When work is “Physically Commenced”?

In some instances a development consent will not lapse if building, engineering or construction work relating to the building, subdivision or work is “physically commenced”. What does this mean exactly?

“Physical commencement” under the EPA Act

Section 4.53 of the Environmental Planning and Assessment Act 1979 (EPA Act) relevantly states (with emphasis added):

4.53 Lapsing of consent

(1) A development consent lapses—

(a) 5 years after the date from which it operates if the development consent commences operation after the prescribed period, or
(b) 5 years after the date from which it operates if the development consent commences operation during the prescribed period, or
(c) 2 years after the date on which the development consent would otherwise have lapsed if the development consent commenced operation before, and has not lapsed at, the commencement of the prescribed period.

(2) A consent authority may reduce a period specified in subsection (1)(a) or (b) in granting development consent.

(4) Development consent for—

(a) the erection of a building, or
(b) the subdivision of land, or
(c) the carrying out of a work,

does not lapse if building, engineering or construction work relating to the building, subdivision or work is physically commenced on the land to which the consent applies before the date on which the consent would otherwise lapse under this section.

(7) The regulations may set out circumstances in which work is or is not taken to be physically commenced for the purposes of this section.

(8) In this section—
prescribed period means the period commencing on 25 March 2020 and ending on 25 March 2022.

Case law

The concept of “physical commencement” was considered in Hunter Development Brokerage Pty Ltd v Cessnock City Council; Tovedale Pty Ltd v Shoalhaven City Council (Hunter Development Brokerage) where the New South Wales Supreme Court of Appeal relevantly stated:

“…the concept that the work must be “physically commenced”, requires physical activity which involves an appearance of reality and which is not merely a sham.  In other words, the relevant work must be more than merely notional or equivocal in that it must truly be work relating in a real sense to that which has been approved…”

In the judgment of Hunter Development Brokerage the Court determined that survey work and the geotechnical investigation work could constitute a type of work that is “physically commenced” on land and prevents the lapsing of consent.

Recent Legislative Changes

On 15 May 2020 clause 124AA was inserted into the Environmental Planning and Assessment Regulation 2000 and relevantly states:

124AA When work is physically commenced

(1) For the purposes of section 4.53(7) of the Act, work is not taken to have been physically commenced merely by the doing of any one or more of the following—

(a) creating a bore hole for soil testing,
(b) removing water or soil for testing,
(c) carrying out survey work, including the placing of pegs or other survey equipment,
(d) acoustic testing,
(e) removing vegetation as an ancillary activity,
(f) marking the ground to indicate how land is to be developed.

(2) This clause does not apply to a development consent granted before the commencement of this clause.

These recent changes mean that development consents granted from 15 May 2020 may not be “physically commenced” in circumstances where certain types of work are carried out.

Why does it matter?

It is important to determine if “physical commencement” has occurred because development consents are valuable. They are often considered by Councils during regulatory compliance matters, or may be relied on to carry out development following a property transaction. The lapsing of a consent can have dire consequences for persons seeking to rely on a consent to carry out their development. 

If you are unsure as to whether works have “physically commenced” it is best to obtain legal advice at the earliest opportunity.

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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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