Court of Appeal on characterisation of 'ancillary' uses

Co-authored by Law Graduate, Jennifer Chen

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Court of Appeal on characterisation of 'ancillary' uses

Court of Appeal on characterisation of 'ancillary' uses

Co-authored by Law Graduate, Jennifer Chen

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May 31, 2024

The decision in Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 (Foodbarn) has long stood for the principle that activities subservient to a dominant purpose of the use of land may be considered to be ancillary to that use, and not require development consent separately, provided the dominant purpose is being lawfully carried out and the ancillary uses are not prohibited.

The Court of Appeal in Cooke v Tweed Shire Council [2024] NSWCA 50 (Cooke), considered the application of Foodbarn in determining whether farm buildings for storage, and subsequent processing, of hemp leaves into low-TCH products for sale was ancillary to horticulture (being a form of intensive plant agriculture) or extensive agriculture, which were uses permissible without development consent.

The appeal was brought against a decision of Pain J in Tweed Shire Council v Cooke [2023] NSWLEC 73 where she found in favour of Council. Tweed Shire Council (Council) commenced proceedings against Mr Cooke, claiming that the processing, infusion and packaging activities of hemp infused products and the erection of buildings for storage was being undertaken without development consent where development consent was required under the Tweed Local Environment Plan 2014 (LEP).

The Use

Mr Cooke held a licence pursuant to s 5 of the Hemp Industry Act 2008 (NSW), to cultivate or supply low-THC hemp for production and manufacturing purposes. He carried on a business of growing, cultivating and harvesting the hemp, but also the storage of and subsequent processing hemp leaves by infusing it into olive oil or beeswax, which was then sold to the public on-line and from a shop at a different location.

The Land on which the Use was being carried out was zoned RU2 Rural Landscape under the LEP.

The Parties Characterisation

Mr Cooke submitted that the Use was permissible without development consent in the RU2 Zone as either horticulture (being a form of intensive plant agriculture) or extensive agriculture. He submitted that, properly characterised, the activities undertaken on the Land (which included the construction of farm buildings for the storage of the hemp as well as the processing of the hemp leaves) were all ancillary to the dominant purpose of horticulture (relying on that part that means “the cultivation of … foliage … for commercial purposes”) or alternatively extensive agriculture (relying on that part which means “the production of crops … for commercial purposes”).

Mr Cooke accepted that in order to be permissible without consent the construction of the buildings had to be “ancillary or incidental to” a use permitted without consent, and submitted that the “consequential processing activities” of hemp oil products are either part of the defined uses or ancillary to those uses, they do not change the overall characterisation, or add a different independent use.

The Council did not argue that the growing and cultivation of hemp could not be carried out without development consent. It alleged that properly construed the use being carried out on the land, which included the storage buildings and the production of hemp infused products, was that of farm buildings and a rural industry, both uses which were permissible but only with development consent in the RU2 Zone.

The Council accepted that hemp leaves constituted a form of “foliage”, but submitted that the correct way to read the definition of horticulture was to treat the composite phrase “cut flowers and foliage” as one item.

The Court’s consideration

Horticulture

The Court found at [44] that the growing of hemp plants did not constitute horticulture:

…horticulture is not, either in its ordinary meaning or its defined meaning, synonymous with cultivation of a crop; the separate references to crops in the definitions of both intensive plant agriculture and extensive agriculture confirm the distinction. Producing hemp is more readily assimilated to production of a crop than horticulture, as defined.

The Court went further by unpacking the manner in which the applicant sought to limit the use to foliage at [46] to [47] finding that:

In short, both common syntactical practice and context require that the definition of horticulture involves as one item “cut flowers and foliage”. That phrase does not sensibly include a crop of hemp, even if hemp is correctly identified as a flowering plant.

Extensive agriculture

The Court accepted at [50] that farming of hemp for commercial purposes falls within the definition of extensive agriculture, however said that:

…what is produced is a crop: it may properly be described as agricultural produce. The crop undoubtedly encompasses the leaves of the hemp plant, together with any other part of the plant which can be used for commercial purposes. However, the ordinary scope of that language does not include the result of processing the crop. A rice farmer produces rice, but not chocolate coated rice bubbles.

The Court observed that there may be activities ancillary to extensive agricultural activity “such as harvesting the crop and storage pending transport to market, including the use of machinery and trucks to undertake those tasks.” Importantly the Court went on to say at [51]:

…If, for example, those ancillary activities involve buildings on the land, those buildings will require development consent as “farm buildings”. That is because categorisation of an activity as “ancillary to” another activity tells one nothing about the status of the ancillary activity under the statutory instrument: that question can only be answered by reference to the express terms of the statutory instrument.

The Court ultimately found in favour of the Council at [52] that:

So far as the processing of the hemp leaves is concerned, it does not, in any event, naturally fall within the category of ancillary activities of the kind identified above. The Tweed LEP could, of course, provide a different answer to that question. However, the Tweed LEP does the opposite: it demonstrates a clear intention that such activities are not to be encompassed within the concept of production of a crop. Any “handling, treating, production, processing, storage or packing of … plant agricultural products for commercial purposes” falls within the definition of “rural industry”.

Ancillary uses

Returning to a consideration of Foodbarn (Cooke at [54] to [60]), what the Court did in that case was to examine the definitions of the uses of the planning scheme applicable at that time. The Court held in Foodbarn at p160, “An ordinance which sets out to provide a catalogue of activities some of which are permitted and others prohibited could hardly intend that the prohibited activity would be acceptable if it were allied to some other permitted activity. A prohibited purpose is equally repugnant to the planning scheme, whether or not it be carried out in isolation from other purposes.” The Court construed and applied the words of the scheme to identify the use.

In Cooke the Court applied the same test, that is by having regard to the express terms of the LEP, in finding that the ancillary uses alleged by Mr Cooke either do not arise from the definitions relied on or are otherwise specifically provided for as defined permissible uses. The Court ultimately reminds us about what Foodbarn stands for as regards ancillary uses at [58]:

Beyond recognising the possibility that one purpose could subserve another dominant purpose, the circumstances in which that could arise were not important because Foodbarn was not such a case. However, where the ultimate purpose for which land is used is the production of goods for sale, steps in the course of the processing of material to create the goods are likely to be ancillary or incidental to the final production, if they are not part of the process of production itself. On the other hand, the separation of grain from chaff, or the grading of fruit or vegetables, may be seen as ancillary to the production of a crop for sale, although it may involve an industrial process.

What is an ancillary use?

As can be seen in Cooke, merely because a use (here the production and sale of hemp oil products and the construction of storage buildings) is subservient to a dominant use (here the cultivation of hemp) does not mean that use is ancillary to the dominant use. It may well be subservient, but nevertheless an independent use which either requires development consent or is prohibited.

Cooke serves as a reminder to consider that whether or not a use is ancillary will depend on the form of a particular dominant use and then whether the ancillary use is incidental to that dominant use. As can be seen in the examples the Court gives, some ancillary uses may indeed be incidental to defined use X, but the same ancillary uses may form part of or be specifically defined in use Y, in which case they may not be ancillary to defined use X.

Key takeaways

Just because an activity can be characterised as ‘ancillary’ to a use that is permitted without consent, does not mean that the activity itself is permitted without consent.
The only way to determine whether an activity may truly be regarded as ancillary to a permissible use is to look at the LEP and carefully consider all the forms of use which are identified as permissible with or without consent or prohibited, to confirm whether the ancillary use is truly incidental and not itself a form of use.
Not arising from the decision but as a reminder to our readers that development permissible without development consent does not mean the use may be carried out with no environmental assessment; it is often the case that such development amounts to an activity which requires an approval under Part 5 of the Environmental Planning and Assessment Act before being carried out.