SAT strikes out condition purporting to require a monetary contribution

It is common for conditions of development approval to require a proponent to pay a monetary contribution to local government (or other public authorities), to be applied towards public infrastructure requirements that arise in connection with the proposal. 

It is also common for such conditions of development approval to be imposed in circumstances where the public infrastructure works in question would still be required, regardless of whether the development in question proceeds.

It is important for developers and landowners to understand that such conditions of development approval are potentially legally invalid and may be the subject of legal challenge.  This very issue was recently considered by the State Administrative Tribunal in Prosser and City of Bunbury [2018] WASAT 41.

This case involved a development approval authorising showrooms to be built on a site that had previously been used for tyre repairs.  The local government imposed a condition of development approval requiring the proponent to make a fixed monetary contribution to the costs of upgrading the footpath located in the public realm out the front of the development site.  The proponent challenged this particular condition of development approval in the Tribunal, pursuant to section 252 of the Planning and Development Act1.  There were two grounds of review argued in this case.

The first ground was that the condition infringed regulation 73 of the Planning and Development (Local Planning Schemes) Regulations2, which states that:

“A local government must not levy a contribution for the provision of infrastructure or facilities for an area unless there is a development contribution plan in place for the area”. 

There was no developer contribution plan in place for the subject site and the proponent accordingly argued that the condition infringed regulation 73.

The Tribunal rejected this argument, on the basis that the term “area” as used in regulation 73 refers to a developer contribution area identified under a local planning scheme and not just to any area generally.  On the reasoning of the Tribunal, regulation 73 would simply prevent contributions being levied in circumstances where a local planning scheme identifies a developer contribution area, but no developer contribution plan has yet been put in place.

The reasoning of the Tribunal in rejecting the first ground of review in this case is open to question and could potentially be challenged in future cases.  That is because if regulation 73 is indeed referring to developer contribution areas specifically, and not to any area generally, then presumably regulation 73 would expressly refer to “developer contribution areas” and not simply to “areas”.

The second ground of review in this case was however upheld by the Tribunal.  This ground contended that the condition of development approval failed to satisfy the requirements of the common law test for validity of conditions of approval.  The common law test of validity (recently affirmed in the Western Australian context in Reid v Western Australian Planning Commission [2016] WASCA 181) says that a condition of development approval must:

1) have a planning purpose;
2) reasonably and fairly relate to the development permitted; and
3) not be manifestly unreasonable.

The Tribunal found that although the condition had a planning purpose and was not manifestly unreasonable, the condition did not reasonably and fairly relate to the development permitted and was therefore legally invalid.

In particular, the evidence before the Tribunal indicated that changing the land use of the site from tyre repairs to showrooms would not cause any increase in the amounts of pedestrian movement to and from the site.  Put simply, the proposal itself did not give rise to the need to upgrade the adjacent footpath.  The footpath would have required upgrading in the near future regardless of whether the proposal was implemented and it was therefore improper for the local government to use the development approval as a mechanism to levy a contribution from a developer to partially cover the upgrade costs.

If a development approval requires contributions to be made for public purposes, whether in the form of a monetary payment, ceding of land or otherwise, then the proponent should carefully consider any such conditions to ascertain whether they have been validly imposed.  Any conditions that have not been validly imposed and are otherwise commercially unacceptable to the proponent should ideally be challenged in the Tribunal and struck off the development approval.

As a rule of thumb, if the public infrastructure works for which a contribution is sought would be going ahead regardless of whether a development approval was granted, then there may be a strong case for the deletion of such a condition.

If you would like Lavan to review a condition of development or subdivision approval and advise you on the prospects of a successful challenge, please feel free to contact the Lavan Planning and Environment Team.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.