Posted on November 25, 2013 by Stuart Simington

Validity of conditions securing public benefits in doubt

The second limb of the Newbury test for the validity of a condition of consent requires that the condition must fairly and reasonably relate to the development under consideration.

The Court has been willing to find such a relationship in relation to the undergrounding of overhead cables (here and here) particularly in residential areas, on the grounds that such conditions ‘benefit’ the development by creating a more pleasant residential environment and amenity for the development and even though the wider public is also benefited.

In a recent case, however, Community Association DP 270253 v Woollahra Municipal Council [2013] NSWLEC 184, the Court refused to uphold the validity of a condition requiring public foreshore access through a development site, even though the condition was:

• imposed in accordance with planning controls which promoted public access to the intertidal zone; and
• offered by the developer in the development application.

In a series of case, the Court has strayed close to equating the second Newbury test with an enquiry as to whether a development derives ‘benefit’ from a condition.

There do seem grounds to argue that this is too narrow an approach. But the extension in  Community Association DP 270253 now has further significant implication in relation to development applications that propose ‘mere’ public benefits. Unless these are secured by voluntary planning agreements, it seems that they cannot be provided. Given that what can be included in a VPA is to be significantly narrowed under the Planning Bill 2013, the approach operates to exclude a range of desirable planning outcomes.

The notion of ‘benefit’ as the conflation (or  the rewriting) of the second Newbury test seems to originate from Parramatta CC v Peterson (1987) 61 LGRA 286. Peterson was a case concerning a s94 condition which required a monetary contribution towards a parking station located somewhat away from the development site but still in the Parramatta town centre. There was no dispute that the development generated a demand for off-street parking and Stein J held that the second Newbury test was satisfied notwithstanding the distance between the development and the facility, because the parking station would, still serve the whole of the Parramatta CBD. It therefore still provided ‘benefit’ to the development. Stein J rejected the argument that there had to be a direct nexus between the facility and the development.

Whether ‘benefit’ was necessary or merely sufficient, however, is a somewhat vexed question. Following Peterson, the ‘benefit’ approach was applied by Pearlman J in a non-s94 context in McGregor v Bathurst City Council [1995] NSWLEC 71.

Subsequently the matter arose for consideration in Dogild Pty Ltd v Warringah Council [2008] NSWLEC 53. Biscoe J considered a condition requiring the grant of a right of carriageway in favour of a number of  strata owners of land at the rear of the development site. He found at [60] that the development neither needed the ROW nor benefited from it and therefore held that the condition was invalid. Importantly, Biscoe J did clarify at [52] that ‘benefit‘ should only be considered a ‘sufficient’ requirement for validity under the second limb:

‘Although this line of authority indicates that such a benefit is sufficient to satisfy the second Newbury test, it may not be inconsistent to envisage cases where a condition is fair and reasonable in the circumstances of a particular case …even if it does not benefit the permitted development.’

Unfortunately, Biscoe J did not explain what other circumstances might constitute the fair and reasonable relationship he was postulating.

Cavasinni Constructions Pty Ltd v Fairfield City Council [2010] NSWLEC 65 was a similar case. The developer appealed against the Council’s refusal to delete a condition from a consent which required the creation of a right of carriageway across the site. The ROW was to provide rear lane access to properties located to its east. Craig J held at [33] that the fact that the ROW caused no real detriment to the development was not relevant until a nexus between the development and the ROW had been established. His Honour discussed Biscoe J’s above observation in Dogild and said:

While no authority is cited by Biscoe J for the observation made in the final sentence of [52] of his judgment, I do not interpret it as meaning that the second Newbury test can be satisfied even if there is not a relevant nexus between condition and development. Ordinarily, that nexus will be established if benefit, even though indirect, is demonstrated. I take his Honour to be indicating that there may be circumstances in which the nexus can be demonstrated by some means other than benefit. However, it is only after a relevant nexus is demonstrated that one can consider or balance advantages and disadvantages to the development in question by the imposition of the condition under consideration.

So the problem remains. If nexus can be demonstrated by a means other than ‘benefit’, the Courts are not willing to say in what circumstances.

The most recent case came before Pain J in Community Association DP 270253 v Woollahra Municipal Council [2013] NSWLEC 184.

The matter related to a consent for the redevelopment of Babsworth House and its extensive grounds from a hospital use to five (5) apartments and nine (9) new dwellings. Access to the foreshore was available across the proposed community lot.

The Council imposed a condition requiring a public positive covenant for a public foreshore access to Sydney Harbour over part of the community lot.  Importantly, however, the condition reflected the offer of the developer as part of its development application: see at [93].

The subject proceedings were brought following the Council’s attempt to enforce the condition. Pain J held that the need for the access did not arise from the development and there was no nexus between the condition and the development. Rather, the condition was imposed in order to pursue a Council policy of providing greater foreshore access to the public [92] and provided no benefit to the Estate [95]. Therefore the condition was invalid and couldn’t be enforced.

Pain J held that the fact that the covenant had been offered voluntarily was ‘immaterial’ to the Council’s power to impose the condition [93].

In holding that the voluntary offer was ‘immaterial’, Pain J referred to a ‘similar finding‘ in another recent (apparently anomalous) decision in Australian International Academy of Education Inc v The Hills Shire Council [2013] NSWLEC 1. In that case, Craig J held that a Council cannot impose a condition requiring the dedication of land in absence of a contributions plan authorising such conditions, and this, whether or not the offer to dedicate the land was made voluntarily as part of the development application.  Lindsay Taylor discussed the implications of that decision in some detail here.  Craig J’s decision, if followed, has the potential to invalidate almost every major subdivision that creates public roads or other land for utility providers. Pain J’s reference to it in this case, however, is confusing because it is an entirely different context. This case was governed by whether or not there was a relevant nexus required by the second Newbury test between the positive covenant and the development. It is not all clear how Craig J’s decision was relevant?

I query how a condition does not fairly and reasonably relate to a development when all it does is accord with and secure the proposal in the applicant’s development application in accordance with the objectives of the applicable planning controls. Surely this is at least one circumstance where ‘benefit’ does not need to be demonstrated in order to satisfy the second limb in Newbury.  Alternatively, benefit should be assumed if a developer has proposed the public benefit.

It seems to me that the notion that  ‘benefit’ can be the only way of satisfying the second Newbury test is self-evidently incorrect. Conditions of consent that address impacts of a development never ‘benefit’ the development. But their validity has never been in question.

The most troublesome aspect of Pain J’s decision is that it appears to stand for the proposition that the planning system cannot be used to secure ‘mere’ public benefits.

Rather, it seems arguable that a consent to a proposal that contains a proposed benefit should actually be conditioned to expressly exclude any approval of that aspect of the development. If the benefit cannot be secured by a condition, it follows that it must be also be an irrelevancy which could cause the planning discretion to miscarry if taken into account.

The outcome  seems very odd. The planning system clearly admits of planning controls that mandate public benefits as a consequence of development.  That was clearly the case here. If, however, Pain J is correct, the system nevertheless negates the ability to secure them.

Indeed if Pain J is correct, the only way to secure mere public benefits will be to include them in a planning agreement. But under the Planning Bill 2013, the scope of what may be included in VPAs has been significantly narrowed.