Posted on March 27, 2012 by

Contractual arrangements concerning owner’s consent to DAs and carrying out of work

On 1 March 2012 the New South Wales Supreme Court delivered a judgment in Ryding v Miles & Ors [2012] NSWSC 153. In issue in the case was whether the terms of a lease obliged the owners to give their consent to the lodgement of a development applications by the tenant and/or to consent to the carrying out of works the subject of the development application.

The Issue

A requirement for landowner’s consent in relation to a DA arises from clause 49(1) of the Environmental Planning and Assessment Regulation 2000 (EPA Reg), which provides that a development application may be made by the owner of the land to which the development application relates, or by any other person with the consent in writing of the owner of that land. (see Landowner’s consent given once and for all in relation to Rothwell Boys Pty Ltd v Coffs Harbour Council [2012] NSWLEC 19.)

Although the lessee in this case was unsuccessful, the case shows that a clause within a lease or other contractual arrangement which provides one party with rights to undertake work ‘necessary or convenient’ to the purpose of the lease may carry with it an implied obligation on the owner to do such things as are necessary to enable the party to do so.

In a planning context, this means that an owner may not be able to withhold consent to the lodgement of a development application necessary in order for a tenant to take advantage of rights under the lease to carry out works.

The facts

The subject land was a quarry within Frederickton, New South Wales.

The land was owned by four individuals, two of which held the land as life tenants (Mr J Stewart and Mrs Miles), and two who held title as remaindermen (Mr G Stewart and Mr Alan Miles).

In 2002, Mr Ryding took a lease of the land to carry out his construction and quarrying business upon the land.

In about November/December 2002, Mr Ryding advised Mr J Stewart and Mrs Miles of his intention to install a weighbridge, associated structures and roads and requested that they sign the ‘owner’s consent’ section of a development application (the Weighbridge DA).

Mr J Stewart and Mrs Miles signed the owner’s consent in May 2003. Their solicitors subsequently advised Mr Ryding that any actual works the subject of the application required their further consent.

The Council informed Mr Ryding that consent was required from all four owners.

In October 2003, Mr Ryding wrote to Mr G Stewart and Mr A Miles requesting ‘consent to the installation of a weighbridge‘ (the October 2003 Letter). Mr Ryding did not  obtain their consent and the Weighbridge DA was subsequently refused.

In 2007, following various communications between the parties’ legal representatives, an owner’s consent signed by Mr G Stewart and Mr Alan Miles was provided to Mr Ryding.

In 2007, Mr Ryding commenced proceedings against the four owners contending that he had suffered loss by reason of the owners failure to sign a consent form relating to the Weighbridge DA.

The terms of the lease

A clause within the lease conferred upon Mr Ryding specific liberties (Clause 2), including:

“(i) To enter upon the said lands and to search for dig work and
obtain by excavations and quarryings open to the daylight and not by underground workings the demised gravel and other minerals and to carry away and dispose of the same for their own benefit.

(ii) To erect such further buildings and to erect and place such engines and machinery and to open sink and make such quarries levels watercourses and other works whether upon or below the surface of the said lands as may be necessary or convenient. [emphasis added]

(iv) To use and repair any roads already made and to make use and repair any new roads or ways which may be necessary or convenient for the effectual working carrying away and disposing of the demised gravel and other materials.

(vi)Generally to do all things which shall be convenient or necessary for working getting merchantable and disposing of the demised gravel and minerals and for obtaining the benefits of the rights liberties and privileges hereby granted.” [emphasis added]

Breach of contract

Mr Ryding argued that Mr J Stewart and Mrs Miles (who signed the owner’s consent for the lodgement of the Weighbridge DA) were in breach of Clause 2 by failing to consent to the carrying out of the work the subject of the Weighbridge DA.

The Court disagreed concluding that Clause 2 conferred rights ‘which may be exercised providing the relevant works are “necessary or convenient” but does not impose an additional obligation upon the owners to consent to any particular works.’

The Court found that ‘Mr Ryding was entitled to carry out those works without further consent of the Defendants if they were within the specified liberties under cl 2 of the lease, and if they were not, then he was not.’

On this point the Court held that to determine whether the works were ‘necessary or convenient’ for the purposes of clause 2 would require the precise scope of the works to be known whereas the description of the works in the Weighbridge DA to which consent had been given was in the most general of terms so no breach of clause 2 could be established.

Implied terms

Enable the other party to have the benefit of the contract

In respect of Mr G Stewart and Mr Alan Miles (who did not initially give their owner’s consent), Mr Ryding argued that this failure also breached Clause 2.

The Court observed that, on its face, Clause 2 did not expressly require the owners to consent to the lodgement of a DA.

The Court did agree that there was an obligation to consent to the lodgement of a DA in respect of works which were permitted under clause 2 having regard to the implied obligation of each party of each party to do all such things necessary on its part to enable the other party to have the benefit of the contract, including the implied covenant not to hinder or prevent the fulfilment of the purpose of an express promise under the Lease.

Nevertheless, the Court found that Mr Ryding had not established that Mr G Stewart and Mr Alan Miles were asked to consent to the lodgement of DA for a specific proposal at the time of the October 2003 letter.

The October 2003 letter sought consent for the ‘installation of a weighbridge’ rather than consent to the lodgement of a particular DA.

As such, the consent requested in 2003 was a wider consent then Mr Ryding was entitled under Clause 2.

As such the breach of contract argument in respect of Mr G Stewart and Mr Alan Miles was also rejected.

Consent extends to the doing of works

Mr Ryding argued that the lease contained an implied term to the effect, that if owners consented to or were required to consent to his lodging of a development application and that development application was approved by the Council, their consent extended to his performing the work the subject of the development application.

The Court examined the requirements for an implied term as set down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266. Those requirements are:

1. The specified term must be reasonable and equitable
2. The specified term must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it
3. The specified term must be so obvious that ‘it goes without saying’
4. The specified term must be capable of clear expression
5. The specified term must not contradict an express term of the contract.

The Court held that the suggested implied term did not satisfy several of these requirements. Specifically the Court concluded that the term was not reasonable and equitable, it was not required to give business efficacy to the lease and it was not ‘so obvious it goes without saying’.

Implications

Parties need to carefully construe their contractual arrangements (both as to their express and implied elements) in order to determine whether landowner consent to the lodgement of a DA (or for the carrying out of the associated work)  is required, must be given or  is not necessary at all. The answer will depend on the facts and the precise terms of the agreement.