Property 101: Will a restrictive covenant prevent development on my land?

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Property 101: Will a restrictive covenant prevent development on my land?

by Robecca Cunningham

The benefit of a covenant, said to run with the land, may be enforceable by and between successors in title. Although s 3.16 of the Environmental Planning and Assessment Act 1979 (NSW) (EPAA Act), provides the power to suspend a covenant to facilitate development this applied differently in different local environmental plans, and differently again through the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (Codes SEPP).

The Codes SEPP makes provision for covenants to be suspended, in particular circumstances, and relevantly states (with emphasis added):

Clause 1.20  Suspension of covenants, agreements and instruments

(1) For the purpose of enabling development on land in any zone to be carried out in accordance with this Policy, or with a consent granted under the Act, any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.

(2) This clause does not apply—

(a) to a covenant imposed by a council, or that a council requires to be imposed, requiring compliance with a development standard that is—

(i) consistent with the development standards specified for the development concerned under this Policy, or

(ii) not dealt with by the development standards specified for the development concerned under this Policy, or

(b) to a covenant that is specifically required by another environmental planning instrument, or

(c) to a covenant imposed by an owner or former owner of the land concerned, other than a covenant that has been required by a council to be imposed

The power under to s 3.16 of the EPAA Act is, however, applied differently in a local environmental plan. The Sydney Local Environmental Plan 2012 (Sydney LEP) is a relevant example which is on point.

The Sydney LEP addresses suspension of covenants in clause 1.9A. This is set out in similar, yet not identical, terms and relevantly states (with emphasis added):

Clause 1.9A  Suspension of covenants, agreements and instruments

(1) For the purpose of enabling development on land in any zone to be carried out in accordance with this Plan or with a consent granted under the Act, any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.

(2) This clause does not apply—

(a) to a covenant imposed by the Council or that the Council requires to be imposed

The application of cl 1.9A of the LEP is restricted by cl 1.9A(2)(a) and therefore facilitates development proposed under the LEP by the suspension of covenants other than covenants imposed by the Council or that the Council requires to be imposed. In contrast the exception provided in cl 1.20(2)(c) of the Codes SEPP excludes a covenant imposed by an owner or former owner of the land concerned, other than a covenant that has been required by a council to be imposed from being suspended by this clause.

Although the Codes SEPP does not provide the power to suspend covenants imposed by an owner or former owner of the land, this is not the case for development applications made pursuant to the Sydney LEP. As cl 1.9A is not part of the Standard Instrument Local Environmental Plan this clause is not consistent across local environmental plans in different areas.

An instrument which restricts application of a covenant must be in express terms

In Cracknell & Lonergan Pty Ltd v Council of the City of Sydney (2007) 155 LGERA 291 (Cracknell) Preston CJ differentiated between a ‘right of way’ and a covenant and found that for an instrument to constitute a restriction on the carrying out of development within the meaning of s 3.16, it must affect that restriction by its express terms. Although an instrument such as a covenant which is registered under s 88B of the Conveyancing Act may be such an instrument the Court in this case found that the ‘right of way’ was not displaced by s 3.16 of the EPAA Act. Conversely, in Lennard v Jessica Estates (2008) 159 LGERA 420 the Court of Appeal decided that the unambiguous wording in the LEP caused the s 88B instrument to be displaced.

Whether a covenant will be set aside by a clause enabled by s 3.16 of the EPAA Act will therefore depend on the particulars of the clause in the instrument itself, and, as we have seen above, such clauses are inconsistent across environmental planning instruments.

Although there is inconsistency between the powers to suspend under the Codes SEPP and the Sydney LEP there are further differences between local environmental plans in different areas. In any application for development consideration should be given to the clause of the specific instrument under which consent is being sought.