Recent Court of Appeal judgment on Voluntary Planning Agreements

16 December 2011

The NSW Court of Appeal reversed a July decision of the Land and Environment Court regarding the Huntlee New Town development.




The Land and Environment Court decision centred on whether the former Planning Minister took into account an irrelevant consideration, namely a voluntary planning agreement (VPA) that was alleged not to provide for the enforcement of the agreement “by a suitable means”, this being a requirement of the Act. Hence, the Land and Environment Court declared that the rezoning of the land for urban purposes was void. The Court of Appeal has now taken the opposite view and the rezoning now stands.

The implication of this decision is that it clarifies a number of matters with respect to VPAs. We understand that since July, some planning authorities have been arguing that developers must supply a bank guarantee for all obligations upfront, even before they have received development consent or sought to commence constructions works, with failure to do so being a ground for legal challenge. However the Court of Appeal decision returns the legal position to what it was commonly believed to be prior to July this year. That is, it was accepted by the parties that a breach of the requirement to provide for enforcement of an agreement by suitable means does not result in the invalidity of the planning agreement. The Court of Appeal says that it is not for a court to decide objectively whether the enforcement mechanisms in the VPA are suitable.

Rather, the provisions of the Act suggest that the person who should decide whether the enforcement mechanisms are “suitable” is the Minister or other planning authority (e.g. a council).

Further information on this matter can be accessed from Corrs Chambers Westgarth Lawyers website here

and Gadens Lawyers news letter accessible from here.