The answer is yes but it depends on circumstances – see our case summary on 2 Phillip Rise Pty Ltd v Kempsey Shire Council [2023] NSWLEC 28 (Case) below for more details.
What is a zombie development consent?
A zombie consent is not a legal term. It is generally used to describe a consent granted many years ago for a legacy or historical development, not acted upon to the stage of physical construction.
If actions required to be undertaken under the exclusions of the lapsing provisions in the Environmental Planning and Assessment Act 1979 (NSW) (Act) were satisfactorily undertaken, the zombie consent would be preserved in perpetuity and could be acted upon by any subsequent landowner at any later stage.
The Act
In the earlier version of the Act (now superseded), the lapsing provisions are as follows:
99 Lapsing of consent
(1) A development consent lapses:
(a) 5 years after the date from which it operates, except as provided by paragraph (b), or …
(4) Development consent for:…
(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…
The consent relevant to the Case was granted under the earlier version of the Act (now superseded) so the above s99 applied.
The Case
Background
The applicant, 2 Philip Rise Pty Ltd, sought to appeal the refusal of a construction certificate for development at a development site located at South West Rocks (site).
The site was subject to a development consent for a resort complex (consent), dated 30 years prior to the time when the applicant decided to take further action and applied to obtain a construction certificate under that consent.
The Kempsey Shire Council opposed the issuance of the construction certificate, arguing that the consent had lapsed due to non-compliance with its conditions, particularly contamination (acid sulphate soil) testing under condition 38 of the consent.
Condition 38 of the consent is in the following terms:
Further testing for the presence of acid sulphate soils shall be undertaken prior to the release of the building application and appropriate measures identified and implemented to obviate and [any] impact.
Issues
The following issues were discussed:
- compliance with condition 38: whether the acid sulphate soil testing conducted by the former landowner (through Caltex’s environmental consultants) satisfied condition 38 of the consent;
- interpretation of “purpose”: whether the testing’s purpose, as understood by the Acting Commissioner, was a valid legal basis for determining compliance; and ultimately
- lapsing of the consent: whether the failure to satisfy condition 38 led to the consent lapsing under section 99 of the Act.
Held
Moore J upheld the appeal, finding that:
- the testing conducted on behalf of Caltex met the substantive requirements of condition 38 of the consent, irrespective of why it was undertaken;
- the Acting Commissioner had misdirected himself by narrowly interpreting condition 38 of the consent and focusing on the subjective “purpose” behind the testing, rather than the technical compliance with that condition; and
- the borehole drilling and testing of the material extracted from the borehole conducted on behalf of Caltex constituted “engineering work” for the purposes of section 99(4) of the Act, and the consent had not lapsed.
The Court directed that a construction certificate be issued to the applicant.
Effects
2 Phillips Rise demonstrated that it is possible to revive a zombie consent.
A zombie consent can be revived for the following reasons:
- the test of whether work has commenced for the purpose of the Act before 15 May 2020 is less stringent as compared to consents granted under the current version of the Act;
- once the low threshold test of a zombie consent is met, the consent may be preserved in perpetuity;
- a condition in a consent can be satisfied by any person, not necessarily by or on behalf of the consent-holder, unless it is expressly noted otherwise in the consent; and
- whether a condition in a consent is satisfied is a matter of fact.
Key takeaway
It is common knowledge that sites subject to development consents are valuable if those consents reflect the intended development, including zombie consents. As zombie consents may have been assessed many years prior and so not against current planning laws, controls and policies as well as environmental impact considerations they may provide benefits as against a new application.
If you are a Landowner, you should therefore hold all records of development applications and consents to improve the land value.
If you are intending to acquire sites with zombie consents, particularly developers, you should:
- carefully consider whether actions taken to avoid the lapsing of the consent are sufficient to satisfy the relevant operative test for commencement under the relevant provision in the Act, even though it is a relatively low threshold if the superseded version of the Act applies;
- consider whether each condition in the zombie consent can in fact be complied with given the passing of time;
- weigh the financial and commercial benefits of utilising the zombie consents against the scrutiny they may receive from not just the community but ongoing dealings with the consent authority. For example, the public may be able to write to the State Minister to call the development in for assessment under the Environment Protection and Biodiversity Conservation Act 1999 (Cth);
- consider whether the zombie consents are sufficient to substantially satisfy their development requirements as submission of section 4.55 modification applications may potentially provide the consent authorities the opportunity to introduce new conditions which would bring the consent more into alignment with the current planning and building requirements; and
- consider the risks of authorities exercising their rights under the Act to revoke historical applications (although this right has not been exercised much or at all likely due to the compensation regime that follows).
In 2 Philip Rise, for example, the applicant ultimately surrendered the zombie consent and lodged a new consent.
If you would like to discuss this article with us, please contact Yanlie Leung, Senior Associate on (02) 9261 5900.