Posted on March 8, 2011 by Lindsay Taylor

Court of Appeal Straightens-Up s94 Credit Analysis

On 18 February 2011, the NSW Court of Appeal (Tobias, Campbell, Macfarlan JJA) delivered an important decision on how credits under s94 of the Environmental Planning and Assessment Act 1979 should be calculated for residential development on land historically used for urban purposes.

The issue in Meriton Apartments Pty Limited v Council of the City of Sydney [2011] NSWCA 17 was how to determine the demand created by new development for s94 purposes in such circumstances and whether the rateability of the land and the previous provision of public amenities and public services to the land by the Council, however funded, were relevant to the determination.

Meriton was granted development consent by the Council in 2008 for a residential apartment development in Zetland on land that had been used for various industrial, warehousing and other non-residential purposes for many years. The consent required Meriton to pay monetary s94 contributions to the Council of approximately $5,000,000.00.

In 2009, Meriton applied to modify this requirement by reducing the amount payable by nearly $500,000.00. This was to reflect the net increase in demand for public amenities and public services generated by Meriton’s development having regard to the past use of the land and the pre-existing demand for public amenities and public services generated by that past use.

The Land and Environment Court (Moore C) held that the ‘credit’ should be reduced to approximately $200,000.00. In so doing, the Commissioner determined that the rating history of the land was a relevant factor for consideration.

The Commissioner found that the land had been in Government ownership for many years and had been exempt from rating during that time. The Commissioner determined that a discount should be adopted to reflect the fact that for many years there had been no revenue from rates to subsidise or contribute to the cost of public amenities or public services required or utilised by the past use of the land.

The Court of Appeal rejected this approach and upheld Meriton’s appeal.

The Court held that nothing in the scheme of s94 provides any basis for linking the rateability of land in the past to the net demand for public amenities and public services generated by proposed new development.

The Court held that s94 requires the pre-existing demand from the historical use of the land to be determined to enable the net demand of the development to be derived. This requires the ‘actual or deemed’ resident or workforce population on the land before the proposed development is carried out to be determined. However, this cannot be dependent upon whether such demand was ever met by the Council or from what source of revenue this may occurred. These considerations were held to be irrelevant to the determination of the credit due to Meriton.