A snapshot of the changes to NSW planning laws and significant cases in 2018
In 2018 there were a significant number of regulatory changes (both qualitative and quantitative), Land and Environment Court and Court of Appeal decisions (also both qualitative and quantitative), and policy changes.
One of the biggest changes now sees Panels (rather the Councillors) determining the most significant development applications around the State.
We set out below some of the other important developments over the last year.
Land and Environment Court statistics
The Land and Environment Court Annual Review for the financial year ended 30 June 2018 is available here.
In short, the industry is seeing longer lead times for section 34 conciliation conferences, which in turn holds up the hearing of matters in Court which do not settle at the section 34 conferences. There was a sharp increase in appeals in 2017 (97% increase over 4 years), and 2018 does not appeared to have been significantly different with Class 1 merit appeal registrations sitting at 782 for the year back in October 2018 (compared to 1021 for the 2017 year). Part of the reason for this is the many deemed refusals of development applications leading to appeals given the cost involved in playing the "waiting game" with councils.
Overhaul of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act)
2018 began with the largest number of changes to the EP&A Act since it commenced almost 40 years ago. Our article from earlier this year summarised the main changes. The changes were implemented in stages, with some changes postponed for commencement until next year.
Interim occupation certificates
The change to the regime surrounding planning certificates has caused some industry consternation.
However, developers can continue to apply for interim occupation certificates until 1 September 2019, which is when the changes to Part 6 of the EP&A Act will commence under the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017.
Despite these changes, developers will still be able to obtain an "occupation certificate" that authorises occupation or use of part of a new building, or to commence a new use of part of a building resulting from a change of building use for an existing building.
Building and Development Certifiers Bill 2018
The Building and Development Certifiers Bill 2018 was passed on 31 October 2018, which includes amendments to Part 6 of the new EP&A Act. This amends the EP&A Act to insert section 6.6(4A), which introduces the ability to prescribe an alternative appointment process for principal certifying authorities in the purported hope of supporting certifier independence.
The alternative appointment process is yet to be finalised. Based on the Improving Certifier Independence: Options Paper, it appears that three options are being considered:
Option 1: The rotation scheme
Option 2: The cab rank scheme
Option 3: The time limit scheme
Establishment of an eligibility list where the certifier is appointed in a randomised order.
Establishment of an eligibility list where the next available certifier on the list is allocated to the job.
Requiring a certifier to take a two-year break after working for the same client after a certain period of time.
The Options Paper also describes potential thresholds, that if met would mean that the alternative appointment process would apply, such as if a development is a Class 2-9 building above 3 storeys with a total floor area greater than 2,000m2 valued at $5 million or more.
This will raise a number of significant implications for certifiers and those appointing them.
Under section 9.5 of the EP&A Act, the Secretary of the Department is responsible for accepting enforceable undertakings on behalf of the Department and NSW Councils.
The first two enforceable undertakings have been entered into. One was accepted by the Secretary on behalf of the Department of Planning and Environment. The other was accepted by the Secretary on behalf of a council (North Sydney Council). They are published on the Department's website.
It will be interesting to see how extensively these are used across NSW, which councils are willing to use them, and if there is any consistent pattern as to when and in what circumstances they are used.
Those considering entering into an enforceable undertaking should understand the repercussions for breach of a term of the undertaking under section 9.5(4) of the EP&A Act, given the Court can make compensatory and monetary benefit orders (among others) where there is a breach.
Review of the Environmental Planning and Assessment Regulation 2000 (Regulations)
The Department has recently commenced a review of Regulations, following the changes to the EP&A Act earlier this year. The Issues Paper for the Review of the Regulations is available here. The draft amendments to the Regulations have not yet been released.
Changes to the Standard Instrument Local Environmental Plan and Codes SEPP
Reinforcing a widely considered view within the industry that an LEP becomes redundant the day it is gazetted, numerous changes have been made to the Standard Instrument LEP for retail, including new definitions for ‘artisan food and drink industry’, 'garden centre', ‘local distribution premises’, ‘neighbourhood supermarket’ and ‘specialised retail premises’. These changes have the obvious intention of catching the planning system up to new consumer trends.
There have also been recent changes proposed to introduce exempt and complying development pathways that enable Short Term Rental Accommodation (STRA) to catch up with the rise of suppliers of STRA like Airbnb. Our Property team has recently published an article on the impact of peer-to-peer accommodation (such as Airbnb) on hoteliers, and the new regulatory framework for short-term letting platforms under the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW).
The State Environmental Planning Policy Infrastructure 2007 has also been amended, in another interesting example of the planning system catching up to new technology and consumer behaviour. It now allows for the installation of electric car chargers in car parks, depots and other vehicle related facilities, without planning approval.
Low Rise Medium Density Code
One of the most controversial policy changes in 2018 relates to the Low Rise Medium Density Housing Code, which allows one and two storey dual occupancies, manor houses and terraces to be carried out under a fast track complying development approval for medium density zones. A complying development approval can be issued within 20 days if the proposal complies with all the relevant requirements in the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (Codes SEPP).
The implementation of this code was however deferred for 50 councils until 1 July 2019.
Western Sydney Aerotropolis
Planning for the Badgerys Creek airport and surround lands has well and truly begun. The Stage 1 Land Use and Infrastructure Implementation Plan (LUIIP) for the Aerotropolis provides an overview of proposed land uses and the sequence of development that will deliver the Aerotropolis around Badgerys Creek. The LUIIP was on exhibition between 21 August to 2 November 2018.
SEPP 70 changes
One of the final reforms currently being proposed, which could have a significant impact on any development in NSW, is the proposed amendments to State Environmental Planning Policy No. 70 – Affordable Housing (Revised Schemes) (SEPP 70). SEPP 70 allows councils named in it to prepare affordable housing contribution schemes within their local government area. If additional local government areas are added, it would add yet another form of contributions that councils could collect.
Court of Appeal judgments
The last year has seen a number of Court of Appeal judgments that have sprung from the Land and Environment Court.
One such judgment that has gained notoriety is Al Maha Pty Ltd v Huajun Investments Pty Ltd  NSWCA 245. That case has already impacted the way Commissioners now prepare their decisions in cases where a section 34 agreement is entered, as well as the way these agreements are now prepared. The decision will also have implications on the types of scenarios where development is held to be "in relation to" other land, as well as the use of the "slip rule".
Another interesting case was Mailey v Sutherland Shire Council  NSWCA 343, where the appellants appealed an order issued under item 21 of the Table to section 124 of the Local Government Act 1993 (NSW) requiring the appellants to do certain things specified in the order to place the land in a safe condition. The matter involved retaining walls in the rear yard which were considered to be at risk of failure. The Court of Appeal upheld the primary judge's decision that the order was not outside of power, not void for uncertainty, and not issued for an improper purpose. What was also interesting was that the Appellants made a claim for damages for the expenses they incurred in complying with the order issued by the Council. Obviously it was not necessary to determine this aspect of the appeal given the findings above.
Land and Environment Court judgments
We have seen the start of litigation on strata renewals under Part 10 of the Strata Schemes Development Act 2015 (NSW) and Part 6 of the Strata Schemes Development Regulation 2016. At least five interlocutory judgments explaining some of the process issues have now been handed down.
Also in the Class 3 jurisdiction, the height of the WestConnex acquisition matters has subsided. But 2019 will see a return of Carlewie v RMS after the Court of Appeal's decision in Carlewie Pty Ltd v Roads and Maritime Services  NSWCA 181, which overturned the first instance decision in the Land and Environment Court due to the Commissioner's adjudicatory role in that decision which was held to render the judgment invalid.
A number of interesting land access appeals under section 40 of the Land and Environment Court Act 1979 (NSW) have also been handed down. In Acorp Developments Pty Ltd v HWR Pty Ltd  NSWLEC 68 it was held that a right of carriageway was not reasonably necessary and as such the easement was not ordered. But in A.T.B. Morton Pty Ltd v Community Association DP270447 (No 2)  NSWLEC 87, a right of carriageway was considered reasonably necessary and the easement was ordered. Both judgments were handed down by Robson J.
In the Class 1 jurisdiction, there have been two interesting decisions where development consents have been held to lapse in circumstances where a deferred commencement condition had not been complied with: Savellis v Sutherland Shire Council  NSWLEC 100 and Dennes v Port Macquarie-Hastings Council  NSWLEC 95. The careful review and satisfaction of conditions in consents is important to ensure that they are properly commenced.
Probably the most well-known decision handed down in the last year was Initial Action Pty Ltd v Woollahra Municipal Council  NSWLEC 118. Since August 2018 when judgment was delivered by Preston CJ, it has been cited in 17 other decisions. The decision has relevance to anyone preparing clause 4.6 requests to vary development standards.
In the Class 4 jurisdiction, and in one of the longer judgments of the year (close to 900 paragraphs), Molesworth AJ considered a large scale designated development at the Martins Creek Quarry in Dungog (Dungog Shire Council v Hunter Industrial Rental Equipment Pty Ltd (No 2)  NSWLEC 153). The development activity was held to be unlawful, but the judgment provides useful commentary on the characterisation of existing uses.
Finally, we have written previously about the Mansfield decision in the Class 5 jurisdiction of the Court. The Court of Criminal Appeal's decision in this matter is yet to be handed down, but will have a bearing on how councils go about investigations of alleged unlawful activity.
Looking ahead to next year
With changing property market conditions in NSW, two elections next year, and changing lending conditions, the impact of NSW's planning and environment system also forms an important part of this landscape that regulators and those involved with developing property need to be aware of.