The decision of the Land and Environment Court of NSW in Modern Development Pty Ltd v Cumberland Council [2025] NSWLEC 1070 delivered on 11 February 2025 provides helpful insight into site amalgamation clauses and in particular, what is necessary to satisfy the Court that a  "reasonable offer" has been made to consolidate with surrounding properties.

Modern Development Pty Ltd v Cumberland Council [2025] NSWLEC 1070 was a Class 1 appeal to the Land and Environment Court of NSW (Court) against the Cumberland Council's refusal of a development application for a child care facility at 12 Florence Street, South Wentworthville.

The Court at [48] held that the site consolidation controls of the Cumberland Development Control Plan 2021 (CDCP) Part F4 - Finlayson Transitway Precinct, were applicable. This included a requirement in the CDCP to amalgamate the site with adjoining properties.

The Court held at [54] and [59] that the applicant's proposed variations to the site consolidation plan in the CDCP were not supported by attempts to "genuinely engage in the alternate amalgamation process provided by the CDCP". This was because the Court found that the applicant's offers made to purchase the adjoining properties were inadequate. 

Furthermore, the Court was not satisfied that the application would result in the remaining sites being able to achieve the development outcomes sought in the CDCP without the consolidation required by the CDCP. 

As a result, the Court refused the development application.

The development site was identified in Figure 13 of the CDCP as requiring consolidation with other properties for redevelopment. 

The CDCP Part F4 at clause 4.2 set out the objectives and controls for site consolidation, and also recognised that in some circumstances this cannot be achieved. Control C3 set out what was necessary in those circumstances: 

"C3. In instances where amalgamation cannot be achieved, the following information must be submitted with any development application:

• two written valuations indicating the value of the remaining sites that were to be developed in conjunction with the applicants properties. These are to be undertaken by two independent valuers registered with the Australian Valuers Institute, and;

• evidence that a reasonable offer has been made to the owner(s) of the affected sites to purchase and valuation reports." (Emphasis added).

In terms of the offer that had been made, the judgment notes the following steps that were taken:

• Prior to 2024, an offer had been made by the applicant, but was not accompanied by a valuation report. The phone number supplied by the applicant in that correspondence was the architect's number. When the owner of 10 Florence Street called the architect, the contact details of the person who made the offer were refused. The Court at [58] noted that this was "unorthodox" and indicative of "an unwillingness from 12 Florence Street [the applicant] to reasonably engage in the process".

•  Undated, unsigned offers were made by the applicant to the relevant surrounding property owners of 8, 10, and 14 Florence Street in approximately mid-February 2024. 

• Valuation reports were attached to the offers. 

• No response was received by the applicant to the offers made to the owners of 8 and 14 Florence Street. The owner of 10 Florence Street refused the offer on 18 February 2024.

• An amended valuation report with more comparable sales was prepared for 10 Florence Street in June 2024. However, the Court found at [54] that "on its own, the amended valuation report is of little assistance. The intended recipient (the adjoining landowner) did not receive the amended valuation report with a letter of offer and lacks the benefit of the evidence that the offer made has been based on market value". 

In considering whether the above steps comprised "evidence that a reasonable offer has been made", the Court held at [53] that as the valuation reports accompanying the offers were flawed, reasonable offers had not been made. 

In that regard, the Court noted that the parties' planners had agreed that the valuation reports "did not consider the properties as development sites", and the Court found at [53] that "the sites relied on were not comparable in terms of zoning, permissibility, height and FSR."

By failing to make reasonable offers to the adjoining landowners, the Court found that control C3 of section 4.2 of the CDCP was not met. 

Another aspect of the alternate amalgamation process outlined at controls C3 - C6 of section 4.2 of the CDCP was that the applicant needed to demonstrate that despite not amalgamating according to the CDCP, that the redevelopment potential of those adjoining sites would not be prejudiced:

"C4. Alternative consolidation patterns may be considered by Council if it can be demonstrated that development controls can be satisfied on the land and adjoining properties.

C5. Where amalgamation (as required) is not achieved, the applicants must show that the remaining sites, which are not included in the consolidation, will still be able to achieve the development outcome prescribed in this DCP, including achieving the required vehicular access, basement parking and built form.

C6. Sites must not be left such that they are physically unable to develop in accordance with the prescribed built form outcomes outlined in this DCP."
 

The Court at [62]-[63] held that the applicant's concept plans were sufficiently detailed for the purpose of addressing controls C4-C6, but that these plans did not "demonstrate that the remaining sites can achieve the development outcomes sought in the CDCP."

The Court's reasons for this conclusion included the following issues applying to 1 or more of the remaining properties: insufficient minimum frontage, vehicular access, basement parking, and that the built form shown on the concept diagrams was not achievable without varying other key development outcomes sought by the CDCP. 

At [69] the Court noted that concept plans for the proposed development appear to be "alien in their built form" as opposed to the continuity sought by the CDCP, and further at [70] that the "likely impacts of the development would unreasonably reduce the redevelopment potential of adjoining sites and result in built forms that are inconsistent with the desired streetscape."

Finally, the Court at [73]-[75] found that the variations to the site consolidation plan sought by the applicant were "not supported by genuine attempts to consolidate", such that flexibility was not warranted pursuant to controls C4-C6 of 4.2 of the CDCP, and that the development application should be refused.

This judgment underscores the critical importance of prioritising robust valuation reports to underpin the making of a "reasonable offer", if that is what is required by applicable lot consolidation provisions. Tokenistic offers underpinned by flawed valuations may well lead to the refusal of a development application where these provisions are sought to be invoked.

Mere refusal to sell by the existing landowners will not necessarily lead to a conclusion that amalgamation cannot be achieved if the offers to those landowners were not "reasonable", either in relation to the sum offered, or the supporting methodology underpinning the offer. 

Even where a reasonable offer has been made, applicants may also need to ensure that an appropriate level of detail is given explaining how the remaining sites will still be able to achieve the required development outcome set out in the relevant controls.

It is prudent to front-end proper preparation of valuation reports and offers, and then documenting the process of negotiations with the owners of adjoining properties. Well-reasoned explanations as to how the development outcome for those sites can occur, if amalgamation does not occur also needs to be carefully considered. It can be a false economy to avoid investing work on these issues at the early stage.

Where lot consolidation provisions appear in Local Environmental Plans as preconditions to the grant of consent (as opposed to a DCP as was the situation in this case) and no alternate process is provided in the clause where consolidation cannot be achieved, this judgment reinforces the importance for applicants to ensure that the steps taken to attempt consolidation are robust in order to support a clause 4.6 request to vary the development standard (see for example the new Part 8 of the Hornsby Local Environmental Plan 2013 inserted by the Chapter 5 - Transport Oriented Development of the State Environmental Planning Policy (Housing) 2021).

Please contact our PGIE Team for assistance in identifying and managing any of the issues discussed above.