Australia: High Court confirms that conditions of development approvals are enduring personal obligations

Who should read this?

  • Purchasers of land subject to current development approvals
  • Developers
  • Local Governments

Things you need to know

  • The High Court of Australia handed down its decision in Pike & Anor v Tighe & Anor [2018] HCA 9 on 14 March 2018. The article provides a summary of the history of the case and the High Court's decision, including the submissions raised by each of the parties.

What you need to do

  • Ensure appropriate due diligence is carried out prior to purchasing land to determine whether conditions of any development approvals granted in relation to the land have been fulfilled. If not, you are required to fulfil the condition within a reasonable time.

Update

On 14 March 2018, the High Court of Australia (HCA) handed down its decision in Pike & Anor v Tighe & Anor [2018] HCA 9 (Pikes' Case).

Pikes' Case dealt with an appeal from the Court of Appeal (COA) in relation to the operation of section 245 of the now repealed Sustainable Planning Act 2009 (Qld) (SPA) which provides that a development approval attaches to land and binds the successors in title.

The HCA was asked to determine two questions:

  • whether section 245 SPA obliges a successor in title of a parcel of land created by the reconfiguration of a larger parcel to comply with a condition of the approval for the reconfiguration that should have been, but was not, satisfied by the original owner prior to completion of the reconfiguration; and
  • if question 1 is answered in the affirmative, whether the Planning and Environment Court may make an "enforcement order" under the SPA requiring the successor in title to fulfil the condition.

The HCA answered both questions in the affirmative and unanimously allowed the appeal and ordered costs in favour of the Appellants in both the HCA proceedings and the COA proceedings below.

The Approval

Townsville City Council (Council) approved an application by the then registered owners of land for a development permit for reconfiguration of a lot (1 lot into 2 lots) (Approval). The Approval was subject to a number of conditions, including condition 2 which required an easement to allow pedestrian and vehicle access, on-site manoeuvring and utilities be provided over lot 1 for the benefit of lot 2. The Approval also provided that all conditions had to be satisfied prior to the Council signing the survey plan.

The then registered owners of the subject land executed an easement in terms that did not comply with condition 2; in particular it did not include reference to on-site manoeuvring and connection of services and utilities. Despite this, Council approved the relevant survey plan to give effect to the reconfiguration. The titles for lots 1 and 2 were subsequently created and a second easement, identical to the first easement, was registered in relation to each title.

Following this, the Tighes and the Pikes purchased lots 1 and 2, respectively, and became the registered owners of the respective lots.

For a number of years following the Pikes' purchase of lot 2, there was ongoing correspondence between the parties in an attempt to have an easement registered in compliance with condition 2. These attempts were clearly unsuccessful.

Legislative Regime

Section 245 of the now repealed SPA provides:

"(1) A development approval –
  1. attaches to the land the subject of the application to which the approval relates; and
  2. binds the owner, the owner's successors in title and any occupier of the land.
(2) To remove any doubt, it is declared that subsection (1) applies even if later development, including reconfiguring a lot, is approved for the land or the land as reconfigured."

Further, section 580 of the now repealed SPA provides:

"(1) A person must not contravene a development approval, including any condition in the approval.
Maximum penalty – 4500 penalty units
..."
The Planning and Environment Court Proceedings

The Pikes filed an application in the Planning and Environment Court (PEC) seeking:

  • a declaration that condition 2 of the Approval had been contravened; and
  • an enforcement order directing the Tighes to comply with the condition.

The primary Judge granted the application, holding that section 245 SPA had the effect that the conditions of the Approval ran with the land. The primary Judge held the Tighes had committed a development offence by failing to comply with condition 2, which warranted the making of an enforcement order requiring the Tighes to provide the Pikes with an easement in accordance with the condition.

The Court of Appeal Proceedings

The Tighes appealed the PEC's decision to the COA. The COA allowed the appeal holding that section 245 SPA binds only the person permitted by the approval to carry out the subdivision of the original lot.

The COA determined that in order to make an enforcement order, the development offence had to have been committed by the person against whom the order was sought. Because the Tighes were not parties to the reconfiguration of the original land, condition 2 imposed no obligation on them and they could not have contravened the condition.

It was held that the obligation to provide the easement in condition 2 was an obligation to register the easement described in condition 2 in conjunction with the survey plan and only as a condition of the simultaneous reconfiguration of the land into lots 1 and 2.

The Current Proceedings

Pikes' submissions
The Pikes relied upon two submissions.

First, they submitted that the circumstance that a development offence had been committed is sufficient to engage the power to make an enforcement order, even if the actual offender is not the person against whom the order is made.

Second, the Pikes submitted that the fact the Tighes were not a party to the Approval does not mean that an enforcement order cannot be made against them. Having subsequently become the registered owners of the servient tenement, they failed to comply with the conditions of the Approval binding on them as a result of section 245 SPA.

The Pikes argued that section 245 SPA continues to operate notwithstanding a later reconfiguration. The mere registration of the survey plan, in circumstances where the conditions of the Approval had not been fulfilled, did not result in the expiration of the conditions.

Tighes' submissions
The Tighes submitted that the COA was right to construe condition 2 as imposing a condition of the reconfiguration of the original lot that terminated upon registration of the easement in conjunction with the survey plan.

The Tighes also raised a concern as to the potential effect of the Pikes' submissions on indefeasibility of title, however the HCA quickly rejected this submission.

Findings of the court
The HCA unanimously allowed the appeal.

The HCA held that section 245 SPA is not expressed to operate in relation to the carrying out of an approved development; it expressly gives the conditions of a development approval the character of personal obligations capable of enduring beyond the completion of the development the development approval authorised. The obligations expressly attach to all the land the subject of the development application. The owners of the land in lots 1 and 2 are the successors in title to the owners of the land in the original lot.

It was held that section 245 SPA draws a distinction between "the land" as the subject of development and "lot/s" into which the land may be reconfigured. The land to which the approval attached was the land the subject of the development application.

Accordingly, the HCA held that the COA erred in regarding section 245(1)(b) SPA as applicable only to successors in title of the unsubdivided original lot.

In relation to whether the PEC could make an enforcement order requiring the Tighes to comply with condition 2, the HCA held that, for the purposes of section 580 SPA, "contravening" the conditions of a development approval includes, but is not limited to, failing to comply with those conditions. It is "failure to comply" rather than bare non-compliance which gives rise to a development offence which may give rise to the making of an enforcement order.

The Court noted that in the three years after the Pikes purchased lot 2, there was lengthy correspondence between the parties in which the Pikes sought compliance with condition 2 of the Approval. The Court was of the opinion the Tighes had ample opportunity to provide an easement in compliance with condition 2.

The Court held that, contrary to the Tighes' submission, a person is not guilty of an offence at the moment they purchase land that does not comply with a condition. Rather, an offence will be committed when a reasonable time to comply with the condition has passed or if there is a pre-emptory refusal to comply with the condition.

The HCA ultimately held that by failing to provide the easement as required by condition 2 after they were requested to do so, the Tighes committed a development offence and the PEC could make an enforcement order requiring the Tighes to fulfil condition 2.

Key takeaways
The case confirms that conditions of a development approval attach to land and bind successors in title, even in circumstances where the original land, which was the subject of the development application, is reconfigured. In such circumstances, the reference to "land" in section 245 SPA refers to the original land the subject of the development application, and not the lots created as a result of the reconfiguration.

The HCA further clarifies that more than mere non-compliance with a condition of approval is required to constitute a development offence. There must be a failure to comply with the condition before the power to issue an enforcement notice is enlivened.

Understandably, a person does not commit a development offence the moment they purchase land that does not comply with a condition, but rather when a reasonable time to comply with the condition has passed or the purchaser refuses to comply with the condition.

While SPA has now been repealed, section 73 of its successor, the Planning Act 2016 (Qld) (PA) has the same effect of section 245 SPA despite a difference in the wording of the two provisions. Accordingly, the HCA's decision in Pikes' Case is equally as applicable to the PA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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