Development offence risks for property owners

The High Court Decision in Pike v Tighe is going to cause issues for property owners when previous owners have failed to comply with development conditions.

The Pikes and the Tighes were both subsequent owners of a two lot subdivision. The development approval for the subdivision required an easement that allowed:

“… pedestrian and vehicle access, on-site manoeuvring and connection of services and utilities for benefited lot two overburdened lot one.”

An easement was signed and was lodged with the sealed plan. But the easement did not contain any reference to on-site manoeuvring nor the connection of services and utilities, as required by the approval.

The Pike’s submission was that, even though the Tighes were subsequent owners, they were committing a development offence as they had failed to comply with a development approval that ran with the land.

The High Court recognised that this was unduly harsh by exposing a subsequent owner to a penalty merely by acquiring land which happened to be bound by the terms of a development approval. The High Court’s position was it was a “failure to comply” rather than bare non-compliance that gave rise to a development offence.

More than three years had elapsed between Pike’s acquisition of the lot and the filing of the Planning and Environment Court application. The High Court found that the Tighes had ample opportunity to provide a complying easement.

The Court said that the offence did not occur when the land was purchased by the subsequent owners but when a reasonable time to comply with the condition had elapsed or where there was a refusal to comply with the condition.

What does this mean for property owners?

Generally speaking, it is too hard to tell. In this case, the standard conveyancing searches would not have disclosed the failure to comply. To identify the failure the solicitor for the Pikes would have needed to review the development approval and then review the easement against the development approval.

Property buyers need to be made aware that there are risks of an offence if all development conditions have not been satisfied. The purchasers need to make a commercial decision on how much they wish to spend on undertaking due diligence to off-set these potential risks.

[2018] HCA9 14 March 2018

 

Authors

Jacob Duane is a Director at Bennett & Philp Lawyers