Applicant v Respondent

1 This proceeding concerns a claim for compensation by the applicant ('Greenwells') pursuant to s 98(1)(a) of the Planning and Environment Act 1987 ('the Act'). Greenwells is the registered proprietor of land situated at 220 Craigieburn Road, Wollert ('Subject Land'). On 23 February 2017 amendment C187 to the Whittlesea Planning Scheme was gazetted. Relevantly, public acquisition overlay - Schedule 2 ('PAO2') reserved 0.85ha of the Subject Land for the future widening of Craigieburn Road.

2 On 17 July 2017 Greenwells lodged planning permit application 716806 with the City of Whittlesea ('the Council'). The application sought the subdivision of the Subject Land including the 0.85ha reserved by PAO2. On 13 September 2017 the Council rejected the application on the grounds that the site was affected by PAO2 and was reserved for the future duplication of Craigieburn Road.

3 Greenwells contends that it has suffered financial loss of $1.83 million as a consequence of the Subject Land being reserved for a public purpose. Greenwells contends that as a consequence of the reservation of 0.85ha of the Subject Land for the duplication of Craigieburn Road the market value of the land has been reduced by $1.83 million. The $1.83 million which it claims reflects its inability to undertake residential development of the 0.85ha reserved for a public purpose.

4 On 5 March 2023 I made orders pursuant to rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 that the question of liability be determined separately from the question of the quantum of Greenwells' claim. It is common ground that in order to determine the question of liability it is necessary to assume that Greenwells has suffered some financial loss as a consequence of the reservation of the land by PAO2. I made the rule 47.04 order for two reasons. First, the question of liability can be determined without the need to address a significant amount of evidence filed by the parties directed to the quantum of Greenwells' claim. Second, if the order had not been made there was a real prospect that the hearing scheduled to commence on 8 March 2023 would have been adjourned to accommodate Greenwells' desire to file additional expert evidence.

5 There are two issues for determination. First, whether Greenwells has standing to make a claim for compensation. Second, if Greenwells does have standing, whether any financial loss it suffered was a natural, direct and reasonable consequence of the reservation of 0.85ha of the Subject Land for a public purpose. For the reasons which follow the first issue is to be answered in the affirmative and the second issue in the negative.

6 Greenwells is a subsidiary of AVJennings Pty Ltd, a company engaged in the business of property development. In late 2007 AVJennings had a land acquisition strategy aimed at securing land outside the urban growth boundary ('UGB') with the aim of subsequently advocating for its future inclusion within the UGB. AVJennings identified that demand for residential housing within the City of Whittlesea might require the UGB to be expanded further north towards Craigieburn Road.

7 In 2008 AVJennings actively sought to acquire land to the immediate north of Craigieburn Road. Mr Adrian Cresp, AVJennings' acquisition manager in 2008, gave the following evidence:

I particularly wanted to secure the Subject Land, as I considered it to be key land for AVJennings' development. It was directly opposite the extension of Edgars Road (to the south) and was a natural entry point into what I anticipated would be a new residential estate. It was also (and remains) a key exposure location along Craigieburn Road. This is demonstrated by the fact that the AVJennings "Lyndarum North" sales display suite is currently located on the Subject Land.[1]

8 On 14 October 2008, Adnow Pty Ltd ('Adnow') granted an option to Greenwells to purchase the Subject Land ('Option Deed'). Under the Option Deed, Greenwells was to pay an option fee of $52,500 per annum exclusive of GST, to be retained absolutely by Adnow if the option was not exercised.

9 The Option Deed required the option to be exercised within four years, with extensions available for a further two years subject to conditions. The option period was extended three times: the first until 31 October 2014; the second until 14 April 2015; the third until 14 October 2015. It further required the option to be exercised only if within the option period, a proposed Precinct Structure Plan ('PSP') affecting the Subject Land had been prepared by the Council or had been approved by the Minister for Planning.

10 In consideration for the option to purchase, Greenwells paid Adnow $815,000, comprising six annual payments of $52,500 for the period October 2008 to October 2014, and two $250,000 payments for the two extensions thereafter.

11 The price Greenwells was to pay for the Subject Land was not fixed as of October 2008 but was to be determined in accordance with clause 5 of the Option Deed. Clause 5.4 provided:

5.4 In the event that the Parties are unable to agree on a Price within 14 days of the date of the Pre Exercise Notice, each party will engage an Appointed Valuer who shall then meet and use their best endeavours (having regard to the Valuation Guidelines), to agree on the valuation of the Property. In the event that the Precinct Structure Plan has been prepared by the City of Whittlesea, but has not yet been approved by the Minister for Planning, the Appointed Valuer for each Party must assume that the Precinct Structure Plan has been approved.

12 In 2009, the state government undertook a review of the UGB. In February of that year, AVJennings commissioned Paroissien Grant & Associates ('PGA') to prepare a report on the Subject Land detailing the servicing requirements of the land, should it be brought within the UGB. The PGA Report was commissioned to support AVJennings' submission to the 2009 UGB review seeking to have the Subject Land brought within the UGB.[2] The report, which was submitted to the state government, foreshadowed the potential for Craigieburn Road to be widened in the event of the Subject Land's inclusion within the UGB:

3.9.1. Arterial Road Access

Craigieburn Road East is an arterial road under the control of VicRoads. It currently has a 20m wide road reserve with a single carriageway of rural cross-section having one traffic lane each way and sealed shoulders. Table drains are relatively shallow in some areas.

From discussions with VicRoads -

3.9.1.1. Land acquisition of 30m is likely to be required on the north side which will affect this development. The land acquisition is necessary to provide for a future dual carriageway with central median.

3.9.1.2. Construction of a second carriageway along the north side of Craigieburn Road East (i.e. in the acquired land) may be a requirement of development depending on traffic volumes. However this may be alternatively dealt with by means of a development contribution plan, most likely administered through the City of Whittlesea.[3]

13 Following the receipt of the PGA Report, Mr Cresp's attitude to the development of the Subject Land changed:

Once I was made aware of the potential future road widening, subsequent land budgets that I prepared for the proposed development of the Subject Land included the potential road widening in the Gross Developable Area of the Land Budget (and not within the Encumbered Land). That was because I always assumed that if the Applicant purchased the Subject Land, it would be compensated in the event of any future road widening, as opposed to the land being treated as encumbered for which no compensation would be payable.[4]

14 By early 2013 the Growth Areas Authority had begun circulating drafts of a proposed urban structure plan and property-specific land budget for the proposed Wollert PSP. The draft land budget identified that part of the Subject Land would be required as part of a proposed widening of Craigieburn Road to accommodate a six lane arterial road.[5]

15 Greenwells discovered a letter from VicRoads dated 22 March 2013. The letter, which is addressed to the Whittlesea Council, responds to a draft of the Wollert PSP circulated by the Council. Among the comments provided by VicRoads is the following:

In the preparation of the Wollert Precinct Structure Plan, the following matters require consideration:

...

Widening of Craigieburn, Epping and Summerhill Roads to accommodate a 6-lane cross-section within a 41 metre reservation with additional 12 metre reservations provided for localised frontage roads/service lanes;[6]

16 On 30 April 2015, pursuant to s 19(3) of the Act, proposed amendment C187 was formally exhibited and a Notice of Preparation of Amendment was posted in the Victorian Government Gazette. The proposed amendment C187 showed the future urban structure proposed in the Wollert PSP and, relevantly, identified that PAO2 would apply along the northern side of Craigieburn Road.

17 Under the proposed amendment C187, PAO2 would reserve part of the Subject Land for a public purpose, being the widening of Craigieburn Road. The area proposed to be reserved was a 0.85ha strip on the southern boundary of the Subject Land abutting Craigieburn Road. This 0.85ha strip is the reserved land the subject of this proceeding.

18 The proposed amendment C187 also exhibited a draft Development Contributions Plan ('DCP') for the proposed development of the Wollert area that was prepared by the City of Whittlesea. The draft DCP set out the nature of the financial contributions developers would be required to make towards the proposed development of the Wollert Area. There were also a number of specific items not included within the funding arrangements proposed within the document. Among the items not included were 'State Infrastructure Items', which relevantly included 'construction of the second carriageway of Epping Road between Craigieburn Road and Boundary Road/Bridge Inn Road'.[7]

19 Mr Cresp gave evidence regarding the financial assumptions he made upon the formal exhibition of proposed amendment C187:

To the best of my knowledge this was when I first became aware that a PAO was proposed for the road widening, and that it was not an item that would be included within the DCP. However, on the basis of the Draft DCP, I also assumed that it may be possible to offset providing the Subject Land and/or construction of part of the additional carriageways as against the GAIC payable in future in relation to the development of the Subject Land.[8]

20 Following the exhibition of proposed amendment C187, Mr Cresp conducted a number of financial feasibility studies for the Subject Land. Mr Cresp acted on the assumption that compensation would be available for any reservation of the Subject Land:

The fact that part of the Subject Land might in future be required for road widening did not impact on the Applicant's assessment of the viability of continuing with the purchase of the Subject Land pursuant to the Option. Based on my past experience (both at AVJennings and as a Certified Practicing Valuer), I always assumed that some form of compensation, credit or offset would be available for any part of the Subject Land that might in future be affected.[9]

21 On 10 July 2015 Greenwells gave Adnow notice of its intention to exercise the option under cl. 5.2 of the Option Deed. The notice of intention set in train the price determination and valuation procedures contained in the Option Deed. Settlement of the contract was due to take place on 18 April 2016.

22 On 21 December 2015 Adnow provided Greenwells with a vendor statement pursuant to s 32 of the Sale of Land Act 1962. The statement annexed a letter from VicRoads dated 10 December 2015 stating:

VicRoads have completed a Planning Study for the Craigieburn Road. The subject property is located within the Wollert Precinct Structure Plan.

At this stage, the Precinct Structure Plan has not been finalised. The alignment of Craigieburn Road will impact on this property and the Precinct Structure Plan will determine the amount of land required.[10]

It is common ground that VicRoads was a determining referral authority under the Whittlesea Planning Scheme in respect of any application to develop the Subject Land. As such, VicRoads had the right under s 56 of the Act to object to any application by Greenwells for a permit seeking residential development of the 0.85ha reserved for a public purpose. If it did object, pursuant to s 61(2) of the Act, the Council was bound to refuse the permit application.

23 Following Greenwells' notice of intention the parties obtained valuations to determine the price payable for the Subject Land. The valuations obtained by the parties differed significantly. Greenwells' valuer derived a value of between $400,000-$500,000 per developable hectare, while Adnow's valuer priced the land at a higher rate of $816,000 per developable hectare. As a result of the disparity between the parties' valuations, the parties jointly appointed an independent valuer. Mr Mark Murray was appointed on 4 November 2015. In preparing his valuation, Mr Murray was advised to assume that compensation would be payable in respect of the 0.85ha proposed to be reserved by amendment C187.[11] On 7 January 2016, Mr Murray delivered a valuation of $18,700,000, equating to a rate of $525,000 per developable hectare.

24 On 4 April 2016, Adnow instituted proceedings in this Court seeking to set aside Mr Murray's valuation. The proceeding was dismissed by Judd J on 14 April 2016.[12] Following Judd J's determination, the parties entered into a deed on 27 April 2016 requiring Adnow to transfer the Subject Land to Greenwells at Mr Murray's valued rate. The deed preserved Adnow's capacity to appeal Judd J's judgment, requiring payment of the difference in the event Adnow was successful on appeal. The Court of Appeal dismissed Adnow's appeal on 23 November 2016.[13] On 27 May 2016, Greenwells became the registered proprietor of the Subject Land.[14]

25 On 23 February 2017, amendment C187 was gazetted and came into immediate effect. As foreshadowed by the exhibition of the amendment nearly two years prior, the amendment applied PAO2 to part of the Subject Land, reserving 0.85ha for the future addition of carriageways to Craigieburn Road.

26 On 27 February 2017 Greenwells lodged planning permit application 716423 with the Council. This application sought a permit 'to develop the Land excluding the part of the Land affected by PAO2, for residential purposes, consistent with the expectations and requirements for the land contained in the Wollert PSP'.[15] The application was supported by a plan of subdivision prepared by Taylors Development Strategies Pty Ltd ('TDS'), dated 30 October 2015.[16] The TDS plan did not propose residential development of the 0.85ha reserved by PAO2. On 13 April 2017 the Council granted a permit in respect of application 716423.[17]

27 On 17 July 2017 Greenwells lodged a further permit application with the Council. This application was numbered 716806.[18] This application sought a permit for subdivision and works within the area reserved by PAO2,[19] as part of its plan 'to develop the whole of the land for residential purposes'.[20]

28 On 18 July 2017 Greenwells lodged a slightly revised plan of subdivision prepared by TDS in support of permit application 716423 which had been approved on 13 April 2017. This application excluded 0.80ha from residential development compared to the 0.85ha which had been excluded in the earlier plan of subdivision lodged with the Council on 27 February 2017 in support of application 716423. The subdivision plans lodged on 18 July 2017 demonstrated that notwithstanding the permit application lodged on 17 July 2017 seeking development of all of the Subject Land, Greenwells was actively taking steps to develop the Subject Land in accordance with the application lodged on 27 February 2017 and approved on 13 April 2017. I infer that in lodging the further application on 17 July 2017 Greenwells was motivated by a desire to enliven an entitlement to claim compensation in respect of that portion of the Subject Land which would not be available for residential development under the permit granted by the Council on 13 April 2017.

29 On 13 September 2017 the Council rejected application 716806 on the following grounds:

i. The site is affected by a Public Acquisition Overlay reserved for the future duplication of Craigieburn Road.

ii. The proposed residential development within the Public Acquisition Overlay is contrary to the purpose for which the land is required.

iii. VicRoads are a Section 55 determining referral authority and have objected to any permit being issued for the application.

30 Part 5 of the Act provides for compensation. Sections 98(1) and (2) provide:

98 Right to compensation

(1) The owner or occupier of any land may claim compensation from the planning authority for financial loss suffered as the natural, direct and reasonable consequence of -

(a) subject to subsection (1A), the land being reserved for a public purpose under a planning scheme; or

(b) subject to subsection (1B), the land being shown as reserved for a public purpose in a proposed amendment to a planning scheme of which notice has been published in the Government Gazette under section 19; or

(c) a declaration of the Minister under section 113 that the land is proposed to be reserved for a public purpose; or

(d) access to the land being restricted by the closure of a road by a planning scheme.

...

(2) Subject to subsection (2A), the owner or occupier of any land may claim compensation from a responsible authority for financial loss suffered as the natural, direct and reasonable consequence of a refusal by the responsible authority to grant a permit to use or develop the land on the ground that the land is or will be needed for a public purpose.

99 When does the right to compensation arise?

A right to compensation and the liability of a planning authority or responsible authority to pay compensation arises -

(a) under section 98(1)(a), (b) or (c) after -

(i) the responsible authority has refused to grant a permit for the use or development of the land on the ground that it is or may be required for a public purpose; or

(ii) the Tribunal directs that a permit must not be granted on the ground that the land is or may be required for a public purpose; or

(iii) the responsible authority -

(A) fails to grant a permit within the period prescribed for the purposes of section 79; or

(B) grants a permit subject to any condition which is not acceptable to the applicant -

and the Tribunal disallows any application for review of the failure or condition on the ground that the land is or may be required for a public purpose; or

(b) under section 98(1)(a), (b) or (c), on the sale of the land concerned under section 106; or

(c) under section 98(1)(d), on the coming into operation of the relevant provision of the planning scheme; or

(d) under section 98(2), on the refusal of the permit.

102 What if compensation has been previously paid?

In determining the compensation to be paid under this Part, regard must be had to any amount already paid or payable in respect of the land by way of compensation under -

(a) this Part, or any corresponding previous enactment; and

(b) any other Part of this Act or any other Act.

104 Maximum amount of compensation payable

The compensation payable for financial loss under section 98 must not exceed the difference between -

(a) the value of the land at the date on which the liability to pay compensation first arose; and

(b) the value that the land would have had at the date if the land had not been affected by any circumstance set out in section 98(1) or (2) or 107.

106 Loss on sale

(1) The owner of land may claim compensation under section 98 after the sale of the land if -

(a) the owner of the land sold it at a lower price than the owner might reasonably have expected to get if the land or part of the land had not been reserved or proposed to be reserved; and

(b) before selling the land, the owner gave the relevant authority not less than 60 days notice in writing of the owner's intention to sell the land.

(2) The owner is not required to give notice under subsection (1)(b) if -

(a) the owner and the relevant authority have agreed that the owner does not have to give notice; or

(b) before or after the sale, the Minister exempts the owner from giving notice on the ground that the requirement to give notice would cause hardship to the owner.

(3) In this section relevant authority means -

(a) the Minister, public authority or municipal council designated in the planning scheme as the acquiring authority for the purposes of this Act in respect of the land; or

(b) if there is no acquiring authority, the planning authority.

108 Persons who are not eligible to claim compensation

(1) A person does not have a claim for compensation in respect of any land if that person was not the owner or occupier of the land at the time the right to claim compensation arose.

(2) A person does not have a claim for compensation in respect of the sale of land which the person acquired after -

(a) notice is published in the Government Gazette under section 19 of a proposed planning scheme or amendment to a planning scheme which shows the land as being reserved for a public purpose; or

(b) the approval of a planning scheme or amendment reserving the land for public purposes; or

(c) a declaration under section 113 that the land is proposed to be reserved for public purposes -

unless a subsequent amendment to the planning scheme provides or proposes more stringent planning controls over the use or development of the land.

36 In Mason v Head, Transport for Victoria[21] the Court of Appeal identified six key elements which emerge from the statutory scheme for compensation under Part 5 of the Act:

First, s 98(1) relevantly provides for a right to claim compensation by the owner in respect of financial loss which is suffered as the natural, direct and reasonable consequence of the reservation of land for public purposes. In this regard, we accept the respondent's submission that, read in context, the reference to land 'being reserved' is to be understood as a reference to the event of reservation rather than the continuing state of reservation thereafter. Each of sub-ss 98(1)(b), (c) and (d) plainly refer to specified events. The right to compensation flows from those events.

Secondly, s 98(1) does not in terms state that the owner or occupier of land must be the owner or occupier at the date of the imposition of the reservation. Nor does s 98(3) - which excludes certain persons from making claims - contain a provision to this effect. Conversely, it can be seen that s 98(3) would have enabled such a provision to be readily inserted.

Thirdly, s 99 provides for the circumstances in which the right to compensation arises. In particular, the right may arise under s 99(a) in consequence of an adverse decision with respect to a planning permit, or under s 99(b) on the sale of the land concerned.

Fourthly, the right to compensation is with respect to the loss suffered and assessed as at the date the right to compensation arises. This is so explicitly with respect to claims for loss suffered on sale made in accordance with s 106 and, as the respondent concedes, implicitly upon claims arising on a permit decision.

Fifthly, whilst s 98 contains no provision as to the date at which the owner or occupier must fulfil this description in order to claim compensation, s 108(1) makes specific provision as to eligibility by reference to the criterion of the time of ownership or occupancy. It provides that only the person who was the owner or occupier at the time the right to compensation arises can claim. Section 108 embraces both claims for compensation pursuant to s 98 and claims pursuant to s 107.

Sixthly, s 108(2) qualifies s 108(1) by providing that owners who had constructive notice of the proposed reservation of land when they acquired the land will not have an entitlement to compensation unless the proviso to that sub-section is satisfied. Declarations under s 113 of the P&E Act, that the land is proposed to be reserved for public purposes fall within the scheme of this subsection because such declarations may provide for the implementation of a planning scheme at a subsequent date.[22]

37 The Court of Appeal held that there is no right to compensation until one of the events in s 99 occurs:

We do not, with respect, agree that the terms of s 99 are irrelevant to the definition of the subject matter of a claim for compensation. They provide the date at which the relevant financial loss (if any) falls to be assessed. Because both market value and the highest and best use of the land may change subsequent to reservation, the critical question governing the right to compensation is whether an actual financial loss (falling within the limits imposed by s 104) has been suffered as at the date of one of the events specified in s 99 as a natural, direct and reasonable consequence of the reservation. There will be many cases - such as the reservation of a narrow strip of farmland for road widening purposes - where the reservation does not affect the highest and best economic use of the land and no loss is suffered until compulsory acquisition. There will be other cases where the highest and best use of the land changes after the imposition of the reservation and it is only following this change that the reservation can be said to have resulted in financial loss. Section 99 contemplates that the question of loss (and hence the existence of a right to compensation) will not fall to be assessed until one of the stipulated events occurs. It cannot be said that a right to compensation arises until an actual loss is ascertained.

For similar reasons, we do not, with respect, agree that reservation (or proposed reservation) alone can justify a claim for compensation under s 98(1). There is no right to claim compensation until financial loss is suffered as the natural, direct and reasonable consequence of the reservation. Whether such loss has been suffered falls to be assessed upon the happening of one of the events specified in s 99. There is no enforceable right to compensation until one of the events in s 99 occurs.[23]

38 The respondent submits that s 108(1) renders a person ineligible to claim compensation if the person was not the owner or occupier of the land when a right to claim compensation first arose. The respondent submits that the right to claim compensation in respect of the Subject Land first arose when Adnow sold the land to Greenwells on 27 April 2016. The respondent submits that when the sale occurred the Subject Land had been shown as reserved for a public purpose in a proposed amendment to a planning scheme of which notice had been published in the Government Gazette, as a result of the exhibition of proposed amendment C187 in the Government Gazette on 30 April 2015. The respondent submits that at the time of sale of the land Adnow had a right to claim compensation pursuant to s 98(1)(b) read in conjunction with s 99(b) of the Act. The respondent submits that as Greenwells was not the owner of the land when Adnow's right to claim compensation arose it has no standing to claim compensation. It submits that s 108(1) should be construed such that only one party (Adnow) had a right to claim compensation in respect of the Subject Land. In effect, the respondent submits that s 108(1) of the Act mandates that there cannot be more than one party with standing to bring a claim for compensation under ss 98 and 99 in respect of Subject Land. I reject this submission.

39 On 13 September 2017 the Council rejected Greenwells' permit application 716806 lodged 17 July 2017. The application was rejected on the ground that the Subject Land was affected by PAO2. Upon the refusal to grant the permit Greenwells had a right to claim compensation under s 98(1)(a) and s 99(a)(i). The right to claim compensation arose on 13 September 2017 when the Council rejected permit application 716806.

40 Section 108(2) of the Act does not deprive Greenwells of standing to make a claim for compensation. Section 108(2) governs the standing of a party to claim compensation in respect of the sale of land. Section 108(2) has no application to Greenwells' standing because its right to claim compensation was not enlivened by the sale of the Subject Land. Rather, it was enlivened by the Council's refusal on 13 September 2017 to grant Greenwells a permit to develop the 0.85ha of the Subject Land affected by PAO2.

41 The Council's refusal to grant Greenwells a permit on 13 September 2017 enlivened its right to claim compensation under s 99(a)(i) read in conjunction s 98(1)(a). The respondent's construction of s 108(1) requires the word 'first' to be read into the phrase 'at the time the right to claim compensation arose'. The text of s 108(1) does not support the respondent's construction. The word 'first' does not appear in the phrase 'the right to compensation arose'. Contextual considerations do not warrant restricting the eligibility of persons to claim compensation arising from the rejection of a permit application to only those who were owners of the land when a right to compensation first arose. Assuming Adnow did have a right to claim compensation upon the sale of the Subject Land, Greenwells' right to claim compensation under s 99(a)(i) was not affected by Adnow's right to claim compensation.

42 The respondent's construction of s 108(1) is inconsistent with s 102 of the Act. Section 102 provides that in determining compensation to be paid under Part 5, regard must be had to any amount already paid or payable in respect of the land by way of compensation under Part 5 and any other part of the Act or any other Act. The effect of s 102 is that assuming Adnow did have a right to claim compensation upon the sale of the land, this right did not extinguish Greenwells' standing to subsequently claim compensation upon the refusal of its permit application. Rather, the quantum of any compensation payable to Greenwells must take account of any compensation already paid to Adnow. Contrary to the respondent's submission, Greenwells does have standing to claim compensation under Part 5 of the Act.

Is Greenwells' financial loss the natural, direct and reasonable consequence of the Subject Land being reserved for a public purpose?

43 For the purpose of determining liability it is necessary to assume that by reason of being deprived of the ability to undertake residential development of 0.85ha reserved for the duplication of Craigieburn Road, Greenwells has suffered some financial loss. The critical question is as follows: Was the loss suffered by Greenwells as a consequence of the Council's refusal to grant Greenwells' permit application on 13 September 2017 a natural, direct and reasonable consequence of the reservation of 0.85ha of the Subject Land for the duplication of Craigieburn Road?

44 During the course of the proceeding there was considerable debate as to whether the Subject Land was 'blighted' upon the exhibition of proposed amendment C187 on 30 April 2015. The term 'blight' and 'blighted' do not appear anywhere in the Act. Addressing the question of whether the land was blighted by the gazettal of proposed amendment C187 has a tendency to obscure the requisite statutory inquiry under s 98(1). The statutory inquiry is not whether the gazettal of a proposed reservation will result in the Subject Land being blighted. Rather, the statutory inquiry required by s 98(1) is whether, as at 13 September 2017 when Greenwells' permit application was refused, Greenwell had suffered financial loss as the natural, direct and reasonable consequence of the reservation of 0.85ha for the purposes of duplication of Craigieburn Road.[24]

45 Mr Goubran KC, who appeared with Ms Dermody for the respondent, submitted that from the time of the gazettal of the proposed reservation of land on 30 April 2015, the Subject Land was 'blighted'. He submitted that from 30 April 2015 the exhibition of the proposed reservation had the effect that no planning permit could be issued. He submitted that the exhibition of itself created a planning blight.[25] He submitted that as the Subject Land was already blighted when it was purchased by Greenwells in April 2016, any financial loss subsequently suffered by Greenwells as a consequence of it not being able to undertake residential development of the land, was not a natural, direct and reasonable consequence of the reservation.

46 Ms Hannon KC, who appeared with Ms Trewhalla for Greenwells, submitted that, notwithstanding the gazettal of amendment C187 it was not inevitable that Greenwells' application for residential development of the 0.85ha would not receive approval. I accept this submission. Upon VicRoads objecting, the effect of s 61(2) was that the Council had no discretion to approve the permit application. However, under s 77 of the Act a permit applicant has a right to apply to the Victorian Civil and Administrative Tribunal ('Tribunal') for a review of the refusal of the permit. When hearing an application for review the Tribunal is not bound to refuse an application by reference to the obligations of the Council with respect to the original application.[26] The powers conferred on the Tribunal by s 85(1) include the power to grant a permit with or without specified conditions. Section 85 confers an independent discretion upon the Tribunal. The exercise of that discretion is not fettered by s 61(2).[27] I accept Ms Hannon's submission that, notwithstanding the gazettal of amendment C187 and VicRoads' subsequent objection to Greenwells' application for a permit for residential development of the 0.85ha, the Tribunal had the power to hear an application for review of the refusal to grant a permit, and also the power to grant a permit for the residential development of the land.

47 In Roads Corporation v McCarthy & Ors,[28] the Tribunal granted a permit to development and use land on North Road, East Bentleigh. The subject land was located within a business 1 zone under the Glen Eira Planning Scheme. The Roads Corporation was a referral authority in respect of the acquisition of a three metre strip of land running along the front of the subject land. The land was reserved for the future widening of North Road. The Roads Corporation objected to the grant of a permit to use and develop a three storey building comprising ten dwellings and an office with associated car parking. The front portion of the development extended over the three metres of the subject land reserved for a public purpose.[29] VicRoads objected to the grant of a permit which allowed development within the reserved three metre strip.[30] Upon receipt of the objection the council refused the permit on the ground that if the building was set back three metres as required by Roads Corporation, this would result in an unacceptable urban design outcome.[31] Following a review hearing the Tribunal granted a permit. The Tribunal was satisfied that the proposed use and development of the land could proceed without prejudice to the purpose of the reservation, on the basis that the front three metres of the building could be separated from the rest of the structure to accommodate the widening of North Road without compromising the structural integrity of the rest of the building.[32] The permit was granted subject to a condition that Mr McCarthy enter into an agreement with the Roads Corporation and the council under s 173 of the Act, providing that no compensation will be payable by Roads Corporation and requiring VicRoads to be indemnified for any future loss.[33]

48 I accept Ms Hannon's submission that Roads Corporation v McCarthy supports the proposition that the gazettal of a proposed or actual reservation of land for a public purpose does not mandate the conclusion that the land is blighted. I accept that in the present case Greenwells could have sought a review in the Tribunal of the Council's decision of 13 September 2017 to refuse to grant a permit. However, the availability of a right of review of the Council's rejection of permit application 716806 does not result in the statutory inquiry required by s 98(1) being answered in Greenwells' favour. The question for determination is not whether the availability of a right of review of the rejection of permit application 716806 meant that the Subject Land was not blighted by the gazettal of the proposed reservation on 30 April 2015, or alternatively, the gazettal of the actual reservation on 23 February 2017. Rather, the statutory inquiry required by s 98(1) is whether as at 13 September 2017 the loss suffered by Greenwells by reason of it not being able to undertake residential development of the Subject Land was the natural, direct and reasonable consequence of the reservation of the land on 23 February 2017.

49 The three adjectives 'natural, direct and reasonable' in s 98(1) 'connote a very limited connection between the imposition or proposal of the reservation and the financial loss suffered'.[34] Each of the three words 'natural, direct and reasonable', must be given meaning and effect.[35] The word 'natural' means arising according to the usual course of things. The word 'direct' connotes an immediate and substantial causal connection. The word 'reasonable' connotes a reasonable response to the event triggering the right to compensation.[36]

50 On 30 April 2015 Greenwells received notice of the proposed reservation via the exhibition of amendment C187 published in the Government Gazette. On 10 July 2015 Greenwells gave Adnow notice of its intention to exercise the option to purchase the Subject Land. I infer that shortly thereafter, Greenwells instructed TSD to prepare a plan of subdivision which excluded from residential development the 0.85ha reserved for the widening of Craigieburn Road. TSD had completed the plan of subdivision by 30 October 2015. On 21 December 2015 Adnow provided Greenwells with a vendor statement pursuant to s 32 of the Sale of Land Act 1962. The statement annexed a letter from VicRoads dated 10 December 2015 which stated:

VicRoads have completed a planning study for the Craigieburn Road. The subject land is located within the Wollert precinct structure plan. At this stage, the precinct structure plan has not been finalised. The alignment of Craigieburn Road will impact on this property and the precinct structure plan will determine the amount of land required.[37]

51 The letter from VicRoads annexed to the s 32 statement stated 'the alignment of Craigieburn Road will impact on this property'. Greenwells entered the contract to purchase the Subject Land on notice that the reservation of land for the widening of Craigieburn Road would reduce the amount of land available for residential development.

52 On 23 February 2017 amendment C187 applied PAO2 to the Whittlesea Planning Scheme. On 27 February 2017 Greenwells lodged a permit application for the development of the Subject Land which excluded the 0.85ha reserved for the widening of Craigieburn Road. This permit application was granted on 13 April 2017.

53 The word 'natural' in the phrase 'natural, direct and reasonable consequence' means 'arising according to the usual order of things'.[38] Any loss resulting from Greenwells' inability to undertake residential development of the 0.85ha is a natural consequence of the reservation of the Subject Land for a public purpose and the refusal of its 17 July 2017 application because of the reservation. However, any loss suffered by Greenwells was neither a direct or reasonable consequence of the reservation of the land.

54 The word 'direct' has a narrower and stricter meaning than 'natural' and 'reasonable' in the phrase 'natural, direct and reasonable consequence'.[39] The word 'direct' connotes an immediate and substantial causal connection.[40] The direct cause of any loss suffered by Greenwells was its decision to purchase the Subject Land on notice that the alignment of Craigieburn Road would impact on its capacity to undertake residential development of the land reserved for the widening of Craigieburn Road.

55 The notice provided to Greenwells by the s 32 statement is sufficient, of itself, to support a finding that any financial loss suffered by Greenwells was not a direct consequence of the reservation of the land. However, in addition to the notice provided by the s 32 statement, Greenwells had been on notice since 2009 of the likelihood that the amount of land available for residential development would be reduced by the need to set aside land for the widening of Craigieburn Road.

56 In October 2008 when Greenwells acquired the option to purchase the Subject Land it was outside the UGB. In aid of its submission to the state government to move the UGB to permit residential development of the Subject Land, Greenwells submitted a report by PGA which had been commissioned by AVJennings. That report referred to discussions with VicRoads to the effect that land acquisition of 30m was likely to be required on the north side of Craigieburn Road which would affect the development of the land.[41] As part of its successful submission to bring the Subject Land within the UGB, Greenwells expressly acknowledged the likelihood that land acquisition for the widening of Craigieburn Road would affect the development.

57 By early 2013 drafts of the proposed Wollert PSP referred to the proposed widening of Craigieburn Road. Further, Greenwells obtained a letter from VicRoads dated 22 March 2013 which stated that the preparation of the Wollert PSP required consideration of the widening of Craigieburn Road. The exhibition of proposed amendment C187 on 30 April 2015 identified that PAO2 would apply along the northern side of Craigieburn Road. On 10 July 2016 Greenwells exercised the option to purchase the Subject Land. It did so in the knowledge of the likelihood that the land available for residential development would be diminished by PAO2. That notice was provided by the gazettal of proposed amendment C187 on 30 April 2015. Greenwells then instructed TSD to prepare plans of subdivision, dated 30 October 2015, which excluded from residential development the 0.85ha reserved by PAO2 in proposed amendment C187.

58 The only evidence of any steps taken by Greenwells consistent with it seeking to undertake residential development of the 0.85ha reserved by PAO2 was the lodging of permit application 716806 on 17 July 2017. That application was lodged approximately three months after the Council had approved Greenwells' application to undertake residential development of the Subject Land which excluded the 0.85ha reserved by PAO2. Further, the day after Greenwells lodged application 716806 it submitted a further plan of subdivision from TSD which excluded 0.80ha from residential development. This plan of subdivision was in aid of the permit application which had been approved on 13 April 2017.

59 I accept Greenwells' contention that the rejection of permit application 716806 enlivened its right to claim compensation. However, I reject Greenwells' contention that any loss suffered by it as a result of not being unable to undertake residential development of the 0.85ha of the Subject Land reserved by PAO2 was a direct consequence of the reservation of the Subject Land for a public purpose.

60 The finding set out above that any loss suffered by Greenwells was not a direct consequence of the reservation of the land means that Greenwells' claim for compensation must be rejected. An applicant for compensation under s 98(1) must satisfy each of the three criteria, natural, direct and reasonable. It is therefore unnecessary to address the question of whether any loss suffered by Greenwells was a reasonable consequence of the reservation of the land. However, for the sake of completeness I shall do so.

61 The word 'reasonable' in s 98(1) connotes a reasonable response to the event triggering the right to compensation.[42] Greenwells' right to compensation first arose on 13 September 2017 when the Council rejected permit application 716806. When that application was rejected, application 716423 had already been approved on 13 April 2017. Application 716423 did not seek approval to undertake residential development of the land reserved by PAO2. The application was supported by the TSD plan of subdivision dated 30 October 2015 which excluded the land reserved by PAO2. Permit application 716806 was lodged by Greenwells to enliven a right to claim compensation for financial loss flowing from its inability to undertake residential development of the land reserved by PAO2, as a consequence of the approval of application 716423. Any loss flowing from the rejection of permit application 716806 was not a reasonable response to the rejection of that application.

62 Any loss suffered by Greenwells upon the refusal of permit application 716806 was not a direct and reasonable consequence of the Subject Land being reserved for a public purpose. The applicant's claim for compensation must be rejected.

63 I will provide the parties with an opportunity to make submissions in respect of the costs of the proceeding.

[1] CB230, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [24].

[2] CB232, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [38].

[3] CB367, Report of Paroissien Grant & Associates dated February 2009.

[4] CB233, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [42].

[5] CB233, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [43]-[47].

[6] CB394, Letter from VicRoads to City of Whittlesea dated 22 March 2013.

[7] CB419, Wollert Development Contributions Plan dated April 2015.

[8] CB235, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [53].

[9] CB235-6, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [58].

[10] CB679, Letter from VicRoads dated 10 December 2015.

[11] CB701, Report of Mr Mark Murray dated 7 January 2016.

[12] Adnow Pty Ltd (as trustee for the Adnow Pension Fund) v Greenwells Wollert Pty Ltd [2016] VSC 153.

[13] Adnow Pty Ltd (as trustee for the Adnow Pension Fund) v Greenwells Wollert Pty Ltd [2016] VSCA 282.

[14] CB242, Witness Statement of Mr Adrian Cresp dated 11 March 2021, [110].

[15] Plaintiff's Written Submissions filed 27 January 2023, 28 [60].

[16] CB543, Indicative Masterplan of the Subject Land dated 30 October 2015.

[17] CB5901, Planning Permit 716423 dated 13 April 2017.

[18] CB1525, Application for Planning Permit dated 17 July 2017.

[20] Plaintiff's Written Submissions filed 27 January 2023, 27 [57].

[21] [2021] VSCA 19; (2021) 63 VR 175 ('Mason').

[24] Cf Austin Health v Tsikos [2023] VSCA 82, [124]-[126].

[25] Transcript of Proceedings, T 28 L 16-19 (6 March 2023).

[26] Roads Corporation v McCarthy & Ors [2004] VSC 369, [50].

[28] [2004] VSC 369.

[34] Halwood Corporation Ltd (Scheme Administrator Appointed) v Roads Corporation (1995) 89 LGERA 280, 303 ('Halwood'); Mason (n 21) 192 [77]; Brompton Lodge Pty Ltd v Head, Transport for Victoria [2021] VSCA 302, [98].

[35] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, 382 [71].

[36] Halwood (n 34) 301-303; Roads Corporation v Schembri [2009] VSC 369, [25] ('Schembri').

[37] CB679, Letter from VicRoads dated 10 December 2015.

[41] CB367, Report of Paroissien Grant & Associates dated February 2009.