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The Land and Environment Court has issued the new Practice Note to increase the speed and efficiency of proceedings. It also shows that the Court wants to ensure that parties engage in conciliation conferences with the genuine purpose of reaching an agreement.

The key changes in the new Practice Note are the:

• incorporation of the Court’s policy on agent’s obligations when appearing on behalf of another
• expansion of the directions that can be sought through the Online Court
• widening of the Court’s power to order costs
• introduction of stricter requirements for a s 34AA conciliation conference and hearing
  • Amended plans must be presented 14 days before the conference date
  • Response to amended plans by Respondent and drafts of conditions of consent must be provided 7 days prior to the conference date
  • Expert evidence at a s 34AA conference and hearing is no longer allowed as an automatic right

These changes require that both parties are prepared for conciliation conferences and hearings, and that they, or their agents, have the power and intention to genuinely negotiate.

In the recent case of Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217, the Federal Court of Australia ordered Lucky Homes to pay compensatory damages to Henley Arch for copyright infringement of house plans that had been provided to a client.

The clients, Mr and Mrs Mistry, engaged Henley Arch to draw up plans for the development of a project home. The Mistrys then engaged Lucky Home to build the homes at a lower price. Lucky Homes made 15-20 alterations to the plans, advising the clients that this would prevent any risk of copyright infringement.

The Mistrys raised the defence of innocent infringement, arguing that they lacked subjective awareness that their acts constituted an infringement of the copyright and that they had no reasonable grounds for suspecting that the acts constituted an infringement. Lucky Homes denied copyright infringement altogether. Both these arguments failed.

Lucky Homes was ordered to pay compensatory damages of $34,400 to Henley Arch, and an additional order of $25,000 was made against its managing director and sole shareholder, for copyright infringement of house plans that had been provided to a client. Mr Mistry was ordered to pay $10,000 to Henley Arch, and Lucky Homes was ordered to compensate half this amount to Mr Mistry for misleading and deceptive conduct. This case serves as a forceful reminder to builders and landowners to ensure compliance with copyright laws.

The new State Revenue Legislation Amendment Act 2017 amends the Duties Act 1997 (Duties Act), the Land Tax Management Act 1956, and the Payroll Tax Act 2007. The important amendments to the Duties Act include:

• s 149(1B) now stipulates six circumstances to considered when deciding whether acquisitions are one arrangement
• s 158A provides that a constructive trust can be held by a linked entity, even if the interest to which the entity is entitled is less than 50%
• s 159A(2) now includes land holdings which have been either transferred, or agreed to be transferred, in the 12 months before the acquisition
• s 160 specifies that where both a put and call option is included in in agreement, it is to be treated as an uncompleted agreement for landholder duty purposes

These amendments are effective from April 11, 2017.

In Hallmark Construction Pty Ltd v Strathfield Municipal Council [2016] NSWLEC 170, the Land and Environment Court encountered the novel argument that s 124 of the Environmental Planning and Assessment Act 1979 gives the Court power to modify development consent. Hallmark was attempting to use s 124 to seek an urgent order, rather than lodge a formal modification application.

During construction, Hallmark had begun pouring concrete, and sought an order from the court that the pouring could be continued beyond the hours stipulated in the development consent. Hallmark argued that the power given to the Court by s 124 to ‘prevent’ a breach should be read widely, so as to include the power to modify the condition which would be breached.

This argument was rejected by the Court as it would be inconsistent with the aims of the Environmental Planning and Assessment Act 1979. 

Amidst rumours regarding raising the capital gains tax, the Property Council of Australia has warned the Government to proceed with caution and carefully consider the long-term consequences of such harsh reforms. Such actions discourage investors and damage confidence, a potentially disastrous combination during a time when Australia needs to invest in new residential developments to accommodate the increasing population.

The Property Council also submitted:

1. adjusting the discount may have undesirable repercussions: potentially inflating housing prices, constricting housing supply, and threatening the livelihoods and financial security of those who work in the industry, particularly in construction.
2. while the property sector remains sympathetic to the fact that maintaining Australia’s AAA rating and regulating the Budget is essential, this should not be done at the expense of the housing industry and those who depend on it.

The Retail Leases Amendment (Review) Bill was passed by the NSW Legislative Council on 22 February 2017.

The key amendments were outlined in the December edition of this newsletter. The following points are additional important aspects of the successful bill:

1. Any payments charged for services provided by a landlord are not classified as outgoings
2. With the exception of a few, online transactions will be removed from the calculation of turnover rent, although the term ‘online sales’ is not defined in the Act
3. Landlords are forbidden from accessing and reclaiming mortgagee consent fees
4. The Civil and Administrative Tribunal will also have greater authority regarding disclosure statements and increased monetary threshold limits, in addition to an established civil penalty regime if the amendment is breached

These changes are relevant for retailers across NSW. The bill is awaiting royal assent, and the date of commencement will soon be published in the Government Gazette.

Development consent from Councils may have conditions attached that restrict the user of the title of land, in order to limit potential future development on that land. The recent decision in D’Alterio v Newcastle City Council [2017] by the Land and Environment Court serves as a reminder that restrictions to user will be closely observed, but may not necessarily be an impediment to development on the land.

In the case of D’Alterio v Newcastle City Council [2017], the plaintiff appealed Newcastle City Council’s denial of planning permission for a two-storey residential development plan. The site was to be built on land constrained by a registered covenant operating under Section 88b of the Conveyancing Act 1919. In effect, the registered covenant prohibited construction exceeding one storey.

The Land and Environment Court found that the purpose of the covenant was to protect the views of a local heritage item and certain private properties. After close examination of the evidence, the Court decided that the development would not adversely impact the views of the heritage site, and that the loss of views from private properties was irrelevant to the covenant. Consequently, the Court chose to allow the appeal from the developer.

The importance of the case is that although restrictions to title are generally narrowly construed, the Land and Environment Court will consider the purpose of the restriction when applying it, and may choose to vary it in favour of the development at hand.

In late 2016 the new Strata Schemes Development Regulation 2016 and Strata Schemes Management Regulation 2016 came into effect, requiring owners to review their by-laws. Model by-laws have been provided; these can be directly adopted, or owners can use them as a guide for changing current by-laws.

Once existing by-laws change, a full set of consolidated by-laws must be lodged with the NSW Office of the Registrar-General. The Registrar-General can however exempt owners from this process, but the regulations do not specify what conditions would need to be satisfied to receive that exemption. Once the changes have been lodged, they will be recorded on the common property folio. Owners to whom these laws apply must amend their by-laws by 30 November 2017.

The NSW Government Department of Planning & Environment has recently committed to implementing reforms which will affect both builders and certifiers.  An independent review of the Building Professionals Act 2005 suggested 150 reforms, 72 of which have been supported by the government.

The reforms will increase fire safety of all buildings, amalgamate certain Environmental Planning & Assessment Act 1979 provisions, and amend the rules for certifiers under the Building Professionals Act 2005. It is predicted that the final draft of the Building and Development Certifiers Bill will be introduced to Parliament late this year.

Draft District Plans have been released for each of Greater Sydney’s six districts (Central, North, West Central, West, South West and South) and will be open for public consultation until March 2017.

The plans involve the establishment of three cities, with the CBD forming part of the Eastern City, the Greater Parramatta area forming the Central City and areas surrounding the new Western Sydney Airport forming the Western City.

The plans will have consequences for current and future developers as the Commission’s priorities of productivity, liveability and sustainability will inform how local councils assess building and construction plans over the next 40 years.