24 April 2018

Beware Before Consenting to Development Approvals

In a recent case, a property owner was stuck with a $400,000 infrastructure charges bill because he consented to a development application without paying proper attention to the possible consequences.

An infrastructure charge is something which councils can impose for new development.  They are usually triggered by a development application, and become payable when the rights under the development approval are exercised, such as when the change of use occurs.   Although the planning legislation in its various recent forms has not specified that infrastructure charges run with the land, it has for some time said that they are recoverable as rates.

In the case, an owner consented to a tenant making a development application to use his land as a refuse transfer station.   The use had actually already, unlawfully, commenced.  The application was approved by the council, and council issued an infrastructure charges notice to the tenant (not the owner) for $356,718.84.  The tenant did not pay it, and presumably was insolvent because it was not joined in the proceedings.  Four years later the council issued a rates notice to the owner for $400,574.94, which included the infrastructure charges.   Ultimately the Court of Appeal held that council could do this, and the owner had to pay.

In my experience property owners are often fairly flippant in granting consent to tenants, purchasers and option holders to enable them to make development applications.  Often in the case of contracts and options, there is no real description of what it is that the owner is required to consent to  – just a development application of some sort.  It is worth remembering though that development approvals, and their conditions, run with the land and so will bind the owner.  As this case shows, infrastructure charges are treated similarly.  Owners should be cautious about what they are consenting to, especially if there is a prospect of the development commencing while they are still the owner of the land, thus triggering the need to comply with conditions and pay infrastructure charges.

For more information, please contact Partner, Nigel Hales.

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