The Yacht Club entered into the Lease in 1986 for a term of 21 years with an option for renewal for a further term of 21 years. The initial annual rent under the Lease was $4,240. The Lease allowed the lessor to reappraise the annual rental every three years. It was a term of the Lease that the amount of the reappraised rental must not exceed 102% of the rental payable prior to the date of the appraisal.
In December 2006, the then Minister for Planning and Infrastructure decided that the rent reappraisal clause provided the Yacht Club with more favourable rental terms than was intended. The Minister therefore asked the Yacht Club to enter into a new lease with a higher annual rent and less favourable rent reappraisal terms. Unsurprisingly, the Yacht Club declined the Minister’s request. Had the Yacht Club entered into a new lease, its annual rental would have jumped to $57,200, from $5,066.
Fast forward to August 2014. The Yacht Club lodged an application for approval of development which included the replacement of two jetties, the replacement of boat maintenance and slipway facilities, the reclamation of approximately 1,100 square metres of riverbed and the construction of a seawall. The Minister for Environment granted approval of the application but imposed a condition that the Yacht Club enter into a new lease over the riverbed prior to the commencement of the works. The Yacht Club challenged the imposition of this condition and was successful.
It is a well settled principle that a condition on a planning approval is validly imposed only if it is for a planning purpose and not for any ulterior purpose. It must also fairly and reasonably relate to the proposed development and must not be so unreasonable that no reasonable planning authority could have imposed it.
Justice Chaney found (amongst other things) that:
- “the conclusion is inescapable that a substantial purpose of the requirement to enter a new lease …. was to require the [Yacht Club] to pay [increased rent]”; and
- the condition, which “enables the lessor to insist on a very significant increased rent“, did not, and could not, fairly relate to the proposed development.
His Honour concluded that the condition was imposed by the Minister for an improper or extraneous purpose.
It is important to carefully review each condition imposed on any planning consent. If you consider that a condition has been imposed on your planning consent for an improper or extraneous purpose, please contact us.