High Court on standing to challenge planning decisions which may adversely affect the economic interests of a business

planning decisions

The High Court has clarified the principles and analysis required to determine whether economic detriment to a business by reason of a planning decision may give rise to standing in a judicial review application under the Administrative Decisions (Judicial Review) Act.  The case is Argos Pty Ltd v Corbell, Minister for the Environment and Sustainable Development [2014] HCA 50 (10 December 2014).

Facts

The appellants sought to review the Minister’s decision to approve an application by the respondents for a statutory approval of a commercial development proposal at the Giralang Local Centre in the ACT including a supermarket and specialty shops.  The second and third appellants operated supermarkets at the Kaleen Local Centre and the Evatt Local Centre, respectively.  The first appellant held a Crown lease at the Kaleen Local Centre and sublet the supermarket there to the second appellant (at [88]).

Determination of the development proposal required consideration of “amenity” under certain Development Controls for Commercial Zones, including Criterion 33 which required that:

A proposal to carry out development in a local centre must have regard to any significant adverse economic impact on other commercially viable local centres”.

The primary judge found that the proposed development at the Giralang Local Centre would be likely to result in a 7.5% or greater reduction in the annual turnover (and hence profit) of the Kaleen and Evatt Local Centres.  The second and third appellants gave evidence that depending on the scale of the reduction in turnover, each supermarket might be forced to close or to reduce the size of its operations (at [89]).

The first appellant gave evidence that the second appellant was an “anchor tenant” critical to ensuring that the Kaleen Local Centre remained a viable business operation, and that the closure or downsizing of its supermarket would be likely to affect the continuing profitability of the Kaleen Local Centre as a whole (at [89]).

The question on appeal

The question on appeal was whether the appellants were “persons aggrieved” as defined in s 3B(1)(a) of the Administrative Decisions (Judicial Review) Act 1989 (ACT), being “a person whose interests are adversely affected by the decision”.  The High Court treated the ACT ADJR Act as being relevantly identical to the Commonwealth ADJR Act, hence the importance of this decision outside the ACT.

The decisions below

The Supreme Court of the ACT, at first instance and on appeal held that none of the appellants was a “person aggrieved” by the Minister’s decision and dismissed their applications for judicial review.

The primary judge held that the second and third appellants did not have standing because their alleged economic interests (their profitability would be affected by increased competition) were not directly affected by the decision.  The first appellant’s interests as landlord, being one step further removed from the decision, did not have standing either.

The Court of Appeal noted the primary judge’s conclusions and observed that the effect of increased competition on the appellants’ profitability was too remote to make them “aggrieved persons”, characterising their interests as “merely concerned with addressing trade competition”.  The Court of Appeal observed, based on earlier authorities that:

as a general rule, mere detriment to the economic interests of a business will not give rise to standing”.

The arguments in the High Court

In the High Court the appellants disputed the existence of any such general rule, and none of the respondents supported the existence of such a rule.

The appellants submitted that they had standing by virtue of the primary judge’s finding as to the likely adverse effect of the development proposal on the profits of the second and third appellants.

The respondents submitted that the interests of the second and third appellants were too remote or indirect to be “persons aggrieved”, and that the scope and purpose of the relevant Planning Act served to narrow the interests which satisfied s 3B(1)(a) of the ADJR Act.  In relation to the latter the interests of a person are relevantly affected by a decision only if they are “coincidental with the particular public interest” addressed by the legislation under which the decision is made (at [24]).

The appellants conceded that whilst one must have regard to the legislation giving rise to the administrative decision under review to determine the legal and practical effect of the decision, the relevant planning law did not limit the operation of the ADJR Act.  In particular it is sufficient to show that the decision had an adverse practical effect upon a person’s interests, irrespective of whether those interests were “coincidental with the particular public interest” sought to be served under the Planning Act.

The High Court’s decision

The High Court unanimously allowed the appeals of the second and third appellants, and by a majority of 4-1 (Gageler J dissenting) dismissed the appeal of the first appellant.

All justices rejected the existence of any “general rule” that “mere detriment to the economic interests of a business will not give rise to standing”.

French CJ and Keane J held that it was sufficient for it to be established as a fact that the approval of the development proposal would adversely affect the profitability of the second and third appellant’s businesses.  The courts below erred in then asking whether a test of “directness” could be satisfied on the basis that those adverse effects depended on uncertain market forces and competitive responses (at [29]):

Under the planning regime relevant here, as indeed under the general law, no trader has an interest in hindering competitors or being protected from competition.  It is a matter of public policy that no trader has an interest in being protected from “competition per se” or “mere competition” (at [34]) [citations omitted]

Neither the Planning Act nor the Territory Plan evinces any intention to permit decision‑makers to accommodate private traders’ desires to be protected from competition per se.  In this case, however, the second and third appellants demonstrated, as a matter of fact, that their businesses will suffer a loss in profitability as a result of the decision which they sought to challenge.  And if their challenge to the lawfulness of the decision proves to have merit, the consequences of the competitive pressures resulting from the decision they seek to challenge can properly be described as a situation of “unfair competition”, rather than mere competition” (at [35])

The position of the first appellant is different.  There was no finding of fact that the second appellant’s business would be likely to fail as a result of increased competition consequent upon the implementation of the Development Proposal.  As a result, there was no finding that the first appellant would, in turn, lose the benefit of its lease to the second appellant.  Nor was there a finding that, in the event of the failure of the second appellant, the lettable value of the first appellant’s land would be reduced by the implementation of the proposed development.  The appeal by the first appellant fails at this point.” (at [36])

As to directness, remoteness and proximity:

The judgments of fact and degree required to resolve the ‘problem … inherent in the language of the [ADJR] may conveniently be expressed in terms of directness or remoteness or proximity.  But these terms are expressions of conclusionary judgments; their use does not indicate the deployment of tools of analysis.” (at [39]) (emphasis added)

In the present case, once it was shown, on the balance of probabilities, that the second and third appellants would suffer a not insignificant loss of profitability in their businesses, no further inquiry as to directness or remoteness or proximity was required in order to determine whether their interests were adversely affected by the decision in question.” (at [40])

As to the relevance of the legislation under which the decision is made, their Honours held that the statutory criterion for standing under s 3B(1)(a) does not alter according to the scope and purpose of the enactment under which the impugned decision is made.  To do so would undermine an important purpose of the ADJR Act which was to simplify judicial review processes (at [42]).

However it is necessary to have regard to the relevant enactment and the legal effect and operation of the decision in order to determine how the interests of the applicant for review may be adversely affected or how the applicant may otherwise be a person aggrieved (at [40] – [48]):

It may be accepted that the public interest in town planning is properly and relevantly served by ensuring that local shopping centres do not become wastelands by excessive competition between traders.  That is the concern addressed by Criterion 33.  It may also be accepted that Criterion 33 is concerned with the public interest, and not the interest of individual traders in being protected from competition.  But the circumstance that an effect upon a private interest is not a consideration relevant to the making of the decision does not mean that such an interest is not adversely affected by the decision so as to afford an affected person standing to challenge the lawfulness of the decision on grounds that are relevant to its validity.” (at [47]) (emphasis added)

Hayne and Bell JJ generally agreed with French CJ and Keane J, and observed as follows:

It may well be right to say, as the second and third respondents did, that the Planning Act does not have as an object or purpose the “protection of the commercial interests of [individual] owners of shopping centres or supermarkets, or the protection of existing supermarkets from competition”.  But it by no means follows that an individual owner or operator is not adversely affected by a planning decision that will have direct commercial consequences for that owner or operator.  As the Planning Act makes plain in its statement of objects, it is concerned with the general commercial health of the Territory.  So much appears from the use of the expressions “the orderly and sustainable development of the ACT”, “the social, environmental and economic aspirations of the people of the ACT”, and “sound financial principles”.  Claims of individual adverse effect are not irrelevant to the pursuit of those general objectives.” (at [73]) (emphasis added)

Gageler J generally agreed with the other justices and relevantly observed:

The ADJR Act … permits a person whose interests are adversely affected by a purported decision of an administrative character, made outside the subject-matter, scope or purposes of the enactment under which it was purported to be made, to seek an order setting it aside or declaring it invalid. The ADJR Act would be self-defeating were the person denied that permission on the basis that the interests of the person so affected were themselves outside the subject-matter, scope or purposes of the same enactment.

The argument of the first respondent, that the interests to which the ADJR Act refers are limited to those which fall within the subject-matter, scope and purposes of the particular enactment under which a decision was made or purported to be made, must for that reason be rejected in principle.” (at [79]-[80])

In addition to allowing the appeals of the second and third appellants his Honour would have allowed the appeal of the first appellant landlord, because in his view there was a real potential risk that the decision would have a significant adverse effect on the first appellant’s profitability.

Comment

This decision is a helpful guide on advising business owners on whether they may have standing to challenge a planning decision that adversely affects their individual economic interests.