The commence and complete trap in planning approvals

The Commence and Complete Trap in Planning Approvals

We have seen an increasing number of developers encounter problems arising from unanticipated expiry of their development approvals. In essence, the Planning and Development Act requires commencement of “development” within a certain time after the approval “takes effect”, and completion of development within a certain time after development begins.

Unfortunately, it is sometimes not clear when these periods start, or end. Time can be deadly in these instances because, once the approval has expired, ACTPLA has no power to extend or reset time. There is power to extend time for completion but an application must be made before the expiry of the approval.

The problem typically comes to light when land is sold with an approval. However it may only become apparent during construction, resulting in a halt to works. Worse still, the planning laws may have changed so that the development is no longer possible in its original form. The delays may also precipitate problems with the dreaded Crown Lease development provisions.

The regime for the commencement and completion of development is contained in a complex web of provisions. Generally, the approval takes effect 28 days after the notice of decision (and often there is a note saying that in the Notice of Decision). However, the commencement and completion deadlines vary depending on a number of factors, including whether there is a condition that something must happen before the approval takes effect.

The first problem is often working out what the approval means when it says that the approval is subject to conditions. This leaves unclear (and it can vary from case to case) whether the approval is effective and the “conditions” can be met after the approval is in effect, or, on the other hand, whether the “conditions” are in fact things to be done as a precondition to the approval being effective. This can make a dramatic difference to when the clock starts ticking for the commencement deadline.

Second, there is a question whether there are different commence and complete deadlines for

different parts of a single approval—for example, a lease variation aspect and the design and siting aspect. If so, then commencing development for one is not necessarily commencing development for the other. One view is that an approval should be treated as a whole for the purpose of commencement and completion. Another view—which ACTPLA appears to hold— is that the commence and complete provisions operate separately for design and siting on the one hand, and lease variation on the other, so that it is necessary to do something referable to design and siting and something referable to lease variation within 2 years of the approval taking effect.

Third, there is contention about what constitutes the commencement of “development”, particular in the case of a lease variation. In Rutledge v ACTPLA [2012] ACAT 8 the Tribunal (consisting of Mr Hatch, presiding member, and Dr McMichael, member) split on the question whether payment of the change of use charge sufficed to commence “development”. Mr Hatch ruled it was not, and Dr McMichael to the contrary. As Mr Hatch was the presiding member, his decision held sway, but the division of opinion even within the Tribunal shows the complexity of what looks like a simple question of fact: “has development commenced?”

For a full discussion on the rules relating to commencement and completion, contact us:

Mark Flint — Partner — Dispute Resolution Team
(02) 6279 4428
mark.flint@meyervandenberg.com.au

Jim Hartley — Lawyer — Dispute Resolution Team
(02) 6279 4391
jim.hartley@meyervandenberg.com.au