Posted on January 19, 2026 by Liam Mulligan, Dominic Smith and Sinead Macauley 5

Switching off covenants and restrictions – revisiting the operation of clause 1.9A

A recent decision of the NSW Supreme Court provides a timely example of the operation of clause 1.9A – a clause contained in many LEPs which can operate to suspend or override restrictive covenants. Relevantly, clause 19.A(1) provides:

(1)  For the purpose of enabling development on land in any zone to be carried out in accordance with this Plan or with a consent granted under the Act, any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.

This case shows how the clause applies where a covenant is relied upon to restrain a competing commercial use.

Background

The case concerned a neighbourhood shopping centre and an adjoining pub and bottle shop. A covenant had been registered over the centre which prohibited the use of the burdened land for any business involving the sale of alcohol (other than a restaurant on licence). The dispute arose after the council approved a development application by a retail supermarket to convert part of the shopping centre into a bottle shop.

The owner and operator of the existing pub and bottle shop in the same complex, which was the beneficiary of the restrictive covenant, commenced proceedings in the Supreme Court seeking an injunction to enforce the restrictive covenant. 

It argued that clause 1.9A did not apply to suspend the operation of the existing restrictive covenant because:

• the development consent was limited to internal fit-out works and did not extend did not authorise the sale of alcohol, or alternatively,
• the sale of alcohol depended on a separate liquor licence.

The relief was resisted jointly by the owner of the shopping complex, the supermarket applicant of the DA, and the lessee of the subject tenancies, on the basis of clause 1.9A(1).

Decision

The Supreme Court held that the restrictive covenant preventing the sale of alcohol was suspended by operation of a local environmental plan, where development consent had been granted for a Liquorland bottle shop. Once the development consent was granted, the restrictive covenant that would frustrate the approved development will not apply to the extent necessary to enable that development.

Suspension of the restrictive covenant

Clause 1.9A of the standard LEP permits a council to suspend a restrictive covenant entirely in its consideration of the development application. The LEP in question was the Port Macquarie-Hastings Local Environment Plan 2011 (LEP).

A central issue to this case was whether clause 1.9A of the LEP rendered the restrictive covenant inoperative once the development consent was granted.

The Court held that the covenant was an “agreement or covenant” that restricted the carrying out of development approved under the Environmental Planning and Assessment Act 1979. Under clause 1.9A, the covenant did not apply to the extent necessary to enable the approved development.

The Court’s processing of reasoning was lengthy and involved an analysis of the particular activities authorised by the relevant development consent – in particular whether it authorised the sale of alcohol from the premises – but the Court applied the “three-step” process identified by Preston CJ of the LEC in Carey-Evans v Wu (2022) 256 LGERA 1:

…first, identifying what interest is created by the instrument that is the Dealing; second, ascertaining whether the Dealing creating that interest is ‘any agreement, covenant or other similar instrument’; and third, determining whether the Dealing ‘restricts the carrying out of that development’, being development in accordance with the consent granted by the Council. The first step is necessary in order to undertake the second step, and the second step is necessary in order to undertake the third step.

This decision is particularly relevant to councils and developers because it confirms that, when a council grants development consent, provisions such as clause 1.9A of the standard instrument LEP can render private restrictive covenants inoperative to the extent they would frustrate the approved development. The Court emphasised that councils are taken to consent not only to physical works but also to the specific use of land described in the approved plans and supporting documents. As a result, development consents may have the practical effect of overriding private land use restrictions, and that the scope and clarity of consent documentation will be critical in defining what development is lawfully enabled.

Jurisdiction

An interesting side note to the case is that the operator of the pub commenced the proceedings in the Supreme Court rather than the Land and Environment Court.

His Honour confirmed the Supreme Court had jurisdiction to grant injunctive relief enforcing a restrictive covenant, notwithstanding that the Land and Environment Court has exclusive jurisdiction in many planning matters. His Honour (Emmett J) found that disputes concerning property rights may still be brought in the Supreme Court in certain circumstances, even where the resolution of the issue depends on the construction and application of certain planning controls.

You can read the Supreme Court’s judgment here: Tacking Point Holdings Pty Ltd v JTT Enterprises Pty Ltd [2025] NSWSC 1576.

Our previous article discussing whether a consent authority has power to suspend the operation of an easement for the purpose of enabling development to be carried out in accordance with a development consent can be found here: Update on a consent authorities’ power to suspend the operation of an easement.

If you have any questions regarding this article, please leave a comment below or contact Dominic Smith or Liam Mulligan ((02) 8235 9715).