Setting the stage for a valid consent for staged development in NSW

In a surprising outcome for developers and consent authorities alike, the NSW Court of Appeal has overturned a NSW Land and Environment Court (L&E Court) decision and held that:

• construction-related impacts for a staged development proposal must be addressed in the development application (DA) for the concept or first stage of that proposal; and
• the staged development consent process can only be used for developments with more than one stage, and so the widely used practice of obtaining concept approval for a single stage development before obtaining detailed consent for the construction and use of that proposal is no longer available.

The Court of Appeal was responding to a legal challenge to the concept development consent for the $210 million arts precinct at Walsh Bay between the Barangaroo headland and Dawes Point Park. The owner of a local restaurant brought the legal challenge, claiming that it had not been consulted about the impacts of the future construction of that proposal on its business.

The L&E Court dismissed the legal challenge, in one of the first cases to consider specifically the statutory scheme for concept proposals in staged DAs under Part 4 Division 2A of the Environmental Planning and Assessment Act 1979 (Planning Act). However, the Court of Appeal unanimously overturned that decision (Bay Simmer Investments Pty Ltd v State of New South Wales [2017] NSWCA 135).

What is a staged development application?

Section 83B of the Planning Act defines a staged DA as a DA that sets out "concept proposals" for the development of a site, and for which "detailed proposals for separate parts of the site" are to be the subject of separate DAs.

The staged DA scheme is commonly used by proponents of large-scale or complex development with multiple stages. It is often accompanied by a detailed proposal for the first stage, such as subdivision and preliminary works, or demolition, which can be approved with the development concept.

Sometimes a concept DA and consent are referred to as a "stage 1" DA and consent, even though they do not relate to a particular stage of the development.

The advantages of a concept development consent include that:

• it provides some early acceptance of a development concept, giving proponents, financiers and other stakeholders greater confidence that detailed proposals will be approved; and
• it locks in key design parameters of a proposal, such as land uses, building envelopes and allocations of gross floor area (GFA), since subsequent development consents must not be inconsistent with that concept consent.

For these reasons, staged approvals are also used sometimes for large scale, single stage developments. This has allowed deferral of requirements such as design competitions or the preparation of a development control plan (DCP).

The Walsh Bay DA and the L&E Court decision

In 2015, Arts NSW lodged a State significant development (SSD) application for the Walsh Bay Arts Precinct. The DA sought consent for the "overall Precinct concept only", which included a new waterfront public square, the refurbishment of a wharf, the adaptive reuse of a pier and the use of the Precinct for arts festivals and cultural events.

The technical assessment reports submitted by Arts NSW in support of the DA recognised that the physical construction of the Precinct would have adverse noise, vibration and traffic impacts on surrounding businesses. However, Arts NSW stressed that the concept DA would be followed by "one or more" detailed DAs which would address the construction-related impacts.

The Planning Minister's delegate granted the concept consent subject to a condition requiring any future detailed DA to demonstrate how the construction-related impacts would be addressed. The delegate did not consider those impacts because they would be taken into account in the future detailed DAs.

Fearing the possibility that the concept consent would inevitably lead to detailed consents, the neighbouring restaurant owner challenged the validity of the concept consent. The crux of the objector's case was that the Minister's delegate had impermissibly deferred a critical matter for later consideration (ie. construction impacts), and so had made a legal error which rendered the concept consent invalid.

In dismissing the challenge, the L&E Court decided that, because the concept DA did not itself propose the carrying out of any construction work, the construction-related impacts were not direct or indirect consequences of the concept and there was no need to consider them for that DA.

The problems with the Land & Environment Court's approach

The Court of Appeal overturned the L&E Court's decision and found that this approach was wrong for two reasons.

First, the Planning Act's staged development consent scheme does not allow for single stage developments. The structure, purpose and language of Part 4 Division 2A of the Planning Act, especially the provision for "detailed proposals for separate parts of the site", required at least two detailed stages. Although the Arts NSW DA envisaged “one or more” detailed DAs, it did not commit the proponent to more than one further DA, nor did it specify “separate parts of the site” which were to be the subject of the subsequent detailed DAs.

Second, there is no basis in the language of the Planning Act to suggest that the assessment process at the concept stage should be limited to the impacts of the concept only. The Court observed that it would be curiously artificial to assess a concept DA on the basis that the completed development had simply materialised, without regard to how it had materialised (ie. construction).

What does this mean in practice?

The Court of Appeal's decision will put an end to single stage concept DAs, and will mean that all concept DAs need more detailed assessment of construction impacts for all stages of the development proposal. This is likely to add cost and time to the concept DA process.

It might also prompt challenges to other single stage concept approvals, where these are not time-barred.

The Court of Appeal's reasoning could extend to other impacts of a staged development as well, requiring more consideration of impacts at the concept stage.

There have been calls for the NSW Government to propose amendments to the Planning Act to reverse the effect of the Court of Appeal's decision. It remains to be seen whether that will occur.