Buyer beware! Have all approval conditions been satisfied? If not, you could be responsible

By Melissa McKenzie, Michael Richardson and Kathryn Pacey

29 Mar 2018

When you undertake due diligence for a potential purchase of land, ensure you satisfy yourself that conditions of a development approval attaching to that land have been properly satisfied and are not outstanding.

The High Court of Australia's unanimous decision in Pike v Tighe [2018] HCA 9 puts beyond doubt that in Queensland compliance with conditions of a development approval is not only the responsibility of the original owner of the land to which the development approval attaches, but will also become the responsibility of any subsequent owners of that land or a reconfigured parcel of that land.

The subdivision and the conditions on it

The Townsville City Council approved an application by the owners of land for development involving the reconfiguration of one lot into two lots (lot 1 and lot 2). The approval was subject to a condition (condition 2) requiring the provision of an easement to allow pedestrian and vehicle access, on-site manoeuvring and connection of services and utilities over lot 1 for the benefit of lot 2. This condition had to be satisfied before the Council signed the survey plan.

The registered owners of the original lot 1 executed an easement which made no mention of on-site manoeuvring and connection of services utilities. Despite this, the Council approved the relevant survey plan to give effect to the reconfiguration.

Subsequently, the Tighes became owners of lot 1 and the Pikes became owners of lot 2. Relying on section 245 of the now repealed Sustainable Planning Act 2009 (SPA), the Pikes sought a declaration in the Planning and Environment Court that condition 2 had been contravened and an enforcement order directing the Tighes to comply with the condition.

Section 245 of SPA stated:

"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."

The Planning and Environment Court held that the Tighes had committed a development offence warranting the making of an enforcement order to provide the Pikes with an easement in compliance with condition 2. The Tighes appealed to the Queensland Court of Appeal, which overturned the original decision and held that the conditions of the development approval for the reconfiguration of the original lot bound only the owner of, and any successors in title to, that original lot.

Off to the High Court

The Pikes appealed to the High Court against the decision of the Court of Appeal. The High Court said that the Court of Appeal had glossed the language of section 245 by interpreting the reference to "the land" in section 245 as being a reference to the original lot only - not the lots created by the reconfiguration.

In accepting the Pikes' submission that section 245(1) continues to operate notwithstanding later reconfiguration, and that the mere registration of the survey plan, absent fulfilment of the conditions of approval, did not result in the expiration of the conditions, the High Court held that:

  • section 245 expressly gives the conditions of a development approval the character of personal obligations capable of enduring in their effect beyond the completion of the development which the development approval authorised;
  • these personal obligations expressly attach to "the land the subject of the application to which the approval relates";
  • the natural and ordinary meaning of these words is that the obligation attaches to all land the subject of the application;
  • the terms of condition 2 expressly applied to the land in each of the new lots;
  • section 245 and condition 2 together obliged the Tighes to provide the easement rights required by condition 2.

The Tighes also argued that this approach was contrary to the principles of indefeasibility of title under the Torrens title system. Both the Court of Appeal and the High Court agreed issues of indefeasibility do not arise as the condition of development "runs with the land by virtue of a statutory provision to that effect" - in this case section 245.

The High Court further found that the Tighes had been given ample opportunity to provide an easement in the terms required by condition 2, but had failed to do so, and thereby contravened the development approval and committed a development offence. The matter was remitted to the Planning and Environment Court for the making of final orders.

But SPA no longer applies

SPA may have been replaced by the Planning Act 2016 but that Act contains a similar provision (although expressed somewhat differently) binding successors in title and occupiers. Section 73 refers to "premises" rather than "land" and expresses a limitation to the obligation to "while a development approval is in effect", however it retains the express confirmation that a development approval attaches to premises even if a later development (including reconfiguring a lot) is approved or the premises are reconfigured.

What does it all mean?

When you undertake due diligence for a potential purchase of land, ensure you satisfy yourself that conditions of a development approval attaching to that land (and, if relevant, the original parcel from which the land was reconfigured) have been properly satisfied and are not outstanding - even if the object of the development approval appears to have been fulfilled.

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