The Operation or Non-Operation of Restrictive Covenants in NSW

In New South Wales, restrictive covenants have long been perceived as a measure of prohibiting various development.  However, since the introduction of Section 28 of the Environmental Planning and Assessment Act 1979 (NSW) (“the Act”), planning authorities have had legislative standing in which to override restrictive covenants.

In Ludwig v Coshott (1994) 83 LGERA 22, Bryson J held that Clause 32 of the Woollahra Local Environmental Plan (LEP) No. 27 (“LEP 27”) had the effect of overriding a restrictive covenant for the purposes of enabling development to be carried out.

Bryson J’s reasoning was upheld on appeal in Coshott & Anor v Ludwig & Anor (1997) NSW ConvR 55-810.

Meagher JA, with whom Giles JA and Simos AJA agreed, held that the purpose of Section 28 of the Act, when reviewed in light Clause 32 of LEP 27 was to nullify and remove all obstacles on title, so as to give effect to the planning principles decided on by the Council or the Minister.

In summary:

  1. Section 28 of the Act affects a restrictive covenant only if, and to the extent that, the restrictive covenant expressly, or by necessary implication, conflicts with “an environmental planning instrument” (e.g. a LEP) or “development consent.”
  2. Pursuant to Section 28(2), the restrictive covenant is affected only “to the extent necessary to serve that purpose”, being “the purpose of enabling development to be carried out in accordance with an environmental planning instrument or in accordance with a consent granted under this Act”.
  3. Section 28 will not affect a restrictive covenant in circumstances where the covenant does not conflict with an environmental planning instrument or development consent.
  4. Finally, Section 28 might not result in nullifying the covenant, but merely modifying its operation so that only part of the covenant (the inconsistent part) would be affected.

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