Australia: Development conditions requiring registered covenants – factors relating to reasonableness

Last Updated: 28 April 2016
Article by David Nicholls

The use of covenants as a development control mechanism is a relatively new phenomenon. Section 349 of the Sustainable Planning Act 2009 (SPA) precludes covenants from having legal effect when entered into in connection with a development application other than as a requirement of a condition of a development approval, or under an infrastructure agreement.

Sections 373A of the Land Act 1994 and section 97A of the Land Title Act 1994 impose restrictions on the scope of covenants that may be registered. Most relevantly to planning, the covenant must relate to the use of a lot or part of a lot or a building or proposed building, or be aimed directly at preserving a native animal or plant or a natural or physical feature of the lot that is of cultural or scientific significance. Revegetation is not within the scope of these sections.

Traditionally, covenants have been utilised on a voluntary basis to secure conservation of part of an overall development site by being proposed in a development application. Section 349 of the SPA speaks of a covenant that "is entered into in connection with a development application." That form of words is apt to cover a covenant proposed by an applicant, but it may be wide enough to apply to a covenant which is not proposed by an applicant but is nevertheless required by a condition imposed on a development approval.

There are now instances of covenants being imposed through conditions where the applicant has not offered the covenant and is unwilling to voluntarily accept it. Conditions usually require a covenant to be registered in accordance with standard covenant terms which the local government has registered in the Land Title Office. There are instances of conditions which require development to be located with a building envelope and require a covenant over the whole of the balance area precluding most forms of use, for example, constructing walking or riding trails, or keeping domestic animals. Covenants of that type immediately raise questions about the lawfulness of the condition under which they are sought to be imposed.

It should be noted that:

  • a covenant may be no wider than the condition under which it is required;
  • the condition itself, and therefore in practical terms the covenant, is subject to the reasonableness and relevance tests for the lawfulness of conditions contained in section 345 of the SPA;
  • the practical effect of the covenant is to place the condition on the title to the land in perpetuity, unless the local government later agrees to its removal or an application is successfully made to the Supreme Court to that end;
  • once registered the effect of the covenant is to neutralise, for all practical purposes, the statutory processes under the SPA that otherwise would allow for a condition to be changed in the future, because the process for removing a covenant requires either the local government's cooperation or an application to the Supreme Court of Queensland under section 181 of the Property Law Act 1974;
  • the power of the Planning and Environment Court to change a condition does not extend to the modification or removal of a covenant required under a condition. Only the Supreme Court has jurisdiction to do that;
  • covenants provide a method by which local governments are able to "future proof" the development of land against planning scheme changes that are beneficial to the land owner.

The permanent nature of covenants and the difficulties inherent in changing or removing them is relevant to the lawfulness of conditions that require covenants to be entered into.

There are at least three aspects to this:

  • is the underpinning condition, in its entirety, relevant or reasonably required?
  • are the terms of the covenant consistent with the terms of a condition that may otherwise be lawfully imposed?
  • is the additional step of registering the covenant over the title to the land necessary to achieve the lawful purposes of the condition?

The inherent nature of covenants connotes mutuality between the covenantor and the covenantee. The inflexibility of covenants once registered seems inconsistent with the changing and evolving nature of town planning, and the ability to make future development applications that will be assessed against contemporary planning instruments. Covenants imposed unilaterally through the imposition of conditions should therefore be approached with caution.

Recently the Planning and Environment Court considered a condition imposing an easement for overland flow over 90% of the area of a block of land that was zoned conservation. The Court had the following to say:

"[28] The proposed easement is remarkable for taking nearly the whole of the parcel and leaving an inadequate building area; it comes close to confiscation of the site. It is not shown that such a depredation is necessary; the better view is that it is not. Why should not a house of more conventional size be achieved by a cantilevered structure protruding above the easement area? The existence of an easement would probably preclude this – and even more, the activities of construction. There is no need for an easement to place additional difficulties in the way of future development."

Parsons v Redland City Council (2011) QPELR 691

Exactly the same logic might be applied for a condition requiring a covenant.

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