Enforcement mechanisms for Voluntary Planning Agreements

To ensure a Voluntary Planning Agreement is enforced, it might be registered on the title of the land – but it doesn’t have to be!

What is a Voluntary Planning Agreement?

Planning agreements (more commonly known as Voluntary Planning Agreements or VPAs) are legal contracts that are increasingly being used by developers and government agencies (like councils). VPAs are used to facilitate the delivery of public services and amenities by developers.

VPAs can be entered into:

  • at the rezoning of land stage, to fund the provision of early infrastructure in new developments; and
  • before, or as part of, the development application process, to establish essential infrastructure at greenfield sites and broader community infrastructure at infill sites.

VPAs can require a developer to provide land, money, or any other material public benefit. This means that there is a lot of flexibility when it comes to the types of contributions that can be provided under VPAs, including things like community programs, or funding for staff at community centres.

As the name suggests, a VPA is not a mandatory requirement. It must be entered into on a voluntary basis by a developer and a government agency.

Development contributions are required as part of the development application process. If a VPA is not entered into as part of the development application process, the usual development contributions under the Environmental Planning and Assessment Act 1979 will apply (click here to get an insight on the operation of contributions under section 94).

The law

Section 93F of the Environmental Planning and Assessment Act 1979 (EPA Act) sets out what must be in a VPA. The list includes:

  • a description of the land to which the agreement applies;
  • a description of the rezoning or the proposed development;
  • what contributions the developer proposes to make, including how and when those contributions will be made; 
  • in the case of development, how the VPA interacts with other sections of the EPA Act that require contributions (for example, details if the VPA excludes the need for contributions under section 94 of the EPA Act); 
  • details of how disputes under the VPA will be resolved; and
  • details of the enforcement of the VPA by a suitable means if the developer breaches the terms of the VPA.

The final point about enforcement of the VPA by a suitable means is particularly important. VPAs can provide critical infrastructure to a community, and the promises made by a developer can impact the broader community if they are broken. The law recognises this, and makes it mandatory for a VPA to provide suitable ways of enforcing promises made by developers.

There are many different ways that could be considered to be suitable means. Suitable means of enforcement could include things like:

  • the developer could be required to provide bonds or guarantees that are only released once promises under the VPA are performed;
  • there might be complex legal mechanisms in the VPA itself that provide for recourse against the developer if it breaks a promise; or
  • the VPA could be registered on the title of the land, making it binding on, and enforceable against, the owner of the land.

Section 93H of the EPA Act gives the developer and the government agency the ability to register the VPA on the title of the land. Once a VPA is registered on the title of the land, the VPA will be binding on, and enforceable against, the owner of the land. However, section 93H does not mandate that VPAs are registered on the title of the land. Registering the VPA on the title of the land is just one option that could be negotiated to enforce the terms of a VPA.

Furthermore, even if a government agency would like a VPA to be registered on the title of the land, section 93H requires that the consent is obtained from those who own the land, and those who have an interest in the land (for example, consent would need to be obtained from any person who has a lease over the land too).

If consent cannot be obtained, it may be necessary to negotiate other suitable means to enforce the terms of the VPA.

How does this work in reality?

In Huntlee Pty Ltd v Sweetwater Action Group Inc, the New South Wales Court of Appeal emphasised that government agencies need to have suitable means to enforce the terms of a VPA. The Court recognised that there could be a wide range of suitable means to enforce a VPA, and acknowledged that different mechanisms may be suitable in different situations.

In this case, the Court considered a VPA on a major urban release site (the Hunter VPA). The site was being rezoned for up to 7,200 dwellings in the Hunter region.

The Court pointed to the different means of enforcement in the Hunter VPA, and considered whether they would provide a suitable means of enforcement if promises under the Hunter VPA were not performed by the developer.

In the Hunter VPA, an elaborate scheme was set up that ensured the terms within the VPA were enforced through:

  • the registration of the Hunter VPA on the title of the land, by using the ability set out in section 93H of the EPA Act; and
  • complex terms in the Hunter VPA itself, which prevented the developer from being released from its obligations if it sold the land to others (extra steps were required before a new party could take over).

Although the Hunter VPA was registered on the title of the land, the Court made it clear that registration in itself would not have been enough. The site was large (1702 hectares) and arguably required a complex legal mechanisms to ensure that the government agency and the community would receive all of the intended benefits of the Hunter VPA.

Overall, enforcement of the VPA by a suitable means was achieved through the combination of both the registration on the title of the land, and the complex legal obligations in the Hunter VPA.

Key take-away messages

Although registration of a VPA on the title of land is the most common method of enforcement, it is not the only option available, and may not actually be suitable depending on the circumstances.

Other mechanisms that can be used to create a suitable means of enforcement under a VPA include:

  • bonds – like a deed that promises to provide a specific sum of money if there is a breach of the VPA;
  • guarantees – like bank guarantees;
  • novel legal mechanisms – like a developer providing consent in the VPA to the compulsory acquisition of land if the terms of the VPA are not satisfied.

It is best to seek legal advice if you are considering a VPA as part of your rezoning or development application.

 

Posted by

Alyce is a civil engineer and a practicing lawyer, who has a desire to share her insights on the legal and practical realities of the development industry.

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