E S Turnbull Pty Ltd v The Council of the City of Wollongong

[1988] NSWLEC 17

Land and Environment Court

of New South Wales

CITATION:

E S Turnbull Pty Ltd v The Council of the City of Wollongong [1988] NSWLEC 17

PARTIES:

APPLICANT
E S Turnbull Pty Ltd

RESPONDENT
The Council of the City of Wollongong

FILE NUMBER(S):

10091 of 1988

CORAM:

Holland J

KEY ISSUES:

:-

LEGISLATION CITED:

Environmental Planning and Assessment Act, 1979
Interpretation Act 1987

CASES CITED:

DATES OF HEARING:

DATE OF JUDGMENT:

09/27/1988

LEGAL REPRESENTATIVES:

JUDGMENT:

HIS HONOUR: These are Class l proceedings in which the applicant is appealing under s.97 of the Environmental Planning and Assessment Act, 1979, against the respondent Council's refusal of its application for development consent to the use of part of a building for the retailing of general merchandise.

The ground of refusal was that the proposed use was prohibited under the provisions of the Wollongong Local Environmental Plan No. 38.

The applicant contends that the proposed use was not prohibited and that the Council should have approved its application.

At the time of the hearing a draft L.E.P. No. 140, amending in a material respect L.E.P. No. 38, had reached the stage that the Minister had made the plan under s.70 of the Environmental Planning and Assessment Act, 1979, the Council had given notice of it pursuant to s.70(7) and it was expected to be gazetted any day.

Counsel for both parties invited the Court to proceed with the appeal and decide the question whether the proposed use was prohibited and, if not, whether it should be approved, as if L.E.P. No. 140 was already in force; but asked the Court to withhold the delivery of judgment and the making of orders until L.E.P. No. 140 was published in the Gazette and had taken effect pursuant to s.34(5) of the Act.

The building in question is one of an assortment of five buildings erected on a large area of land located on the northern side of Gipps Street between Flinders Street/Princes Highway and the Illawarra Railway line at North Wollongong.

The land was formerly used as a timber yard and the buildings were used for the storage and milling of timber and for the sale of timber and associated homeware and handyman products.

Some of the buildings are wholly or partly vacant and various parts of some of them are being used for various commercial, storage and retail purposes.

The buildings are numbered. The company on whose behalf the present application is made, Davo's Sales Pty. Limited, has leases from the owner of parts of two of the buildings, Nos. 1 and 5. In building No. 1, the part leased is known as "Warehouse No. 2", and in building No. 3 the part leased is known as "Warehouse No. 9". The two buildings are quite separate and a substantial distance apart.

On 30 July 1985 Davo's Sales Pty. Limited sought development approval (D85/459) to use Warehouse No. 2 for the purpose described as:-

"Wholesale/Retail General Merchandise e.g. Manchester Toys Kitchenware, Giftware, Toiletries, Tools, Electricals, Garden Accessories, Motor Vehicle Accessories."

An approval was given by the Council on 16 August 1985 but limited to the use of the building for the purpose of the "Wholesale of General Merchandise". Condition 6 attached to the approval was that:-

"The building shall at all times be so designed and laid out as to give the impression of a warehouse/showroom and not a shop".

On 18 September 1985 the Council consented to the erection of two signs on the building but required that the proposed wording, "Davo's Discount Warehouse", be changed to "Davo's Showroom Warehouse".

On 14 January 1988 E. S. Turnbull Pty. Limited, the present applicant, as town planning consultants for Davo's Sales Pty. Ltd., applied for development approval (D88/35) described as "Change of Use - Warehouse No. 9 Timber storage to warehousing of general Merchandise". The size of the building was given as: 13.5 x 16 = 215m2. On 10 February 1988 the Council approved the use of Warehouse No. 9 for the "Warehousing of General Merchandise" subject to conditions of which one, No. 5, provided:-

"Consent is given only for the warehousing of general merchandise. No retailing shall be permitted from the warehouse."

On 5 February 1988 the applicant made this present application for development approval (D88/109) describing the development as follows:-

"Light Industrial Retail Outlet of 167m2. Davo's Sales Pty. Ltd. being the lessees of Warehouses 2 and 9 of 440m2 (approx.) for warehousing general merchandise intend to retail the warehoused goods from the part of Warehouse 2 shown in the accompanying plan."

The accompanying plan showed four areas marked out as : Showroom 150m2; Sales Office 17m2; Warehouse 46m2; Staff Amenities 12m2. Those areas total 225m2.

The application was accompanied by a letter dated 11 February 1988 which explained that : l. The proposal was to use the Showroom and Sales Office space (150 + 17 = 167m2) as a retail outlet in conjunction with a pair of warehouses, being the remainder of Warehouse No. 2 and all of Warehouse No. 9, approval having already been given for warehousing in those two warehouses (225m2 + 216m2 = 44lm2), the "shop" area of 167m2 being 38% of the total area of 441m2 provided by the two warehouses. 2. As two warehouses were involved and thus the application was a departure from the defined development standard which literally referred to only one warehouse (see later the definition of "Light Industrial Retail Outlet") formal objection was made under the State Environmental Planning Policy No. 1 to adherence to that standard on the ground that, as the intention of the standard would be maintained, it was unnecessary and unreasonable for the standard to be imposed according to its literal interpretation.

Under L.E.P. 38 the land is zoned "No. 3(b) (Peripheral Business Zone)", the stated objective of that zone being-

"to allow for land intensive business, excluding convenience establishments, to locate close to, or peripherally to, general business."

In this zone, no use is permitted without development consent but use for any purpose not prohibited is permissible with development consent. The list of prohibited purposes includes "shops other than those specified in Schedule 2 or 6". It is common ground that the purpose for which the applicant seeks to use part of Warehouse No. 2 is not a shop as specified in those Schedules. The question whether the proposed use is prohibited turns on other provisions.

By cl.8(l) of the L.E.P. 38, the definitions in cl.4 of the Environmental Planning and Assessment Model Provisions 1980 are (with some immaterial exceptions) adopted; but, by cl.8(2), a reference in the definition therein of "shop" to cl.4 thereof is to be construed as including a reference to cl.7(l) of the L.E.P.

First, the definition of "shop" in the Model Provisions:-

"'Shop' means a building or place used for the purposes of selling, exposing or offering for sale by retail, goods merchandise or materials, but does not include a building or place elsewhere specifically defined in this clause, a building or place used for a purpose elsewhere specifically defined in this clause".

Then, because of the words "in this clause" in the definition of shop, cl.7(l) of the L.E.P. comes into consideration. That is a definition clause in which, after a direction that the meanings given are to have effect except in so far as the context or subject matter otherwise indicates or requires, the following relevant definition appears:-

"'light industrial retail outlet' means a shop -

(a) which is used in conjunction with a light industry or warehouse;

(b) which is situated on the land on which the light industry or warehouse is located;

(c) which has a retail area the gross floor area of which does not exceed -

(i) 40 per cent of the gross floor area of the building in which the shop is situated; or

(ii) 250 square metres,

whichever is the lesser; and

(d) in which are sold only such goods as have been assembled, manufactured or warehoused on the land on which the shop is situated."

By the amending instrument, Wollongong L.E.P. No. 140, to which I have referred, pars. (b) and (c) of the above definition are amended to read:-

"(b) which is situated in the building in which the light industry or warehouse is located; and

(c) which has a retail area the gross floor area of which does not exceed -

(i) 40 per cent of the gross floor area occupied by the shop and the light industry or warehouse in conjunction with which the shop is used; or

(ii) 250 square metres,

whichever is the lesser;"

(I have added the underlining to highlight the changes made by L.E.P. 140).

These provisions also make relevant, for present purposes, the definition of "warehouse" in the Model Provisions:-

"'warehouse' means a building or place used for the storage of goods, merchandise or materials pending their sale and distribution to persons engaged in the retail trade."

The question at issue is whether the proposed use of 167m2 of Warehouse No. 2 satisfies the requirements for a "light industrial retail outlet" laid down by the amended definition. If it does not, it is prohibited development and consent to it must be refused. If it does, then consent may be given to it.

The first matter for consideration is what is the proposed use. According to the application form it was "light industrial retail outlet" which was elaborated by the statement that it was intended to retail the warehoused goods, they being described as "general merchandise", to be warehoused in the buildings.

In refusing the application the Council had regard to a number of inspections of Warehouse No. 2 in which Davo's Sales had been carrying out activities since it obtained on 16 August 1985 development consent to use the premises for the wholesaling of general merchandise.

Mr. Doughton, a Town Planner who is the Assistant City Planner to the Council, gave the undermentioned description in a statement of evidence which he affirmed in the witness box:-

"However, it appears to me that no warehousing activities are being carried out. Rather, the existing business has all the atmosphere and appearances of a retail shop. The main body of the so-called warehouse, an area of approximately 11.8 m x 14 m (167 square metres) is fitted out with display shelving, stands and cabinets and contains a service counter and small office in one corner. The room has bright lighting, a suspended ceiling and ceiling fans and a carpeted floor. The shelving, stands and cabinets are stocked with a wide range of merchandise. Included are, children's toys of all types and varieties, giftware, kitchenware, cosmetics and sporting goods. All items are stocked in quantity and all individually price-tagged. Any member of the public may enter the shop and purchase any item with payment being made by cash or credit card.

A small room measuring 7.6 m x 6m marked warehouse on the plan, submitted with the development application, is accessed off the main display/sales area. This room has all the appearances of providing replacement stock for the sales area rather than being a warehouse from which stock is distributed to other retail outlets. Further, the only access to this "warehouse" area appears to be through the retail sales area. It is therefore difficult to imagine, how this "warehouse" area can function as a warehouse given the layout of display shelving, tables and cabinets and the volume of stock displayed for sale in the retail sales area.

Overall, the dominant use of the premises is not a warehouse with an ancillary retail sales area but rather a retail shop selling convenience and gift items and keeping close to normal retail hours."

In giving evidence Mr. Doughton said that from his observations there was no evidence of a genuine warehousing operation in Warehouse No. 2. In the area marked on the plan as Warehouse 46m2 he could see no evidence of storage for wholesale to retailers in accordance with the definition of "warehouse" in the Model Provisions - rather the evidence pointed to storage for replenishment of the "shop" area.

He also inspected and there were photographs produced of Warehouse No. 9. In its present condition it is totally unfit for warehousing. There are holes in the walls and ceiling, defects in the roof flashing, no separation from Warehouse No. 10 in the same building, rough gravel floor, no doors, just a huge opening that would need to be enclosed.

The Council appears to have concluded that the current use of the premises represented the proposed use and as the current use did not demonstrate a genuine warehousing activity but only a form of shop retailing with storage for that purpose, the proposed use would not conform with the definition of "Light Industrial Retail Outlet" and so would be prohibited development. Accordingly consent was refused.

Counsel for the applicant protested that it was a fallacious approach for the Council, and would be for the Court on a Class 1 Application, concerning a development application to pay regard in determining the application to the current use being made of premises when approval was being sought for a proposed use which, if given, would operate prospectively and attach to the land for the benefit of any future owner or occupier.

It was contended that the proper approach to the case was that development approval had already been granted for the use of both warehouses for the purposes of the Warehousing of General Merchandise and the only question now was whether approval could and should be given for the use of a specified part of one of them as a retail outlet in conjunction with the warehousing activities already approved.

On that basis the applicant set out primarily to establish the use of the premises proposed by Davo's Sales Pty. Limited and only secondarily to answer the Council's criticism of its current operations and the allegation that it was not genuinely engaged in warehousing.

Mr. Steven Abraham Fester gave evidence for the applicant. He has been a director of Davo's Sales Pty. Limited since its inception in 1979. He gave the account of that company's operations that follows.

The company buys job lots and makes bulk purchases of general merchandise in order to be able to sell at cheap prices. Since last year it has been importing supplies directly from overseas in container lots.

The product range includes office equipment, stationery, outdoor recreational equipment, glassware, car accessories, home decorating equipment, wall hangings, building supplies (including tools), luggage, baskets, caneware and soft furnishings and, as development application D85/459 indicated, manchester, toys, kitchenware, giftware, toiletries, electricals and garden accessories.

The company aims for a quick turnover of stock and uses a variety of outlets for that purpose. It operates a number of trucks which carry merchandise to various markets, including Prospect, Leppington, Dapto, Caringbah, Fairfield, Penrith, Menangle, Mount Druitt and Wollongong Showground. The trucks are specially constructed so that one side may be opened up to display stocks inside the vehicle and make a counter upon which goods may be displayed for sale, and the selling at these markets takes place from the trucks themselves. Another outlet is to sell stock to stall holders and other operators whose business it is to sell goods at these and other markets. Another operation is by means of a travelling salesman who drives a truck laden with merchandise to various places including the south coast and other country places where he visits regular customers and looks for new customers and outlets, all of which he supplies directly with goods which he is carrying on the truck. A further outlet is by way of sales o

f bulk quantities of various types of merchandise to some retailers for onsale to their customers. Sales of bulk quantities are also made to a number of charities, institutions, clubs and social groups which, presumably, are disposed of by them at fetes or by way of sale to members or as prizes for competitions and gifts at Christmas time. Then there are sales of bulk quantities to a few schools prior to the festive season at Christmas. In addition to the foregoing, goods are disposed of by way of retail sale to casual customers who call at the showroom and sales office operated by the company in No. 2 warehouse at North Wollongong. At the premises lastmentioned, in addition to the ordinary retail sales to casual customers, bulk sales of goods stored at those premises are made to representatives of charities, institutions, clubs, social groups and any retailers who call at the premises to obtain their supplies.

Originally the company occupied warehouse premises at St. Peters from which it supplied clubs, social groups and charities and used the premises for warehouse and storage facilities, loading and unloading their trucks for their market and country-run business. The business was expanding and in order to provide storage the company acquired premises at Alexandria where it established its head office and warehouse consisting of about 20,000 sq. ft. including a retail outlet area of about 2,000 sq. ft. in the same building.

Another outlet consists of a retail shop at Merrylands on the Great Western Highway between Parramatta and Penrith with a floor space of l,800 sq. ft. including 300 sq. ft. used for storage.

Turning to the company's operations at Wollongong and in the Illawarra district, sales are made from a truck at the Wollongong Showground market and some bulk sales are made to stall holders who themselves operate at that market. The traveller, who operates in and around the district carrying stock and selling it from the truck, draws some of his supplies from goods stored at Wollongong and some of the Wollongong stock is used to service the truck operation at the Menangle market which takes place at the Menangle trotting course. I have already mentioned sales from the Wollongong stocks of individual pieces to casual customers and in quantities to social clubs and others.

The applicants tendered a batch of invoices made out by the traveller who operates from his truck in the Illawarra district, a batch of invoices of goods supplied from warehouse No. 2 and a number of receipt books for goods sold from that warehouse. These documents were relied upon to support the applicant's claims that its business involves supplying stock in quantities and bulk lots to clubs, social groups, charities and other institutions in the Illawarra area, as well as to buyers who were retailers. None of these documents on their face demonstrated the terms of the transactions so as to disclose whether the prices at which the goods were sold were other than the retail price at which goods were offered for sale in the "shop" section of warehouse No. 2. They bore no evidence of differentiation for bulk sales between a retail price and a wholesale or "trade" price. The invoices tendered covered some two to three years and although substantial in number, included very few that could be identified as sales

to a retailer. There was one in October 1985 made out to a service station, one in June 1986 made out to a newsagency at Yanco and another in October 1986 made out to a newsagency at Leeton. The rest of the invoices named mainly ex-servicemen's, social and sporting clubs plus a few trade unions and institutions.

The receipt books covered the three years from September 1985 to September 1988. They showed very little in the way of sales to buyers who might be assumed to be retailers. In more than 300 receipts only 8 names of apparent retailers appeared and only 12 receipts were issued in these names. They included the Yanco newsagency, two chemists, two florists, a restaurant and two customers called Illawarra Auctions and Stewart Auto. In all but four cases, where the amounts exceeded $200, the amounts charged were small and in no case was there evidence of a wholesale, trade or discount price being charged for the goods sold.

Mr. Fester was invited to explain the company's system of pricing its merchandise. It appears from his evidence that the company operates what fundamentally may be termed "free market selling". The object is to move the goods as quickly as possible. Whilst staff are provided with access to a list of prices, they are given a discretion to offer discounts to bulk buyers or special or regular customers but only if necessary to make sales or shift large quantities of merchandise. It is not the company's policy to advertise its willingness to give discounts or special prices below marked or regular prices. The policy is to get the highest price that the market will pay and if a buyer does not ask for a discount he won't be offered one. Goods offered for sale in the "shop" area of No. 2 warehouse are all price tagged and there is no notice offering reduced prices for bulk purchases. Even if a club representative orders a large quantity of goods at the Wollongong showroom, he will not be invoiced at anything less th

an the marked prices unless he successfully bargains for a cheaper price. The staff at the Wollongong showroom have access to a computer which lists prices. The road traveller also carries a list of prices. But, until very recently, only one price was given to sale staff for their guidance, there being no designation of wholesale or trade prices as distinct from retail prices. Recently sales staff have been provided with a list of "trade" prices to guide them as to the lowest price at which they might offer to sell in bulk quantities if in their discretion they decide to lower the regular price for a particular sale or customer.

The company's business in the Illawarra district and south of Sydney is increasing and is in need of additional and more convenient storage space. With more storage at Wollongong, the truck traveller can draw and replenish his stocks from there without also having to stock up from the Alexandria store. As well, the truck selling operation at Menangle could be serviced with stock from Wollongong, about twenty minutes away, as compared with Sydney, about l-3/4 hours away. Moreover, the cost of providing storage space is cheaper in Wollongong than in Sydney.

If development approval were granted, the company would carry out whatever works were needed to make warehouse No. 9 suitable and secure for the storage of its merchandise. At present those works have been delayed because the company does not wish to waste the expense involved in carrying them out only to find that it cannot get approval to operate their business from that site.

In describing the viability of the present operations at Wollongong, Mr. Fester said that he believed that the warehousing and retailing activities at that site went hand in hand in that for the first nine months of the year it was bulk sales that kept the business going as the retail business was minimal and in the last three months of the year, because of the Christmas trade in which a lot of toys were sold, the business was boosted by a surge in retail sales as well as an improvement in bulk sales.

When asked to state the company's plans for the future, Mr. Fester said that the company was satisfied with its present arrangements in Warehouse No. 2 with respect to its retail outlet and would propose to continue that operation as at present. When asked by the applicant's counsel to state the uses proposed to be made of the two buildings in the future, Mr. Fester said it would be proposed to use the remainder of Warehouse No. 2 and all of the leased area of Warehouse No. 9 for the warehousing of the company's merchandise to service all of the outlets which he had described and as well to supply the stock to be offered for sale in the showroom and sales section of warehouse No. 2 for the approval of which this present application is being pursued.

The case was argued on the basis of the new definition of "light industrial retail outlet" in L.E.P. No. 140.

The Council contended that the applicant's proposed use would fail to satisfy the requirements of the definition in three respects:-

1. The proposed "shop" would not be "used in conjunction with a warehouse" because, on the evidence, it should not be found that the applicant would be conducting a "warehouse" within the meaning of that word as defined in the model provisions: par. (a) of the definition.

2. The proposed "shop" would not be situated "in the building in which the warehouse is located": Par. (b).

3. The floor area of the shop exceeds 40 per cent of the gross floor area of "the warehouse (being Warehouse No. 2 or Building No. 1, as the case may be) in conjunction with which the shop is used": par. (c).

In response to these contentions the applicant argued as follows:-

1. By reason of the stated intention to store the company's merchandise for the purpose of sales to such buyers as market operators at the Wollongong and Menangle markets, service stations, newsagents, chemists and an auction house, all of which may be assumed to be retailers and not consumers, it should be accepted by the Court that the proposal is to use the premises as a "warehouse" as defined and also as a retail outlet for the warehoused goods.

It was submitted that for the purposes of a development application it was not appropriate to weigh up the degrees of use or consider whether one predominated over the other. The definition, as to having a "shop" in conjunction with a "warehouse", was satisfied if the proposal was to use the premises for the two purposes of (a) storage pending sale and distribution to persons engaged in the retail trade; and (b) retail sales of the warehoused goods to customers attending the designated "shop" area.

It was submitted that the question is not whether, if approval of such use was given, current or future practice by the operator was such that it could not be found that the premises had been or were being used for warehousing, whether because of predominating use or otherwise. If the approval once given was afterwards flouted that would be a case for Class IV proceedings. Therefore, the Court should not judge the present application on current usage; but, even on current usage, the use proposed satisfies par. (a) of the definition.

2. The words "in the building" do not have to be given a singular construction. By section 8(b) of the Interpretation Act, 1987, words in the singular include the plural and "building" in the singular is used in numerous places in the definitions in s.7(1) of L.E.P. 38 where both singular and plural would be intended. There is no contextual reason here for not reading the words with plurality so as to mean, for example, "in the building or buildings or one of the buildings in which the warehouse or warehouses are located". It was pointed out that the amendment of par. (c)(i) of the definition omitted the reference to "the building in which the shop is situated" and it was submitted that this, with the new wording, supported the view that the shop and warehouse might be in different buildings. Also it was suggested that par. (d), which was not amended, is consistent with separate buildings as it referred only to the shop and warehouse being on the same land.

3. In par (c)(i) as amended, the word "warehouse" should be understood as "warehouse or warehouses" as there was no reason to maintain singularity and, as mentioned above, the amendment made of this provision favours not restricting the shop and warehouse to the same building. On this basis, the combined floor area of Warehouses Nos. 2 and 9 give the permitted space ratio.

It was further argued for the applicant that the fact that par. (d) was not amended and so continued to require only that the shop and warehouse be on the same land, and the fact that the reference to "the building" was omitted in the amendment to par. (c)(i), indicated that there was a purpose intended by the amendments different from the meaning given to the amended definition by the Council's contentions, namely, to require that any retail outlet or shop be in a building and be not outdoors or run from a stall or the like.

A further point urged by the applicant was that the words "in the retail trade" in the definition of "warehouse" may be given a wider connotation than the words "sale by retail" in the definition of "shop". It was submitted that the clubs and sporting bodies and the like that bought bulk quantities were not to be regarded as end users but more as retailers as they disposed of the goods by various means to their members or outsiders including by sale to raise funds for their own purposes, and so might fairly be regarded, in the broad view, as engaged in the retail trade.

With due respect to the full and careful arguments of counsel for the applicant, I am not persuaded that the new definition of "light industrial retail outlet" may properly be interpreted as having the meaning he sought to extract from it.

The object of the definition is to define a form of retail outlet for the purposes of town planning and development control. That is the context in which the provisions of the definition are to be read. It provides no reason for giving the words and expressions used other than their ordinary and natural meaning. Whilst broken into paragraphs, the definition is to be read as a whole. So read, it seems to me to show a clear intention that the carrying on of a shop business would not qualify as a light industrial retail outlet unless it was used in conjunction with (for present purposes) a warehouse, was in the same building as that warehouse, occupied no more than 40 per cent of the floor space of that warehouse and sold only goods stored in that warehouse.

Critical to the requirements of the definition is the existence of a warehouse. Not only is there to be no shop without a warehouse, but the shop must only be conducted in conjunction with it, must be in the same building, must be subordinate to it as to floor space occupied and must sell only the goods warehoused in it.

In my opinion, the definition is structured to have a progressive and cumulative effect in defining the category intended. The words "in conjunction with a warehouse" in par. (a) presuppose that a warehouse will be in operation on the land, exclude the possibility of the shop being operated independently and require that it be conducted as ancillary to and in association ("conjunction" is a stronger word) with it. Upon that condition is added by par. (b) the condition that the shop be "in the building" in which the presupposed warehouse is located. Those two conditions having been laid down, par. (c)(i) adds the next condition as to the maximum floor space permitted by reference to the floor area "occupied by the shop and... the warehouse in conjunction with which the shop is used". Having already required that the two be in the same building, there was no need to repeat that requirement in par. (c)(i) which, to my mind, is a natural and sufficient explanation of the change of wording effected by the amendmen

t to that sub-par., namely, the omission of the words, "the building in which the shop is situated" and the substitution of a reference to the area occupied by the shop and warehouse. Moreover, the repetition in the amended sub-par. of the earlier reference to the shop being used in conjunction with the warehouse not only carries forward by direct inference the concept of the two being in the same building, but also emphasises the relationship that is to exist between the shop and warehouse operations.

As to the submission based on the failure to amend par. (d), namely, that leaving untouched the reference to the shop and warehouse being on the same land suggests that the intention of the amendments was only to require the shop to be in a building and not in the open, the submission does not seem to me to answer the objection made by counsel for the respondent that, if such was the intention, the amendment of par. (b) would have read simply, "(b) which is situated in a building on the land on which the.... warehouse is located".

The application of the Interpretation Act to give plurality to singular words and expressions presentsdifficulties here. On my interpretation, the shop and warehouse must share the same building. On one of the applicant's arguments, whilst, under par. (b), the shop needs to be in a building, the warehouse may consist of a number of buildings of which only one need be shared by the shop. In this concept the warehousing operations could be conducted in any number of separate buildings to make up the aggregate floor space to provide the required shop space ratio and it would not matter in which building or on how much floor space of that building the shop was located. If plurality was applied throughout there could be any number of shops also, so long as the ratio was maintained.

In my opinion, the concept of a "light industrial retail outlet" to be derived from the definition read as a whole involves the conduct of a warehouse in a building part of which is used as a shop to retail the warehoused goods, so that the shop section presents as subordinate in space and ancillary in operation to the warehouse within the one building. I think that the criteria laid down by the definition suggest a desire both to permit retailing only as an adjunct to warehousing and to avoid allowing the retail area to present the appearance of an ordinary shop instead of limited space in a warehouse where the warehoused goods might be purchased at a retail level as to quantity and price. To no further extent was a "shop" to be allowed. This reading of the definition focuses on a single building and would exclude a number of separate buildings or parts thereof used for warehousing to be aggregated in the manner proposed by the applicant. The concept of a single building would not necessarily preclude a comp

lex structure or a series of interconnected buildings constituting a warehouse with a retail section in part of the structure or one of the interconnected buildings provided the relationship between the retail and warehousing operations, the ratios, and the appearance of the shops being an adjunct to the warehouse was maintained.

In my opinion, the use of the specified section of Warehouse No. 2 proposed to be used for the retailing of goods to be warehoused in the parts of Warehouses Nos. 2 and 9 leased by Davo's Sales Pty. Limited fails to qualify as a "light industrial retail outlet" as defined in L.E.P. No. 38 as amended by L.E.P. No. 140 in that the only building that may be considered for the purposes of the definition is either Building No. 1 or that part of that building which is used and occupied by the applicant as Warehouse No. 2. In either case, on the evidence, the gross floor area of the retail area exceeds 40 per cent of the gross floor area "occupied by the shop and the warehouse in conjunction with which the shop is used".

I would add that I am inclined to the view that on a proper construction of the definition, the word "building" in par. (b) is to be regarded as referring only to the area within a building occupied by the warehouse and shop so that, if, for example, a building is sectionalised with the shop and warehouse occupying one section, it is that section which is to be treated as the building for the purposes of par. (c)(i). In the present case, the evidence was to the effect that Warehouse No. 2 is physically a separate part of Building No. 1 with a different roof line and no interconnection and may readily as to its structure and otherwise be treated as a different building from the remainder of Building No. 1. For the purpose of applying the ratio requirement of par. (c)(i) I think that it would be more correct to use the floor space dimensions of Warehouse No. 2 by itself; but, as I said, in either case the ratio limit is exceeded by the present application.

The objection under cl.6 of S.E.P.P. No. 1 made by the letter accompanying the application to the Council was not pressed by counsel for the applicant on the basis that it could not be sustained against the decision of the Court of Appeal in Woollahra Municipal Council v. Carr (1985) 62 L.G.R.A. 263. In my opinion the principle on which that case was decided would apply here, so that objection must be rejected.

The failure to meet the space ratio required, which was the third ground relied on by the Council, must lead to a refusal of approval of the proposed development; but the other grounds of contention should also be dealt with.

From what I have already said the Council's second ground must be upheld, that is, the proposed "shop" would not be situated in the building in which the warehouse was located, within the meaning of par. (b) of the definition, as it is proposed to house the bulk of the warehousing in Warehouse No. 9 whilst the shop remains in Warehouse No. 2.

The first ground was the most fundamental as it challenged the existence of any intention to conduct a warehouse in conjunction with which the proposed shop could be operated. The definition of warehouse in the Model Provisions takes a limited view of that activity by confining it to the storage of goods pending their sale and distribution to "persons engaged in the retail trade". Bulk storage or storage for wholesaling to bulk buyers or retailers is not the criterion. When looked at overall, the applicant's business and methods of operating and pricing its goods do not present a warehousing operation of the defined kind. As demonstrated by the invoices and receipts tendered, sales to persons engaged in the retail trade are extremely minor. I do not believe that the sporting, social and other clubs and institutions to which bulk sales were made could in any ordinary use of the phrase be regarded as "persons engaged in the retail trade". The absence of any standard system of wholesale or trade pricing in the c

ompany's operations, the policy of seeking the highest price obtainable on a free market basis with only a discretion given to sales staff to offer on the spot discounts if pressed or in order to move large quantities of stock from time to time and the methods of operation by the company generally are not, in my opinion, typical of conducting a warehouse for wholesaling to the retail trade.

On the whole of the evidence I find that the vast bulk of the company's operations generally and in Wollongong and the Illawarra District in particular are not directed to the sale or distribution of goods to persons engaged in the retail trade; transactions with such persons are only an ancillary and very minor part of the company's activities; the business is predominantly low, cut price and discount selling by retail to the public via markets, truck (mobile shop) operations and retail outlets (as at Wollongong and Menangle markets, the truck traveller and Warehouse No. 2); the general merchandise stored and to be stored in the future is predominantly for supplying the company's own operations and outlets and only in a minor degree for disposal to retailers and that, for these reasons, the company ought not to be considered as using now or proposing to use in the future the subject premises for the purposes of a warehouse within the meaning of the relevant definitions. Therefore, I am not prepared to find t

hat the proposed use of 167m2 of Warehouse No. 2 is for a shop to be used in conjunction with a warehouse within the meaning of par. (a) of the definition.

The submission by counsel for the applicant that the Court is concerned on a Class 1 application with only future not current use of premises has no force in this case when his own client declares that its future activities are intended to be a continuation of and the same in nature as its present; but, in any case, I have taken full account of the evidence as to the company's proposed future use of the subject buildings as well as drawing inferences from the evidence of past and present activities that indicate the company's future intentions when the company declares that it desires to continue them.

As the applicant has not established that the proposed use of the designated part of Warehouse No. 2 as a "shop", either as at present or intended for the future, is or will be a use as a "light industrial retail outlet", the proposed use must be regarded as for a prohibited purpose and consent refused.

The orders of the Court are:-

l. Appeal dismissed.

2. The applicant's application for development approval No. D.88/l09 is refused.

3. No order as to costs.

4. Exhibits may be returned.