. However, cl 74 is a savings clause that, if retained in the final version, would save applications lodged before the gazettal of the draft LEP.

10 Two non-statutory metropolitan policy documents of the State government were in evidence, though the applicant disputes their relevance. The first is Integrating Land Use and Transport – The right Place for Business and Service – Planning Policy (ILUT), which was issued by Transport NSW and the then Department of Urban Affairs and Planning in 2001.

11 On page 12 the Policy discusses factory outlets in the following terms:

These comprise sales of manufactured goods often described as ‘seconds’ or ‘surplus’, usually at discounted prices. These should be treated like normal retailing outlets unless they are genuinely ancillary to on-site manufacturing and used only occasionally. Other forms of factory outlets are simply shops seeking low rents and could be encouraged to agglomerate in existing declining centres where they can play a positive role in their revitalisation.

12 The second is the Metropolitan Strategy, which is a regional policy document issued by the State Government in December 2005. One of its seven strategies relates to centres and corridors. Under actions for this strategy, B4 “Concentrate activities near public transport” contains a discussion of the location of retailing, as follows:

The 2001 Integrated Land Use and Transport (ILUT) package, specifically the Right Place for Business and Services component supported centres and precincts linked to transport, aimed to eliminate proliferation of retail in industrial areas, and included locational criteria for emerging retail forms. The Metropolitan Strategy incorporates the principles of this Right Place for Business and Services policy. They will be reflected in the new Standard Local Environmental Plan template and will form the basis of relevant provisions in direction to be provided for local government planning.
The ILUT package remains Government policy, however Draft SEPP 66 will cease to operate as a draft statutory instrument upon the issuing of new section 117 Ministerial Directions to councils. These will provide advice and guidance on the zoning for all types of retail and commercial activity.

The experts

13 The applicant relied on the evidence of

Mr C Hill, a planning consultant,
Mr P Leyshon, a retail analyst and economist.

14 The council relied on the evidence of

Mr S Falato, a council planner,
Ms A McCabe, a planning consultant,
Mr I Booth, a retail analyst and planning consultant,

15 The intervener relied on the evidence of

Mr N Ingham, a planning consultant,
Mr S Rumbold, a retail analyst and economist.

The issues

16 The council submitted a Statement of Issues containing four core issues, with several sub-issues in each category. It was agreed that the traffic issue would either be resolved between the parties or dealt with by the Court after the issue of permissibility was determined. The core issues are the permissibility and appropriateness of the proposed retail development in the industrial zone. It is probably best to state the first four issues in the terms used in the SPSO, ie:

· Is the proposed shopping centre ordinarily incidental or subsidiary to industry; or is it primarily intended to serve persons occupied or employed in a land use otherwise permitted in this zone; or is it, by virtue of its nature, the services provided, or the products produced, distributed or sold, appropriately located in this zone.

· Will the development detrimentally affect the viability of any business centre in the locality?

· Is suitable land available for the development available in another business centre?

· Is the development of a type appropriate to an Industrial zone or to the general character of existing development within the Industrial zone?

· What weight should be given to the draft LEP?

17 The Court introduced an additional topic by asking what, in the opinion of each planning expert, was the planning purpose of restricting retailing in industrial areas. The experts gave short written responses.

18 An additional issue emerged during the hearing on the role of non-statutory regional planning policies vis-à-vis statutory local plans.

The role of non-statutory regional planning policies vis-à-vis statutory local plans

19 The Court asked the four planning experts to list, in order of importance, the plans and policies that were relevant to the application. Mr Falato’s ranking was:

1. SPSO.

2. Draft LEP.

3. Metropolitan Strategy.

Mr Falato also mentioned Development Control Plan 20 – Parramatta Road Corridor Area and the Strathfield Town Centre Strategic Master Plan; however, these documents were not in evidence.

20 Ms McCabe’s ranking was:

1. SPSO

2. Draft LEP.

Ms McCabe did not place the Metropolitan Strategy and ILUT in a strict hierarchical position. In her opinion, the role of these regional policy documents was to inform local plans like the SPSO, in particular where the local plans required value judgments or qualitative assessments to be made.

21 Mr Ingham’s ranking was:

1. SPSO

2. Metropolitan Strategy

3. ILUT

4. Draft LEP.
Mr Ingham also mentioned draft State Environmental Planning Policy 66; however, that policy was not in evidence.

22 Mr Hill’s ranking was:

1. SPSO;

2. Metropolitan Strategy;

3. Draft LEP.

23 It can be seen that all the experts considered the SPSO to be the paramount planning document. With the exception of Mr Falato, they all placed the draft LEP as the least important. The main difference between Ms McCabe and Mr Ingham, on the one hand, and Mr Falato and Mr Hill, on the other, was the role they attributed to regional planning policies like ILUT and the Metropolitan Strategy. Ms McCabe and Mr Ingham said that the Metropolitan Strategy should provide the background against which the value judgments and qualitative assessments required by the SPSO should be made. Mr Falato and Mr Hill placed the non-statutory Metropolitan Strategy in a subservient position to the SPSO. Mr Hill wrote (page 11 of his Statement in Reply to Ms McCabe):

The Metropolitan Strategy is, as with all policies, advisory only. They are not mandatory. Further, while they may have some input in assessing the merits of development proposal, they are not of determinative weight like the provisions of a gazetted environmental planning instrument.

24 Where several statutory planning instruments apply, s36 of the Environmental Planning and Assessment Act 1979 (the Act) states that the general presumption is that the higher-level instrument, such as a State environmental planning policy or a regional environmental plan, prevails over the lower-level instrument such as a local environmental plan. However, the Act makes no mention of, and to my knowledge, no principle exists on, the role of non-statutory regional planning policies, or their relationship to statutory local plans. In Terrace Tower Holdings v Sutherland Shire Council [2003] NSWCA 289 it was held that policies such as ILUT may be taken into account under s79C(1)(e) of the Act the public interest. The question arises: how does one take into account two entirely different types of planning document that do not exist within a simple hierarchy?

Planning principle: the role of non-statutory regional planning policies vis-à-vis statutory local plans?

25 The role of regional planning policies is to guide the development of a region, such as the Sydney metropolitan area. One of their functions is to inform and influence statutory plans for the local areas of a region. Regional planning policies provide a sense of purpose and direction to local plans; they are, as it were, the glue that binds local plans together. The fact that they are non-statutory is not an indication of their subservience to statutory plans. Planning policies usually do not lend themselves to statutory expression because they do not relate to specific parcels of land and do not contain numerical development standards. This fact, however, does not mean that they have no relevance to individual development applications, particularly those that have impacts extending beyond the local area.

26 Where the provisions of an environmental planning instrument are clear, unequivocal and do not require value judgment (for example numerical development standards or zonings where the character of a use is not in dispute), they take precedence over non-statutory regional planning policies. However, where those provisions can be applied only on the basis of value judgments (for example, where the character of a use is in dispute, a development standard is to be varied, or where imprecise terms like “appropriate”, significant”, “detrimentally affect” or “ecological sustainability” need to be given meaning in the context of a development application, non-statutory regional planning policies provide the background against which those value judgments should be made.

27 In applying the above principle to the subject application, the term in the SPSO that needs to be given more precise meaning is appropriate. In my opinion, ILUT and the Metropolitan Strategy may be taken into account in forming this value judgment.

Planning purpose of restricting retailing in industrial areas

28 The planning experts responded to the Court’s question “what is the purpose of restricting retailing in industrial areas?” in writing. For the sake of brevity, I paraphrase their response.

29 Mr Falato made the following points:

· Shops located in commercial areas are usually easily accessible to residential areas, while industrial areas are not.

· Some industrial uses may be incompatible with shops.

30 Ms Mc Cabe said that restricting shops in industrial areas:

· reduces amenity impacts;

· avoids land use and traffic conflicts;

· protects the viability of commercial/retail centres;

· allows more transport options;

· avoids fragmentation of retailing;

· ensures adequate land allocation; and

· allows land values to reflect zoning intentions.

31 Mr Ingham made the following points:

· Since the Cumberland County Planning Scheme the structure of the metropolitan area has been formed by public transport networks and identified retail centres. The principle of ensuring that significant retail centres are located where there is good public transport has been followed since 1951.

· Industrial areas are not normally in central locations at transport nodes. They are more dependent on car travel.

· Only small numbers of the public need to access industrial areas.

· The purpose is to make retail centres more attractive; to reduce the extent to which travel by cars is necessary, to enable people to carry out more than one activity in a single trip; and to ensure that the viability of existing centres is not adversely affected.

32 Mr Hill concentrated on two issues:

· Shops have traditionally not been permissible in industrial zones because planners have endeavoured to separate industrial zones from shopping centres because industrial activities may have an adverse impact on retailing.

· With the changing of manufacturing processes and because particular sites have good access, the government has encouraged councils to make their industrial zones more flexible and to provide for a broader range of appropriate non-industrial uses in the industrial zone.

33 It is of interest that Mr Hill, who supported the application, was the only expert who did not mention the transport implications of allowing retailing in industrial zones. His perspective was restricted to the adverse impacts an industrial use may have on retailing.

34 The cover page of ILUT (see paragraph 11) provides a compact answer to the question, ie:

This policy explains why important businesses and services should be in locations which

· offer a choice of transport;

· encourage people to travel shorter distances;

· help people to make fewer trips;

· enable people to carry out more than one activity in a single trip, eg shop and go to work.

Is the proposal appropriately located in the zone?

35 According to the list of prohibited uses in the SPSO, the proposed shopping centre is prohibited in the Industrial 4 zone, unless it is

· incidental or subsidiary to industry, or

· primarily intended to serve persons occupied or employed in a land use otherwise permitted in this zone, or

· by virtue of its nature, the services provided, or the products produced, distributed or sold, it is appropriately located in this zone.

36 It was common ground among the experts that the proposed shopping centre did not fit into the first two of the above categories. Therefore it is permissible only if it fits into the third category, ie if it is appropriately located in the zone by virtue of its nature or the products sold. (It was also agreed the shopping centre does not provide any services, nor does it produce or distribute products.)

37 The applicant submitted that I should consider the third criterion, whether the DFO centre is appropriately located in this zone, independently of the first two criteria. Thus I should assume that the DFO centre may be appropriate in the industrial zone, even though the outlets are not incidental or subsidiary to industry, or primarily intended to serve persons occupied or employed in a land use otherwise permitted in this zone. I accept the submission, and I turn my mind to the question of appropriateness independently of the first two criteria.

38 Clause 61GB(3)(c) provides that the council may give consent to the application only if it is satisfied that, among other things,

The development is of a type appropriate to an Industrial zone or to the general character of existing development within the Industrial zone.

39 Thus the SPSO requires three questions to be asked:

Does the nature of the products sold make the proposal’s location appropriate in the industrial zone?
Is the shopping centre of a type appropriate to an Industrial zone? and
Is the shopping centre of a type appropriate to the general character of existing development within the Industrial zone?

40 The experts agreed that, at least theoretically, the distinction between a DFO and a shop is that the DFO sells surplus goods and seconds, while a shop sells the latest fashion goods (though this may be difficult to apply to, for example, china or glassware). Ms McCabe’s report went to some detail to refute this assumption in the case of the existing Homebush DFO, by demonstrating that there was little difference between the products sold in the Homebush DFO and those sold in shops in mainstream retail centres like Chatswood, Bondi and Burwood.

41 Mr Hill’s justification for the DFO being appropriate on industrial land was as follows:

1. In 2000 the council considered the application for the existing DFO centre appropriate. The current application is merely to expand it.

2. Industrial areas are increasingly being characterised by a variety of uses including commercial and retail activities. Mr Hill referred to this phenomenon as flexibility.

3. The existing building (within which the expansion of the DFO is proposed) is typical of an industrial or warehouse building, not being as well finished as a traditional shopping centre; DFOs therefore have strong affinity with industrial areas.

4. DFOs rely on a business model that requires them to be on cheaper land in industrial areas.

5. DFOs are a specialist type of retailing that does not conflict with mainstream retailing.

6. If the outlets were not concentrated as proposed, they would otherwise exist in separate industrial buildings in the Homebush industrial zone.

42 I turn to the above reasons in sequence. The fact that the council gave consent to the existing DFO centre is the applicant’s strongest point. However, it is not strong enough. If this application comprised the addition of one or two outlets, one may come to the conclusion that, given the existence of the centre, a small expansion will have minor impact, even if the original decision had been an error of judgment. However, the application is to nearly double the size of the centre. The scale of the expansion is so great that it requires the application to be assessed in a similar way to that of a new centre.

43 As regards Mr Hill’s second point, it may be true that industrial areas are becoming more flexible because, in addition to manufacturing, they now include warehousing and distribution. However, this is not true of retailing. The evidence suggests that metropolitan and local planning policies have become more rather than less stringent in aiming to keep retailing out of industrial areas.

44 As regards Mr Hill’s third point, the fact that the existing DFO is not as plush as, say, Chatswood Chase, does not make it akin to an industrial or warehouse use. The similarities to Chatswood Chase are far greater than the differences. Walking through the existing DFO centre one feels oneself in a shopping centre, not in a warehouse.

45 Mr Hill’s fourth point flies in the face of the facts. Mr Hill was not aware of any other DFO centre located on industrial land. Other evidence in the case suggests that all DFO outlets in Australia are on commercially zoned land, with the exception of those at airports. Airport land is not subject to State planning laws.

46 Mr Hill’s fifth point, whether DFOs sell different goods from mainstream shopping centres was much debated during the hearing. Most of the evidence suggests that the similarities are greater than the differences. However, even if I accept that DFOs sell different goods, this is not a reason for locating them in industrial areas, unless the nature of those goods in some way requires an industrial location. No reason was advanced, either by Mr Hill or Mr Leyshon, why this year’s fashion must be sold from commercial land, while last year’s may be sold from an industrial location.

47 As regards Mr Hill’s sixth point, there was no evidence that the shops in the expanded DFO centre would, in the case of refusal, set up in other buildings in the Homebush industrial area. It seems to me unlikely that they would or could.

48 Among the justifications provided by the applicant, the one that was missing, was a reason why a DFO centre in general, and this one in particular, cannot be located on commercial land. Whether or not the nature of goods is different, in most other aspects the DFO centre is similar to a mainstream shopping centre. It looks like a shopping centre, it uses floor space intensively, it generates large amounts of parking, and it would benefit from location near good public transport. There is no intrinsic reason why it needs different location criteria from mainstream shopping centres.

49

In my opinion

· the nature of the products sold in the proposed DFO expansion do not render its location in the industrial zone appropriate; and

· the shopping centre is not of a type appropriate to an Industrial zone.

50 I am strengthened in the above conclusion by metropolitan planning policies, such ILUT and the Metropolitan Strategy. Both documents suggest that DFOs are inappropriate in industrial areas. Both documents emphasise the importance of locating retailing in identified centres, preferably those with good public transport links. To give consent to this application would be inconsistent with these regional planning policies.

Impact on the viability of other any business centres

51 Clause 61GB(3)(a) states that the council shall not grant consent to development for the purposes of a shop or commercial premises unless it is satisfied that:

the development will not detrimentally affect the viability of any business centre in the locality;
The SPSO does not define the word locality . This suggests that the makers of the LEP intended locality to change its meaning depending on the context in which it is used. (For example, when locality refers to visual impact, it means the area from which a proposal could be seen.) I note that in Boutros v Strathfield Municipal Council [2005] NSWLEC 605, Commissioner Bly considered locality to be smaller than the local government area; however that was in relation to a reception centre, which is not comparable to a DFO outlet of 14,000m2.

52 Mr Leyshon, Mr Rumbold and Mr Booth produced a joint report and gave concurrent evidence on the proposal’s impact on the viability of business centres in the locality. Mr Leyshon took the term locality to mean Homebush and suburbs contiguous with it, no further than 4km by road. Mr Rumbold and Mr Booth defined locality as the area from which the DFO drew its customers. I am inclined to accept the wider definition. To do otherwise would be to assume that the makers of the SPSO were interested in protecting the viability of business centres only if these were located within 4km of Homebush. This makes no sense for a DFO centre that draws its custom metropolitan-wide. While a local council may regulate land use only within its area, this does not prevent it taking into consideration the impact of what happens within its boundaries on the wider metropolis. Indeed, a council would be accused of xenophobia, if it disregarded effects external to its boundaries.

53 There is another reason why I am not inclined to accept Mr Leyshon’s narrow definition of locality. Based on a customer survey annexed to his report, he defined the existing DFO centre’s trade area very widely. (As mentioned before, two-thirds of the customers came from beyond a 10km radius.) This allowed him to distribute the impact also widely. By defining locality as being within a 4km radius, he took into consideration only a small portion of the impact on other business centres.

54 The experts’ disagreement on the meaning of “business centres” was of a more limited nature and, in my opinion, little turns on it. All three agreed that a centre zoned for business and commercial purposes was a business centre. Mr Leyshon and Mr Booth did not consider a planned centre, such as Westfield Burwood, to be a business centre. Mr Rumbold thought that Westfield Burwood was of sufficient scale and breadth of functions to be classed as a business centre in its own right. Everyone accepted that Birkenhead Point was a business centre, though Mr Leyshon did not accept it being in the locality.

55 While the experts disagreed on how impact on viability was to be measured, they agreed on the fundamental concept that, if competition led to the loss of a core retail or commercial function within a centre, such that its role in the centres hierarchy was threatened, that would constitute a detrimental effect on viability. Mr Booth pointed out that if there are already some vacancies in a centre, even a small increase in the number of vacancies could affect viability.

56 Mr Leyshon and Mr Rumbold agreed that it would not affect Westfield Burwood or other strip shopping centres nearby. Mr Booth disagreed. He thought that in many cases the DFO expansion could be the last straw for some retailers in particular centres.

57 Mr Rumbold’s main concern was the impact on the Birkenhead Point Centre and Brand Smart at Parramatta. He thought the DFO directly competes with these two centres for both sales and tenants. The competition is heightened as the market for outlets becomes more saturated. Mr Rumbold thought that the DFO expansion could lead to a loss of outlet tenants in these two centres.

58 The experts disagreed on the percentage loss in turnover that would constitute detrimental impact on viability. Mr Booth said that a 5% decrease could sometimes be the straw that broke the camel’s back. The other experts did not agree on a percentage figure. Given the persuasive nature of Mr Booth's evidence, I am inclined to conclude that an impact under 5% would not be detrimental to viability, an impact over 10% would usually be detrimental, and an impact between 5 and 10% would send warning signals.

59 Mr Leyshon’s assessment of the impact on Birkenhead Point was 7%. Mr Leyshon agreed that this had been a struggling centre before being invigorated by becoming partially a DFO centre. Since only some of the shops are DFOs, it is reasonable to assume that the impact on DFOs would be more than 7%. This suggests that the DFO expansion at Homebush is likely to have a detrimental impact on the viability of Birkenhead Point.

60 It is difficult to come to precise conclusions on something as unpredictable as shopping behaviour. Two things, however, appear to be beyond doubt:

· the impact on Birkenhead Point should be taken into account; and

· when taken as a whole, the evidence suggests that the DFO expansion is likely to affect detrimentally the viability of Birkenhead Point.

61 I am strengthened in the above conclusion by two matters. The first is Table 24 in the customer survey attached to Mr Leyson’s report, which shows that 42% of the Homebush DFO centre’s customers had shopped at Birkenhead Point. The second is the common-sense notion that if one creates sixty to seventy new shops in an area, which, in the opinion of all the experts, is well served by retailing, someone somewhere will feel the effect.

Suitable land available in other business centre

62 Mr Booth and Mr Leyshon did not know of any available land in other centres for the DFO expansion. In his evidence in chief Mr Leyshon wrote:

While I have not examined the land ownership and zoning provisions in every centre in the locality, I am unable to identify an appropriately zoned parcel of land in an existing centre, which could accommodate development of 14,000 to 15,000m2 plus associated car parking.

63 Mr Rumbold thought that it would be difficult to find land (or an existing building) for the whole of the expansion in one spot, though it is likely that two parcels would be available for parts of the proposal, say, 50 in one location and 30 in another.

64 In the event there was no hard evidence either way on this question; which is not surprising. An applicant, whose interest it is to prove that there is no land available, is not likely to search very hard. Councils are usually not competent to answer such questions. I do not think that one can take this issue further than Mr Rumbold’s evidence without actually doing a search for available land, which is beyond the scope of these proceedings.

Weight to be given to the draft LEP

65 While there was no complete agreement, a near-consensus emerged from the planning experts that the draft LEP was neither certain or imminent. In my opinion, the relevance of the draft LEP is to demonstrate that the council is moving towards a harder test to apply to proposals for retailing in industrial areas. Apart from the above observation, I have not relied on the draft LEP.

Conclusion

66 The applicant’s main argument in support of the application was that the DFO expansion

· was a different kind of retailing from mainstream retailing;

· fitted into the industrial area without adverse impact; and

· had little effect on the viability of other shopping centres.

67 The council’s position was that the DFO expansion was inappropriate in the industrial area because

· the nature of goods sold was not markedly different from those sold in mainstream shopping centres;

· it was inconsistent with metropolitan planning policies aimed at concentrating retail activities in business centres with good public transport access; and

· it would have detrimental effect on the viability of other retail centres.

68 My findings are in the council’s favour on all points. It seems to me, however, that the nature of goods sold in a DFO centre is a secondary issue. Whether the goods are this year’s or last year’s fashion makes no difference to the fact that the main characteristics of a DFO centre are similar to those of a mainstream shopping centre. Like other shops that do not cater for the industrial area, DFO outlets should be located in commercial zones. For the above reasons the appeal is dismissed.

Orders

1. The appeal is dismissed.

2. Development application to expand the existing Direct Factory Outlet Centre (the DFO centre), provide additional parking and adjustments to road works, on lot 100 DP 1042833, known as 3-5 Underwood Road, Homebush is determined by refusal.

3. The exhibits are returned.

_______________________
Dr John Roseth
Senior Commissioner

21/07/2006 - Incorrect opinion attributed to an expert - Paragraph(s) 58