Free (super)market economics – the SAT rules in favour of retail competition

In a significant win for the development industry and for proponents generally, the State Administrative Tribunal (SAT) has granted development approval for a new shopping centre in the suburb of Midvale, despite fierce opposition from both the respondent decision-maker and existing retail operators in the area.

The decision in John Nominees Pty Ltd v Presiding Member of the Metro-East Joint Development Assessment Panel 1 confirms that commercial competition is not a valid reason to refuse a development application and absent the clear potential for a net loss of benefit to the community, new retail developments should be supported.

The proponent in this matter submitted a development application for a neighbourhood centre type shopping complex on vacant land in Midvale.  The land was not specifically zoned for commercial purposes, but was rather zoned for residential development.  The land was subject to a structure plan, but the area that included the land was designated in the structure plan as being subject to further planning.  On the other hand, a new commercial strategy document adopted by the City of Swan had identified this general area as being suitable for a future new retail centre.

The development application was refused at first instance by the Metro-East Joint Development Assessment Panel (JDAP), primarily based on concerns that the proposal would divert retail trade from three existing shopping centres in the locality, to their detriment.  The JDAP’s purported planning justification for this reason for refusal was State Planning Policy 4.2 – Activity Centres for Perth and Peel (SPP4.2), which refers to establishing and protecting a defined retail hierarchy.

The proponent subsequently commenced an application for review in the SAT in respect of this refusal.  After an unsuccessful mediation with the JDAP and a formal reconsideration process, the matter was programmed towards a final hearing, at which stage, representatives of the three existing shopping centres in the locality were granted leave to intervene.  The proponent therefore effectively had to contend with four different respondents in this SAT proceeding.

As the reasons of the SAT record, the respondent and the intervenors largely approached this matter as being a dispute about economics.  There were six hearing days alone spent on the topic of retail sustainability, during which the various expert witnesses for the respondent and the intervenors attempted to persuade the SAT that the proposed development would put the existing shopping centres (and in particular the supermarket anchor tenants) out of business.

The SAT in its reasons correctly identified that this was a planning matter and that by reference to SPP4.2, increased commercial competition is not itself a relevant planning consideration.  Further, the SAT correctly concluded that SPP4.2 would only warrant refusing a development application if a given proposal would lead to a loss of services to the community, which loss would not be made good by the proposal itself.

The SAT ultimately preferred the expert evidence put forward by the proponent’s retail economist, which found that although there would be a diversion of trade, it would not be enough to threaten the viability of the existing shopping centres in the area.  The SAT further indicated a view that even if, as a worst case scenario, other supermarkets in the area were made to go out of business, the new proposed supermarket would be a superior offering and would clearly make good any loss of services to the community.

The SAT concluded that the development application was supportable by reference to SPP4.2 and would be consistent with orderly and proper planning, despite the current absence of any specific structure planning provisions.

Lavan comment

This decision of the SAT demonstrates that even in challenging scenarios with significant resistance from various stakeholders, meritorious development applications should and can be approved.  It is hoped that this SAT decision will see decision-makers adopt a more flexible approach to applying policy documents such as SPP4.2 and disregard the potential for increased commercial competition as a planning consideration in determining proposals.

Lavan is proud to have represented the successful proponent in this rather long and complicated SAT proceeding.  If you have any questions regarding proposed retail development or the application of SPP4.2, please do not hesitate to contact Lavan’s Planning, Environment and Land Compensation Team.