High Court confirms that subsequent owners of reconfigured land are bound by the conditions of a development approval made prior to reconfiguration of the land

The case of Pike v Tighe [2018] HCA 9 concerned an appeal to the High Court of Australia (Court) against the Queensland Court of Appeal's decision in respect of proceedings commenced by the Appellant in the Planning and Environment Court (P&E Court) for the Respondent’s failure to comply with a condition of a development approval.

 

The development approval was given by the Townsville City Council (Council) for the reconfiguration of a lot into two smaller lots. The approval was subject to certain conditions. The Respondent is the owner of lot one and the Appellant is the owner of lot two.

 

The first question raised in the appeal was whether section 245 of the Sustainable Planning Act 2009 (SPA) requires a subsequent owner of reconfigured land to comply with a condition of a development approval that was made prior to the reconfiguration and not satisfied by the original owner. The second question raised in the appeal was whether the P&E Court can make an enforcement order under the SPA requiring a subsequent owner to comply with the condition of a development approval that was made prior to the reconfiguration and not satisfied by the original owner.

 

The Court considered the effect of section 245 of the SPA and held that the Court of Appeal made an error in finding that the Respondent, as the subsequent owner of lot one, is not required to comply with the relevant condition, being condition two, of the development approval. The Court confirmed that conditions remain attached to reconfigured land and bind subsequent owners. The Court held that the P&E Court could make an enforcement order under the SPA requiring the Respondent to comply with condition two.

 

It is noted that the SPA is now repealed and the equivalent of section 245 of the SPA is found in section 73 of the Planning Act 2016 (PA). Accordingly, the Court's decision remains good law under the PA. The Court’s decision reinforced the importance of applying the core principles of statutory interpretation to ensure that legislative provisions are interpreted correctly.

The Council approved a development application made by the original owner for the reconfiguration of the subject land in May 2009. The approval was subject to certain conditions including condition two which required an easement be provided over lot one to allow pedestrian and vehicle access, on-site manoeuvring and connection of services and utilities for the benefit of lot two.

 

The original owner of the original parcel of land executed an easement with no mention of on-site manoeuvring or the connection of services and utilities. Despite this inconsistency, the Council approved the survey plan to carry out the reconfiguration.

The Appellant argued that the Respondent is required to comply with condition two under section 245 of the SPA. The Appellant contended that the Respondent failed to comply with condition two and sought an enforcement order from the P&E Court requiring the Respondent to comply with condition two. 

 

Section 245(1) of the SPA provides that a development approval attaches to the land and binds the owner and any subsequent owners of the land. Section 245(2) of the SPA provides that section 245(1) applies even if reconfiguration of the land is approved.

 

The P&E Court accepted the Appellant's argument and held that section 245 of the SPA requires conditions of the development approval to remain attached to land after reconfiguration. As a result, the P&E Court found that the Respondent committed a development offence for failure to comply with condition two. However, the P&E Court did not make an enforcement order on the basis that the two parties would agree upon the appropriate terms for the Respondent to comply with condition two.

The Respondent argued that a development offence had been committed by the original owner for failure to comply with condition two as the owner of the original parcel of land. The Court of Appeal accepted the Respondent's argument and held that the P&E Court made an error in finding that the Respondent had committed a development offence for failure to comply with condition two.

 

In respect of section 245 of the SPA, the Court of Appeal found that condition two was not "a continuing and freestanding obligation served from the simultaneous creation of the approved configuration". The Court of Appeal found that section 245 of the SPA only binds the original owner of the original parcel of land to carry out the reconfiguration. Accordingly, the Court of Appeal found that condition two attaches to the original parcel of land but does not attach to lot one and lot two after reconfiguration.

 

The Court of Appeal cited Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472 (Hillpalm decision) to establish that an enforcement order can only be made against the person who committed the development offence. The Court of Appeal held that an enforcement order cannot be made against the Respondent as the Respondent is not required to comply with condition two.

The Appellant maintained that section 245 of the SPA imposes condition two on the Respondent as it continues to apply even after the reconfiguration of land. The Appellant cited section 245(2) of the SPA as an explicit indication that condition two remains attached to the reconfigured land.

 

The Court accepted the Appellant's argument and held that the Court of Appeal made an error in concluding that condition two of the development approval binds the original owner as it only attaches to the original parcel of land.

The Court held that the Court of Appeal had "glossed" over section 245 of the SPA and incorrectly interpreted the provision. To highlight the flaws in the Court of Appeal's interpretation, the Court provided the example of a large residential development that is subject to conditions. If the Court of Appeal's interpretation is accepted and the conditions had not been complied with after registration of the survey plan, the P&E Court would lack the power to make an enforcement order against the developer or subsequent owners. The Court noted that this example illustrates how the Court of Appeal's interpretation restricts the scope of section 245 of the SPA and jeopardises the protection of the public interest in the effective use of land.

 

The Court cited the case of Peet Flagstone Pty Ltd v Logan City Council [2015] QPELR 68 and held that the Court of Appeal's interpretation of section 245 of the SPA contradicts the statutory character of a condition as the price a developer must pay for a development approval.

 

The Court rejected the Court of Appeal’s consideration of the Hillpalm decision. The Hillpalm decision concerned whether effect should be given to a condition of a local government's approval to reconfigure land in circumstances where the legislation did not contain the equivalent of section 245 of the SPA. The Court found "striking" differences between the Hillpalm decision and this appeal.

 

The Court applied a core principle of statutory interpretation and considered the natural and ordinary meaning of section 245 of the SPA. The Court confirmed that the natural and ordinary meaning of the provision is to attach condition two to all of the land. The Court held that there is no need to ignore this meaning and minimise the effect of the provision by only attaching condition two to the original parcel of land. The Court concluded that section 245 of the SPA expressly attaches condition two to the reconfigured land and binds the Respondent as the subsequent owner of lot one.

The Court confirmed that the Respondent committed a development offence for failure to comply with condition two under section 580 of the SPA. The Court held that the P&E Court could make an enforcement order under sections 601, 604 and 605 of the SPA requiring the Respondent to comply with condition two.

 

The Court acknowledged the harsh nature of the SPA which exposes a subsequent owner to a penalty simply by acquiring land that is bound by conditions of an existing development approval. However, the Court noted that an enforcement order is discretionary and the P&E Court is required to consider such circumstances when making the order.

 

The Court clarified that the Respondent did not commit the offence by simply acquiring land with the conditions attached to it. The Court held that the Respondent committed an offence by refusing to comply with condition two within a reasonable amount of time. The Court noted that more than three years had elapsed since the Appellant commenced proceedings in the P&E Court. The Court held that three years is a reasonable amount of time for the Respondent to comply with condition two.

The Court allowed the appeal and set aside the decision of the Court of Appeal. The Court redirected the matter to the P&E Court for the making of final orders against the Respondent.