The option of testing the reasonableness of a section 7.11 contributions condition in the Land and Environment Court is now more attractive for development of $10 million or more because the payment of any monetary contribution is deferred until prior to the issue of an occupation certificate, rather than a construction certificate.

The reform of development contributions in New South Wales has been in the spotlight since the New South Wales Productivity Commission published its Final Report on its Review of Infrastructure Contributions in New South Wales in late 20201, the release of the New South Wales Government‘s response to that report in March 20212, and the introduction into the New South Wales Parliament in late June 2021 of the Environmental Planning and Assessment Amendment (Infrastructure Contributions) Bill 20213 which is now subject to a parliamentary committee review.

In the meantime, developers should keep in mind that there is available to them the ability to test in the Land and Environment Court the reasonableness of a section 7.11 contributions condition (but not a section 7.12 contributions condition4).

This option has not always been attractive because of the consequential delay it causes in the issue of a construction certificate. 5However, that timing disincentive does not currently apply to development with an estimated cost of $10 million or more. 6This is because the payment of any monetary contribution required by a section 7.11 condition for certain development7 is deferred until prior to the issue of an occupation certificate, rather than a construction certificate.8

Any section 7.11 condition could be appealed to the Court:

  • Against the development consent (but this is often not the preferable option9); or
  • Against the deemed or actual refusal of any section 4.55 application seeking amendment of the section 7.11 condition.10

The Court has a broad discretion and can disallow or amend the condition because it is unreasonable in the particular circumstances of the case . Provided cogent evidence is presented, the Court can amend or impose a section 7.11 condition that is not determined in accordance with the relevant contributions plan.

Unreasonableness of any section 7.11 condition

Reasonableness is to be tested according to its ordinary meaning.12 As the law currently stands, the unreasonableness must arise by the application of the contributions plan and not due to other circumstances.13 Below are some Court examples.

Examples where the Court has found the contribution condition is unreasonable

  • Nexus: The proposed subdivision did not generate the need for the conservation corridor the subject of the contributions plan.14
  • Double dipping: A Commissioner held that the contribution conditions imposed on five development consents for the subdivision of land in a release area were unreasonable. Approximately 50% of the release area had already been developed and contributions paid in accordance with the former contributions plan. The new, relevant contributions plan sought substantially higher contributions for the same facilities the subject of the earlier plan.15
  • Disconnect between amount and scope of works sought by the Council and the contributions plan: The Court held that the condition was not reasonable because the amount in the conditions was calculated based on a cost estimate and works not referenced by the Council’s adopted and published contributions plan.16
  • Miscalculation: Where the contribution is determined by the number of road trips, applicants have been able to successfully prove to the Court that the number of road trips applied by the relevant council in calculating the contribution is excessive.17
  • Amended development: The Court reduced the contribution towards the payment of car parking because a modification of the development consent removed the residential component of the approved development.18

Examples where the Court has found the contribution condition is not unreasonable

  • No double dipping: The Court rejected an offset of the cost of providing a public car park in the development against the contribution sought to be imposed by the council pursuant to a contributions plan for local roads, public transport facilities, open space and recreation community facilities. The Court was not satisfied that the car park was an in-kind contribution contemplated by the contributions plan. Also, in this case the developer received the benefit of an additional two storeys by constructing the car park.19
  • Material public benefit not considered: A consent condition required the applicant to carry out the construction of a roundabout that would not only benefit the proposed subdivision but would provide a public benefit. The value of the roundabout works exceeded the contribution required to be paid.. The applicant was unsuccessful in seeking to reduce the amount of contributions payable to take into account the value of the material public benefit works required by the consent.20
  • Delay in determination of the development application: The applicant argued unsuccessfully that the contribution condition was unreasonable because the Council delayed in assessing and determining the development application. Had the application been determined before the lifting of the $45,000 cap per lot, the contribution required by the contributions plan would have been approximately $900,000 less. The Court held that any “unreasonableness” in the actions of the Council is not within the meaning of “unreasonable” in section 7.13(3).21
  • Insufficient evidence: The Court rejected the applicant’s submission that a monetary contribution for roadworks for an additional dwelling was unreasonable because no evidence was provided to the Court as to what the trip generation of the approved development would be or why a future occupant would not utilise the road network.22