Jetset Properties v Eurobodalla Shire Council

[2007] NSWLEC 198

Land and Environment Court

of New South Wales

CITATION:	Jetset Properties v Eurobodalla Shire Council [2007] NSWLEC 198
PARTIES:	Applicant: Jetset Properties Pty Ltd Respondent: Eurobodalla Shire Council
FILE NUMBER(S):	10685 of 2006
CORAM:	Roseth SC
KEY ISSUES:	Development Application :- economic and social impact, retail hierarchy
CASES CITED:	Kentucky Fried Chicken v Gantidis (1979) 140 CLR 675 at 687; Fabcot Pty Ltd v Hawkesbury City Council (1997) 93 LGERA 373 at 378-39; Cartier Holdings Pty Ltd v Newcastle City Council (2001) 115 LGERA 407; Randall Pty Ltd v Willoughby City Council (2005) 144 LGERA 119; Milne v Minister for Planning [No 2] [2007] NSWLEC 66
DATES OF HEARING:	10/04/2007, 11/04/2007, 12/04/2007, 07/05/2007
DATE OF JUDGMENT:	9 May 2007
LEGAL REPRESENTATIVES:	Applicant: Mr M Craig, SC leading Mr R Lancaster, barrister instructed by Mr D O'Donnell, solicitor of Mallesons Stephen Jaques Respondent: Mr P Larkin, barrister leading Mr C Norton, barrister instructed by Ms N Simmons, solicitor of Sparke Helmore

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Roseth SC

9 May 2007

10685 of 2006 Jetset Properties Pty Ltd v Eurobodalla Shire Council

JUDGMENT

1 Senior Commissioner: This is an appeal against the refusal by Eurobodalla Shire Council (the council) of a development application to construct a building containing a supermarket, four specialty stores and a 108-space carpark on lot 299 DP 1038547, known as 2-10 Cunningham Crescent, Sunshine Bay.

The site

2 The site is on the corner between Cunningham Crescent, Canning Crescent and Sunshine Bay Road. Its area is 8,680m2. Its rear boundary adjoins two residential properties, 9 Canning Crescent and 4 Cunningham Close. The site is vacant. The area around is low-density housing. A sign stands on the site:

SUNSHINE BAY
NEIGHBOURHOOD
SHOPPING CENTRE
PROPOSED SITE

3 The main centre in Eurobodalla is the Batemans Bay town centre, followed by Narooma and Moruya. There are several smaller centres, most of which are strung along the coastal road, Beach Road. The site is close to two of these centres, namely Batehaven and Surf Beach. It is about 5 km from the Batemans Bay town centre.

The proposal and its history

4 The applicant proposes to erect a building containing a supermarket with a gross floor area of 2,900m2, four specialty stores, each of 80m2, and ancillary areas. The remainder of the site is to be an open-air 108-space carpark. The supermarket operator is to be Woolworths.

5 In 1994 the council issued development consent in respect of this site for a shopping centre with a floor space of 1,500m2 including a supermarket of 750m2. The consent did not proceed.

6 The applicant lodged the development application in May 2006. Following notification, the council received nine submissions and a petition containing over 600 signatures against the proposal. In September 2006 the council considered a report, prepared by its planning staff, recommending refusal. The council accepted the recommendation and refused the application in October 2006 for ten reasons, which were later reflected in the Statement of Issues. The applicant lodged the appeal against deemed refusal in August 2006.

7 Two letters from the Department of Planning commenting on the proposal were in evidence. The first, dated 26 October 2006 and addressed to the council’s General Manager, was expressly opposed to the proposal. The second letter, dated 15 February 2007 and addressed to the Development Manager of Woolworths, is more neutral, saying, in effect, little beyond the proposition that the analysis of the appropriateness of the proposal is “a matter for the local council”.

Relevant planning controls and policies

8 The following planning controls and policies are arranged according to whether they predated or post-dated the application. Despite the fact that they were exhibits in the proceedings, I have not included studies that were not available to the public.

Controls and policies before May 2006

9 Integrating Land Use and Transport (ILUT) is a policy document issued jointly by the NSW Departments of Transport and Planning in 2001. It has no statutory role. It contains advisory guidelines for the location of retail that can inform planning decisions.

10 The Eurobodalla Urban Local Environmental Plan 1999 (LEP 99) zones the subject site 3a Business. The relevant objectives of the 3a Business zone are (b) and (f):

(b) to recognise and reinforce a hierarchy of commercial centres, ranging from the three major centres of Batemans Bay, Moruya and Narooma, to village and neighbourhood shopping centres, and
(f) to ensure that small commercial centres providing primarily for the daily needs of nearby residential areas retain a scale and character consistent with a residential neighbourhood, and

11 Development Control Plan: Neighbourhood Business and Commercial Centre Development Guidelines (the DCP) contains controls for shopping centres. The DCP identifies a Floor Space Ratio (FSR) of 1:1 for the site. Under Building appearance, the Acceptable solutions are:

· Commercial premises should be of a scale and bulk that is in keeping with nearby development.

· Roof pitch should be similar to the average roof pitch in the street. If flat roofs are used a façade to the street frontage is required.

· Building design should reflect the positive design elements in the existing streetscape.

12 Draft Eurobodalla Urban Settlement Strategy (the draft Settlement Strategy) was exhibited for public comment in December 2005. It contains a section on retail hierarchy. On page 27 Sunshine Bay is identified as a Village Main Street centre. A table on page 25 defines Village Main Street as a centre with a total floor area of less than 3,000m2 where the major tenant is one small supermarket.

Instruments and policies after May 2006

13 The South Coast Regional Strategy contains a section dealing with retail hierarchy. It identifies Batemans Bay as a major regional centre, Moruya and Narooma as major town centres. Below these levels in the retail hierarchy are town centres and villages.

14 The Eurobodalla Urban Settlement Strategy (the Settlement Strategy) is based on the draft Settlement Strategy and was adopted in December 2006. The Settlement Strategy was not re-exhibited. It changed the characterisation of Sunshine Bay from Village Main Street to Small Urban Neighbourhood Centre, which is defined as having a total floor area of 600-1,400m2.

15 A further change from the draft to the final Settlement Strategy was that it introduced a zone for bulky goods retailing on a 5ha site at Surf Beach owned by the council. The council has awarded the Walker Corporation a 99-year lease for the site for a bulky good centre with some 19,000m2 of floor space.

16 Amendments to the DCP bring it in line with the Settlement Strategy. However, these amendments are so recent that it was common ground that the Court should place minor weight on the amendments.

This issues

17 The council submitted a Statement of Issues containing six issues. During the hearing the following emerged as the salient issues:

· whether the built form of the proposal is acceptable;

· whether the proposal fits into the retail hierarchy; and

· whether the economic impact of the proposal is acceptable.

The objectors’ evidence

18 The Court heard the objections of several residents near the site of and of shopkeepers in Batehaven and Surf Beach. In addition, the Mayor of Eurobodalla, Councillor Neil Mumme, gave evidence. Councillor Mumme drew attention to the extensive community consultation that led to the council’s adopting its retail hierarchy. He considered that the proposal was antipathetic to the adopted hierarchy.

19 The following residents gave evidence:

· Mrs Dianne Gee of 6 Cunningham Close;

· Mr Peter Godfrey of 24 John Oxley Crescent;

· Mr Andrew Winter of 9 Canning Crescent;

· Mr John Stevens of 16 Canning Crescent; and

· Mr John Mudge of 20 Canning Crescent.

20 The residents pointed out that the sign on the site (referred to above) advises that there will be a neighbourhood shopping centre on it. They had assumed that the word neighbourhood indicated a small centre, something in the nature of the Surf Beach centre. They were particularly afraid of the 24-hours operation of a Woolworths supermarket, and the additional noise and traffic that it would create. Most residents now do their main shopping at Batemans Bay and ancillary shopping at Surf Beach and Batehaven. Some, however, said that they used the smaller centres regularly for more than ancillary shopping.

21 Five shopkeepers gave evidence. Mr Mark Smith, who runs the IGA supermarket in the Surf beach shopping centre, said that his gross floor area was 420m2, his net sales area was 250m2, the average basket size was $12.66, and the average number of customers was 574 per day. His store was open from 8am to 7pm from Monday to Saturday, and from 8am to 6pm on Sundays. Sales were higher during holiday periods, accounting for 20% of his trade spread over the year. Asked at what point of decline he would close his business, he responded that a 30% decline would cause him to cease operating his business. However, any decline would require him to dismiss some of his 18 (part-time) staff.

22 Mr Peter Scott, who owns the pharmacy at the Surf Beach shopping centre, said that he feared the effect of the proposal on is business. He pointed out that the proposal was eight times larger than the Surf Beach shopping centre, and that it is not on the main road, so it would not catch through traffic. Hence its custom would probably come from some of his existing customers.

23 Mr Matthew Burgess, co-owner of the IGA supermarket at the Batehaven shopping centre, said that the development of the Stockland mall at Batemans Bay had reduced his business by 20%, though he had “clawed back” some of that loss since. That development was 5km from Batehaven, so he reasoned that a large supermarket only 1.5km from his shop would affect him. The average size of his shopping basket was $12, which is comparable to the overall average of $14.50 for IGA stores. He noted that the applicant’s assessment assumed that his average basket size was only $4.50. He employed 26 (part-time) staff. Any reduction in business would cause him to reduce staff, to the point that only the partners would be working. Asked at what point he would cease to trade, he nominated 50% loss. He pointed out, however, that the other stores in the centre would close much sooner, since they rely for their custom on people shopping at the supermarket. He also estimated the tourist trade to be 20% of his business, spread over the whole year.

24 Ms Jenny Scullin, who runs the newsagency at Batehaven, confirmed that the decline in her business following the opening of Stockland mall at Batemans Bay was also 20%. She has also gained back some of the loss since the opening. She pointed out that all the small businesses in the centre depended on the IGA supermarket. She also estimated the extent of tourist trade at 20%. Her customer base was from Surf Beach to Batehaven. She had been aware that the Sunshine Bay site would be developed for a shopping centre, though she had assumed it would be a neighbourhood centre. She had planned to open a sub-agency in one of the shops.

25 Ms Yolande Imms, who is the owner of the hardware store and nursery in the Batehaven shopping centre, said she had experienced a decline with the opening of Stockland mall at Batemans Bay, and she has been able to “claw back” only a very small part of the loss. The turnover of her two businesses was $1.3 million. In her opinion, there is a limited amount of shopping dollars to go around. The small businesses in Batehaven will not survive the quiet period if the proposal goes ahead.

Built form

26 In my opinion, this issue is not justified. Given the size of the proposal, its design is as unobtrusive as possible. The only criticism that can be made of it is that it has a large flat roof. A large flat roof is usually associated with a large supermarket. I do not think that any “prettying up” of the roof in an attempt to make it look like a number of domestic roofs would be successful.

Retail hierarchy
The expert evidence

27 The Court heard the concurrent evidence of Mr John Wynne, town planner for the applicant, and Mr Garry Fielding and Mr Angus Witherby, town planners for the council. The experts agreed that the latest changes to the DCP are too recent for the Court to place major weight on it. In Mr Wynne and Mr Fielding’s opinions, the totality of ILUT, regional environmental plans, settlement strategies (draft and final), together with the various retail and settlement studies have established a retail strategy for the Shire, in which Sunshine Bay has the role of a neighbourhood centre. The characteristic of a neighbourhood centre is to have a supermarket of less than 1,000m2, complemented by half a dozen to a dozen specialty shops. New proposals should reinforce the hierarchy. The proposal, being a supermarket with over 2,500m2 floor space, complemented by four small shops, did not fit into the hierarchy.

28 Mr Wynne has no quarrel with retail hierarchies and accepts that councils may from time to time adopt one. In the case of Eurobodalla, however, the establishment of the hierarchy has only just begun. The hierarchy was not in place when the applicant lodged the application. In any case, the hierarchy that the council has adopted since May 2006 is too rigid, has numerous inconsistencies and the rationale for it is questionable. The fact that the DCP identifies a FSR of 1:1 for the site suggests that the council foresaw an even larger development on it than is now being applied for. In Mr Wynne’s opinion the proposal is a small shopping centre.

Findings

29 I accept Mr Wynne’s evidence that several of the documents referred to by Mr Fielding and Mr Witherby were either not in existence or not publicly available in May 2006. In fairness to the applicant, therefore, I prefer to concentrate on the information that was available at the time of the application’s lodgement.

30 The LEP was made in 1999. While the LEP does not contain a clear retail hierarchy, objective (b) of the 3a Business zone aims to

recognise and reinforce a hierarchy of commercial centres, ranging from the three major centres of Batemans Bay, Moruya and Narooma, to village and neighbourhood shopping centres.

31 A fair-minded reader of the LEP would learn four things from the above objective:

· there is an existing hierarchy of shopping centres in Eurobodalla;

· at the top of the hierarchy is the Batemans Bay town centre, followed by Moruya and Narooma;

· under these centres in the hierarchy are lesser centres, called village and neighbourhood shopping centres; and

· the council wants to strengthen the existing hierarchy.

32 Since the subject site is not in a location nominated for a major centre, a fair-minded reader would conclude that Sunshine Bay is suitable for a lesser centre, called village and neighbourhood centre.

33 The draft Settlement Strategy was published in late 2005. It established the Sunshine Bay shopping centre as Village Main Street, which is defined as a centre with a total floor area of less than 3,000m2 where the major tenant is one small supermarket.

34 The applicant argues that, since the proposal is just under 3,000m2 in area, it fits into the hierarchy as that hierarchy existed at the time of the lodgement of the application. I do not think that this is correct. The proposal cannot be described as village, neighbourhood or village main street in the sense that either ordinary people or planners and retailing experts understand those terms. In my opinion, the correct description of the proposal is a large stand-alone supermarket. Moreover, the draft Settlement Strategy specifically mentions one small supermarket. A fair-minded reader of the draft Strategy would conclude that the kind of development the draft Strategy seeks for the site is a neighbourhood or village centre with an overall floor area of 3,000m2, containing a supermarket of no more than 1,000m2. I am aware, of course, that the size limitation of 1,000m2 is mine and does not arise out of the Strategy or the evidence. However, in my opinion, there is likely to be significant consensus that a supermarket larger than that could not be called small.

35 In the existing retail hierarchy in the Shire (which objective (b) above aims to reinforce), all large supermarkets are located in Batemans Bay town centre, Moruya and Narooma. A supermarket of a size comparable with those that exist in these three centres, located in a residential area and complemented by only four small shops, is inconsistent with the existing hierarchy. It weakens that hierarchy rather than reinforces it.

36 I reject the argument that the FSR of 1:1 applying to the site implies that the council intended or intends it for a major centre. The FSR of 1:1 applies to all 3a zones. It allows a large floor space on this site because it is a large site. It is common practice for LEPs to fit zones to cadastral boundaries rather than to place a zoning boundary within a single allotment. If the FSR applied to this site only and not to other 3a zones, the argument would have greater force.

37 In my opinion, an applicant who had acquainted itself with the planning controls and policies in existence in May 2006 would conclude, on the material then publicly available, that a large supermarket flanked by four small shops at Sunshine Bay is antipathetic to the intended retail hierarchy.

38 I am strengthened in the above conclusion by several circumstances of the case. One is the existence of the policy document ILUT released long before the lodgement of the application. As mentioned above, ILUT is not a statutory document. The objective of ILUT is to reduce the need for travel, a concept that was important in 2001 and is even more important in 2007. The role of ILUT is to inform decision making in planning, including the assessment of development applications. A relevant part of ILUT states:

Supermarkets and large specialist and department stores have an important role in anchoring a broad range of shopping and other services and thereby allow single multi-purpose trips. Retail proposals should be accommodated in centres to allow choice and free pedestrian movement. Ideally, a single retail property should not comprise the whole centre so as to allow for new market entrants and competition and avoid the unnecessary creation of new centres. It is particularly important for decision makers to be consistent and fair because of the competitive nature of the industry.

39 The proposed supermarket does not fulfil its role in anchoring a broad range of shopping and other services. Notwithstanding the four specialty shops, the proposal is best described as a single retail property that comprises the whole centre. It does not promote single multi-purpose trips. A person shopping in a stand-alone supermarket cannot also visit the Post Office.

40 A further circumstance is that planning documents such as the South Coast Strategy, the final Settlement Strategy and the amendments to the DCP appear to carry on the process of defining a retail strategy. I have given them minor weight in reaching my conclusions, partly because they post-dated the application, partly because they are open to the criticism that they were adopted without sufficient public participation, and, in the case of the amendments to the DCP, because it is still on exhibition. The only role these documents play in my decision is that they demonstrate that the council has not suddenly changed course in the development of a retail strategy.

41 I referred above to the long-standing presence on the site of a sign describing its future development as a neighbourhood shopping centre. The applicant, who is also the developer of the residential area around the site, said that it had erected the sign. The existence of a sign is, by itself, not particularly significant and the expression neighbourhood centre does not suggest a particular floor space. However, to the objectors who attribute to the term its ordinary meaning, the proposal does not match with the concept of a neighbourhood centre. This explains their opposition to the proposal, at least in part.

Economic impact

42 The Court heard the concurrent evidence of Mr Ian Shimmin and Mr Tony Dimasi, both market researchers, in the applicant’s case; and Mr Ian Booth, a market researcher, and Mr Witherby (who gave evidence also on retail hierarchy) in the council’s case. The opinions of the two sets of experts were far apart. They relied on different methodologies, used different data and reached different conclusions. Each believed that the methodology and data used by the other was useless. I detected no hint of recognition on either side of the professional competence of the other.

Legal principles of economic impact

43 Clause 79C(1)(b) of the Environmental Planning and Assessment Act 1979 states that, among the matters to be considered in assessing a development application are:

the likely economic impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality.

44 Numerous judgments have dealt with the correct application of the words social and economic impacts in the locality. The parties referred me to Kentucky Fried Chicken v Gantidis (1979) 140 CLR 675; Fabcot v Hawkesbury City Council (1979) 93 LGERA 373; Cartier Holdings v Newcastle City Council (2001) 115 LGERA 407; Randell v Willoughby City Council (2005) 144 LGERA 119; and, most recently, Milne v Minister for Planning [No 2] [2007] NSWLEC 66.

45 The most apposite passage in the above judgments seems to me to be in Gantidis at 687:

If the shopping facilities presently enjoyed by a community or planned for it in the future are put in jeopardy due to physical or financial causes, and if the resultant community detriment will not be made good by the proposed development itself, that appears to me to be a consideration proper to be taken into account as a matter of town planning. It does not cease to be so because the profitability of individual existing businesses are at one and the same time also threatened by the new competition afforded by that new development. However, the mere threat of competition to existing business, if not accompanied by a prospect of a resultant overall adverse effect upon the extent and adequacy of facilities available to the local community if the development be proceeded with, will not be a relevant town planning consideration.

46 The main principles that arise out of the above judgments that should guide me in determining these proceedings are:

· The mere threat of competition between commercial interests is not a planning consideration.

· The threat to the shopping facilities presently enjoyed by a community is a relevant planning consideration.

· The relevant “locality” must be determined in each case.

47 Therefore, a finding that the subject proposal affects a particular business in either Batehaven or Surf Beach would not be a relevant consideration. Alternatively, if this proposal were proposed to be located in the Batemans Bay town centre and it threatened the viability of other supermarkets, it would also not be a relevant consideration. However, a finding that the proposal affects the viability of shopping facilities presently enjoyed by a community, for example the shopping centres of Batehaven and/or Surf Beach, would be an impact to be taken into account under cl 79C(1)(b). That fact alone does not, however, mean that the impact is unacceptable. The question of acceptability is a separate question to be answered.

The Shimmin/Dimasi evidence

48 The Shimmin/Dimasi assessment relies on two methods. One, which they called the competitive usage method, relies on a telephone survey of the main shopping person in permanently settled households in the assumed trading area of the proposed supermarket. The second method, which the Shimmin/Dimasi team referred to as the market share method, estimates the market share each centre will achieve from various existing trade areas and calculates the impact on the basis of the estimated loss of trade from those centres. This method relies on commercially confidential data collected over many years by the Shimmin/Dimasi team. Whether or not this method also relies on the telephone survey is unclear. The oral evidence and the applicant’s submission suggest that the method was independent of the phone survey; however, the Shimmin/Dimasi report includes a sentence that suggest that that the market share approach also relied, at least to some extent, on the phone survey (p 67, Exhibit C).

49 For both methods the Shimmin/Dimasi team defined the trade area of the proposal. According to Mr Shimmin, this was done on the analogue approach, which apparently means that the definition of the trade area is based on Mr Shimmin’s extensive experience, the physical characteristics of the locality and an understanding of the behaviour of supermarket shoppers.

50 The Shimmin/Dimasi team next determined the trade area spending. The source of the figures is the MDS MarketInfo 2004 model, which develops per capita retail spending estimates on a small area basis by use of information from the Australian National Accounts, the Census and the ABS Household Expenditure Survey. Mr Shimmin and Mr Dimasi concluded that the per capita retail spending in the main trade area is $9,500. (The NSW average is $10,000.) The per capita spending on food is $4,200. (The non-metropolitan average for NSW is $4,200.)

51 Finally, Mr Shimmin and Mr Dimasi assessed the proposal’s impact on the trading of other centres in the locality. They found that the following impacts on the centres of Batemans Bay, Batehaven and Surf Beach are likely.

Batemans Bay -7%
Batehaven IGA -19%
Rest of Batehaven -10%
Batehaven total -12%
Surf Beach IGA -17%
Rest of Surf Beach -11%
Surf Beach total -13%

The Booth evidence

52 Mr Booth used a model, developed by his firm, called the IBECON Retail model. The model allocates spending to the existing shopping centres in the relevant area by three main groups of shoppers, residents, workers and tourists. The model converts the spending into floor space. The results are then checked against the actual situation and, where necessary the model is “re-calibrated” until the existing situation is reproduced. The model does not rely on a survey, by telephone or otherwise. The aim is to simulate reality.

53 Mr Booth assumed that the total per capita retail spending in the region was $10,235. However, this included workers and tourists, as well as residents. The per capita spending of residents was only $6,150. Mr Booth justified this figure, which was some 40% below the average NSW figure by the fact that the average income in Eurobodalla is substantially below the NSW average and that residents with a mortgage pay a higher proportion of their income in repayments than the NSW average.

54 I note that Mr Booth has carried out a sensitivity analysis, increasing his assumptions on per capita spending by 10%, without obtaining significantly different results. In an exercise dated 4 April 2007 that came to the Court as Exhibit 10, he ran his model using the same inputs that the applicant had used. He found that, with the Shimmin/Dimasi input, he had difficulty calibrating the model so as to reflect actual floor space and spending in existing centres. When he overcame this problem by making what he considered to be unrealistic assumptions, he still found that the impact on the IGA supermarkets at Batehaven and Surf Beach was high enough to result in the failure of those enterprises. The fact that when the two methods are based on the same data, they still produce different results suggests that both methods cannot be correct; though, of course, both could be wrong.

55 Mr Booth defends his assumption on the basis that they “work”, in the sense that the model reflects the retail floor space actually found to exist on the ground.

56 Mr Booth assessed the proposal’s impact on the trading of other centres in the locality. He found that the following impacts on the centres of Batemans Bay, Batehaven and Surf Beach are likely.

Batemans Bay -6%
Batehaven -28%
Surf Beach -25%

57 I could not find an estimate of the impact on the IGAs at Batehaven and Surf Beach in Mr Booth’s first report (Exhibit 7). However, in a later report (Exhibit 10) in which he carried out sensitivity analyses using the applicant’s data (which he considered invalid and favourable to the applicant’s case), he estimated that the impact on the IGA at Batehaven was 57%, while on the IGA at Sunshine Bay it was 52%.

Differences between the two approaches

58 The major differences between the Shimmin/Dimasi team and Mr Booth were:

· The Shimmin/Dimasi team used the competitive usage and the market share method, while Mr Booth used the IBECON Retail Model.

· While the applicant contended that the phone survey was just a minor input into the competitive usage method, a reading of Mr Shimmin’s suggests that the method does depend on the reliability of the phone survey of permanent resident population. The market share method relies on confidential data collected by Mr Shimmin and Mr Dimasi and their long experience in retail research. (The Shimmin/Dimasi report suggested, however, that the market share method also relied on the results of the phone survey.)

· The IBECON Retail model attempts to reproduce the actual situation on the ground and can therefore be checked against reality.

· The Shimmin/Dimasi team’s assumption of per capita retail spending by Eurobodalla residents is close to the NSW average, while Mr Booth’s assumption is significantly below the NSW average.

· The different assumptions account only partly for the different results, since Mr Booth obtained different results from his model when he ran it with the per capita spending assumed by Shimmin/Dimasi.

59 Summarising the above, it seems to me that the salient differences between the experts, on which the Court must reach a finding, are:

· reliance on the phone survey;

· method used; and

· assumptions for per capita spending.

Evaluation of the evidence

60 Mr Booth had numerous criticisms of the phone survey, of which three appear the most significant. First, the survey questions were slanted in favour of an answer that the respondent shopped in Batemans Bay town centre. (For example, Question 1b of the survey asks: “Where else, either in Batemans Bay town centre, other parts of Batemans Bay or elsewhere, do you do your non-food shopping?” It could have instead asked the shorter question: “Where else do you do your non-food shopping?”).

61 Second, the survey asked respondents whether they would shop at the Woolworths supermarket if one were built. According to Mr Booth, hypothetical questions like this do not elicit a true answer. The problem is not that respondents deliberately lie, but that their answer is the first thing that comes to their head, which is not what they will actually do when the hypothetical event happens.

62 Third, the phone survey was constructed to deal with two issues, ie the impact of the subject proposal and the possible expansion of an existing Woolworths store in Batemans Bay. The dual purpose made the survey less reliable than if it had been constructed for a single purpose.

63 I accept the first two criticisms. As regards the third criticism, multi-purpose surveys are common. (Most people have experienced the kind of survey that begins by testing the respondent’s attitude to questions of morality only to finish with questions about the brand of detergent they use.) I do not think that this invalidates a survey, though it probably weakens it. On balance, I accept that the phone survey is not a highly reliable basis for the assessment of the proposal’s economic impact. I do not think that it alone renders the Shimmin/Dimasi assessment invalid, however, it is a negative feature of the method.

64 I turn to the question which of the methods used by the experts should be preferred. The Shimmin/Dimasi team used two methods, the competitive share method and the market share method. The fact that two methods were used giving the same result is a point in favour. However, the Shimmin/Dimasi method is also weakened by two circumstances. First, the input, (apart from the phone survey, from which, after some remonstrations by the Court, confidentiality was removed) was confidential information collected by Mr Shimmin and Mr Dimasi. A transparent method based on information available to everyone is always preferable to one that is secret and cannot be checked by others, for example by the objectors whose livelihood is at stake. Second, the IBECON Retail model was calibrated until it reflected the actual floor space of existing centres on the ground. This does not appear to be the case for the methods used by the Shimmin/Dimasi team.

65 For the above reasons I conclude that the IBECON Retail model is more likely to simulate reality than the two methods employed by the Shimmin/Dimasi team.

66 I turn to the assumptions on per capita spending. The total amount of retail dollars spent was not significantly different between the experts, mainly because Mr Booth considered not only resident spending but also spending by workers and tourists, whereas the Shimmin/Dimasi team considered only resident spending, probably on the basis that this was the most significant element for a Woolworths supermarket in Sunshine Bay. However, Mr Booth assumed much lower per capita spending by Eurobodalla residents than the national or State average. Mr Shimmin and Mr Dimasi assumed a figure close to those averages.

67 It appears to me that Mr Booth’s assumption is too low. I accept that the residents of Eurobodalla spend less than the State average, but not 40% less, as Mr Booth assumed. I note that Mr Booth has carried out a sensitivity analysis, increasing his assumptions on per capita spending by 10%, and a further analysis using the same input as used by the Shimmin/Dimasi team. The fact that his results still show a high impact on the Batehaven and Surf Beach centres, suggests that the difference in per capita spending was not a major factor in the difference in results.

68 This raises the question: what was the major factor that led to such divergent results? The answer to that question, in my opinion, is to be found in the way the experts distributed the source from which the spending at the proposed supermarket in Sunshine Bay would come. The Shimmin/Dimasi team (or their methods) assumed that the vast majority of the spending would come from people who would otherwise shop at Batemans Bay. Batemans Bay is a large centre, so a supermarket of 3,000m2 would make a small relative dent on its turnover. Mr Booth (or his IBECON model) assumed that many of shoppers at the proposed supermarket would be people who would otherwise shop at Batehaven and Surf Beach. Those centres are smaller, so the same supermarket would make a large relative dent on their turnover. Putting aside for the moment the sophisticated modelling, given that the Batehaven centre is about three minutes drive from the proposal, the assumption that many of its customers would be those that would otherwise shop at Batehaven, at least for top-up shopping, does not seem unreasonable.

69 The above leads me to the finding that Mr Booth’s results are more likely to reflect reality than those of Mr Shimmin and Mr Dimasi. The likely impact of the proposal on the Batemans Bay town centre is a reduction in spending of about 6%, on the Batehaven shopping centre a reduction in spending of about 30%, while on the Surf Beach shopping centre it is a reduction in spending of about 25%. The worst affected centre is therefore Batehaven.

70 I am strengthened in the above conclusion by the evidence of the shopkeepers at Batehaven and Surf Beach. That evidence appeared to me to be remarkably free of exaggeration. Mr Smith, who runs the IGA supermarket in the Surf Beach shopping centre, gave detailed figures on his turnover. His response that a 30% decline would move him to close his business, while a much smaller decline would require him to dismiss staff, appears to be an honest assessment of the situation.

71 Mr Burgess, the owner of the IGA supermarket at the Batehaven shopping centre, gave evidence that complements that of Mr Smith. His estimate that the Stockland mall at Batemans Bay reduced his business by 20% (though he had “clawed back” some of that loss since) reflects the fact that the available retail dollar is finite. Mr Burgess’ fear that the proposal, which is much closer to him than Batemans Bay is, would have a greater effect on him, is neither invalid nor exaggerated. Mr Burgess nominated a 50% loss as the point that would cause him to cease trading. His comment, that the other stores in the centre rely for their custom on shoppers at the supermarket, is one that is supported by the shopkeepers as well as retail theory. Mr Scullin, who runs the newsagency at Batehaven, agreed, pointing out that all small businesses in the centre depended on the IGA supermarket. Ms Imms, who is the owner of the hardware store and nursery in the Batehaven shopping centre, confirmed that the opening of Stockland mall at Batemans Bay lost her business and she has not been able to “claw back” the loss.

72 I also note Mr Shimmin’s response to a question from the Court on the size of economic impact on other centres that he had found in his past work to be unacceptable. Mr Shimmin could not think of a case where this happened. Given the hundreds of retail analyses that Mr Shimmin has carried out, it seems strange that not one of them was found to have an unacceptable impact on other centres.

The significance of the bulky goods zone

73 The applicant takes some comfort from an agreement between the council and Walker Corporation awarding the Corporation a 99-year lease for a bulky good centre of some 19,000m2 of floor space on a 5ha site owned by the council at Surf Beach. In the applicant’s submission such a bulky goods centre will compete with Batehaven and Surf Beach, negates any notion of a retail hierarchy, and suggests that, where its own financial interest is at stake, the council has little concern for maintaining its retail hierarchy.

74 ILUT comments on Bulky Goods Outlets as follows:

Bulky goods outlets need space to display and handle large goods. Where centre locations are not feasible they are sometimes permitted in out-of-centre locations. This approach represents a balance between retailer and consumer needs and the community cost of dispersed commercial activity. Regulation of the format is often required to stop bulky goods outlets selling non-bulky goods. This practice impacts on centres and raises community costs beyond any benefit. Where such concerns exist, councils are encouraged to apply floor space limits or restrictions on the types of goods for sale. This is a fair restriction in return for the cost and locational advantages not available to other retail outlets. Out-of-centre clusters are not automatically necessary for bulky goods outlets. Some larger and most new centres can accommodate bulky goods outlets. Lower order centres in need of investment may also be suitable. The need for car access for loading bulky goods is not an adequate basis for justifying out-of-centre locations. In many instances the goods sold are not immediately available or capable of being transported anyway.

75 I interpret the above paragraph to say that out-of-centre bulky goods outlets are not a good idea, but, if one has to have them, they should be restricted to selling goods that are bulky and cannot be comfortably accommodated within centres. I accept that that a bulky-goods centre, if not administered on proper planning principles, may destroy the existing hierarchy. However, the council has not proceeded beyond identifying the zone and coming to an agreement with a developer. I have no reason to assume that, in administering the bulky goods zone at Surf Beach, the council will disregard proper planning principles and thus destroy the retail hierarchy it so vigorously defends in these proceedings.

76 I note that bulky-goods centres appear in the retail hierarchy in the draft Settlement Strategy. Their floor area is defined as above 10,000m2. It cannot be said therefore that the concept arose suddenly between the publication of the draft and final Settlement Strategies.

Is the impact acceptable?

77 All experts agreed that, if the impacts were as Mr Booth predicted them, they would threaten the viability of the Batehaven and Surf Beach shopping centres. In his sensitivity analysis Mr Booth estimated that the reduction of turnover of the Batehaven IGA would be in excess of 50%. If this happened, the supermarket would close and the Batehaven centre would effectively cease to function. However, even on the Shimmin/Dimasi estimates, the reduction would be 20%. This would reduce the number of staff and make it more of a family operation. The flow-on impact on the other shops, which have lower turnovers, would be devastating. The centres would have a growing number of vacant shops and present a sight to potential shoppers that would further turn them away.

78 I cannot find any substantial benefit that would justify such an impact. A large supermarket at Sunshine Bay might be convenient for a few households close (but not too close) to it; however, the Batemans Bay town centre, with several large supermarkets, is only 5 km away. If there is a need for a supermarket of 3,000m2, it should be located in the Batemans Bay town centre. A shopping centre at Sunshine Bay should be a neighbourhood shopping centre, somewhat along the lines of that approved in 1994.

79 The proposal is antipathetic to objective (b) of the 3a zone. Its economic impact on the Batehaven and Surf Beach shopping centres is unacceptable. For these reasons the appeal is dismissed.

Orders

1. The appeal is dismissed.

2. Development application to construct a building containing a supermarket, four specialty stores, ancillary areas, and a 108-space carpark on lot 299 DP 1038547, known as 2-10 Cunningham Crescent, Sunshine Bay is determined by refusal.

3. The exhibits are returned.

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Dr John Roseth
Senior Commissioner