Registered voluntary planning agreements as compensable interests in land
Implications for landholders and developers following City of Parramatta Council v Transport for NSW [2026] NSWSC 294
Snapshot Summary
The Supreme Court of New South Wales has held that a voluntary planning agreement (VPA) registered against title under section 7.6 of the Environmental Planning and Assessment Act 1979 (NSW) may constitute a “registered interest in the land” within the meaning of section 42(2)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), entitling the relevant planning authority to a compensation notice on compulsory acquisition.
The decision is significant for any landholder or developer whose land is, or may become, subject to a VPA providing for the dedication or transfer of land. Such provisions now carry a discernible compensation consequence for the planning authority in any subsequent compulsory acquisition.
VPAs confined to monetary contributions or works obligations are unlikely to give rise to a compensable interest on this analysis. The character of the underlying rights, rather than the bare fact of registration, remains determinative.
Pre-acquisition title diligence and post-acquisition compensation negotiations are correspondingly more complex where a registered VPA is in place. Apportionment of compensation between the landholder and the planning authority is a foreseeable consequence.
Quantum remains a separate inquiry. Section 37 of the Just Terms Act requires that the interest be divested, extinguished or diminished by the acquisition. A registered but speculative or contingent right may attract only modest compensation.
In City of Parramatta Council v Transport for NSW [2026] NSWSC 294, Campbell J held that the City of Parramatta Council’s rights under a registered VPA constituted a registered interest in land for the purposes of the Just Terms Act, and that the existence of such an interest was a jurisdictional fact reviewable by the Court for correctness. Transport for New South Wales (TfNSW) was ordered to pay the Council’s costs and the Valuer General was directed to assess compensation according to law. The decision has practical consequences for any landholder whose title is, or may become, subject to a registered VPA, and for any developer engaged in negotiating and performing such an agreement.
Background
The factual matrix is set out by his Honour in characteristic brevity at [2]:
As part of the expansion of the light rail services of this State, the Parent Parcel was part of a swathe of land which was compulsorily acquired to enable the construction of this new network. The Council sought compensation for the acquisition of their purported interest. Transport for New South Wales (“TfNSW”) and the Valuer General did not accept that any such interest existed and denied its claim.
The VPA had been entered into in November 2021 between the Council, the registered proprietor and the developer of land on Hill Road, Wentworth Park, pursuant to section 7.4 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). Clauses 6.3 and 6.4 of the VPA provided for the dedication of parts of the land to the Council upon fulfilment of certain conditions concerning the performance of works by the developer, although the VPA itself imposed no enforceable obligation on the developer to undertake those works. In June 2023, the Council registered a caveat in reliance on clause 8.2 of the VPA, and the VPA itself was subsequently registered against title in the manner contemplated by section 7.6 of the EPA Act, with Item 15 of the relevant folio recording “PLANNING AGREEMENT PURSUANT TO SECTION 7.6 ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979”. TfNSW compulsorily acquired the land in May 2024. Both the Valuer General and TfNSW declined to recognise the Council’s claim for compensation, and TfNSW did not issue the compensation notice contemplated by section 42 of the Just Terms Act. The Council sought judicial review.
The Court's analysis
Three strands of reasoning are of particular relevance to landholders and developers: that the existence of a registered interest is a jurisdictional fact; that registration of a VPA conferring rights to the dedication or transfer of land crystallises a legal interest in rem; and that subsidiary arguments addressed to the nature of the registered interest were each rejected, although a logically anterior question concerning alienability remains open.
Registration is a jurisdictional fact
The threshold issue was whether the existence of a “registered interest in the land” within section 42(2)(a) of the Just Terms Act is a jurisdictional fact, reviewable by the Court for correctness, or whether it is a matter committed to the acquiring authority’s evaluative judgment. The principles articulated by Spigelman CJ in Timbarra Protection Coalition v Ross Mining NL (1999) 46 NSWLR 55 supplied the analytical framework. His Honour summarised the relevant principle at [16] in the following terms:
There are some facts which Parliament clearly intended must actually, objectively exist before a power is exercised, as opposed to merely depending on the opinion of the decision-maker [citation omitted]. These “jurisdictional facts” are so important to the proper exercise of the statutory function that judicial review will lie where a failure to observe them has been occasioned. Deciding whether a fact is jurisdictional is a process of ordinary statutory interpretation.
Applying that approach to section 42(2)(a), his Honour’s conclusion was expressed in unequivocal terms at [26]:
I am unable to accept that this is anything other than a jurisdictional fact. There is no room for subjectivity or a reasonable difference of opinion here – an interest is either registered, or it is not. It either appears on the Register, or it does not. If an interest is on title, the owner is entitled to receive a compensation notice, according to the valuation of the Valuer General. It is not for TfNSW to decide that it will go behind the Register and make its own mind up about whether an interest recorded is actually an interest in land.
The textual architecture of the Just Terms Act supported the objective construction. Section 42(2)(b) introduces an element of subjectivity only as a qualification to a mandatory first limb (lawful occupation); section 42(2)(c) turns upon the actual knowledge of the acquiring authority. As to the verb “considers” appearing in section 46(2), his Honour observed at [28]:
To the extent that “considers” empowers the authority to form a subjective opinion, it is a subjective opinion about the entitlement to compensation, not over an interest in land. I also think that there is weight in the Council’s submissions that the explicit choice of subjective language in sections 42(2)(b) & (c) and 46(2) militate in favour of section 42(2)(a) being construed objectively.
His Honour accordingly held at [30] that “the existence of a registered interest in the land is a jurisdictional fact and consequently that it is amenable to judicial review”. The Register, in short, is to be taken at face value.
Registration crystallises rights in rem, not rights in personam
His Honour next addressed whether the Council in fact held the asserted interest. The Council’s primary submission, which his Honour observed (at [49]) “has the benefit of simplicity”, was that registration of the VPA pursuant to section 7.6 of the EPA Act was itself productive of a legal interest. The Court rejected TfNSW’s response that registration is not strictly necessary to create a legal interest, holding at [50]:
The types of legal interests that exist absent registration are the exception, not the rule. Providing certainty of title is a fundamental feature of the Torrens system and the certificate of title provides the necessary conclusive proof: Breskvar v Wall at 384 (Barwick CJ). The fact that some interests may escape the need for registration does not undermine registration as the quiddity of the Torrens system.
Importantly, his Honour accepted that the closed categories of legal interests at common law could not be expanded by mere private agreement, but identified the Council’s submission as one of statutory creation. At [51]:
But in this case, there is no suggestion that this was a legal interest known to common law. Rather, as the Council contended, its interest is the creature of statute. Parliament may, in the exercise of its legislative function, alter the general law. It really only remains to determine whether, by force of the statute, registration under section 7.6 of the EPA creates a legal interest vested in the Council.
TfNSW relied principally upon Huntlee Pty Ltd v Sweetwater Action Group Inc [2011] NSWCA 378 for the proposition that section 7.6 registration is concerned with the binding of successors in title rather than with the creation of property rights. His Honour accepted that proposition, but drew the critical distinction in the following terms at [53]:
Registration of a planning agreement under this provision does not, ipso facto, create a proprietary interest in land. That is because this provision is not concerned with the substantive nature of the rights themselves, rather, with ensuring that those rights continue to bind successors in title: Huntlee at [135] (Sackville AJA, Beazley JA and Tobias AJA agreeing). Whether the rights under a planning agreement are in rem or in personam requires an analysis of the actual rights conferred by the VPA under section 7.4 of the EPA.
The right in issue in Huntlee had been a right to development contributions — a right in personam, a debt due from the proprietor for the time being. In the present case, the right created by clause 6.4 of the VPA was of a different character. As his Honour put it at [54]:
The right in question in Huntlee was a right to development contributions due to the Minister under section 7.4 of the EPA. This was a right to the payment of debt due from the owners of the land from time to time. In this case, the right created by clause 6.4 of the VPA by force of section 7.4(1) of the EPA to the transfer of the Parent Parcel by dedication on the fulfilment of certain conditions. The former speaks, as Sackville AJA held (at [133]-[134]), to a right in personam. I agree with the Council that in this case, it is a right in the land itself, even if contingent.
The corollary requires emphasis. A VPA which is confined to monetary contributions, the performance of works, or other personal obligations — and which does not provide for the dedication or transfer of land — will not, on this analysis, give rise to a compensable interest. The substance of the underlying rights, rather than the bare fact of registration, remains determinative.
Subsidiary arguments rejected; an open question remains
TfNSW advanced two further arguments addressed to the nature of the registered interest. First, it submitted that the VPA was not a “dealing” within the meaning of the Real Property Act 1900 (NSW) because it did not effect an immediate disposition of land. His Honour rejected that contention at [57]:
But the statutory definition does not require that a document actually provides for the disposition of land immediately. The VPA, while contingent, plainly “relates to” the disposition of land which is authorised by sections 7.4 and 7.6 of the EPA. I am not prepared to accept a construction of that document which would defeat the clear (and one must assume deliberately broad) language of the statute.
Secondly, TfNSW submitted that any interest held by the Council was not “capable of alienation” within the gloss articulated in Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554, because sections 7.3, 7.4 and 7.10 of the EPA Act required that a planning authority remain a party to a planning agreement. The response is significant for the analysis of similar arrangements containing restricted assignment provisions. His Honour’s reasoning at [59] is set out in full:
I agree with TfNSW that these sections establish a regime which requires a planning authority to be a party to a planning agreement. I therefore accept that the interest under the VPA is not assignable to the world at large. However, merely because an interest is not assignable in gross does not necessarily mean it is not capable of alienation. Assignment clauses in contracts are frequently drafted to limit assignment to members of a particular class. This statutory interest is no different. There would be, to my mind, nothing stopping the Council from assigning their right to another public authority. The fact that the size of the class of potential assignees is small is not relevant to the question that it can be assigned and therefore is capable of alienation. In any event as a species of property created by statute it is not essential that the general law attributes of property are present.
His Honour’s reasoning at [59] should be read with the corresponding open question to which it gives rise: a matter to which we return below.
Implications for developers
For developers engaged in negotiating, performing or assigning VPAs, the decision reframes the long-term legal significance of dedication and transfer provisions. Such provisions are no longer to be viewed merely as performance obligations governing the relationship between the developer, the proprietor and the planning authority; they are productive of a registered legal interest in the land, which may be enforced not only against successors in title but also against future acquiring authorities. The Court’s characterisation at [54] of the Council’s right as “a right in the land itself, even if contingent” ought to be expected to inform the commercial position taken by planning authorities in subsequent negotiations.
Three drafting consequences follow.
First, the structural choice between monetary contributions and dedication of land has acquired an additional dimension. Dedication structures will be more attractive to planning authorities than monetary contributions of equivalent nominal value, because the former crystallise on registration as compensable rights enforceable against future acquiring authorities, whereas the latter (per Huntlee) do not. Developers should anticipate that authorities may seek dedication structures in preference to monetary contributions, and consider that dynamic in negotiation.
Secondly, contingency mechanisms (the events upon which the dedication obligation crystallises) and any associated caveat provisions of the kind found in clause 8 of the VPA in this case should be drafted with attention to their operation upon a subsequent acquisition.
Thirdly, removal and release provisions (governing the discharge of the planning authority’s registered interest upon performance, frustration or commutation of the underlying obligation) should be drafted to a similar standard.
A further consideration applies to developers who are also proprietors. The registration of a VPA against title materially affects the value of the developer’s own unencumbered interest in the land, and that diminution should be taken into account in any subsequent valuation exercise (including for the purposes of refinancing, disposal or compulsory acquisition of the proprietor’s own residual interest). His Honour’s observation at [59] that restricted assignability remains assignability is also of relevance: assignment provisions confined to particular classes of assignee (such as other planning authorities) will not be vulnerable to challenge on that basis alone.
Implications for landholders
For landholders, three sets of practical implications arise.
Pre-acquisition diligence on title. Registered VPAs are now to be treated as a substantive feature of any title diligence exercise. The character of the rights conferred by a registered VPA — in particular, whether the agreement provides for the dedication or transfer of land, or is confined to monetary contributions — should be expressly addressed in the diligence report. The Court’s observation at [66] that an explicit reference to section 7.6 on the folio “discloses what type of interest is involved, at least generically” and would permit a person inspecting the Register to ascertain the relevant statutory framework is significant: the diligence inquiry must extend beyond the folio entry to the substantive terms of the registered VPA itself. The presence of a registered VPA with dedication provisions has implications for value, for the conduct of any subsequent disposition, and for the position which the proprietor may expect to occupy in any future compulsory acquisition.
Apportionment of compensation upon acquisition. Where land subject to a registered VPA is compulsorily acquired, the planning authority is now squarely a party to the compensation process. The compensation payable in respect of the land must be apportioned between the proprietor (whose interest is in the land subject to the planning authority’s registered interest) and the planning authority (whose interest is in the contingent dedication right). The two claims are distinct in character: the proprietor’s claim is for the value of the residual interest in the land; the planning authority’s claim is for the diminution of its registered right. Both claims, however, will be made against the same acquiring authority and will need to be reconciled. Landholders should accordingly anticipate a more complex compensation process, in which the planning authority’s position must be addressed at an early stage.
The contingent nature of the planning authority’s interest. A point of particular importance to landholders is that the planning authority’s registered interest may, on the facts of a given case, be highly contingent. In the present case, the dedication contemplated by clauses 6.3 and 6.4 of the VPA was conditional upon the developer’s performance of works which the VPA itself did not separately oblige the developer to undertake. The diminution suffered by the Council upon the acquisition is, in those circumstances, a matter of assessment under section 37 of the Just Terms Act (see further below). The existence of a registered interest is necessary, but not sufficient, to ground compensation; the quantum of the planning authority’s entitlement will depend upon the likelihood that the contingency would, but for the acquisition, have matured.
Quantum: section 37 remains the gateway
His Honour was careful to emphasise that the identification of a registered interest is necessary, but not sufficient, to found an entitlement to compensation. The relevant principle, by reference to section 37 of the Just Terms Act, is articulated at [22]:
The key is a determination of whether a person has an interest in land. It also requires that the interest must have been divested, extinguished or diminished by an acquisition. Generally, that will be clear, but not always. Suffice it to say, the identification of an interest does not, in and of itself, give rise to a right to compensation under this section, absent divestment, extinguishment or diminution.
His Honour’s illustration of the principle at [23] bears repeating:
By way of example, if the authority acquired land subject to a lease, to the end that the current occupant’s rights would not be impaired, then that does not give rise to a right to compensation under section 37 because there has been no divestment, extinguishment or diminution of that interest.
Where the planning authority’s registered right is contingent, the quantification of any diminution is likely to be a substantial exercise. The valuation will engage the probability that the contingency would have matured, the value of the contingent right at the date of acquisition, and the residual position of the planning authority following acquisition. From the landholder’s perspective, a registered VPA with highly speculative contingencies may attract only modest compensation in favour of the planning authority. From the developer’s perspective, the strength of the contingency mechanism in the VPA — and any associated separate obligation to perform the triggering works — will materially affect the value of the planning authority’s registered interest. These are matters which can, and should, be addressed in the drafting.
Aspects of the reasoning that may merit further development
His Honour’s judgment is, with respect, comprehensive in its engagement with each of the substantial arguments advanced by TfNSW. The decision is, however, one at first instance, and addresses a number of questions in a developing area of the law in which intermediate appellate authority is sparse. Without intending any disrespect to a carefully reasoned judgment, the following observations are offered for the assistance of landholders and developers who may be required to take a view as to the likely durability of the decision in subsequent proceedings or in the event of an appeal.
The binary characterisation of section 42(2)(a)
His Honour’s formulation at [26] that “an interest is either registered, or it is not” elegantly captures the first inquiry which section 42(2)(a) requires. With respect, however, the provision is arguably comprised of two analytically distinct inquiries: first, whether an entry has been made on the Register (which is objectively determinable, and admits of no subjectivity); and secondly, whether the entry so made constitutes a “registered interest in the land” within the statutory meaning (which is a question of legal characterisation). The latter inquiry occupied his Honour for some seventeen paragraphs at [49]–[67] and engaged contested questions of statutory construction, the proper application of Huntlee, and the closed categories of legal interests at common law. The very substantiality of that analysis may be thought to sit in some tension with the binary characterisation deployed at [26]. The orthodox approach to the identification of jurisdictional facts — deriving in particular from Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 — counsels against the extension of that category to determinations of legal characterisation reposed in expert administrative decision-makers, and the tension may bear further consideration.
The characterisation of contingent rights
The distinction drawn at [54] between the right at issue in Huntlee (to development contributions, in personam) and the right at issue in the present matter (to the transfer by dedication of land, said to be in rem) is, with respect, less stable than the language of the reasons might suggest. The right conferred by clause 6.4 of the VPA was contingent upon the developer’s performance of works which the VPA itself did not separately oblige the developer to undertake. The Council possessed no mechanism by which to compel performance, and accordingly no unilateral power to bring the contingent right to maturity. A right of that character is materially different from, for example, the right of the grantee of an option to purchase, whose equitable interest in land is grounded precisely upon the capacity for unilateral enforcement. An alternative view — perhaps more readily reconciled with Huntlee — would treat the Council’s right as, in substance, a registered contractual right against the developer, the registered character of which served (per Huntlee) to bind successors in title but did not transmute the underlying personal right into a proprietary one. The proposition that such a right is “a right in the land itself, even if contingent” may be expected to be tested in future proceedings.
The inference of statutory property from section 7.6
Section 7.6 of the EPA Act does not, in terms, create a new species of property. The provision authorises the registration of planning agreements and provides that a registered agreement is “binding on, and is enforceable against, the owner of the land from time to time as if each owner for the time being had entered into the agreement” — language conventionally associated with the binding of successors to personal obligations, rather than with the creation of proprietary rights. His Honour’s conclusion that registration crystallises a contingent right as a legal interest is accordingly drawn by inference from the statutory scheme (at [51]). That inference, while certainly available, sits in some tension with the inference drawn by the Court of Appeal in Huntlee, which his Honour himself describes at [53] as concerned not with the substantive nature of the rights but with ensuring that those rights continue to bind successors in title. The reconciliation of those two inferences — each derived from substantially identical statutory provisions — may be expected to occupy the attention of any appellate court.
The alienability analysis
Two separate observations may be advanced.
First, as has been noted in the body of the analysis above, the capacity-for-alienation requirement articulated in Dial A Dump arose in respect of the second limb of the section 4 definition. His Honour found a limb (a) interest at [60], but addressed alienability without express consideration of the prior question whether that requirement applies to limb (a) at all.
Secondly, the reasoning at [59] that the size of the class of potential assignees “is not relevant to the question that it can be assigned” is, with respect, somewhat conclusory. Whether a right capable of assignment only to another statutory body of essentially the same character as the holder — in many cases, a singular such body — is properly described as “capable of alienation” in the conventional sense, which contemplates transferability for value in market transactions, is a matter upon which views may legitimately differ. Both questions may be expected to receive further attention in due course.
The observations above are not advanced with any suggestion that his Honour’s ultimate conclusion is necessarily incorrect; the propositions accepted by his Honour are, on any view, substantial and were advanced by counsel of the highest standing. They are directed, rather, to the reasoning by which the conclusions were reached, and are offered to assist landholders and developers in forming a view as to the prudent management of the risks and opportunities to which the decision gives rise pending any further appellate consideration of the issues.
Comments:
The decision will be of particular relevance to those engaged in major infrastructure corridors, urban renewal precincts and transit-oriented development, in which VPAs with dedication provisions are commonly deployed. The judgment provides authoritative guidance, at first instance, on the legal status of such agreements, and imposes a corresponding discipline upon their drafting and administration. A registered VPA with dedication provisions is now, in substance, a registered legal interest in the land; landholders and developers should attend to that characterisation from the negotiation stage onwards, while remaining alive to the possibility that aspects of the reasoning may be revisited.
The open question concerning the application of the Dial A Dump alienability gloss to limb (a) interests is also to be watched, particularly in respect of VPAs which confer rights of a less plainly proprietary character than those in issue here.
