VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL ......22.13, 22.18, 52.06, 52.07 and 65. Land description The land is 3.503ha and located on the north 1 side of the Mornington-Tyabb Road,

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL

ADMINISTRATIVE DIVISION

PLANNING AND ENVIRONMENT LIST VCAT REFERENCE NO. P1128/2017

PERMIT APPLICATION NO. P16/2201

CATCHWORDS

Section 82 of the Planning and Environment Act 1987; Commercial 2 Zone; Former Masters Hardware

Site; Proposed Full-Line Supermarket and Restricted Retail Premises; Amendment VC100; Activity

Centre Policy; ‘Out-of-Centre’; Impact on Other Activity Centres and the Network of Activity Centres;

Role of Section 173 Agreement.

APPLICANTS Vicinity Centres Pty Ltd, Mornington Chamber of Commerce Inc

RESPONSIBLE AUTHORITY Mornington Peninsula Shire Council

RESPONDENT Home Investment Consortium Company Pty Ltd

SUBJECT LAND 61 Mornington-Tyabb Road

MORNINGTON VIC 3931

WHERE HELD Melbourne

BEFORE Margaret Baird, Senior Member

Bill Sibonis, Member

HEARING TYPE Hearing

DATES OF HEARING 23, 24, 25 and 26 October 2017

DATE OF ORDER 3 November 2017

CITATION Vicinity Centres Pty Ltd v Mornington Peninsula

SC [2017] VCAT 1802

ORDER

Permit granted

1 In application P1128/2017, the decision of the responsible authority is

varied.

2 In planning permit application P16/2201, a permit is granted and directed to

be issued for the land at 61 Mornington-Tyabb Road, Mornington, in

accordance with the endorsed plans and the conditions set out in the Notice

of Decision to Grant a Permit issued on 9 May 2017, subject to:

Condition 5 being amended as follows:

o Part b.iv. is amended to read:

VCAT Reference No. P1128/2017 Page 2 of 23

Any subsequent permit allowing the sale of liquor, including packaged liquor, must solely be in association with and accommodated within the supermarket floor area of the

‘4250sqm area designated for a supermarket’.

o The last two sentences in Condition 5 are amended to read:

The agreement is to remain extant for the life of the approved

use and development at this property.

The agreement must be executed prior to the occupation of the development and all costs relating to the preparation of the

agreement are to be borne by the Applicant.

Condition 21 being deleted.

3 The permit allows:

Use and development of the land for a supermarket;

Development of six restricted retail premises and a café;

Reduction in car parking requirements;

Reduction in loading and unloading requirements;

Reduction in bicycle end-of-trip facilities.

Margaret Baird

Senior Member

Bill Sibonis

Member

APPEARANCES

For Vicinity Centres Pty Ltd,

Mornington Chamber of Commerce Inc

Ms M Foley of counsel instructed by Rigby

Cooke lawyers. She called expert evidence from:

Mr R Milner, town planner.

For Mornington Peninsula

Shire Council

Ms S Rigo, town planner, Hansen

Partnership Pty Ltd.

For Home Investment Consortium Company Pty Ltd

Ms S Brennan SC and Ms J Sharp of counsel instructed by Norton Rose Fulbright

Australia. They called expert evidence

from:

Mr J Ganly, economist.

Mr T Dimasi, economist.

Mr B McNamara, town planner.

Mr J Walsh, traffic engineer.

Mr K Twite, town planner.


INFORMATION

Description of proposal

Re-use the existing building for a supermarket with a

total leasable floor area of 4,250m2, six restricted retail

premises (ranging in size from 500 to 2,000m2), and a

café (100m2). 403 car parking spaces and 54 bicycle

spaces are provided. The supermarket would operate

from 6am to midnight seven days a week. The

restricted retail premises are expected to operate from

9am to 6pm daily other than Thursdays and Fridays when they would open to 9pm. No signage is proposed.

Nature of proceeding Applications under section 82 of the Planning and

Environment Act 1987 – to review the decision to grant a permit.

Planning scheme Mornington Peninsula Planning Scheme [scheme].

Zone and overlays Commercial 2 Zone [C2Z]. Mornington-Tyabb Road is a Road Zone Catgeory 1.

Permit requirements Clause 34.02– use and develop the land for a shop (supermarket) exceeding 1,800m

2 in leasable floor area.

Clause 34.02 – to develop six restricted retail premises and a café.

Clause 52.06 – to reduce car parking.

Clause 52.07 – to reduce loading and unloading requirements.

Clause 52.34 – to reduce bicycle end-of-trip facilities.

Key scheme policies and provisions

Clauses 9, 10, 11, 15, 17, 18, 19, 21, 22.01, 22.02, 22.13, 22.18, 52.06, 52.07 and 65.

Land description The land is 3.503ha and located on the north1 side of the

Mornington-Tyabb Road, east of the Nepean Highway.

Tribunal inspection 27 October 2017 (unaccompanied).

1 The subject land is off-set from north. We have simplified directional references for ease.


REASONS2

INTRODUCTION

1 The closure of a large format Masters hardware store which formerly

occupied the subject land leaves vacant a substantial building with

expansive parking facilities. This is where the respondent proposes a full-

line supermarket, six restricted retail premises and a café.

2 The Mornington Peninsula Shire Council determined to approve the permit

application and issued a Notice of Decision to Grant a Permit [Notice]

subject to conditions. Two applications before the Tribunal ask for that

decision to be reviewed. They are by Vicinity Centres Pty Ltd (owner of

Bentons Square and Mornington Central) and the Mornington Chamber of

Commerce Inc.

WHAT THE DISPUTE IS ABOUT

3 The dispute focuses on the proposal for a supermarket of 4,250m² leasable

floor area. This floor area exceeds 1,800m² for a supermarket that is an as-

of-right use within the C2Z. Proposed restricted retail uses are more than

500m² each (to a total of 6,495m2) and are as-of-right in the same Zone.

4 Relying on expert planning evidence, the applicants submit the application

for a full-line supermarket is not strategically justified and there is

insufficient support for a full-line supermarket on the subject land. They

submit that the scale of the supermarket is radically different to an as-of-

right supermarket and in this case will fragment commercial activity, will

establish a critical mass of conventional retail facilities and will duplicate

facilities in other activity centres leading to, among other things, the

creation of a separate retail precinct. The proposal is, the applicants submit,

the antithesis of strategic directions urged by local policy in the scheme and

has the potential to result in significant and detrimental impacts on

established activity centres and, in turn, affected communities.

5 The applicants’ grounds are challenged by the Council and respondent, with

expert planning, economic and traffic evidence called on behalf of the

respondent. The respondent offered several permit conditions during the

permit application process that are included in the Notice and does not seek

review of any conditions included in that Notice.

WHAT THE DISPUTE IS NOT ABOUT

6 Before we turn to our findings with respect to the key issues, it is important

in a balanced assessment of the proposal to identify matters that are agreed

or not in dispute between the parties:3

2 The submissions and evidence of the parties, supporting exhibits given at the hearing and the

statements of grounds filed have all been considered in the determination of the proceeding. In

accordance with the practice of the Tribunal, not all of this material will be cited or referred to in

these reasons. 3 Noting some third party exemptions also apply in clauses 34.02-6 and 52.34.


There are no identified or unacceptable potential off-site amenity

impacts including for existing residents, residential areas or other

sensitive land uses;

The adaption of the existing building on the subject land is acceptable,

with conditions proposed by the Council to enhance the urban design

outcome and establish safe pedestrian access via a signalised crossing

of the Mornington-Tyabb Road;

The majority of the floorspace would be used for restricted retailing,

a use of the subject land for which no planning permit is required and

a use that is supported by local policy in this location;4

The volume of on-site parking is acceptable, with a reduction of seven

spaces from the rates required in clause 52.06 for a supermarket, café

and restricted retail premises;

Arrangements for loading and waste management are acceptable;

Traffic associated with the use can be accommodated on the road

network including through the roundabout adjacent to the subject land

on the Mornington-Tyabb Road;

The proposal would re-use or re-purpose the former Masters hardware

store and land with benefits in terms of renewing infrastructure for

which there has been a substantial investment. That also has

environmental benefits;

A relevant consideration is the impact on the role, function and

viability of activity centres not on competitor businesses.

7 It is further unchallenged that the proposal will:

Create more jobs than:

o the former Masters business – a total of some 161 full-time

equivalent jobs for all of the proposed uses and 31 more than the

former Masters operation.5 Of these, 94 are for the supermarket;

o a smaller supermarket of 1,800m2;

Not include any small-scale speciality shops and only the café is less

than 500m2 in floor area;

Deliver choice and competition as well as offer a convenient option

for residents and workers;

Achieve improved urban design and landscape outcomes consequent

upon conditions included in the Notice.

4 For example, clause 22.02 seeks to facilitate the provision of additional restricted retail floor space

in bulky goods clusters on the edge of townships that have major activity centres. 5 Economic Impact Assessment by Mr Ganly, 14 November 2016, at page 17. Additional indirect

employment will be created by the proposal (100 full-time equivalent) and would also be expected

with a smaller supermarket although the latter is not quantified.


PHYSICAL CONTEXT

Subject land and environs

8 The subject land, and an abutting lot to its south-east, stand alone in this

pocket of C2Z-zoned land. The subject land was rezoned from INZ3 to

Business 4 via Amendment C149 following an Advisory Committee review

of Woolworths’ “Oxygen” proposals in 2010. It was then rezoned C2Z as

part of Amendment VC100 in 2013. The wider area is INZ3. Public land is

to the east and south. A residential area is to the south-west. These zones

are shown in the property report extract in the ‘Information’ section above.

9 The subject land abuts a main road, with roundabout, and is in a setting

where there are commercial, industrial and business uses to the north and

west, parkland to the east, houses to the south-west (west of Dunns Road)

and a civic reserve to the south/south-east. The commercial/industrial area

continues east beyond the Dallas Brooks Reserve. The businesses extending

along the Mornington-Tyabb Road from the Nepean Highway include car

showrooms, a 7-Eleven store, bridal wear, toy shop, a vet, and automotive

services. They have a retail and/or service flavour. Internal to the

industrial precinct are other businesses, some of a light industrial nature.

There are service industries and other uses such as a ballet school and gym.

10 Land on the north side of the Mornington-Tyabb Road is part of a

commercial/industrial corridor. Our description is consistent with the

description by the Advisory Committee reviewing the “Oxygen” proposals

in 20106 and the Council’s 2017 Activity Centres Strategy Review (to which

we refer again below) which describes it as a “mixed business area”.

Activity centres and supermarkets

11 Activity centres are identified in local policy at clause 21.07-3:

6 Report of the Woolworths Advisory Committee Reference No. 3, 25 June 2010, at page 11.


12 Supermarkets in the Mornington region are shown in the extract from the

2016 Economic Impact Statement below:7

13 These include:

Mornington activity centre - north of the Nepean Highway. Main

Street has a distinctive fine-grained character with extensive speciality

shopping, cafés, restaurants and other uses. South of this area are

parkland, community and business uses including a hospital.

The Mornington activity centre contains three supermarkets that sit at

the edge of the retail/commercial area:

o Coles in Mornington Central with a floor area of 3,277m2;

o Woolworths in Mornington Village with a floor area of 2,894m2;

o Aldi at Mornington Village with a floor area of 1,334m2.

The 2017 Activity Centres Strategy Review refers to a low vacancy

rate of 1%.

Bentons Square sits centrally within a large residential area. It

contains a Woolworths supermarket with a floor area of 4,257m2.

There are some 45 specialty and related stores with a Dan Murphys

and service station. There are some community uses. The economic

evidence refers to one vacancy. Mr Dimasi refers to four vacancies.

We saw three vacancies on our visit, with one the subject of a fit-out.

This centre has grown since the 2005 Activity Centres Strategy – then

the supermarket was 3,500m2 with 18 tenancies.

The Peninsula home maker centre is north of Bungower Road. An

ALDI supermarket is in this centre.

7 Mornington Masters Redevelopment Economic impact Assessment, 14 November 2016 at page 8.


Overall, there are two Woolworths, two Aldi stores, a Foodworks, and

one Coles within this region without including Mt Eliza and Mt

Martha. The proposed supermarket is to be occupied by Coles.8

14 Current permit applications before the Council include an expansion of

Mornington Village comprising an additional 600m2 for Woolworths and

266m2 for Aldi.

9 We were also advised of pre-application discussions for a

restricted retail premises on the land adjacent to the subject land within the

C2Z and another property at Craigie Road/Nepean Highway with respect to

a possible rezoning. No formal applications have been lodged with the

responsible authority/planning authority, as far as we are aware.

STRATEGIC CONTEXT

15 We must take account of, and give effect to, State policies applicable to

issues before us to ensure integrated decision-making.10

We must take

account of the Municipal Strategic Statement and local policies.11

16 In the case of Mornington Peninsula, Mornington in the largest activity

centre in the Shire and a Major Activity Centre in the Municipal Strategic

Statement and Plan Melbourne 2017 – 2050. Clause 22.18 identifies the

Mornington Major Activity Centre’s retail core and professional services

areas. The subject land is not within either of these areas. Bentons Square

is a Large Township Centre in local policy.12

The hierarchy of activity

centres is relevant to reinforcing the Peninsula’s distinct settlement

pattern.13

17 State planning policy seeks to support the role and function of each centre

in the context of its classification.14

Local policy supports the activity

centre hierarchy.15

Local policy at clause 21.07-3 further includes that

“Additional retail and office development should be directed primarily to

Major Activity Centres and to a lesser extent to Large Township Activity

Centres in a way that is commensurate with population growth in their

catchments” [emphasis not in the original]. The policy explains this

position, including facilitating a high level of service to the community,

multiplier effects and certainty for investment decisions.

18 Local policy describes fragmentation of commercial activity as not in the

best interests of the community and ‘out-of-centre’ retail (and other)

developments as detracting from compact urban patterns.16

8 Letter from Coles National Transactions Manager to Blueprint Group Australian Trust dated 18

October 2017 tendered by Ms Brennan SC. The letter refers to Coles Mornington as “performing

well” and “is expected to continue to perform well as an anchor to the Main Street shopping

centre”. 9 Based on figures included in Mr Ganly’s statement is evidence at paragraph 38.

10 Clause 10.03.

11 Clauses 20.01 and 20.02.

12 Clause 21.07-3.

13 Clause 21.07-3.

14 Clause 11.03-1.

15 Hierarchy is not mentioned Plan Melbourne 2017-2050 but different categories of centres are nominated.

16 The Mornington Peninsula Localised Planning Statement makes similar points.


19 Bulky goods are “best provided in clusters developed for that purpose”

rather than in dispersed locations on industrial land along main roads or in

other ‘out-of-centre’ locations.17

Such clusters are directed to the edge of

the three townships with major activity centres – one being Mornington.

20 Key issues in the scheme are identified as including the impact of locating

retail and office development, and service stations, outside activity centres

(whether along main roads or in other ‘out-of-centre’ locations) on the

efficiency of the overall hierarchy of centres and on the role, function and

viability of existing individual centres.

21 Post-dating local policy in the scheme, the C2Z allows supermarkets (that

are typically regarded as a core retail use) to be located in a wider range of

locations. The purpose of the C2Z includes:

To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

To encourage commercial areas for offices, appropriate manufacturing and industries, bulky goods retailing, other retail uses, and associated

business and commercial services.

To ensure that uses do not affect the safety and amenity of adjacent, more sensitive uses. [emphasis not in the original]

22 Tribunal decisions to which we have been referred comment on the State-

wide changes as a consequence of Amendment VC100 for commercial and

industrial zones.18

We do not need to add to these remarks. There has been

a strategic policy decision to provide greater flexibility and growth

opportunities for Victoria’s commercial and business centres, responding to

changing retail, commercial and housing markets by allowing for a wider

range of uses to support mixed use employment.19

23 We accept an important principle in State and local policy is to give clear

direction in relation to preferred locations for investment. Strategies in

clause 17.01 do not depart from that. They include:

Locate commercial facilities in existing or planned activity centres.

Provide new convenience shopping facilities to provide for the needs

of the local population in new residential areas and within, or immediately adjacent to, existing commercial centres.

Provide small scale shopping opportunities that need to needs of local

residents and workers in convenient locations.

24 The principle of different roles and functions in a network of activity

centres is evident in policy and the Council’s current strategic thinking.20

17

Clause 21.07-3. 18

Wittner Pty Ltd v Kingston CC [2014] VCAT 789, [6] – [15]; Langmore v LaTrobe CC [2015]

VCAT 690, [17] – [21]. 19

Explanatory statement for Amendment VC100. 20

2017 Activity Centres Strategy Review and the officer’s report addressing that review and the

Industrial Areas Review 2017 September 2017.


25 We do not consider the local policy relating to activity centres in the case

before us should have limited weight as contended by the respondent.

Notwithstanding that the Council states that there is a disconnect between

local strategies that do not support an ‘out-of-centre’ location and the

broadened range of land uses permitted in the C2Z, a network of activity

centres with a range of sizes, roles and functions is part of State policy.21

Local policy identifies a hierarchy and State policy refers to such a network

as comprising a range of centres that differ in their size and function.22

26 However, the scheme contemplates retail formats in other locations;

Amendment VC100 is founded on creating opportunities in other places. It

allows the use of land, as-of-right, for a supermarket to 1,800m2. It allows

permit applications to be made and assessed for larger supermarkets in the

C2Z.

27 The applicants’ evidence refers to the importance of reinforcing the

hierarchy of activity centres. Those who have invested in such centres

should expect planning decisions to support that hierarchy. Mr Milner states

that the policy framework encourages creating greater certainty for

investment by providing for the orderly planning and development of land.

He says the proposal fails in this regard and would not reinforce public

policy. Creating ad hoc centres will likely draw spending and patronage

from the established centres. His evidence concludes that any supermarket

to re-use the Masters site should be limited to 1,800m2.

28 A location that is within the activity centre or even on the edge of the centre

can fairly be regarded as having greater policy support than an ‘out-of-

centre position’, in simple terms.23

But each site and its context must be

individually assessed to appreciate the specific circumstances that apply.

Whether or not the proposal is regarded as ‘out-of-centre’, we must

consider whether the proposal will affect the role, function and viability of

any activity centre and the network of activity centres, and consider net

community benefit, as set out in State and local policy.

29 We do not find that there are grounds to conclude any supermarket re-using

the Masters facility on the subject land should be limited to the as-of-right

provision of 1,800m2. As becomes apparent from our findings below, the

locational and other specific characteristics of the subject land and its

environs, and the relationships with and impacts on existing activity

centres, lead us to conclude that a larger supermarket is acceptable and will

not undermine existing activity centres in terms of their identified role,

function and economic performance.

RELATIONSHIP WITH THE MORNINGTON TOWN CENTRE

30 The subject land is significantly detached from the discrete land area that

comprises Bentons Square.

21

Clause 11.03-2. 22

Clause 11.03-1. 23

Clause 17.01 deals with the concept of ‘out-of-centre’ development. We refer to it below.


31 The focus of the dispute about the ‘out-of-centre’ location of the subject

land is whether it is ‘out-of-centre’ relative to the Mornington Major

Activity Centre. This is relevant when applying State and local policy with

respect to the siting of large retail facilities in locations that are intended to

support designated activity centres and not undermine the role and function

of such centres.

32 The relationship is not agreed between the parties and material before us.

Differences can be summarised as follows:

The Council regards the subject land and proposal as being outside of

the retail core and town centre and describes the locale as a “mixed

industrial precinct”;24

Mr Milner describes the subject land and proposal as ‘out-of-centre’

but also agrees with a description of the land and environs as an

“existing commercial centre”;

Mr McNamara regards the subject land as part of the broader activity

centre network in Mornington;

Mr Ganly describes the subject land as “just beyond the edge of the

Mornington Activity Centre”;25

The explanatory statement for Amendment C149 refers to the land as

being on the edge of the existing Mornington Activity Centre.

33 It is common ground that the land is not within the Mornington Activity

Centre policy area at clause 22.18. As noted earlier, that policy identifies

two areas – the retail core and professional services areas – all north of the

Nepean Highway.

34 The 2005 Mornington Peninsula Activity Centres Strategy , which is a

reference document, did not include the subject land as part of the activity

centre but did include land around the Nepean Highway/Main Street

intersection. That highway area, including the northern end of the

Mornington-Tyabb Road, is not part of the Mornington Activity Centre

policy area at clause 22.18.

35 The Mornington Activity Centre Structure Plan 2007 , also a reference

document, similarly identifies the “highway precinct” and refers to a review

of the longer-term boundaries of this area.26

The highway precinct does not

extend to the area of the subject land.

‘Out-of-centre’ policy and strategies

36 Decision guidelines in clause 34.02-7 do not specifically address a

supermarket. They have broad reference to considering State and local

policy as appropriate.

24

Ms Rigo’s submission at paragraph 10. 25

Mr Ganly’s statement of evidence at paragraph 92. 26

Mornington Activity Centre Structure Plan 2007, at page 61.


37 State policy with respect to “Business” contains the following objectives

and strategies:27

Objective

To encourage development which meet the communities’ needs for retail, entertainment, office and other commercial services and

provides net community benefit in relation to accessibility, efficient infrastructure use and the aggregation and sustainability of

commercial facilities. [sic]

Strategies

Locate commercial facilities in existing or planned activity centres.

Provide new convenience shopping facilities to provide for the needs of the local population in new residential areas and within, or

immediately adjacent to, existing commercial centres.

38 The phrase ‘out-of-centre’ is in clause 17.01-2 where the objective and

relevant strategies in this proceeding are:

Objective

To manage out-of-centre development.

Strategies

Ensure that proposals or expansion of single use retail, commercial

and recreational facilities outside activity centres are discouraged by giving preference to locations in or on the border of an activity centre.

Ensure that out-of-centre proposals are only considered where the

proposed use or development is of net benefit to the community in the region served by the proposal or provides small scale shopping

opportunities that meet the needs of local residents and workers in convenient locations.

39 This clause was amended under Amendment VC100.28

40 Overall, these strategies are linked with State policy relating to the activity

centre network where the objective is to (among other things) encourage

major retail developments into activity centres which provide a variety of

land uses and are highly accessible to the community. Clause 17.01-1

refers to both “existing and planned activity centres” and “existing

commercial centres” with respect to new convenience shopping facilities to

provide for the needs of the local population.

27

Clause 17.01-1. 28

Parts of the clause have remained the same for some years. In January 2010, part of clause 12.01-

2 is set out below. It in turn was part of a clause relating to the network of activity centres and

identifying the role of specific categories of centres:

Out-of-Centre Development

Ensuring that proposals or expansion of single use retail, commercial and recreational

facilities outside activity centres are discouraged by giving preference to locations in or on the

border of an activity centre.

Ensuring that out-of-centre proposals are only considered where the proposed use or

development is of net benefit to the community in the region served by the proposal.


Existing commercial centre

41 In considering clause 17.01-1, and particularly having regard to the land use

and built form character of the subject land and its environs as we have

described earlier, it can be said that the proposal provides new convenience

shopping facilities to provide for the needs of the local population “within,

or immediately adjacent to, an existing commercial centre”. However, it is

in dispute as to whether the land is within, at the edge of, or outside of the

Major Activity Centre as is relevant to the first strategy in clause 17.01-1.

Location with respect to the existing Mornington activity centre

Single use?

42 In considering clause 17.01-2 as it relates to “single use retail, commercial

and recreational facilities outside activity centres” [emphasis not in the

original], it is relevant that the proposal comprises two land uses, only one

of which requires planning permission in this case – restricted retail and

supermarket. Taken simply on this fact, it could be said that the proposal is

not a single use retail or commercial facility. Having said that, both land

uses are nested in the definition of “shop” and “retail premises” and, with

the integrated design, it is arguable that the proposal is a single retail use.

Either way, it is important that ‘out-of-centre proposals’ are assessed in

terms of net community benefit.

Small scale shopping?

43 We do not consider this proposal can be said to be “small scale shopping”

as referred to in clause 17.01-2 even though it would be a convenient

location for local workers and residents.

In-centre? Edge of centre? ‘Out-of-centre’?

44 The scheme at clause 21.07-3 states that zones are applied as follows:

45 As the subject land is zoned C2Z, based on the above it is arguable that the

subject land is part of the activity centre, although, in reality it is isolated

from other land within C1Z and C2Z. We consider the subject land is on

the edge of this part of the large commercial centre and outside the more

narrowly defined Mornington Major Activity Centre in local policy.


46 Having said that, it is important to recognise the functional relationship

between the retail core/peripheral office areas in the defined activity centre

and the mixed business/industrial/commercial area that work together to

support this township. Amendment C149 did so. Such a relationship is also

recognised in the 2017 Activity Centres Strategy Review when describing

the broader precinct as an “enterprise area” as well as by the Advisory

Committee reviewing Woolworths’ “Oxygen” proposals, cited above.

Local policy directions

47 Local policy in the scheme seeks to:

Prevent out-of-centre commercial developments in the industrial

zones that undermine the activity centres policy at clause 22.02,

particularly along main roads;

Prevent commercial strip development along (among others) main

roads and avoid out-of-centre developments along these roads that

undermine the activity centres policy;29

Prevent out-of-centre developments in non-urban areas that undermine

the activity centres policy; 30

Prevent out-of-centre developments in residential areas that

undermine the activity centres policy.31

48 It is self-evident that the subject land is not part of a non-urban area or

residential area. Its context is industrial although it is not zoned INZ3 like

the area to its north and west. It is on a main road.

49 The local policy remains largely unchanged since its introduction into the

scheme, that occurred well before Amendments VC100 and C149.

Nonetheless, it is consistent with the directions of State policy to assess the

impact of the proposed supermarket on the activity centre network. That is

the case whether or not one regards the proposal as a single use or several

uses, and whether or not it is said to be on the edge of, or out of, centre.

50 The 2017 Activity Centres Strategy Review is not a seriously entertained

planning proposal but a draft that the Council has resolved to exhibit

together with the Industrial Areas Review.32

It does not carry influential

weight but has helpful data. We note that it recognises the flexibility

provided by zoning changes. With that in mind, it still emphasises the

importance of the activity centre hierarchy and proposes criteria to

accommodate ‘out-of-centre’ development of an appropriate scale and

nature that achieves net community benefit and does not undermine the

activity centres hierarchy.33

Five considerations are outlined – location,

accessibility, urban design, economic and net community benefit.

29

Clause 22.06. 30

Clause 22.07. 31

Clause 22.12. 32

Council meeting 18 September 2017. 33

2017 Activity Centres Strategy Review, Essential Economic, at page 70.


51 Thus, this current strategic work does not depart from what we consider are

the central questions for us to determine – will the proposal have an adverse

impact on the network of activity centres and does it achieve a net

community benefit? We go to these matters next.

DEMAND AND NEED

52 The applicants contend that there is insufficient demand for a supermarket

of the size proposed and the proposal cannot be justified on the basis of

need. These propositions are not supported by the expert evidence before

us in this proceeding. This evidence includes:

An economic impact assessment by Mr Ganly in 2016 that informed

the Council’s decision;

A further review by Mr Ganly based on updated information including

the latest Census data; and

A peer review and assessment in Mr Dimasi’s expert evidence.

53 In addition, the Council’s economic development and strategic planning

internal referrals give weight to the economic impact assessment, observing

the demand for bulky goods and restricted retailing as well as population

growth.

54 Among the key findings in relation to the economic impact assessments and

evidence with respect to need and demand are:

In 2016, local supermarket floorspace supply was almost 3,000m2 less

than required. The most recent assessment shows the need has

increased with a revised estimated undersupply of 4,012m2 even with

the recent loss of a ‘Not Quite Right’ premises from Mornington. The

change is explained by the latest Census data which shows the

population to have grown at a much faster rate than estimated by the

Australian Bureau of Statistics previously and specifically in the wider

region of the subject land presented in forecasts for the Council.

Estimates and forecasts of retail spending market in the catchment

also show this is greater than estimated in 2016. Food and drink

spending is smaller, for reasons explained by Mr Ganly, but the size is

expected to increase from 2020 onwards.

Evidence of the undersupply is that trading at existing supermarkets is

at levels well above national averages34

, that is, supermarkets in the

region are trading strongly. It is unchallenged that Bentons Square is

one of the best trading in Victoria and the best in Vicinity’s portfolio.

The Council’s internal referral describes Bentons Square as one of the

most profitable and busiest supermarkets in Victoria while Mr Ganly’s

evidence is Bentons Square and Coles Mornington Central trade at

levels “generally well in advance of national averages”.

34

Mr Ganly’s evidence at para 62.


55 We do not set out all of the detailed findings of the reports and evidence.

We have had regard to them and extensive cross-examination of the

economic experts by Ms Foley wherein she challenges assumptions and the

analyses such as the definition of catchment areas, sales and accessibility.

56 We agree with an observation made by the Council’s internal referral – that

there can be various ways to estimate trade catchments and future

population growth. We appreciate variations in assessment assumptions

and methodology could result in different forecasts. Ultimately, the

experts’ conclusions remain intact and robust following cross-examination;

that there is an undersupply of floorspace indicating demand and need.

57 Three further matters require comment and underscore our conclusion with

respect to demand and need and that any short-term oversupply, should it

exist, would be balanced out or surpassed:

First, our conclusion that there is a demand for additional supermarket

floor space to service this community does not rely on population

growth, even though population growth is expected to continue. Our

finding relates to the existing circumstances, based on the expert

evidence.

Second, the proposal before the Council with respect to Mornington

Village is not said to significantly vary these findings insofar as Mr

Ganly estimates that, with an approval of the expansion, the minor

oversupply will be eclipsed by 2020 due to population growth. If that

permit application is approved, there is no basis for us to depart from

the above conclusions on the expert evidence.

Third, the analysis presented in expert evidence does not take into

account additional sales associated with seasonal, holiday, visitation

which Mr Ganly states would boost annual sales by a minimum of 5%

and potentially up to 20% compared with locations where a

supermarket was not in such a location. The 2017 Activity Centres

Strategy Review refers to 14% of total retail sales in the Shire being

non-permanent residents, tourists and other visitors.35

In the current

case, Mr Ganly relies on a conservative figure of 5% that, when added

to the other estimates, reinforces his conclusion that additional

supermarket floorspace is needed and that there is a demand for the

proposed supermarket at a size of 4,250m2.

IMPACT ON THE MORNINTGON MAJOR ACTIVITY CENTRE AND BENTONS SQUARE

58 It is common ground that the catchments of the proposed supermarket and

the existing supermarkets overlap.

59 It is also common ground that there will be a loss experienced by existing

business if the proposed supermarket is approved, particularly with respect

to food and groceries. 35

2017 Activity Centres Strategy Review, at page 56.


60 The respondent submits that the proposal will not have unacceptable

economic impacts on other supermarkets or the activity centres based on Mr

Ganly’s and Mr Dimasi’s expert evidence. The two assessments of impacts

on existing activity centres do not reach identical findings but the

conclusions align – that there will be an impact on sales for the Mornington

and Bentons Square activity centres but this will not threaten the viability of

the existing supermarkets, activity centres or the hierarchy as a whole, nor

change the role or function of any activity centre.

61 Mr Ganly’s assessment updates the Economic Impact Assessment he

prepared in 2016 taking into account changes such as the delay in opening

the proposed premises, changes in floorspace in the activity centres,

recently reported sales for Bentons Square and Mornington Central, and

revised sales forecasts for the proposed supermarket and restricted retail

premises. Other conclusions in Mr Ganly’s and Mr Dimasi’s expert

evidence include:

The impact on the Mornington Town Centre would be -6.6% for food

and -0.8% for non-food and service retailers. The impact on Bentons

Square would be -9.7% for food and -1.0% for non-food and service

retailers.

Bentons Square is a very successful centre with high trading levels

without a strong tourist/visitor focus. Mornington Village is

performing well and expected to continue to do so. The street-based

shopping environment of Main Street, Mornington, is very different to

the proposed facility.

Given the strength of these trading positions, the projected impacts

will not threaten the ongoing viability of any centre or supermarket

and the activity centres will continue to thrive.

The consequences of any impact would be mitigated by factors

including the following – an undersupply in supermarket floorspace,

strong population growth, low vacancy rates in the key activity centres

together with strong supermarket performance, and that the

supermarket will be accompanied by restricted retail tenants only and

therefore limit impacts on specialty traders in the activity centres.

62 It is important to our conclusions that:

There is no contrary expert evidence.

There is no indication on any material or evidence before us that the

supermarkets with which the proposed supermarket would compete

are vulnerable or at risk.

The assumptions and parameters upon which the expert evidence is

founded have been tested through cross-examination and, because of

the strong trading position of the existing supermarkets and activity

centres, the projected impacts do not give rise to concerns that the

network or role and function of activity centres will alter.


Mr Dimasi’s sensitivity analysis demonstrates that even if there are

variations in the order of +/-10% there would still not be a significant

impact on Bentons Square, particularly given its outstanding level of

performance today. Indeed, Mr Ganly’s evidence was that a loss of

some 50% would need to occur to threaten Bentons Square. Nor

would supermarkets in other centres, and more broadly the

Mornington Town Centre, be adversely impacted.

The Council’s economic development referral states that the

Mornington Main Street is a traditional town centre and offers a

seaside feel that shoppers will continue to be highly attracted to with

its village experience. The referral concludes that the proposal will

not compromise the assets that Main Street has to attract shoppers.

The strategic planning referral’s main concern relates to the potential

for speciality shops to be attracted to the subject land and thereby

create a node of activity. It proposes restrictions to prevent this

outcome by limiting the number of premises, as we refer to again

below with respect to the section 173 agreement under the Planning

and Environment Act 1987. The referrals agree with the conclusions

of the respondent’s economic analyses.

63 For these reasons, we do not accept the applicants’ submission that a

supermarket of the scale proposed on the subject land will undermine any

existing activity centre, or the network or hierarchy of centres.

LOST OPPORTUNITY

64 The applicants submit bulky goods retailers have difficulty finding land of a

sufficient size to accommodate their format so the use of a considerable

proportion of the subject land for a supermarket is a lost opportunity.

65 There is no suggestion that there is such a shortage of other land for

restricted retail use in this area to place weight on the applicants’ argument

and evidence on the question of lost opportunity. The 2017 Activity Centres

Strategy Review refers to an adequate supply of industrially-zoned land for

the next 10 years, although it also says that it would be timely to start to

look for additional areas and indicate areas where retail development in

industrial areas will be opposed.

A NEW ACTIVITY CENTRE?

66 The applicants submit approval of the proposed supermarket would create a

new retail node, is effectively a shopping centre based around a full-line

supermarket, and will duplicate facilities in the established activity centres.

That is, it will create a new retail precinct as a foundation for a new activity

centre that has not been the subject of strategic review in the context of the

broader activity centre hierarchy and network.

67 This concern to the Council was among the reasons why a section 173

agreement is included in the Notice, with the aim of restricting the

expansion of retail uses on the subject land. We refer to it below.


68 We agree that the subject land would operate as a convenience centre,

assisted by the high level of accessibility along main roads. We further

agree with the applicants that the proposed supermarket will create a node

of retail and commercial activity. That will occur on land that is currently,

and has historically been, used for commercial land use (including the

former use of the subject land as an antique centre and then the Masters

store).

69 However, we are not persuaded to the view that a new activity centre is

being established. The subject land would largely be used for convenience

supermarket shopping trips but without associated facilities found in the

activity centres such as speciality retailing and entertainment.

70 Moreover, there are several features of this location that do not suggest that

approval of the current application will create or foster a larger complex or

separate activity centre having regard to the physical conditions and the

existing zoning regime:

The C2Z area is confined wherein the vacant lot to the south-east of

the subject land is the only additional C2Z land in the vicinity;

That land, and the subject land, abut the large Dallas Brooks Reserve,

thereby restricting new development and use immediately to the east.

Another large commercial area zoned INZ3 is further to the east but

well detached from the subject land;

Land to the south, across a main road, is in public use for parkland,

recreation facilities and a gallery with land to the south-west

developed with dwellings in a General Residential Zone;

The subject land is elevated relative to land to its west that is part of

the commercial/industrial precinct zoned INZ3 and, without some

significant physical works, does not offer a convenient link to

properties to the west;

There are many lots and businesses to the west of the subject land

with extensive consolidation not an imminent likely prospect;

Land to the north is separated by a road and the supermarket’s back of

house facilities such as the loading dock and is also zoned INZ3.

71 The INZ3 zone limits the nature of retail uses that can occur in this large

industrial, commercial and business precinct as-of-right. The area performs

a significant economic role, as evident in the strategic reviews of industrial

areas and activity centres that have been prepared for the Council and are to

be the subject of public comment. Any proposal to rezone land in the

vicinity of the subject land would be subject to a strategic assessment. We

cannot speculate as to whether an outcome of the 2017 Activity Centres

Strategy Review and 2017 Industrial Areas Strategy will result in such

actions.


72 The Woolworths “Oxygen” Advisory Committee referred to the potential

for the subject land to be a catalyst for future development and strategic

planning initiatives along the business corridor. The 2017 Activity Centres

Strategy Review raises questions about the future role of this area as well. It

is clear, however, that the role of this area is distinctly different to Main

Street, but supportive of, the role of Mornington as the largest settlement

and service centre for the broad region.

73 These findings suggest future strategic work by the Council to guide the

future of the industrial area. The proposal will not pre-empt future strategic

planning for that wider industrial area and arterial road corridor having

regard to the previous use of the land and the constraints associated with

expansion. The Council is expected to take the lead on this consistent with

Plan Melbourne 2017-2050 that includes the following at Direction 1.2

with respect to supporting the network of activity centres:36

All activity centres have the capacity to continue to grow and diversify the range of activities they offer. Opportunities to partner with the private sector to enable future diversification, investment and

employment growth should be explored and, where appropriate, facilitated through planning provisions.

Diversification will give communities access to a wide range of goods and services, provide local employment and support local economies and the development of 20-minute neighbourhoods. In many activity

centres, this growth will include housing, particularly at higher densities.

To capture and to accommodate future growth opportunities activity centres will need greater flexibility in planning controls than surrounding residential areas. Local plans undertaken in consultation

with the community will identify the scope and nature of future growth within each activity centre

74 Further, although the subject land is proximate to recreation and some

cultural facilities, it is not in a location where it is likely that the wide range

of other uses encouraged to locate in an activity centre would occur in the

current planning regime so as to create a new activity centre. Examples of

the broad range of desired uses in activity centres cited in clause 22.02-2

include retail and commercial services (noting the restrictions in the

adjacent INZ3 area), residential development and hospitality/entertainment

services and community facilities.

SECTION 173 AGREEMENT

75 We have referred to an important component of the Council’s decision as a

section 173 agreement in Condition 5. Among its terms are that the use of

the land is limited to the supermarket and food related tenancies within the

maximum floorspace of 4,250m2 and all restricted retail tenancies must

have a minimum leasable floor area of 500m2.

36

Plan Melbourne 2017-2050 at page 37.


76 The respondent accepts the terms of the agreement as set out in the Notice

of Decision37

, referring to it as a “safe-guard to prevent duplication of the

offer at Bentons Square”.38

77 Mr Ganly expresses some reservation about a 500m² limit as the minimum

floor area for restricted retail premises, given some retailers now operate

smaller premises (such as Godfreys at 200 to 300m²) in the form of a

showroom with online sales in addition to on-premises sales. Conversely,

there is an acceptance in other expert evidence, such as by Mr Dimasi, that

the agreement will give comfort by limiting the prospect of smaller

specialty businesses relocating, for example, from the town centre.

78 We are persuaded to accept the appropriateness of including the proposed

section 173 agreement as a condition of permit. We agree that it provides a

safeguard and degree of comfort that are reasonable in the specific

circumstances of this case. Shop-front retailing, such as experienced along

Main Street, is valued and important. The proposal offers something

different to this. The section 173 agreement is a mechanism to endeavour

to maintain a distinction and prevent the proposed development “morphing”

into a retail node that could undermine existing activity centres.

OVERALL IMPACT ON ACTIVITY CENTRE NETWORK AND INDIVIDUAL CENTRES

79 From the above, we conclude the proposal:

Will not adversely impact to any significant degree on existing

activity centres;

Will not create an unplanned and/or rival activity centre that would

threaten the role, viability or function of the designated activity

centres; and

Will complement the available offerings.

80 The volume of restricted retail floorspace in the current proposal is larger

than the supermarket component and would complement the role and

function of this location in terms of restricted retail floorspace.

81 Clause 22.02-3 includes a policy to oppose retail developments that would

cause a change to the classification of any identified activity centre. The

proposal will not do so. It will not create an excessive surplus of floorspace.

PRECEDENT

82 Mr Milner’s evidence refers to the potential for approval of the current

application to create a precedent for other ‘out-of-centre’ full-line

supermarkets. An example he gives is another empty Masters store at the

intersection of Lower Dandenong Road and Springvale Road.

37

At the hearing, variations to Condition 5 were discussed to link the agreement to occupation of the

land and to clarify some other aspects of the wording. We have adopted these as agreed between

the parties in the event a permit was issued. 38

Paragraph 14 of the respondent’s written submission.


83 There were over 60 Masters stores nationwide with 18 in Victoria. There

are no others in the Mornington Peninsula Shire. We have been referred to

several proposals to re-use Masters’ sites for a full line supermarket:

Braybrook – a planning permit has been issued for a 4,275m2

supermarket, six restricted retail premises (6,842 m2) and a café

(100m2).

Altona North – proposed Amendment C109 is a combined amendment

and planning permit application for Part Precinct 9: Land fronting

Millers Road, Altona North, which seeks to rezone the land to

facilitate its use as a supermarket and bulky goods retailing.

A proposal for a supermarket at the Tooronga site on Toorak Road.

84 We are unaware of a proposal for the property to which Mr Milner refers.

85 Ms Brennan and the economic experts refer to other re-use proposals in

Victoria and inter-state involving Bunnings, other forms of restricted retail

and trade supplies and formats being proposed by Home Investment

Consortium Company.

86 There is limited land zoned C2Z associated with the Mornington Major

Activity Centre and other activity centres. Permit applications that propose

retail uses in the C2Z will be determined on their own facts and

circumstances. For example, the Braybrook proposal was found to (among

a number of positive outcomes) respond to a demonstrated demand, have

minimal impacts on existing activity centres at Highpoint and Sunshine,

enjoy good exposure, complement other retail and commercial uses, offer a

large range of restricted retailing, create jobs, have no off-site amenity

impacts, re-purpose a building, and not impact on the safety and operation

of the road network.39

Many of these are the same conclusions as we reach

in this case.

NET COMMUNITY BENEFIT

87 The Tribunal must decide whether the proposal will produce an acceptable

outcome having regard to the relevant policies and provisions in the

scheme. Net community benefit is central to reaching a conclusion. Clause

10.04 of the scheme requires the decision-maker to integrate the range of

policies relevant to the issues to be determined and balance conflicting

objectives in favour of net community benefit and sustainable development.

88 There are multiple benefits to the community arising from this proposal and

we agree with the respondent’s summary of them as including:

It will meet a need for additional supermarket floorspace in the region;

It will provide choice and competition in a highly accessible location;

It will provide a different retail offer to that in the retail core of the

Mornington Major Activity Centre and at Bentons Square;

39

Delegate report, Maribyrnong City Council, dated 15 February 2017 tendered by Ms Brennan.


It will provide additional employment relative to the former use of the

land as a Masters home improvement store and will re-use, and

enhance, the infrastructure associated with that store;

It will provide a new signalised pedestrian crossing;

It will not have an unacceptable impact on the trading figures of

surrounding supermarkets;

It will have no amenity impacts;

It will not undermine the network of activity centres, will not create a

new activity centre, and will not affect the role, function or hierarchy

of activity centres.

89 There will be some negative impacts as we have set out in these reasons. We

have formed the view that such impacts are not unacceptable and will, in

time, be adequately mitigated.

CONCLUSION

90 This proposal is an early example of a permit application that seeks to rely on

the flexibility introduced through Amendment VC100 to allow a significant

retail use in a location that is not designated as part of an activity centre.

These types of facilities are typically directed to activity centres for sound

reasons. However, this proposal also shows that there may be locations

where such uses can establish. In this case, the proposal re-uses a former

large business premises that is adaptable for a supermarket and restricted

retail premises. It is not a case of a new commercial site or a greenfields

location. The location is a discrete commercial precinct that is associated

with the Mornington Major Activity Centre and, based on the evidence

before us, can offer benefits to the community without altering, undermining

or placing at risk the role and function of the network of activity centres

nominated in the scheme. There is a net community benefit in approving the

proposal before us.

91 We have not been persuaded to accept the applicants’ grounds that the

proposal does not deliver a net community benefit, undermines the

hierarchy of centres, will create new activity centre, or that there is

insufficient demand and unreasonable impacts arising from a supermarket

of the scale proposed in the C2Z as applies to the subject land.

92 For the reasons above, we agree with the decision made by the responsible

authority to grant a permit but will make some minor variations to the

conditions contained in the Notice for consistency and clarity. We will also

delete Condition 21 as this relates to permission under the Food Act 1984.

The Council can add this as a note should it wish.

Margaret Baird

Senior Member

Bill Sibonis

Member

Documents

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL ......22.13, 22.18, 52.06, 52.07 and 65. Land description The land is 3.503ha and located on the north 1 side of the Mornington-Tyabb Road,