High Court of Australia confirms ongoing effect of development approval conditions

A much-awaited decision of the High Court of Australia has confirmed that development approval conditions attach to land and have enduring effect, even after development has been completed.

On 14 March 2018, the High Court of Australia (High Court) delivered its judgment in the case of Pike v Tighe [2018] HCA 9.

The case concerned an issue which, in recent years, has become highly contentious in Queensland’s planning law – namely, the extent to which a development approval’s conditions attach to and bind land after the approved development has been completed.

In a much-awaited, unanimous (five judge) decision, the High Court has confirmed the enduring effect of development approval conditions. While the decision does not entirely resolve the issue, it should nonetheless overcome much of the recent uncertainty.

The facts of the case

The case arose out of a decision by the Townsville City Council in May 2009 to approve a development application for a 1-into-2 lot subdivision (Approval).

The Approval was subject to various conditions, including a condition (Condition) requiring that one of the two new lots (Lot 1) be subject to an easement in favour of the second lot (Lot 2). The Approval stated that the Condition needed to be complied with prior to Council signing the survey plan for the subdivision (a prerequisite for the plan to be registered with the Titles Registry). More specifically, the condition itself stated that the easement had to be registered in conjunction with the survey plan which subdivided the land.

The owners of the original lot (ie the lot to be subdivided) (Original Lot) executed an easement that did not comply with the Condition. Despite this, the Council signed the survey plan, allowing the subdivision to be registered in November 2010 taking effect with the non-complying easement.

Subsequently:

• in January 2011, the Tighes were registered as the new owners of Lot 1; and
• in January 2012, the Pikes were registered as new owners of Lot 2.

In 2015, the Pikes commenced proceedings against the Tighes in Queensland’s Planning and Environment Court (P&E Court) seeking a declaration that the Tighes had contravened the Condition, and an order (called an ‘enforcement order’ under Queensland’s planning legislation) requiring the Tighes to comply with the Condition.

The basis for this was section 245 of the Sustainable Planning Act 2009 (Qld) (SPA), which provided as follows:

"245 Development approval attaches to land

(1) A development approval –

(a) attaches to the land the subject of the application to which the approval relates; and

(b) binds the owner, the owner's successors in title and any occupier of the land.

(2) To remove any doubt, it is declared that subsection (1) applies even if later development, including reconfiguring a lot, is approved for the land or the land as reconfigured."

We note that although SPA has since been repealed, and replaced by the Planning Act 2016 (Qld) (Planning Act), the above is now reflected in section 73 of the Planning Act.

In response, the Tighes argued that they had not contravened the condition, because any contravention occurred at the time the subdivision was registered. The basis for this argument was that, because the Approval required the Condition to be complied with in conjunction with registration of the survey plan which created the two lots, it ceased to have effect after that time.

The P&E Court did not accept this argument and granted the Pikes application.

This led to the Tighes appealing the P&E Court’s decision to Queensland’s Court of Appeal (QCA). The QCA allowed the appeal, and reversed the P&E Court’s decision.

Broadly, the basis for this decision was a conclusion by the QCA, consistent with the Tighes’ argument, that the obligation under the Condition was merely to register an easement in conjunction with the subdivision. Once the subdivision had been registered, the development approval had been ‘spent’ and the Condition had no ongoing operation, despite section 245 of SPA. The QCA also considered that the ‘land’ referred to in section 245 of SPA was the Original Lot, being the lot in existence at the time the Approval was given, rather than the subsequent Lots 1 and 2, which were created by the subdivision.

In response to the QCA’s decision, the Pikes commenced a further appeal to the High Court, leading to this decision.

The legal context

In October 2016, we published an article, in relation to a P&E Court decision dealing with similar issues. That article outlined in detail the competing legal views on the effect of section 245 of SPA.

Although section 245 of SPA (and now section 73 of the Planning Act) is clear that a development approval attaches to land and binds successors in title, it is less clear how the section operates in specific circumstances.

For example, in Peet Flagstone City Pty Ltd v Logan City Council [2015] QPELR 68 (Peet), the QCA upheld a decision of the P&E Court that a condition of a development approval for vegetation clearing, which had required a specified area of vegetation to be preserved as a buffer, remained binding and enforceable even where a later change in legislation meant that the same area could be cleared ‘as of right’ (without any approval).

In contrast, in Steendyk v Brisbane City Council [2016] QPEC 47 (Steendyk) (the focus of our previous article), the P&E Court held that a development approval condition requiring privacy screening to be ‘constructed and maintained’ on a dwelling house did not remain binding for a dwelling house constructed under a later approval, noting that the earlier approval had ‘simply finished the work it was required to do’.

These and other cases dealing with this issue have given rise to two competing perspectives on the operation and effect of section 245 of SPA. As explained in our previous article, these perspectives can be characterised as:

• the ‘broad’ view, reflected in Peet, that because a development approval attaches to land, its conditions remain binding even where development is later undertaken under a different approval (or ‘as of right’ without approval); and
• the ‘narrow’ view, reflected in Steendyk, that a development approval’s conditions only regulate the specific development approved by that approval, and cease to have effect when the development approval is ‘spent’.

The decision

The High Court unanimously (with a panel of 5 judges) allowed the Pikes’ appeal, holding that the Condition remained binding and enforceable against the Tighes.

In relation to the operation of section 245 generally, the High Court endorsed the ‘broad’ view, stating that section 245 of SPA “serves the readily intelligible purpose of ensuring that [an approval] may be enforced against successors in title to the land” and that there was “no reason to minimise the effect of conditions upon land use and occupation imposed in the public interest by straining against the natural and ordinary meaning of the provision”.[1]

In an apparent (though not unambiguous – see below) rejection of the ‘narrow’ view, the High Court also noted that there was nothing in SPA to suggest that an approval’s conditions terminated once the approved development was carried out.[2]

In relation to the specific circumstances of this case, the High Court noted that the QCA had ‘glossed’ the language of section 245, by treating the section as though it applied to the Original Lot, rather than (as per the language of section 245) the ‘land’ (ie including after subdivision).[3]

In the course of the appeal, the Tighes had raised a concern that the Pikes’ position (ultimately upheld by the High Court) would operate unreasonably harshly for a purchaser, like the Tighes, who acquires land for which a condition has been contravened by a previous landowner. In such circumstances, the Tighes argued, the purchaser would be deemed automatically guilty of offence simply because they purchased a parcel of land.

The High Court did not agree with these concerns, for two reasons.

First, the High Court noted that the offence of contravening a development approval arises in respect of a ‘failure to comply’ rather than a ‘bare non-compliance’. The High Court considered that this meant that a person would not be guilty of an offence immediately upon acquiring land. Rather, an offence would only arise if the person failed to comply within a reasonable time, or if they engaged in conduct confirming that they had no intention of complying.[4]

Second, the High Court noted that, even if an offence was committed, the P&E Court’s power to make enforcement orders is discretionary. If, in a particular case, an enforcement order would be unreasonably harsh, this would be a matter that the P&E Court could take into account in exercising its discretion.

In view of the above, the High Court held that the appropriate course was for the case to be remitted back to the P&E Court, so that appropriate orders could be made.

The implications

The High Court’s decision is important because it confirms that a development approval’s conditions remain binding even after the approved development has completed.

This confirms that aspects of the approach in Steendyk are not correct. In particular, the High Court’s decision clarifies that a development approval’s conditions will not cease to have effect simply because the approval has ‘finished the work it was required to do’.

This provides developers and approval authorities with certainty that the mere fact that development has been completed will not, of itself, mean that the approval’s conditions are spent. They will attach to the land and continue to have ongoing legal effect, unless the conditions themselves say otherwise.

However, the key issue which the High Court’s decision does not resolve is how that ongoing legal effect functions in circumstances where development that would breach an earlier approval condition is carried out under a later approval or ‘as of right’ (as was the case in Peet).

Even with the benefit of the High Court’s decision in this case, it remains arguable whether the earlier approval only regulates the original approved development, or whether it has effect for any development on the land. The competing outcomes in Peet and Steendyk demonstrate that both views have some support.

As discussed in our previous article, the Planning Act has expanded the circumstances in which a development approval can be changed, allowing a means of amending or removing conditions that might otherwise inappropriately stifle future development.

Although the High Court’s decision does not entirely resolve the legal uncertainty, it highlights the need for developers to seriously consider making change applications. Until the legal position is further clarified, the availability of a change application provides a practical means of protecting against any legal risk.