Posted on September 1, 2011 by Frances Tse
High Court declares suspension of restrictive covenant inoperative
In Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd & Ors  HCA 27, the High Court considered whether a provision in an existing environmental planning instrument suspending the operation of covenants, agreements and instruments applied to development on land that was brought within the field of operation of the provision by an amending environmental planning instrument.
Section 28(2) of the Environmental Planning and Assessment Act 1979 (EPA Act) provides:
‘For the purpose of enabling development to be carried out in accordance with an environmental planning instrument or in accordance with a consent granted under this Act, an environmental planning instrument may provide that, to the extent necessary to serve that purpose, a regulatory instrument specified in that environmental planning instrument shall not apply to any such development or shall apply subject to the modifications specified in that environmental planning instrument.’
‘Regulatory instrument’ is defined in section 28(1) to mean ‘any Act (other than this Act), rule, regulation, by-law, ordinance, proclamation, agreement, covenant or instrument by or under whatever authority made.’
Section 28(3) provides that ‘a provison referred to in subsection (2) shall have effect according to its tenor, but only if the Governor has, before the making of the environmental planning instrument, approved of the provision.’
In Cumerlong, the provision suspending regulatory instruments was contained in clause 68(2) of the Ku-ring-gai Planning Scheme Ordinance (Ordinance).
It was argued that clause 68(2) applied to development on land by reason of the rezoning of the land by Ku-ring-gai Local Environmental Plan 194 (LEP 194), which amended the Ordinance and brought the development on the land within the field of operation of clause 68(2).
LEP 194 did not contain a provision pursuant to section 28(2) of the EPA Act, nor had it been approved by the Governor under section 28(3).
Reversing the decision of the NSW Court of Appeal, the High Court held that because the necessary effect of LEP 194 was to provide a ‘changed factum’ for clause 68(2) of the Ordinance, this was enough to require compliance with section 28(3) of the EPA Act before it was made. As this had not occurred, clause 68(2) did not operate to suspend any covenants, agreements or instruments in respect of development on the land.
The case has significant implications for the operation of section 28 provisions in environmetal planning instruments throughout the State.
There are many instruments operating throughout the State containing section 28(2) provisions, which have been amended (in many cases more than once) in such a way as to extend the operation of the section 28(2) provision to development and land. Many of the amending instruments would not have contained section 28(2) provisions nor have been approved by the Governor under section 28(3) before being made.
The effect of the High Court’s decision is that regulatory instruments would not be suspended in relation to the land or development the subject of the amending instruments. This means that the obstacle to the carrying out of development, in accordance with an environmental planning instrument or a development consent, sought to be removed by a section 28(2) provision will in many cases not have been removed and will need to be complied with in relation to the development.