When a section 34 agreement to a development application in NSW can be invalid



No consent by the land owner and a failure to record reasons can result in a lack of LEC jurisdiction to approve the DA.
Australia Real Estate and Construction
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Recently the Court of Appeal held that a section 34 agreement (and subsequent approval by the Court) was invalid for two reasons:

  1. An owner of land affected by the DA did not provide consent; and
  2. The Commissioner failed to indicate in her judgment that she had considered a clause 4.6 request relating to the development.

While both these grounds may seem fairly obvious, as always there is more to the story.

No consent and failure to record reasons result in lack of jurisdiction

Both deficiencies above remove the jurisdiction of the Land and Environment Court ('LEC') to consent to the proposed development. The LEC can only approve a decision or agreement reached between the parties that is a decision that the court could have made in the proper exercise of its functions.

If the agreement reached between the parties (at or after a settlement conference) contains matters outside the scope of a decision that the LEC could otherwise make "in the proper exercise of its functions", the LEC's decision (and therefore the development consent) will be invalid.

Al Maha

In Al Maha Pty Ltd v Huajun Investments Pty Ltd [2018] NSWCA 245 the local council and the developer ('Huajun') agreed to consent conditions allowing Huajun to construct a 'temporary' access to the development site on the condition that it be replaced later by a permanent access from a rear driveway. The consent conditions required that Huajan construct the rear access (and remove the temporary access) once Council had acquired adjoining land (Al Maha's land). Council had not, at that time, acquired that land. The Court of Appeal held that Al Maha was therefore an owner of land on which the development was to be carried outand to which the development application relates (even if the 'development' was a proposed future development).

Al Maha did not consent to the development application. Consequently, "owner's consent" to the development application was not obtained and the LEC had no jurisdiction to approve a development application which failed this fundamental hurdle.

Commissioners must specify that they have considered a clause 4.6 request

As part of the development application, Huajun submitted a clause 4.6 request. The Court of Appeal held that satisfaction of the matters in clause 4.6 (of the local LEP) is a jurisdictional hurdle a consent authority or the LEC must satisfy before it can grant consent. In this case, because the Commissioner did not specifically state in her reasoning that she was satisfied with the clause 4.6 request the inference to be drawn is that the Commissioner was not satisfied with those matters and therefore had no jurisdiction to approve the development application. The formulaic recitation in the Commissioner's judgement "I was satisfied that the decision was one that the court could have made in the proper exercise of its function" was not enough to indicate that the LEC was satisfied of the necessary matters in clause 4.6 of the local LEP.

Accordingly, the development consent was invalid.

Important takeaways:

  • Owners of land on which a development is carried out or to which the development relates will always be required to consent to a development application regardless of whether the development relates to 'future' development on that land.
  • Commissioners must state reasons for their decisions and need to specifically refer to jurisdictional matters and the court's satisfaction of those matters prior to granting consent. Failure to do so may render a development consent issued by the court invalid.

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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