Author(s): Dr. Ian Ellis-Jones & Pierre Le Bas

Subdivision of land means the division of land into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition: see sections 4(1) and 4B of the Environmental Planning and Assessment Act 1979 (NSW) (the ‘EPA Act’). Strata subdivision is a type of subdivision which falls within the definition of ‘development’ in the EPA Act.

Strata subdivision is the subdivision of cubic space within a building. It is one of a number of methods of dividing land, including stratums of land, into separate strata lots. Strata subdivision is effected by the registration of either a strata plan or a strata plan of subdivision.

Many people do not understand the important distinction between a strata plan and a strata plan of subdivision.

A strata plan can only subdivide fee simple land (including leasehold land) under the Real Property Act 1900 (NSW), that is Torrens Title land. A strata plan can subdivide one or more lots in a deposited plan; if there are more than one lot, the lots must be contiguous. The parcel to be subdivided must have a building or part of a building within its boundaries.

A strata plan of subdivision may subdivide strata lots only, common property only or strata lots and common property so as to create new strata lots or new strata lots and common property.

Finally, there is provision in the Strata Schemes Development Act 2015 provides for the subdivision of land which includes only part of a building. More particularly, land which includes only part of a building may be subdivided into lots or into lots and common property. The land may consist of one current lot or two or more current lots, whether contiguous or not. This type of subdivision is known as a part strata development.

Clause 4.1 of the Standard Instrument – Principle Local Environmental Plan imposes minimum lot sizes in respect of lots resulting from the subdivision of land. The clause applies to a subdivision of any land shown on the Lot Size Map that requires development consent and that is carried out after the commencement of the relevant plan. The clause goes on to provide that the size of any lot resulting from a subdivision of land to which the clause applies is not to be less than the minimum size shown on the Lot Size Map in relation to that land. However, clause 4.1(4) states:

(4) This clause does not apply in relation to the subdivision of individual lots in a strata plan or community title scheme.

Many councils, town planners, lawyers and others working in environmental planning and development in New South Wales have taken the view that the minimum lot size development standard in clause 4.1 does not apply at all to strata subdivision. However, the Land and Environment Court of NSW has held that the exception contained in clause 4.1(4) only applies where the strata subdivision is of a lot in an existing strata plan or community development scheme: see DM & Longbow Pty Ltd v Willoughby City Council [2017] NSWLEC 1358.

What this means is that, on a proper reading of clause 4.1, lots created by a new strata subdivision, effected by means of the registration of a strata plan, must meet the minimum lot size development standard. Strata subdivisions are only exempt from that standard where the subdivision is of a lot in an existing strata plan, that is, where the subdivision takes the form of a strata plan of subdivision.

Now, it should be noted that clause 6.1 in Part 6 of State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 provides for a range of strata subdivisions that can be carried out as complying development, provided, amongst other things, the subdivision does not contravene any condition of any development consent or complying development certificate applying to the development. However, the provision excludes strata subdivision of dual occupancies.

We tend to the view that, with the utmost respect to the Court, the conclusion reached by the Court was probably not what was intended at the time of drafting clause 4.1(4) of the Standard Instrument. In planning terms, the distinction which the Court has held exists as respects whether it is necessary to comply with relevantly applicable minimum lot size requirements in the case of a strata subdivision or a community title development seems quite illogical. This may be a case of good law but it hardly seems like good planning.

It is a fact that in the Standard Instrument strata subdivision often requires development consent. An example is a situation where the property in question is located in a heritage conservation area. The question arises—how is it possible for consent to be given at the same time for both the erection of a new residential flat building and the strata titling of the building? The lots in a new strata plan are never compliant with the minimum lot size for Torrens title lots on the relevant lot size map, because the strata lots contain no conventional curtilage and are therefore much smaller, and yet the practice of many, if not most, NSW councils to date has been that strata subdivision of the residential flat building is consented to at the same time as the consent to the erection of the building itself.

The logical (?) conclusion of the approach taken by the Court to the construction of clause 4.1 is that every development application for strata subdivision of a new residential flat building must be accompanied by a clause 4.6 exception request that the Council, or the Court on a merit-based appeal, would need to support. The Court’s decision also puts in doubt the lawfulness of all previous consents granted for the strata subdivision of lots effected by way of the registration of a strata plan (as opposed to a strata plan of subdivision) in circumstances where there was a non-compliance with the relevantly applicable minimum lot size requirements and the development application was not supported by a clause 4.6 exception request (or, where applicable, SEPP 1 objection) which was supported by the consent authority.

In our opinion, the legislation must be amended—with retrospective effect.