Why infrastructure agreements need to be executed prior to Development Plan consent: Lessons from Naiama Pastoral Company Pty Ltd v District Council of Yankalilla (No 1) and (No 2)

We are often asked by development officers how to safeguard a council when granting a development authorisation before executing an infrastructure agreement. Our advice is always that no Development Plan consent should be granted in the absence of the infrastructure agreement being executed.

Commissioner Nolan of the Environment, Resources and Development Court (Court) affirmed this position in the recent decisions of: Naiama Pastoral Company Pty Ltd v District Council of Yankalilla (No 1) [2020] SAERDC 5; and Naiama Pastoral Company Pty Ltd v District Council of Yankalilla (No 2) [2020] SAERDC 6.

Background

The cases concerned a development application (Application) of Naiama Pastoral Company Pty Ltd (Naiama) for Development Plan consent and land division consent to create seven allotments from a single parcel of land (Proposal). Development Plan consent was granted subject to five conditions, but land division consent (for Stage 1 - comprising of only two of the seven allotments) was refused. Naiama then filed an appeal against both decisions, including against condition 5 (Condition 5) on the Development Plan consent, and the refusal of the land division consent.

Condition 5

Condition 5 required Naiama to enter into an infrastructure agreement with the Council prior to full development approval being issued. Condition 5 read:

“The following off-site works (directly related to servicing the needs of the land division) shall be the subject of an Infrastructure Agreement with Council prior to Development Approval being issued:

• The sealing and upgrading of Brown Road to enable sufficient, safe and acceptable access to future residential allotments within the Land;
• Any urban stormwater management device or installation that may be required to be located on land within the vicinity of and required to meet the stormwater management impacts from the development of residential allotments within the Land.”

Naiama argued that Condition 5 was invalid as it: was ultra vires the power of the Council; lacked specificity, certainty, finality or enforceability; did not fairly and reasonably relate to the Proposal; was for an ulterior purpose; and could be severed from the Development Plan consent.

Ultimately, the Court held that Condition 5 lacked specificity, certainty, finality and enforceability and was therefore invalid, but was not severable from the Development Plan consent. It quashed the Development Plan consent and remitted the matter back to the Council for determination. Below is an overview of the Court’s consideration of these issues.

Specificity, certainty, finality or enforceability

Condition 5 required Naiama and the Council to agree a number of unknown factors including: the design; cost; timing; and responsibility for undefined works. The form and terms of the infrastructure agreement had not been finalised and no detailed design work had occurred to inform that process. No draft infrastructure agreement or heads of agreement existed. The Council had not planned or budgeted to deliver the works. There was a distinct possibility that the terms of the infrastructure agreement may not be agreed; the infrastructure agreement may not eventuate; and therefore the works may not be delivered.

The Court found that Condition 5 lacked specificity, certainty, finality and enforceability. The Development Plan consent amounted to an approval subject to a further action; it was not solely within the power of Naiama to implement; and there was considerable doubt as to whether it could implement the condition. Therefore, Condition 5 was ultra vires and invalid. The Court also commented that in the event that Condition 5 required Naiama to pay for the works, it would also likely be ultra vires and invalid. It found that any infrastructure agreement should have been in place before Development Plan consent was issued.

Fairly and reasonably relating to the land

Interestingly, evidence before the Court showed that Naiama had consistently supported the imposition of Condition 5 and had taken responsibility for the upgrading (at its cost) of Brown Road as part of the Application. It rescinded that support after the grant of Development Plan consent. The Court found that the Council acted in good faith and that Condition 5 fairly and reasonably related to the land. Condition 5 had sufficient foundation by virtue of a number of Development Plan provisions regarding access and stormwater. There was a clear planning purpose and a direct relationship between Condition 5 and the Proposal.

An ulterior purpose

The Court found that the Council did not use its powers so as to avoid paying for works it might otherwise have had to undertake. The Application was lodged, assessed and determined on the basis that the off-site works would eventuate and that they would be undertaken by Naiama. Therefore, there was no ulterior motive in the Council seeking to secure this commitment in Condition 5.

The ‘Wednesbury Test’

Established case law provides that a condition will fail if “no reasonable planning authority could have imposed it”. As Condition 5 drew support from specific provisions of the Development Plan, there was a solid foundation for its imposition. The fact that Naiama had repeatedly stated that the works were required confirmed that the road upgrade under Condition 5 was not unreasonable. Therefore, the ‘Wednesbury test’ of unreasonableness was not met.

Severability

The Council submitted that were it not for Naiama’s undertaking to carry out the required works, the Council would not have granted Development Plan consent to the Application, as it would not have sufficiently accorded with relevant provisions regarding stormwater and access. The Court found that Brown Road, in its present form, was not suitable to service the approved allotments (including that it could not provide safe and convenient access to all approved allotments or a satisfactory method of stormwater disposal). There was an inextricable link between the purpose of Condition 5 and the planning policy, and these were not matters that could be left to the land division consent, as they related to fundamental considerations in the Development Plan consent. Condition 5 was clearly integral to the Development Plan consent and could not be severed without altering the meaning and operation of that consent. As a result, Condition 5 could not be severed, the Development Plan consent was quashed, and the Application was remitted to the Council for further assessment.

Conclusion

There were many other findings reached by the Court, including that following the Development Plan consent being quashed the land division consent refusal appeal was then also quashed for want of jurisdiction. Whilst these other findings are interesting, these are beyond the scope of this present article. The general principle to take away is that should off-site works be required to support a proposed development consistent with planning policy in a Development Plan, then a council should always secure an executed infrastructure agreement prior to granting Development Plan consent. At Norman Waterhouse Lawyers we have a dedicated Infrastructure Team to ensure councils can quickly prepare, negotiate and execute infrastructure agreements prior to the grant of Development Plan consent.