Re Section 11a City Area Leases Act 1936 and Re An Application By Calardu Pty Limited To Vary the Provisions of the Crown Lease of Block [1990] ACTSC 52 (18 December 1990)

SUPREME COURT OF THE ACT

IN THE MATTER of Section 11A City Area Leases Act 1936 AND IN THE MATTER of an
application by CALARDU PTY LIMITED to vary the provisions of the Crown Lease
of Block 18 Section 18 Division of Fyshwick in the Australian Capital
Territory
S.C. No. 670 of 1989
Crown Lease
(1990) 109 FLR 343

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Higgins J.(1)

CATCHWORDS

Crown Lease - purpose clause - variation sought - whether consistent with approved policy plans - determination of "industrial" areas - "retailing" - public interest considerations - effect on other properties and property markets - effect on competitors and competition generally - discretion - variations to be in accordance with current Fyshwick Policy Plans.

City Area Leases Act 1936 (ACT)

Buildings (Design and Siting) Act 1964

ACT (Planning and Land Management) Act 1988 (Cth)

ACT (Self Government) Act 1988

Fyshwick Policy Plan

Metropolitan Policy Plan 1984

National Capital Plan - Draft - March 1990

Morpath v ACT Youth Accommodation Group Inc. (1987) 74 ALR 121

State School Teachers' Case [1929] HCA 11; (1928) 41 CLR 569

Professional Engineers' Case (1959)

Kentucky Fried Chicken Pty Ltd v Gantidis [1979] HCA 20; (1979) 140 CLR 675

Contis Investments Pty Ltd and Dinach Holdings Pty Ltd (SC84/1989; ACTSC; Kelly J.; 1/6/89; unreported)

Concrete Constructions Group Pty Ltd v McNamara (ACTG 47/1989; FCA; Gallop, Sheppard and Neaves JJ.; 13/3/90; unreported)

HEARING

CANBERRA
18:12:1990

Counsel for the Plaintiff: Mr Simos QC with Mr Johnstone

Instructing solicitors: Messrs Sly and Weigall

Counsel for the Defendant: Mr Tamberlin QC with Mr Costigan

Instructing solicitors: Messrs Macphillamy Donald and Co

Counsel for the Minister: Mr R. Williams QC with Mr Chen

DECISION

On 25 September 1989, the Commonwealth of Australia granted to the applicant, Calardu Pty Ltd (Calardu) a 99 year lease commencing 28 June 1988 over 1.803 hectares of land at Fyshwick, ACT. It is referred to as Block 18 Section 18 Fyshwick. It is a vacant block on the corner of Ipswich and Barrier Streets, Fyshwick. The railway line to Canberra passes immediately to the south of the block. Clearly, rail access to the block by means of a siding would be very practicable. To the south of the railway line are petrol and gas storage tanks and some gas storage exists to the east of the block. Opposite is a tavern and some retail premises.

2. Barrier Street presently has a mixture of retail and non-retail industrial uses.

3. Mr Gerald Harvey represented Calardu in the purchase of the block. He is the controlling force within the company. The company is one of a group that establishes and promotes "Harvey Norman" Discount stores.

4. The stores in question sell "Homemaker" goods by retail. "Homemaker" goods refer to a range of goods that may be used in and about a domestic dwelling, eg. garden supplies, furniture, whitegoods, furnishings, etc. It covers a wide range of goods other than food.

5. The Crown Lease, as originally offered, contained a purpose clause in the following form:-
"(d) To use the premises only for the purpose of

(i) service trades;
(ii) storage processing packaging and wholesale
distribution of goods;
(iii) any manufacturing process;
(iv) sale of goods manufactured repaired or
assembled on the premises
BUT EXCLUDING any use of the premises which causes
injury to or prejudicially affects the amenity of the
area by the emission of noise vibration smell fumes
ash smoke waste water or waste products grit oil or
otherwise; and
PROVIDED ALWAYS THAT within the meaning of this clause
"wholesale" means the sale or the supply of goods in
bulk for the purpose of resale and "manufacturing
process" means the making of articles by physical
labour or machinery;"

6. It is obvious that the lease did not permit the uses Mr Harvey intended to put the land to. However, he says that before he sought to purchase the lease he was advised that it was possible to seek a variation of the purpose clause pursuant to s.11A of the City Area Leases Act 1936 (ACT) (CALA) and, further, that there was a good chance that his proposed use would not be inconsistent with the future policy for the Fyshwick area.

7. Mr Harvey took the view that the site was eminently suitable for his purposes and decided to take the risk that the purposes clause might not ultimately be varied. He was made aware, he says, that the fact that "non-food retail" was not opposed in Fyshwick by the relevant planning authorities did not imply that his proposed development would be supported or that the Court would approve it.

8. It is clear that Mr Harvey is a supremely confident entrepreneur. It appears his present stores are flourishing. The attraction of his style of operation, apart from apparently effective promotion, is the "one-stop" shopping within the relevant industry sector and the very wide range of goods offered. The stores are divided into various franchises. Mr Harvey does not retail directly.

9. It does seem surprising that, as at June 1988, the Commonwealth would grant a lease containing a purpose clause which was not suitable for the proposed lessee's intended uses or that the applicant would seek to obtain such a lease.

10. I note that the Fyshwick Policy Plan was not approved until September 1988. A draft Plan had, however, issued in May 1987. No plan, previous to June 1988 would have favoured Mr Harvey's proposal. If it was thought likely there would be a change of policy, it is surprising that the disposition of the land in question was not delayed till the Policy was finalised and the lease offered for sale with a purpose clause reflecting that changed policy.

11. The result is fair neither to the community nor to the applicant, even if it does give to objectors a forum they might not otherwise have had to oppose the applicant's proposal.
Background:-

12. By notice of motion dated 6 November 1989 (returnable 15 December 1989) the applicant seeks to amend Clause 3(d) of the Crown Lease so as to read:-

"To use the premises only for the purposes of:
(i) retail (excluding supermarkets and the sale of food
and drink)
(ii) industry (other than hazardous or noxious industry)
and for the purposes subsidiary to such industry
(iii) small scale service offices."

13. The application was supported by an affidavit of 3 November 1989 from Mr Harvey. Annexure B indicates that the ACT Administration (Office of Industry and Development) has no objection to the proposal to vary the purposes clause provided that the Lessee agrees to surrender the lease if so varied. A new lease would then issue,

"to allow previously agreed upon parking and gross floor
area clauses to be inserted in the lease".

14. It is not clear why the parties could not simply agree to a variation of the existing lease to this effect or, perhaps more appropriately, why it should not be a term of approval under the Buildings (Design and Siting) Act 1964. Nevertheless, Mr Harvey has indicated the applicant's acceptance of such a proposal.

15. On 5 December 1989, following the necessary and due advertising and/or service of the Notice and/or Affidavit (see s.11A(4) CALA), Yappeen Holdings (the "objector") filed Notice of Objection. The grounds for objection are not directed to the change of purposes clause as such but focus on the particular proposal which, after all, is but an example of what may become permissible if the variation is approved. That, of course, is quite a natural consequence where an applicant has in mind a particular "reasonable user" and desires a variation to give effect to it.

16. The grounds for objection to the proposal of the applicant, then, may be summarized as follows:-
. It is repugnant to the prevailing Fyshwick Policy Plan; . It would seriously and adversely affect the interests of

local traders and the amenities available in Fyshwick;
. It will create additional and unacceptable pressure on
traffic flows in Fyshwick, particularly at the
Ipswich/Barrier Street intersection;
. It will have a detrimental impact on existing local traders
and town and district retailing centres to such an extent
as to be repugnant to the Metropolitan Policy Plan 1984
(and/or proper town planning principles);
. It will impede the fullest use of the land (ie the land is
uniquely well situated for railway access);
. It is not in the public interest to permit a variation
where the lease was purchased with full knowledge that the
proposal was not permitted by it, with an intention to vary
it contrary to the advertised auction conditions, there
having been no attempt to use the land in conformity with
the purposes clause whereby a price advantage has been
obtained (a discretionary refusal).

17. The evidence for the applicant, additional to that of Mr Harvey, consisted of a town planner, an economist and a traffic engineer.

18. The objector countered with similar experts plus affidavits from numerous competing traders expressing their concerns. The applicant countered the latter by evidence tending to show that many of those traders were, in fact, trading (apparently) contrary to the purposes clauses appliable to their premises.

19. I will turn to the issues raised by the parties.
Whether new legislation permits variation sought - reasonable user:-

20. Since the introduction of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) (ACT(P and LM)A) notified NCDC policies have been given a special status.

21. Eventually, there is to be a National Capital Plan prepared by the newly established National Capital Planning Authority. The Authority is established by Part I of the ACT(P and LM)A and the "Plan" is authorised and required by Part III.

22. There is to be a "Territory Plan". It is to be consistent with the National Capital Plan, not vice versa (s.26 ACT(P and LM)A).

23. Part IV of ACT(P and LM)A requires the ACT Legislative Assembly ("the Assembly") to establish by legislation a "Territory Planning Authority" to prepare the "Territory Plan".

24. There are three concepts central to the ACT(P and LM)A:-

(i) National Land - the Commonwealth has sole management
and control of such lands (s.27 ACT(P and LM)A);
(ii) Territory Land - the Executive (the ACT Government)
has the management and control of such lands
(subject, of course, to the Plans) (s.29
ACT(P and LM)A);
(iii) Designated Areas - these are areas to be designated
in the National Plan as areas for which, whether the
land therein be "National" or "Territory", sole
planning control rests with the National Capital
Planning Authority (s.10 ACT(P and LM)A).

25. No part of Fyshwick, however, is a "Designated Area". There is no "National Land" there.

26. The Interim Territory Planning Act 1988 (ACT) (ITP Act) constitutes a body corporate for the purpose of exercising the powers conferred by Part X of the ACT(P and LM)A. The "Territory Planning Authority" has yet to be established by the Assembly so that Part X of the ACT (P and LM)A therefore contains the legislative provisions defining the powers and duties of the Interim Territory Planning Authority (ITPA). Generally, the ITPA acts as the "Territory Planning Authority" until the latter is established by the Assembly (s.60 ACT(P and LM)A).

27. The relevance of those provisions to this application is to be found in Division 3 of Part X of the ACT(P and LM)A.

28. Section 64 provides -

"During the transition period, the Authority (ie the NCPA),
the Territory (ie the body politic established under the
Australian Capital Territory (Self-Government) Act 1988) or
a Territory authority (see s.3 ACT(SG)A) shall not do any
act that is inconsistent with an NCDC policy while it is in
effect under this Part."

29. Policies, including the Fyshwick Policy Plan 1988 and the Metropolitan Policy Plan 1984, were given effect pursuant to s.62 (ACT(P and LM)A) by publication in the Gazette on 30 January 1989 (Gazette No. S37 pp 2-23 particularly p 9 and p 16).

30. Section 65(1) permits an "NCDC policy" then in effect to be revoked in whole or part by the National Capital Plan during the "transition period". There is, as yet, no National Capital Plan. However, pursuant to s.16 (ACT(P and LM)A) the NCPA may submit a draft plan for discussion and, after consultation, "certification". The certified draft then has effect, so long as the certification remains in effect (s.16(4) ACT(P and LM)A) as if it was "the Plan" (s.17 ACT(P and LM)A). There is a draft Plan which is currently certified (National Capital Plan - Draft - March 1990). It has effect as if it was the National Capital Plan.

31. Section 66 provides for the fate of NCDC policies remaining in force "at the end of the transition period". If declared by a House of the Parliament to be part of the National Capital Plan then such policy may become part of that Plan accordingly. If not so declared, it becomes part of the Territory Plan.

32. There is, as yet, no Territory Plan. However, "during the transition period", the ITPA may vary an NCDC policy (s.73 ACT(P and LM)A) as prescribed by ss.74-79 of the ACT(P and LM)A. There have been no variations to the previously mentioned Plans.

33. Accordingly, it is unnecessary to consider whether the "transition period" defined by s.57 is still in effect. The Certified Draft Plan of March 1990 has effect as do the notified Plans whether or not the transition period continues or has ended.

34. Whether the reasonable user of the land is impeded is a precondition to a variation of the purpose clause being permissible. However, the fact that a variation is legally permissible does not mean it will be made. The latter issue requires a consideration of a wider interest.

35. From Morpath v ACT Youth Accommodation Group Inc. (1987) 74 ALR 121 it may be concluded that s.11A(2)(a) (CALA) is satisfied if the registered proprietor proposes a use which is reasonable and which the current purposes clause of the lease would prevent. A user is usually, but not always, reasonable if it conforms to the applicable approved Plan. It will usually, but not always, be an "unreasonable" user if it does not conform to the applicable approved Plan.

36. Two provisions of the ACT(P and LM)A are relevant, s.11 and s.64. Section 11 provides:-
"11 (1) An enactment that is inconsistent with the Plan has

no effect to the extent of the inconsistency but an
enactment shall be taken to be consistent with the Plan to
the extent that it is capable of operating concurrently
with.
(2) The Commonwealth, a Commonwealth authority, the
Territory or a Territory authority shall not do any act
that is inconsistent with the Plan."

(Section 64 has been set out above.)

37. The combined effect of these provisions, in my opinion, is twofold:-

(i) The Court is not expressly prevented by those
provisions from permitting a variation which would be
contrary to a relevant policy. The ACT Supreme Court
is not, in my view, one of the bodies referred to in
either section. It follows s.11A (CALA) is not
modified or limited by ss.11 or 64 ACT(P and LM)A.
(ii) Nevertheless, all the Court is permitted to do is to
vary the lease purpose clause. It may do so in order
to enable a lessee to proceed with a proposal but the
purpose of that exercise is to ensure that the
proposal is no longer forbidden by the purposes
clause. Sections 11 and 64 place a constraint on the
NCPA, the ITPA and the Building Controller. If any of
those authorities have the view that a proposal
offends a relevantly applicable policy plan then its,
his or her approval, would have to be refused
notwithstanding the change of purpose clause.

38. It seems to me, therefore, that it would be an exercise in futility to approve a variation to a purposes clause to enable the approval of a proposal that cannot be put into effect because it cannot lawfully be accorded the necessary approvals.

39. I turn, therefore, to consider whether the proposal accords with the current lawfully approved Policy Plans.
Consistency with Approved Policy Plans:-

40. The Metropolitan Policy Plan, Development Plan 1984 (exhibit 10) was relevant to Fyshwick and the present proposal in several respects.

"(24) The hierarchy of centres will be maintained, with
each town having a centre acting as a focal point for
higher order retail functions...Civic Centre is intended to
be the highest order commercial entertainment and tourist
centre in Canberra (as well as the Central Business
District and Administrative Centre)."

41. I should interpolate here that the terms "higher order" and "lower order" as applied to "retail" were criticized in evidence. However, as used in the Plan they obviously refer to the ratio between the floorspace required for the generated turnover. Some goods will occupy a smaller floorspace and turnover more quickly than others. I take "higher order" to refer to a high turnover relative to floorspace. The type of goods retailed determines this rather than the efficiency of the retailer.

42. No doubt the 1984 Plan views Fyshwick as an "industrial" area. Again, the term "industrial" is used in the Plan in a special sense. The concept of what is an "industry" or "industrial" is otherwise a wide one.

43. In the State School Teachers' Case [1929] HCA 11; (1928) 41 CLR 569, it was noted that the ordinary use of the term "industry or industries" referred to any commercial activity including such intangible activity as banking and insurance. (Teaching was not considered to fall within the concept as it was a governmental activity rather than commercial, even if some of it is carried on by private schools. The essential activity was non-industrial.)

44. The concept was further considered in the Professional Engineers' Case [1959] HCA 47; (1959) 107 CLR 208. An activity was to be considered "industrial" if it produced tangible or intangible commodities or services for profit. Professions such as teaching, medicine and law would not be included unless such services were provided as ancillary to an unquestionably and dominant industrial undertaking.

45. This accords with the natural meaning of "industry". That concept would, in the absence of words of exclusion or limitation, include retailing. To speak of "retailing" as "an industry" is clearly appropriate. The Metropolitan Plan, however, makes it clear that "industry" is used in the Plan in a narrower sense. It states:-

(44) "Industry has been developed in estates to accommodate
manufacturing, processing, storage, regional service
trades and public utilities."

These activities are contrasted with "retailing".

46. The attitude of the Plan to retailing activity in Fyshwick is made quite clear:-

(63) "The emergence of Fyshwick as a retail centre was not intended.
It grew in response to weak purpose clauses, and the
non-enforcement of purpose clauses. These activities generally
require single level and low-rent floorspace. From a metropolitan
planning view-point, the location of such floorspace at Fyshwick
is not desirable. It is not central to the current and future
population distribution and has led to a higher level of retail
floorspace in Canberra than was intended. There is a demand for
low-rent space for the types of retail activities carried out in
Fyshwick and the demand should be met at locations more central to
the established population."

47. This, of course, was an historical statement, not a policy. The "policy" was relevantly stated as follows:-
(185) "In order to preserve industrial land for industrial

purposes, and to ensure the implementation of planned
metropolitan retail, office and industrial centres,
retail and office uses not ancillary to, or directly
related to, the industrial or service trade function
carried out on a site will not receive planning
approval."

(224) "Industrial Development

Industrial land will continue to be developed in
Fyshwick, Hume and Mitchell. These areas have
adequate capacity to cater for likely demand over the
next two decades."

(224) "There should, therefore, be no further need to select

new locations for industrial areas during the next
twenty years."

48. It was a central feature of this Policy that retailing activity be confined to the Central Business District (CBD) and to the Town and District centres set aside for the purpose. Fyshwick was noted as an anomaly not to be further encouraged. It did not propose a reversal of that situation but it is quite clear that the current proposal would have been regarded as inconsistent with that Plan.

49. This view as to retail uses of Fyshwick land was, however, not supported because of any likely shortage of non-retail industrial land. It seems the objection to retail use was based on the inappropriateness of the infrastructure of Fyshwick to host retailing and the distortion of the intended rationing of retail floorspace apparently designed to ensure the macro-economic viability of retailing at the planned retail centres.

50. This policy, however, effectively placed responsibility for ensuring the likely macro-economic success of newly approved retail space on the approving authority rather than the developer and the retailers attracted to the development. Whilst providing sufficient facilities for retailing is a legitimate planning objective, the nature and extent of utilisation of the theoretically available space may be thought to be legitimately a matter for the market place.

51. This view was recognized in the 1987 Draft Fyshwick Policy Plan.

52. The Draft Plan advanced a number of matters for consideration in relation to retailing in Fyshwick. A few quotations illustrate this -
(3) "From the mid 1960's there was a steady increase in

the number of businesses engaged in retailing motor
vehicles, white goods, furniture, hardware and
electrical goods.
By 1985 non-industrial...accounted for more than
50%...20% may have uses...inconsistent with...lease
purpose clauses."

(5) "Section 8A has not resulted in a clear understanding

and acceptance by all parties as to what is permitted
in Fyshwick's 'industrial' leases."

(7) "Fyshwick is not an 'industrial' estate in the

conventional meaning of the word, ie consisting
primarily of manufacturing and warehouse uses.
Fyshwick caters for activities which have not been
accommodated in the Town Centres in terms of sites,
access, land price or rent levels...
...(eg) retailing of furniture, carpets, hardware,
bookshops, speciality shops, personal service
establishments etc;"

The reference to "Section 8A" is a reference to s.8A CALA.

53. As a result of these considerations, the Draft Plan proposed three options for future policy for Fyshwick -

(i) To enforce all lease clauses strictly;
(ii) To adopt a completely deregulated or laissez faire
approach; or
(iii) To permit "complementary" development, ie "most
forms of retailing except large scale supermarkets
and department stores".

"Complementary" seems to have referred to the planned retail centres being complemented by retail development in Fyshwick rather than a duplication of the respective roles of the planned centres and of Fyshwick.

54. The Draft seems to favour the third option but as to the means of implementation it notes:-

(10) "Land use
Market forces will therefore favour the planned
commercial centres in the majority of cases.
...it is possible to exclude or control in Fyshwick
only those uses which could unreasonably dominate
either the local area or imbalance the planned
centres. ...
Retail
...while space intensive retailing requiring large
scale low-rise buildings and low-rent structures (eg
for furniture retailing) may be appropriate in
Fyshwick...large scale supermarket or discount stores
of a size which would serve substantially more than
the Fyshwick population would be more appropriate in
the town and group centres."

55. The Draft recognized that the unplanned status quo in Fyshwick was not reversible. It recognized the "third option" as the more desirable in the circumstances. That option did not ignore the need for leaseholders in breach of purpose clauses to regularize their positions. The risk in unregulated development seems to have been identified as a threat to the planned commercial retail centres. It was noted that market forces favoured retailing that was space intensive at Fyshwick as opposed to the planned commercial retail centres where space was more expensive.

56. In September 1988, the Fyshwick Policy Plan was issued. That is now the officially gazetted Plan for Fyshwick. It was submitted that this Plan was inconsistent in some respects with the Metropolitan Plan of 1984. Both were notified in the Gazette on 30 January 1989. Mr Tamberlin, QC, for the objector, submitted that this inconsistency should not be resolved in favour of the later Plan, presumably because of this simultaneous notification. Certainly, the submission that the later Plan is subordinate to the former in time cannot be supported. I do not consider that notification of the Plans was intended to or could have altered the meaning and effect the Plans had before such publication. It was intended merely to bring those Plans within and give them status under the ACT(P and LM)A. Accordingly, insofar as there is an inconsistency between the 1984 Metropolitan Plan and the 1988 Fyshwick Policy Plan, the latter will, in my view, prevail. It may be added that the specific Fyshwick Plan would, in any event, be expected to be the primary and dominant policy for Fyshwick rather than the more general Metropolitan Plan.

57. So far as the Fyshwick Policy Plan is concerned the following quotations from it clearly reflect the policy it endorses:-

(8) "Aims
The Policy Plan aims to:
. provide for the development of Fyshwick as the
main, centrally located service, lower order retail,
warehousing and specialised industrial and services
area serving Central Canberra;
. recognize the need to provide a location for
specialised service and retail functions which serve
the metropolitan area as a whole;"
(10) Primary Land Uses (are to be industrial (ie Service
Trades, Manufacturing and Processing Industries;
Extractive Industries and Offensive Industries))
"New leases issued...will not enable the application
of section 8A due to the complexity of interpreting
such leases."
Secondary Land Uses
"Retail (Non-Food)
The retailing of any non-food goods, including
personal service establishments, may be carried out
within this category. No limit is to be placed on the
total amount of retailing in this area."
"Offices/Non-Retail Commercial Uses
. Small Scale Services Offices: These offices shall
primarily provide non-retail commercial services to
other activities in Fyshwick. Uses within this
category include small offices, professional suites,
health care consulting rooms, banks and co-operative
societies."
(11) "Small scale service offices will normally be limited
to a maximum of 500m per lease providing the
Commission is satisfied that there is a demonstrated
demand for the space..."

58. These excerpts clearly indicate that the planners saw no difficulty in permitting market forces to determine the quantity and variety of "lower order" retailing activity to be allowed in Fyshwick. This accords with the proposal the applicant puts forward but it clearly would not support the proposed amendment to the purposes clause in its entirety. The proposed clause 3(d)(ii) is said to be intended to attract s.8A (CALA), an object the Plan deprecates. It is also clear that the purpose "small scale offices" as proposed could only be a subsidiary purpose on such a large site and would need a further restrictive definition to accord with the policy.

59. However, the last word rests, for the present, with the March 1990 Draft National Capital Plan. That Plan has been certified (attracting s.11(2) ACT(P and M)A). The certification has been extended so as to remain current. That Plan, however, makes no variation, express or implied, to the Fyshwick Policy Plan 1988.

60. It may be concluded, therefore, that nothing in the current Plans prevents the proposal of the applicant from being approved by the ITPA. It also follows that, at least prima facie, the proposal is not prevented, by reason of conflict with a current NCPA, ITPA or NCDC policy from being regarded as a "reasonable user" of the land.

61. That conclusion, of course, does not resolve the matter in favour of the applicant. I must also be satisfied that it is in the public interest to approve the proposed variation. The objectors have raised other issues said, individually or in combination, to make it contrary to the public interest to approve the proposed variation.
Traffic Flows:-

62. The major issue identified under this ground was the effect on the Ipswich/Barrier Street intersection. The expert evidence on this issue was that of Mr David Daverin for the applicant and Mr Christopher Hallam for the objector. Mr Hallam's contention was that additional "storage" should be provided for northbound traffic in Ipswich Street desiring to turn right into Barrier Street. Both experts swore affidavits, gave oral evidence and were cross-examined. They were not in fundamental disagreement. It really came down to whether the National (NAASRA) standard was accepted or the New South Wales standard. If the latter was adopted, the intersection needs up-grading. If the former, it probably does not. I consider that Mr Hallam's position was that the intersection needed up-grading whether or not the applicant's proposed development proceeds. The development as proposed would produce traffic conditions for which that up-grading was desirable for longer. Mr Daverin's position was that, as it met the NAASRA standard even with those additional traffic flows, there was no additional problem generated by the proposed development.

63. I am satisfied, given the opening of the Eastern Parkway, that the applicant's proposed development, if it proceeds, is not likely to cause the intersection to become unsafe or require an up-grading that would not otherwise be required in any event. There are no other traffic issues.
Economic Competition:-

64. A great deal of evidence was directed towards this issue. A number of Fyshwick (and district) traders gave evidence that they had suffered slow or diminishing retail sales over the previous 6-12 months and feared that competition from a "Harvey Norman" Store would destroy or further diminish their returns relative to their economic viability. Some referred to their decisions to locate in Fyshwick stating that they would not have done so had they been aware of the likelihood of a "Harvey Norman" proposal being approved.

65. Mr Richard Scheinberg, a director of Yapeen Holdings Pty Limited (Triffetts) the objector, deposed to a conversation with Mr Harvey (director of the applicant). Mr Harvey is said to have declared an intention to put his competitors out of business by trading more competitively than any of them. I omit reference to the colourful expletives referred to.

66. Mr Harvey gave evidence which supports a conclusion that he intended to so advertise as to build up trade steadily for his store complex. However, he clearly expected to out-trade his competitors by a considerable margin. I think it is reasonable for other competing Fyshwick traders to expect that the "Harvey Norman" complex will be an effective source of competition.

67. Attempts were made to quantify that competitive effect. It must be noted that the mere fact than an uneconomic, inefficient or less effective trader is ousted from the market place by a more efficient, economic and effective competitor is not, in itself, contrary to the public interest.

68. In Kentucky Fried Chicken Pty Ltd v Gantidis [1979] HCA 20; (1979) 140 CLR 675 it was held that mere competition not accompanied by the prospect of resultant overall adverse effect upon the extent and adequacy of facilities available to the community was not a relevant town planning consideration (per Stephen J., 687).

69. However, Morpath Pty Ltd v ACT Youth Inc (supra) makes it clear that the Court's discretion is not confined to "town planning" considerations. The "public interest" encompasses a wider range of issues.

70. It is relevant to attempt to estimate the extent of the competitive effect of the "Harvey Norman" proposal. This is to see whether that effect goes beyond mere competition. Replacing one retail facility and source of employment for another is "mere competition". General economic disaster for the entire area as feared by some of the competing traders would be another matter. Clearly, there is also a range of intermediate outcomes possible.

71. In Contis Investments Pty Ltd and Dinach Holdings Pty Ltd (SC 84/1989; ACTSC; 1/6/89; unreported) Kelly J. held that economic competition could not successfully found an objection to a proposed variation to a purposes clause unless there was a reasonable risk that the shopping facilities presently enjoyed by the community or planned for it or any existing amenity of the area would be put in jeopardy by the proposed change of purpose. I agree with that view.

72. To the above considerations may be added the effect on employment and the property market in the Territory or the Fyshwick area.

73. Expert evidence was called as to the economic viability and competitive effect of the Harvey Norman proposal. Mr Ian Booth (Ibecon Pty Ltd) gave evidence for the applicant. He gave affidavit and oral evidence concerning his economic modelling process called "FARST". He says the variables factored into the model have been tested against experience and found to be highly accurate. He concludes that the overall economic effect of the "Harvey Norman" proposal will be positive for consumers - a better range of goods conveniently gathered together in one complex - but negative 8 to 9% for the current pool of traders in competitive goods in Fyshwick. Some would "exit" (ie go broke) but these would be the most inefficient traders. There would, in fact, be some overall increment in retail activity which would "spin-off" to offset the otherwise greater negative impact.

74. Mr Peter Leyshon gave affidavit and oral evidence for the objector. Mr Leyshon's theory was that approval of the applicant's proposal would add to the current over-supply of retail space. It would add to declining returns to retailers in the affected area. The effect would be greater in the furniture/floor coverings area. The negative effects would range from 8.9% to 21.1%.

75. It may be noted that Mr Leyshon concedes that the proposed development may well make Fyshwick a more attractive retail centre and create an increased demand for goods of the category referred to. There would nevertheless be an adverse effect on the current 70,949m of floorspace used for retail. I take this to imply that if the proposed development displaces, say, 14,000m of current retail floorspace, property values in Fyshwick would fall. That is 20% approximately of currently used retail space in Fyshwick. As against that, 20% of floorspace in Fyshwick is estimated to be used illegally for retail purposes.

76. I have to say that, insofar as the opinions of Mr Leyshon and Mr Booth were at issue, I am of the view that Mr Booth's conclusions were more likely to reflect reality than those of Mr Leyshon. The range of variables Mr Booth had considered and the logical appeal of his conclusions were more persuasive. Mr Leyshon concentrated on the pessimistic side of the various scenarios available. He was not in disagreement with Mr Booth as to the basic figures and factors involved. In my opinion, he was too pessimistic.

77. There was a variation between Mr Booth's forecast of turnover for the proposed development and that of Mr Harvey. Whether or not trading reaches Mr Harvey's estimate or remains at Mr Booth's calculated level for the development, I am not convinced that there would be such an adverse effect that efficient traders will be so disadvantaged as to reduce overall employment, trading levels or customer facilities in Fyshwick. I accept some traders, already inefficient or otherwise marginal may well fail but that matter, in a capitalist system, is not relevantly against the public interest. Indeed, the opposite is the case.

78. No forecast can be perfect. My strong impression is that, overall, a successful "Harvey Norman" store would improve the attractiveness of Fyshwick as a retail "Homemaker" centre. This development is what the NCDC jargon refers to as "lower order retail".

79. I conclude that the fears of existing traders, save for the few who are inefficient or ineffective, are largely unfounded.

80. It follows that no negative effect on Fyshwick as a retailing centre can be assumed as a result of economic competition from the "Harvey Norman" development with other Fyshwick traders. Indeed, if the inefficient and ineffective retailers are excluded, it may well be that the remaining, more efficient, traders will experience a benefit from the "spin-off" effect Mr Booth referred to.
Effect on Fyshwick:-

81. The above, of course, does not exhaust the suggested negative effects of the proposed development. It was suggested that a contraction in retail space, even if caused by the withdrawal of inefficient or ineffective competing retailers, would lower property values and cause a general depression in the Fyshwick property market.

82. There was no evidence from any person skilled in the Fyshwick property market. Nevertheless, the following general observations suggest themselves:-

(i) 20% of current commercial space in Fyshwick (at
least) is probably being used for retail purposes in
defiance of the purpose clause applicable (see Draft
Fyshwick Policy Plan, May 1987, p 3);
(ii) The rents for "lower order retail" have not been
demonstrated to be markedly different from rents for
"higher order industrial" space;

(iii) The extent of the addition to current retail

floorspace in Fyshwick will not be more than about
16% if the "Harvey Norman" proposal proceeds;
(iv) A marginal restraint on rents in the Fyshwick area
would not be contrary to the interests of consumers
generally.

It follows that I am not satisfied that there is likely to be any adverse effect on the Fyshwick property market such as should prevent approval of the applicant's proposal.
Effect on Town/Group Centres:-

83. Although the objector did suggest that the proposed development could threaten the hierarchy of retail centres in Canberra, there was no evidence that this would follow from the implementation of the proposal itself.

84. Mr Robert Purdon, a Town Planner, identified the fear of a "flow-on" effect as being significant. Whilst Mr Leyshon identified competitive effects on Town and District Centres, it does not appear that the impact of that competition will be significant. In this respect, I consider Mr Booth's analysis is probably closer to reality than any other in terms of quantifying the economic effects following and not necessarily attributable to the proposed development.

85. It is true, of course, that, in theory, unlimited "lower order retail" development in Fyshwick could seriously affect all other traders in similar goods.

86. It is impossible for the "Harvey Norman" development, adding 16% to the current retail space in Fyshwick, to replace all competing retail space whatever the success of the business. At best (or worst) $23m to $40m (in 1989 dollars) of retail turnover would be diverted from other retailers. The overall retail turnover in January to August 1990, for example, was $878m. It may be added that Mr Booth did not consider more than $23.8m would be attracted. Thus, even if there was zero market growth in real terms, the worst effect would be perhaps an increase to 12% in the average negative effect on competing businesses.

87. Even that effect could not of itself ruin the hierarchy of centres or the character of Fyshwick.

88. If all or a significantly greater number of industrial leases in Fyshwick changed to actual "non-food retail" uses, there may be a difference in the character of Fyshwick or even the planned retail centres. This is, no doubt, the "flow-on" effect. There are a number of reasons why that will not, in my opinion, occur.

89. First, if the ITPA considers the limit has been reached for further "non-food retail" space in Fyshwick, it could advise the Minister to veto a change of purpose application (see s.11A(2)(b) CALA).

90. Second, if the ITPA or an objector demonstrates to the Court that a proposal then submitted for approval would result in such a change, the Court would be likely to refuse to approve a variation to the purpose clause which would enable that proposal to proceed.

91. Third, if the Court formed the view that the town planning effects of a proposed development would create unacceptable effects by reason of the cumulative effects of previous developments, the Court would refuse the application (see Concrete Constructions Group Pty Ltd v McNamara (ACTG 47 of 1989; FCA; Gallop, Sheppard and Neaves JJ.; 13/3/90; unreported).

92. Accordingly, in the absence of evidence that the development in question would threaten the hierarchy of retail centres, the possible "precedent" effect of it is, in my view, illusory and insufficient to render the proposal other than a reasonable use of the land.
Interests of Objectors:-

93. Whilst a number of affidavits of traders likely to be affected by the proposed development were tendered, there was also evidence which indicated that some of those traders were trading contrary to the purpose clause of the leases applicable to their premises. Mr Simos QC, argued that the interests of those traders should not be taken into account. I have not found it necessary to consider that issue.

94. However, given the 1988 Policy Plan, it is surprising that no action has been taken to require registered proprietors either to apply for a relevant variation or to conform to the terms of the lease applicable to their premises.

95. It is, nevertheless, difficult to see how, if the total amount of retail floorspace in Fyshwick is to be taken into account, as much weight should be accorded to space which is being used contrary to the terms of the relevant lease as to space lawfully being so used.
General Discretion:-

96. It was submitted that, notwithstanding the Court was satisfied that the proposed development was not itself against the public interest, the Court should refuse the application because the lease was acquired with the intention of applying for a change of purpose clause.

97. I accept that the Court's discretion is a wide one. It may be that if there was some fraud or deceit involved in the acquisition of the lease now sought to be varied, the Court would refuse to lend its aid to a proprietor who had been guilty of that fraud or deceit.

98. For example, if Mr Harvey had deceived the NCDC into believing that he proposed an entirely different development and, then having got the lease, took a different course with a view to gaining an improper advantage, it may be a consideration that would tip the balance against permitting the variation sought.

99. However, nothing in Mr Harvey's conduct would support any such accusation. He was always open, it seems, about his proposal for the site. He consulted fully with the relevant authorities. Indeed, as I have noted, had the authorities waited until the newer Policy Plan was finalised, this application may not have been necessary.

100. It may be added that there is no evidence that Mr Harvey gained an unfair advantage in the process of purchasing the site by reason of the original form of the lease or that he had any "inside" knowledge.

101. If the value of the lease was increased by virtue of a variation to the purposes clause, the applicant will, of course, have to pay a betterment premium.
Variation sought:-

102. The variation sought needs only the addition to currently permitted uses of clause 3(d)(i) in the proposed substituted clause to permit the "Harvey Norman" development to proceed. There is, of course, no need for the currently permitted uses to be deleted or restricted.

103. There is no difficulty with the proposed clause 3(d)(iii) save that the term "small scale offices" is not defined in the proposed clause to have the same meaning as in the Fyshwick Policy Plan 1988. In my view, that purpose should be defined so that it is consistent with that Plan. This would require that no more than 500m of the floorspace of any building erected on the land would be so used. In the absence of such a restriction it would be open to the registered proprietor to use all the space for offices. What is "small scale" is, of course, quite imprecise. It may permit a number of "small scale" offices on the site.

104. It is not in conformity, in my view, with the current Fyshwick Policy Plan to approve clause 3(d)(iii) as a proposed variation.

105. More objectionable, however, is the proposed clause 3(d)(ii). This is so phrased as, arguably, to attract the application of s.8A (CALA).

106. Section 8A(1) is curiously phrased. It applies s.8A to any lease purpose clause containing the terms "an industry" or "an industry or industries" or "light industrial and commercial businesses" or permitting the conducting of "industries" in buildings erected on the land. It continues:-

"...and so applies whether or not the lease provides that
the use for that purpose is limited or qualified in any
manner or that the land may be used for any other purpose
and whether or not the lease restricts the kind of
industry, industries or businesses for which the land may
be used."

107. There is no definition in the Act of the term "industry" or "industrial". The term "industry" as used in the proposed variation was said to have been intended to attract s.8A. It may not. None of the phrases cited, even with the extended provision, is actually used in proposed clause 3(d)(ii). However, the term "an industry" used in s.8A(1) may be intended to be the same as "industry" as used in the proposed clause 3(d)(ii).

108. The term "industry" simply means any commercial activity, including intangible activity such as banking and insurance. As previously noted, it excludes only professional activities such as teaching, medical or legal services (save as ancillary to an unquestionably industrial undertaking). See State Teachers' Case (supra); Professional Engineers' Case (supra). It follows, therefore, that, if s.8A is not attracted, clause 3(d)(ii), read alone, would permit unrestricted retailing. Clause 3(d)(i), however, does not permit totally unrestricted retailing. It does permit any non-retail commercial usage other than those expressly excepted. Commercial office use would be permitted. Whether it is restricted to "small scale" depends on whether clause 3(d)(iii) is read as restricting the wide prima facie scope of clause 3(d)(ii).

109. Even allowing for the exceptions implied by clauses 3(d)(i) and (iii), the term "industry" is wider than the uses which are ascribed stipulatively to it by the Fyshwick and other policy plans. It follows that if s.8A is not applicable, proposed clause 3(d)(ii) is impermissibly wider than the range of uses proposed by current Policy Plans.

110. If, on the other hand, s.8A is attracted, as the applicant indicated was intended, then s.8A(2) would apply. That states:-

"Subject to this section, land to which this section
applies shall not be used, and the lease of the land shall
not be taken to authorize the land to be used, for the sale
of goods by retail."

111. Section 8A(3) also applies:-

"Subject to this section, a building erected on land to
which the section applies shall not be used, and the lease
of the land shall not be taken to authorize such a building
to be used -
(a) for the sale of goods by retail;
(c) as a boarding-house, guest-house, hostel or hotel or
as a building of the kind commonly known as a motel;
or
(d) as flats or as a building for the provision of
residential accommodation of the kind commonly known
as a flat, an apartment or a home unit."

112. Section 8A(4) then permits a range of retail uses but not a range of sufficient width to encompass the proposed "Harvey Norman" development. Worse, s.8A(4A) whilst permitting a wider range of uses including "food-stuffs or non-alcoholic beverages", provides that no more than 46.5m of the building floor area is to be so used. This legislative provision would override and contradict clause 3(d)(i). It would forbid the proposed development.

113. Accordingly, the proposed variation, if made, either will permit uses outside the Fyshwick Policy Plan (eg hotel/motel) or will forbid the proposed development.
General Conclusion:-

114. It follows that whilst the proposed development is a reasonable user of the land and is prevented by the current purposes clause, the present form of the proposed variation may not enable the proposed development to proceed. If the proposed clause does not attract s.8A, of course, it is open to the planning authority to refuse to approve a development designed for a non-approved use. However, without the advantage of a restriction on the purposes clause it would not be possible to prevent use of the building and land for such of the wider purposes which may be effected without an alteration to the structure of the approved building.

115. Part of the process of approval of a proposed variation is a consideration of the uses to which the land may be put if the proposed variation is approved even if there is no current proposal so to use the land or building. Neaves J. noted in Morpath that a more limited variation than that proposed may be appropriate to take account of such a consideration.

116. In my opinion, therefore, it is not appropriate to approve the proposed variation. It would be appropriate to approve a variation which would permit the uses currently approved by the Fyshwick Policy Plan 1988. If I could approve a variation in an amended form, I would do so.

117. It follows that it is relevant to consider whether the proposed variation may be granted in an amended form. I propose to invite submissions on this issue and if I am satisfied it is possible to do so, I will grant the application in an amended form.