Will a Restrictive Covenant Prevent Your Development?

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The case of Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833, is very instructive with respect to both a local Council’s ability to override covenants and the circumstances in which an owner can have contractual provisions declared unenforceable.

The case decides that where a Council has requested a restrictive covenant or design guidelines be included in a subdivision and these are carried forward in the contract special conditions (even if not contained in a s88B instrument) then the contractual provisions are enforceable against an owner.  However, if Council didn’t make the request and subsequently approves a development contrary to the contract, then the contract is not enforceable against the owner – even though the owner was a party to the contract.  This is because of the power of councils to ignore a covenant if they are approving a lawful development.

S 3.16 of the Environmental Planning and Assessment Act (formerly s28) provides the legislative authority and most councils today have a provision in their Local Environmental Plans consistent with s 28 or the later s 3.16.  The only condition is that the Governor or Minister’s consent is required for the LEP provision, which would not be there if consent had not been granted.

ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 – SECT 3.16

Suspension of laws etc. by environmental planning instruments

3.16 Suspension of laws etc. by environmental planning instruments

(cf previous s 28)

(1) In this section,
“regulatory instrument” means any Act (other than this Act), rule, regulation, by-law, ordinance, proclamation, agreement, covenant or instrument by or under whatever authority made.

(2) For the purpose of enabling development to be carried out in accordance with an environmental planning instrument or in accordance with a consent granted under this Act, an environmental planning instrument may provide that, to the extent necessary to serve that purpose, a regulatory instrument specified in that environmental planning instrument shall not apply to any such development or shall apply subject to the modifications specified in that environmental planning instrument.

(3) A provision referred to in subsection (2) shall have effect according to its tenor, but only if the Governor has, before the making of the environmental planning instrument, approved of the provision.

(4) Where a Minister is responsible for the administration of a regulatory instrument referred to in subsection (2), the approval of the Governor for the purposes of subsection (3) shall not be recommended except with the prior concurrence in writing of that Minister.

(5) A declaration in the environmental planning instrument as to the approval of the Governor as referred to in subsection (3) or the concurrence of a Minister as referred to in subsection (4) shall be prima facie evidence of the approval or concurrence.

(6) The provisions of this section have effect despite anything contained in section 42 of the Real Property Act1900.

Queanbeyan Local Environmental Plan 2012

Part 1  Clause 1.9A

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, or

(b)  to any prescribed instrument within the meaning of section 183A of the Crown Lands Act 1989, or

(c)  to any conservation agreement within the meaning of the National Parks and Wildlife Act 1974, or

(d)  to any Trust agreement within the meaning of the Nature Conservation Trust Act 2001, or

(e)  to any property vegetation plan within the meaning of the Native Vegetation Act 2003, or

(f)  to any bio banking agreement within the meaning of Part 7A of the Threatened Species Conservation Act 1995, or

(g)  to any planning agreement within the meaning of Division 6 of Part 4 of the Act.

(3)  This clause does not affect the rights or interests of any public authority under any registered instrument.

(4)  Under section 28 of the Act, the Governor, before the making of this clause, approved of sub clauses (1)– (3).

Therefore, local Councils have the power to simply ignore a covenant and the cases say that the covenant is rendered null and of no effect if council lawfully approves a development which is contrary to the covenant.  Moreover, if the council didn’t ask the developer to create the covenant the developer can’t insist that you comply with it on contractual grounds.