Correctly characterising a planning use is crucial for ensuring that a development is permissible and lawful.

A recent NSW Court of Appeal decision illuminates the principles on characterisation of use, and answers the questions:

• Does a pharmacy located within a medical centre have an independent use of a ‘shop’?
• What is the distinction between a ‘retail pharmacy’ and a ‘medical pharmacy’?

Bronger v Greenway Health Centre Pty Ltd t/as Greenway Plaza Phamarcy [2023] NSWCA 104

The respondent operated a pharmacy as part of a medical centre, which contained suites for health professionals and provided a variety of health services. The pharmacy serviced the public, in that sales were not restricted only to patients of the medical centre.

The site was zoned B5 Business Development in the Fairfield Local Environmental Plan (the LEP). In this zone, ‘commercial premises’ were prohibited.

The relevant definitions in the LEP were:

commercial premises means any of the following—

(a) business premises,
(b) office premises,
(c) retail premises.

business premises means a building or place at or on which—

(a) an occupation, profession or trade (other than an industry) is carried on for the provision of services directly to members of the public on a regular basis, or
(b) a service is provided directly to members of the public on a regular basis,
… but does not include … medical centre …

retail premises means a building or place used for the purpose of selling items by retail, … whether the items are goods or materials (or whether also sold by wholesale), and includes any of the following—

…
(l)  shops,
…

shop means premises that sell merchandise such as groceries, personal care products, clothing, music, homewares, stationery, electrical goods or the like …

A Complying Development Certificate was issued  for the fitout for the medical centre. An occupation certificate was later issued in June 2020 (the OC), which listed the same building classifications and scope of works as the CDC, but additionally stated ‘Retail Pharmacy (not including Medical Pharmacy)’ under a description ‘Exclusions’.

The applicants contended that the respondents were unlawfully conducting a ‘shop’ or ‘retail pharmacy’ and applied to the Land and Environment Court to restrain the respondent from doing so.

The Decision of the Land and Environment Court

Pain J dismissed the application in the Land and Environment Court. Her Honour found:

• The respondent’s use did not fall under the definition of ‘shop’ – Her Honour found the sale of personal care products was ‘ancillary to the pharmacy operation’ and was not ‘independent use as a shop’.
• The respondent’s use did not fall under a ‘retail pharmacy’ – Her Honour construed the phrase ‘medical pharmacy’ as a pharmacy ‘which largely, not necessarily exclusively, sells medicines to anyone’ and contrasted it with a ‘full service’ retail pharmacy which would sell a greater variety of items. Her Honour rejected any distinction between the two terms being based on who the items could be sold to

The Decision of the Court of Appeal

The applicants appealed to the NSW Court of Appeal. The Court upheld the appeal and ordered the respondent to be restrained from selling items to any person who was not a patient at the medical centre.

Whether the respondent’s use is an independent use of ‘shop’ under the LEP

The Court found that the respondent’s use fell under the prohibited use of a ‘shop’. It found this was an independent use that was not ancillary to the use of ‘medical centre’, and Pain J had erred in finding otherwise.

The Court found:

• The medicines and other goods sold by the pharmacy constituted ‘merchandise’ and ‘items sold by retail’ under the LEP’s definition of ‘shop’;
• The sale of medicines and pharmaceutical items to people who were not patients of other healthcare professionals at the medical centre (i.e. to members of the public), could not be classified as incidental or ancillary to the conduct of a medical centre;
• The sale of medicines and pharmaceutical items to these customers could not be characterised as the provision of ‘health services’ to ‘out-patients’, under the LEP’s definition of ‘medical centre’;
• In any case, the fact that the use could be characterised as a ‘medical centre’ did not preclude the use from also being characterised as a ‘shop’;
• As a ‘shop’ is a form of ‘retail premises’, which are a form of ‘commercial premises’ in the LEP, it is a prohibited use in the zone.

Whether the respondent’s use is a ‘retail pharmacy’ under the OC

The Court found that the respondent’s use was a ‘retail pharmacy’, which was not permitted under the OC, as opposed to a ‘medical pharmacy’, and Pain J had erred in finding otherwise.

The Court found:

• The OC, like development consents, should be construed consistently with relevant planning instruments;
• The phrase ‘retail pharmacy’ should be seen as reflective of the definition of ‘retail premises’ and ‘shop’; and the phrase ‘medical pharmacy’ should be seen as reflective of an ancillary, non-independent use of a pharmacy for out-patients of a medical centre;
• The obvious planning purpose in distinguishing between serving out-patients and other members of the public was to reflect the prohibition of ‘retail premises’ in the B5 zone, under the LEP;
• The distinction between a ‘retail pharmacy’ and a ‘medical pharmacy’ was the sale of goods to the public.

Key Takeaways

• Correct characterisation of use at an early stage is crucial to avoid legal issues arising at a later stage. This applies equally for complying development certificates as well as development consents;
• Development consents, CDCs and OCs must be construed consistently with relevant planning instruments.