The NSW Court of Appeal has unanimously reversed a July decision
by the Land and Environment Court regarding the 7,200 home Huntlee
New Town development, located south of Branxton.
The original Land and Environment Court decision centred on a
number of issues, but relevantly for present purposes, whether the
former Planning Minister (Tony Kelly) took into account an
irrelevant consideration, namely a voluntary planning agreement
that was alleged not to provide for the enforcement of the
agreement "by a suitable means", this being a requirement
of the Act.
The Developer had been due to pay $200,000 by 31 January 2012.
The Developer was also due to pay $900,000 in six annual
instalments of $150,000, with the first instalment due on 31
January 2014. No security was required to be lodged in advance of
the actual cash payment. The obligation to pay was not linked to
the release of a subdivision, construction or occupation
The Land and Environment Court had declared that the rezoning of
the land for urban uses was void. The Court of Appeal has taken the
opposite view and the rezoning now stands, but more important is
the message that it sends in relation to VPAs generally.
The original court decision threw many pending negotiations for
voluntary planning agreements into disarray, and created a
heightened risk of legal challenge by third parties, which
undermined the utility and attractiveness of the entire VPA
concept. Since July, some planning authorities have been arguing
that developers must supply a bank guarantee for all obligations
upfront, even before they have received development consent or
sought to commence constructions works, with failure to do so being
a ground for legal challenge. In our view this was never necessary
and Gadens has been working hard with clients to re-structure
voluntary planning agreements to comply with the July decision,
without the need for blanket upfront bank guarantees or other
Nevertheless, the Court of Appeal decision is welcome, because
it largely returns the legal position to what it was commonly
believed to be prior to July this year, and restores both certainty
and commerciality to the whole VPA process.
In the Court of Appeal, unlike the original proceedings, it was
accepted by the parties that a breach of the requirement to provide
for enforcement of an agreement "by suitable means" does
not result in the invalidity of the planning agreement. Moreover,
it is not for a court to decide objectively whether the enforcement
mechanisms in the VPA are "suitable". Rather, the
provisions of the Act suggest that the person who should decide
whether the enforcement mechanisms are "suitable" is the
Minister or other planning authority (e.g. a council). This
requires an evaluative assessment to be made, taking into account
factors such as:
the particular obligations created by the planning
the risks and consequences of breach; and
the nature of the rezoning sought (if any).
According to the Court, perceived flaws in the judgment of a
Minister or council on these issues can be dealt with via the
mandated public consultation (VPAs must be exhibited for 28
This decision provides some much need clarity to the regime for
voluntary planning agreements and should reduce some of the
confusion and risk prompted by the initial (July 2011) court
decision. This does not mean that voluntary planning agreements can
now be agreed to lightly; they remain complex legal documents.
However, the Court of Appeal's decision does helpfully clarify
the legal rules and minimise the risk of third party challenge. The
decision will ensure that voluntary planning agreements will
continue to be a viable option for developers:
seeking to overcome infrastructure-related objections to their
who want to exercise some control over the nature of their
Our team at Gadens have specialist expertise in preparing,
reviewing and /or negotiating VPAs. For any enquiries, please
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
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