Posted on February 5, 2018 by Frances Tse and Lindsay Taylor

Court refuses proposal to dedicate land in lieu of s94 monetary contributions

In the recent case of McCloy Teralba v Lake Macquarie City Council [2017] NSWLEC 1752 the Land and Environment Court refused to allow a development consent to be modified under s96 of the Environmental Planning and Assessment Act 1979 (‘EPA Act‘) by replacing a condition  imposed under s94(1) of the  EPA Act requiring the payment of a monetary contribution to the Council for open space with a condition requiring the dedication of land free of cost to the Council as public open space. The appeal was brought from a deemed refusal of the application by the Council.

Land proposed to be dedicated

The land proposed to be dedicated to the Council was zoned RE1 Public Recreation under the applicable local environmental plan. However, it was not identified for open space acquisition in the Council’s s94 contributions plan.

The uncontested evidence of the Council was that the proposed land dedication would not reduce the demand for public recreation facilities, which, if the appeal was upheld, would need to be funded without the applicant’s monetary open space contributions.

Court’s considerations

The approach taken by the Court in disposing of the appeal was to evaluate the modification application in accordance with s96(3) of the EPA Act and to consider whether it had the power to substitute the s94 condition in the manner sought in the application.

Section 96(3) – considerations relevant to modification applications

Section 96(3) provides that in determining an application for modification of a consent, the consent authority must take into consideration such of the planning matters referred to in s79C(1) as are of relevance to the development the subject of the application.

In relation to s96(3), the Court accepted the Council’s contention that the proposed land dedication condition was unrelated to the monetary open space contribution and was not the same planning matter as the monetary contribution sought to be deleted. That is, the monetary contribution required by the s94 condition proposed to be substituted had been levied for a purpose provided for in the relevant contributions plan, whereas the proposed dedication of land was not referred to in that plan and was unrelated to the purposes of that plan.

The Court held that something more than mere benefit was required to be demonstrated. The proposed condition had to have a nexus with the demand for open space generated by the subject development and, on the facts of the case, it did not have such a nexus.

Power of Court to substitute s94 condition

The Court held that its power to substitute the condition depended on s94B of the EPA Act, which relevantly provides that a condition under s94 may only be imposed in accordance with a contributions plan and such a condition may only be disallowed or amended because it is unreasonable in the particular circumstances of the case.

The Court accepted the Council’s contention that even if the relevant nexus required by s94(1) had been demonstrated, the absence of a contributions plan providing for the dedication sought was fatal to the imposition of the proposed condition.

The Court also accepted the Council’s contention that neither the modification application, nor the letter to the Council which accompanied it, had asserted that the s94 condition the subject of the application was unreasonable in the particular circumstances of the case and the applicant had not challenged the reasonableness of the condition in the proceedings.

Other possible means to achieve outcome

The case is interesting because it raises the question of whether and by what means the  applicant could have achieved the outcome sought.

An agreement pursuant to s94(5)(b) of the EPA Act also would also not have been possible  because the consent authority is prevented from accepting the dedication of land in part or full satisfaction of a condition imposed under s94(1).

A fresh development application, on its own, could not have produced the outcome because the Council, based on the wording of the Council’s contributions plan, would have had no power under its contributions plan to impose the substituted s94 condition sought by the applicant. However, perhaps if the contributions plan expressly authorised the imposition of a condition under s94(1) that could be satisfied either through the payment of a monetary contribution or the dedication of land acceptable to the Council at an equivalent value the outcome may have been different.

Another possible means by which the the applicant could have achieved the outcome sought is through a voluntary planning agreement (‘VPA‘) under s93F of the EPA Act associated with the modification application. The Court has held that VPAs may be entered into in connection with modification applications under s96 of the EPA Act. Section 93F(3) authorises a VPA to wholly or partly exclude the application of s94 of the EPA Act to development.

If, in connection with the modification application, the applicant had made an offer to the Council to enter into a VPA to dedicate the relevant land  instead of paying the monetary contribution required by relevant s94 condition, arguably the Council would have had the power to modify the relevant consent to delete the s94 condition and instead impose a condition that the VPA be entered into. This, of course, is subject to the applicant being able to convince the Council that the proposal to substitute the dedication of land for the payment of a monetary contribution had planning merit.