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Caltex Australia Petroleum Pty Ltd v City of Holdfast Bay [2014] SASCFC 59

Development of an existing non-complying use - Supreme Court refines and renames the “Mercedes College” principle

In a very recent decision, a Full Court of the Supreme Court (consisting of Chief Justice Kourakis, and Justices Bampton and Parker) has clarified the scope and content of the principle commonly referred to as the “Mercedes College” principle.

The “Mercedes College” principle (now the “existing non-complying use principle”) is a principle of interpretation of development plans.

It applies to development of an existing land use which is listed as “non-complying” in a development plan.

Until the Caltex case, the principle would have been expressed in the following terms:

In the absence of a contrary indication, a Development Plan’s designation of a use as non-complying does not apply to a development which is a reasonable development, or a continuation of, an existing non-complying use.

The Caltex case required the Court to consider two issues more closely, namely:

  1. what is meant by “continuation” of an existing non-complying use (as distinct from a “new” use)
  2. whether the principle includes a concept of “reasonableness”.


Caltex operates an existing petrol filling station and shop on Brighton Road.

Its current approval is subject to a condition which confines operating hours between 6:00am and 10:00pm.

Caltex lodged a development application which sought to demolish the existing shop building and replace it with a larger shop, together with other works on the site. It also sought to extend operating hours to 24 hour trading.

Within the relevant zone, both a “petrol filling station” and a “shop” were listed as kinds of non-complying development.

The Council treated the application as non-complying on the basis that 24 hour trading changed the essential character of the existing use. Therefore, as a change of land use, it fell outside the existing non-complying use principle.

On appeal, the ERD Court agreed with the Council’s decision.

Caltex appealed to the Supreme Court.

The Judgement

The Supreme Court noted that the “existing non-complying use principle” involves “undesirable uncertainty”.

After reviewing previous case authorities, the Court then considered the two issues requiring clarification.

  1. Continuation of an existing non-complying use

    In effect, the question to be resolved by the Court was whether an increase in operating hours brought about a change of land use, or whether it was the continuation of an existing use.

    The Court held that changes of land use are to be determined in accordance with ordinary principles. There can be no hard and fast rules.  The process requires a comprehensive analysis of the activities, before and after, the proposed development for the purposes of classifying them, in a practical way, within a particular “genus”.

    In Caltex’s case, it was held that removal of a condition limiting operating hours did not change the existing use from a petrol filling station and a shop. It did not bring about a change to the “genus” of the use of the land. Thus, it involved the continuation of the existing use of land, and not a new land use.

    This aspect of the judgement reinforces the importance of properly characterising the existing land use when determining whether or not a change of use will occur. The Court gave the example of a shop. It said:

    “...there are many kinds of shops. If “shops” are prescribed as non-complying developments, a change from a fruit shop to a pet shop constitutes a change of use even though both the fruit shop and the pet shop are non-complying uses.”

    Thus, it will be critical for planning authorities to look beyond overly broad descriptions that might be given to existing uses, such as “shop” or “industry”, and to closely examine the precise “genus” of the use.
  2. The concept of reasonableness 

    Importantly, the Court held that reasonableness is not a criterion for delineating developments of an existing non-complying use.

    The difficulty with the concept of reasonableness is that it results classification of the development as non-complying or not, and its assessment on the merits, being merged. 

    The Court said that whether a development is reasonably necessary for the sustainability of a business operated on a site is not a planning issue.

As a result the Supreme Court set aside the decision of the ERD Court, and remitted the application to the Council to process as a merit development.


Arising from the Caltex decision – and other previous decisions – the key propositions pertaining to the “existing non-complying use principle” would seem to be as follow:

  1. The existing use must be lawful.
  2. The principle does not apply to expansion of an existing use onto new land which has not previously been used in conjunction with the use.
  3. The principle does not apply to a change of use of land, including where a new non-complying land use is added to an existing use, or where a change of use occurs even though both uses fall within a non-complying description (such as “shop”).
  4. The principle may be displaced by express provision to the contrary in a development plan.
  5. In the absence of express provision to the contrary, the principle applies to development involving the continuation of an existing non-complying land use. This includes applications for building work, or departure from an existing limitation (condition) on the use.
  6. The concept of “reasonableness” (i.e. whether or not a proposed development is a “reasonable development” of an existing non-complying use) is irrelevant.

In considering specific applications, the key factual and legal issues to be determined will be:

  1. Is the existing non-complying use lawful?
  2. What constitutes the site of the existing non-complying use?
  3. Does the proposal involve a change in the use of the land? In other words, do the proposed activities involve a different “genus” of use, or a change to “the essential nature of the existing use”?
  4. Alternatively, does the proposal involve the continuation of the existing use? In other words, do the proposed activities fall within the same “genus” of use, or do they involve “natural changes in the method of using the land”?

When formulating non-complying lists, policy planners should also consider using clear language where the intention is to displace the “existing non-complying use principle”.

For more specific information on any of the material contained in this article please contact Peter Psaltis on 8210 1297 or

PIA SA - REBOOT 5: Planning and the Law - Dispute resolution in and outside the ERD Court

Norman Waterhouse Lawyers on behalf of PIA have assisted in the coordination of the PIA Reboot 5 - Planning and the Law seminar - and are session sponsors. Partners Gavin Leydon and Peter Psaltis are presenters at the seminar. Further information and registration details follow.

Date: Thursday 19 June
Time: Registration from 2:15pm - session 2:30 - 5:00pm                   
Location: Tennyson Centre, 520 South Road, Kurralta Park
Parking: Free car parking at rear of building
Bookings: Online at
PD Points: 2
Cost:   PIA Members $70.00
Non Members $85.00
PIA Student Members $50.00

Planning is a highly emotive realm, yet it is steeped in the law. The development assessment process is often viewed as an adversarial rather then an inquisitorial one.  While planning is inherently about compromise, opposing parties to a planning matter will not always agree to conciliation or reach a common position.  This seminar will help you understand the critical interventions that can make all the difference between a heated disagreement and a legal dispute.  It will help you identify, avoid and manage unnecessary or costly showdowns in court and to prepare for a hearing in an efficient way where a matter is proceeding to trial.

Speakers include:

Brian Hayes QC - Murray Chambers, Chair, Expert Panel on Planning Reform
Legal processes for dispute resolution in a future planning system

Patrick O'Sullivan QC - Barrister at Edmund Barton Chambers & accredited mediator
Keeping out of Court: Conflict resolution & mediation techniques

Commissioner Stephen Hamnett -  Environment, Resources and Development Court
What to expect if your matter reaches the ERD Court and how it might be resolved

Peter Psaltis - Partner, Norman Waterhouse Lawyers
Pre-trial processes and preparing for hearing


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