In brief – Court of Appeal overturns decision in Huntlee v Sweetwater
A NSW Court of Appeal decision on 8 December 2011 in the matter of Huntlee Pty Ltd v Sweetwater Action Group Inc  NSWCA 378 is good news for developers entering into voluntary planning agreements (VPAs).
Voluntary planning agreement relating to residential subdivision in the Lower Hunter region
The case related to a proposed residential subdivision in the Lower Hunter region south of Branxton in New South Wales, comprising some 1,702 hectares of land, with an expected yield of 7,200 new residential dwellings, to be constructed over a period of 15 years.
As part of the project, the developer, Huntlee Pty Limited, entered into a planning agreement with the Minister for Planning and the Minister for Environment. Among other things, the agreement required the developer to dedicate 5,612 hectares of environmentally significant land for conservation purposes, provide a monetary contribution of $1,000,000 for conservation works and pay a contribution of $100,000 towards the recovery of certain vegetation.
Rezoning of the land declared void as a result of voluntary planning agreement
A local community group, Sweetwater Action Group Inc, challenged the Minister’s decision to rezone the land. Sweetwater argued that in entering into the planning agreement with the developer, the Minister failed to have proper regard to how the developer’s commitments under the planning agreement might be enforced if the developer failed to make good on those commitments as and when required.
In the case at first instance, Justice Biscoe held that the planning agreement failed to provide for the enforcement by "suitable means, such as a bond or guarantee" required by section 93F(3)(g) of the Environmental Planning and Assessment Act 1979 (NSW).
His Honour concluded that "suitable means, such as a bond or guarantee" required an additional, independent and enforceable assurance that the developer's promises would be honoured. As a result, the rezoning of the land by the Governor was declared void.
Enforcing voluntary planning agreements by "suitable means"
The decision was overturned in the NSW Court of Appeal.
The Court of Appeal held that the use of the expression "suitable means" in the Act reflects a very wide range of obligations that a planning agreement may impose on a developer and a variety of mechanisms for enforcement of those obligations that may be suitable.
Among other things, the planning agreement:
- had imposed a liability on the developer to make development contributions by a series of instalments amounting to $1.1 million dollars
- had established a suitable means of enforcement of that obligation in the event of a breach
- contained provisions for registration on title, which meant that the developer's obligations ran with the land
Safeguards were also in place to minimise, if not eliminate entirely, the risk of insolvency, including the effect of registration of the planning agreement on successive owners of the land.
The Court of Appeal held that despite the absence of bank guarantees and the like, the planning agreement complied with the requirements of the Environmental Planning and Assessment Act.
Implications of Huntlee v Sweetwater decision for developers
The decision has been welcomed by the development industry. It provides greater flexibility for developers to adopt a range of measures under planning agreements for security arrangements relating to contributions. Developers are no longer necessarily required to pay up-front bank guarantees or bonds.
If you have any further queries in relation this article or in relation to voluntary planning agreements, please do not hesitate to contact us.
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