Essential Guide to Local Government Law: Lapsing of a Development Consent
A development consent can add significant value to land and can be costly to obtain. It is therefore important to understand when it will lapse. This guide will assist you in determining when this will occur.
A development consent statutory lapsing period
The lapsing of a development consent is dealt with in the statutory provisions in s.4.53 (formerly s.95) of the Environmental Planning and Assessment Act 1979 (the Act). These provisions fix a period of time at the expiry of which the consent will lapse unless certain action has been undertaken.
The starting point is s.4.53(1) of the Act. That subsection provides that a development consent will lapse 5 years after the date from which it operates. However, the 5 year period can be reduced or extended under the subsequent subsections. You also need to consider whether there is a deferred commencement condition. Both of these situations are explained below
When can the 5 year lapsing period be reduced?
Any reduction in the ‘default’ 5-year lapsing period is imposed at the discretion of the consent authority when it determines a development application. However, there are 2 constraints on a consent authority’s ability to do so. These are:
- If a proposed development involves the erection or demolition of a building or the subdivision of land, the consent authority cannot reduce the lapsing period to less than 2 years from the date that the consent becomes operative; and
- If the consent authority issues a development consent for a concept development application which requires the making of a subsequent development application and consent, the lapsing period cannot be reduced at all.
When can the lapsing period be extended?
If the 5 year lapsing period is reduced by the consent authority, the consent authority may extend the lapsing period by 1 year if the applicant for the consent (or any person otherwise entitled to act on it) applies, under s.4.54 of the Act, to the consent authority for a 1 year extension. Such an application must be made prior to the consent lapsing. The lapsing period cannot be extended by a modification application.
The Act also provides that any reduction to the 5 year lapsing period imposed by the consent authority is to be disregarded if the consent falls into specific categories.  These categories were inserted into the Act in 2010 to due to difficulties in obtaining developer finance at that time, and also as a means of providing the Minister with the ability to the extend the lapsing period by regulation in the event of an economic downturn in the future. The categories are:
- If the development consent operated before, and lapses after, 26 May 2010;
- If the development consent lapsed between 22 April 2010 and 26 May 2010;
- If the development consent operated before, and lapses after, a date after 1 July 2011 which is prescribed by the regulations. At the time of writing no date has been prescribed by the regulations (but it may be future).
If a development consent falls within any of these categories, the lapsing period will default to the period which is 5 years from the date from which the consent operates.
What must be done to prevent a consent from lapsing?
The action that must occur to prevent a development consent from lapsing depends upon what type of development has been approved. It also depends on whether the consent has a deferred commencement condition.
A. Deferred Commencement Consent
A development consent may be granted subject to a condition that specifies that the consent does not operate until the applicant satisfies the consent authority as to any matter specified in the condition. In such a situation the consent will lapse if the applicant fails to satisfy the consent authority as to the matter specified within 5 years from the grant of the consent or, if a shorter period is specified by the consent authority, within the period specified. This can occur regardless of whether or not physical works have been undertaken in attempt to satisfy the consent authority of a particular matter.
B. Development involving the erection of a building, subdivision or the carrying out of a work
A development consent for the erection of a building, the subdivision of land or the carrying out of a work will lapse on the lapsing date unless the following three things occur:
- ‘building, engineering or construction work’ is undertaken on the land which is the subject of the consent;
- the work was ‘physically commenced’ before the date on which the consent would otherwise lapse; and
- the work ‘relates to’ the approved development.
A significant body of case law has developed in relation to these three elements and will be summarised below.
1. ‘Building, engineering or construction work’
Under the Act, ‘building work’ is broadly defined as ‘any physical activity involved in the erection of a building’. Neither ‘engineering’ nor ‘construction’ work is specifically defined in the Act but the meaning of these terms has been considered by the Courts.
In Hunter Development Brokerage v Cessnock City Council the definition of ‘engineering work’ in the context of a subdivision consent was found to include all activities associated with and forming a necessary part of, the discipline of engineering, survey work and geotechnical investigation applicable to the subdivision. These principles have also been applied to ‘works’ generally (i.e. not just subdivision).
Examples of works which have been held by the Court to constitute ’building, engineering or construction work’ include:
- extracting samples of water from the site for offsite quality testing;
- obtaining an acoustical engineering report relating to the noise made by trucks entering and exiting the site;
- the removal and testing of soil for the purposes of obtaining a remediation and validation report;
- digging boreholes for testing soil conditions;
- survey work.
Care needs to be taken in relying on these examples, however, as the circumstances of each development will need to be considered to determine whether the work relied on in fact ‘relates to’ the development the subject of the development consent.
2. ‘Physically commenced’
The statutory requirement that work is ‘physically commenced’ necessitates that work is commenced upon the land in a physical sense, as opposed to off-site work such as design and planning work.
There does not need to be a material change to the physical nature of the land as a result of the physical work.
3. ‘Relating to’ the development
The use of the term ‘relating to’ means that there must be some real relationship or connection between the work and the development in respect of which the consent has been granted. The requisite link between the work and the consent will be satisfied if the work is a necessary step in, or part of, the process required for the carrying out of the development. If the work serves more than one purpose, it is sufficient that one of those purposes bears a real relationship to the development.
Importantly, for any work to constitute commencement so as to prevent the consent from lapsing, that work must be undertaken lawfully. Any work which is not lawful, for example, if it is not undertaken in accordance with the conditions of consent or is in breach of the Act, will not ‘relate to’ the development.
C. Development other than development involving the erection of a building, subdivision or the carrying out of a work
A development consent for any other type of development will not lapse if the use of the land, building or work, the subject of the consent, actually commences before the date on which the consent would otherwise lapse.
For further information or assistance with orders, please contact Alan Bradbury and the Local Government & Planning team on (02) 6274 0999.
Further Essential Guides to Local Government Law can be found here.
The content contained in this guide is, of course, general commentary only. It is not legal advice. Readers should contact us and receive our specific advice on the particular situation that concerns them.
 Environmental Planning and Assessment Act 1979 (NSW), s.4.53(2).
 Ibid, s.4.53(2).
 Ibid, s.4.54.
 Kinder Investments Pty Ltd v Sydney City Council (2005) 143 LGERA 237;  NSWLEC 737.
 Environmental Planning and Assessment Act 1979, s.4.53(3A).
 New South Wales, Parliamentary Debates, Legislative Assembly, 22 April 2010, 22150 (David Harris, Parliamentary Secretary) and New South Wales, Parliamentary Debates, Legislative Council, 18 May 2010.22828 (Penny Shape, Parliamentary Secretary) : second reading speeches of the Environmental Planning and Assessment Amendment (Development Consents) Bill 2010.
 Being the date that s.4.54 (formerly s.95(3A)) commenced.
 EPA Act, s.4.16(3).
 Ibid, s.4.53(6).
 Above n 1, s.4.53(4). These three questions are referred to in Hunter Development Brokerage v Cessnock City Council (2005) 140 LGERA 201.
 Above n 1, s.1.4 and s.6.1
 (2005) 140 LGERA 201.
 Benedict Industries Pty Ltd v Minister for Planning; Liverpool City Council v Moorebank Recyclers Pty Ltd  NSWLEC 122 at 61.
 Norlex Holdings Pty Ltd v Wingecarribee Shire Council (2010) 177 LGERA 261.
 Zaymill Pty Ltd v Ryde City Council  NSWLEC 86.
 Rowlane Investments Pty Ltd v Leichhardt Council (2013) 195 LGERA 9.
 JMS Capital Pty Ltd v Tweed Shire Council  NSWLEC 535.
 Hunter Development Brokerage v Cessnock City Council (2005) 140 LGERA 201; Tovedale Pty Ltd v Shoalhaven City Council (2005) 140 LGERA 201 at 104.
 K & M Prodanovski Pty Ltd v Wollongong City Council (2013) 195 LGERA 23.