AVON CAPITAL ESTATES (AUSTRALIA) LTD v CITY OF CANNING

4 The Court of Appeal dismissed an application to extend time to appeal from the decision of the Tribunal: City of Canning v Avon Capital Estates (Australia) Ltd [2009] WASCA 120. Wheeler JA (with whose reasons Martin CJ agreed) identified three issues the City sought to agitate:

(1) whether on a proper construction of s 174(1) land is 'injuriously affected' only where the land has been diminished in value and the conditions set out in s 174(1)(a), (b) and (c) are satisfied;

(2) because the land was previously reserved for a public purpose under the preexisting City of Canning TPS 16, it was not injuriously affected by the 'making' of TPS 40;

(3) land is not injuriously affected for the purposes of the Act unless the person seeking compensation for injurious affection was the person who was the owner of the land at the date it was reserved [20].

5 Her Honour noted that the second two issues had not been properly raised before the tribunal, and it was unlikely that the tribunal was purporting to determine either of them. Further, her Honour said:

The respondent appears to accept that, before the arbitrator, it will be open to the appellant to seek to prove facts relevant to those two contentions, and to make them out in order to demonstrate that there should be no, or reduced, compensation payable [24].

See also Buss JA [44]. The matter then went to arbitration before the second respondent.

6 The arbitration agreement was executed in counterparts in March and April 2010.

7 Under the heading 'Background', the agreement recited:

1. The Claimant has made a claim for compensation for injurious affection of land it is the registered proprietor of, located in a subdivision known as the Ranford Estate arising out of a reservation of the land by the Respondent.
2. The Respondent denies that the Land in question has been injuriously affected as alleged by the Claimant and further denies that the Claimant is entitled to compensation arising from the alleged reservation.

1. The Parties are therefore in dispute over the entitlement to compensation (Dispute).

1. The Parties are now proceeding to arbitration of the Dispute and related issues including but not limited to the amount of compensation payable to the Claimant by the Respondent in the event that the Respondent is found liable to pay compensation to the Claimant.

8 In the first of its operative provisions, the parties appointed the arbitrator and the arbitrator accepted the appointment to arbitrate the 'Dispute'.

9 The City emphasised the breadth of the arbitration agreement, arguing that it goes beyond the matters reserved to arbitration under s 176(2) of the Planning and Development Act. In its written submissions, it submitted that the parties by consent put to the arbitrator to determine, and the arbitrator agreed to determine, several issues which go beyond that identified in s 176(2):

1. whether compensation was payable by the City for something done by the Water Corporation's predecessor (ground 1(c));
2. whether the application of principles of statutory interpretation, including the Interpretation Act 1984 (WA), affected the question whether a valid reserve was created in 1984 (ground 3);
3. the City's pleaded case that some of the land was vested in the relevant minister or the Water Corporation (ground 6);
4. whether any reduced value of the reserved land was caused otherwise than by matters 'due to or arising from the reservation of the land' (ground 7);
5. section 175 of the Planning and Development Act, and whether restrictions imposed by virtue of the reservation were also contained in another Act (ground 8);
6. whether the limitation period under cl 2.7.7 of TPS 40 had expired before the commencement of the Planning and Development Act (ground 9).

10 It is, in my opinion, open to question whether the four background clauses and first operative clause of the arbitration agreement have the effect contended by the City. Because of my findings with regard to the particular grounds of appeal it is unnecessary to say anything further on this question.

11 The City cannot, however, deny that the land was injuriously affected by TPS 40. That matter was determined against it, for the purposes of pt 11 of the Planning and Development Act, by the decision of the State Administrative Tribunal. The tribunal is not a court but an administrative tribunal, even when constituted by a judicial member: Mustac v Medical Board of Western Australia [2007] WASCA 128 [48]; Hartwig v Builders' Registration Board of Western Australia [2009] WASCA 138 [26]. But it has jurisdiction to finally decide the question under s 176(1), subject only to an appeal to the Supreme Court, by leave, and confined to an appeal on a question of law. An estoppel may arise from the decision of a tribunal given power to finally determine the questions raised before it: The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59; (1973) 130 CLR 353, 453. It is not necessary to rely on an estoppel. For the purposes of the statutory scheme in pt 11, the issue has been decided by the body with power to decide it.

12 The arbitrator identified the injurious affection in question as the reservation of the land under TPS 40 for the public purpose of preservation of subterranean water mains that run the length of the land corridor.

13 He then turned to the circumstances of Avon's claim. His findings of fact must be accepted.

14 There is a strip of land running through the Ranford Estate from north to south in which the Serpentine Trunk Main has been laid to bring water under pressure from Serpentine Dam to Perth (the STM land or corridor). The main consists of two steel pipes, one laid in 1959 and the other in about 1965. The diameter of the larger pipe is 1.37 m; the diameter of the smaller pipe is 1.22 m.

15 The arbitrator did not, in his reasons, state the boundaries of the STM land. In an earlier decision in the State Administrative Tribunal, Avon Capital Estates Australia Ltd and City of Canning [2006] WASAT 318, Senior Member Parry (as his Honour then was) described it:

The Ranford Estate is essentially bisected by a 30 metre wide strip of land which runs north to south from a point close to the top of the diamond to a point close to the bottom. The western 10 metres of this strip comprises public open space which was landscaped and dedicated to public ownership by Avon in accordance with various subdivision approvals. This 10 metre wide section is reserved for recreation under TPS 40 and is traversed along its length by a gas main owned by Alinta Gas.

With the exception of five diagonal strips, which are owned by the Water Corporation, the eastern 20 metre wide section of the 30 metre wide strip bisecting the Ranford Estate is owned by Avon. This 20 metre wide section is reserved for public purposes under TPS 40 and is referred to in these reasons as the reserved land. The reserved land is traversed by two water supply trunk pressure mains, with diameters of 1370 millimetres and 1200 millimetres, which are located centrally along the length of the reserved land at a depth of between 0.5 metre and 2.0 metres below ground. The mains, which are known as the Serpentine Trunk Mains, were installed by a statutory predecessor of the Water Corporation in approximately 1959 and 1965. The mains are described by the Water Corporation as being of strategic importance in that they supply water to the Perth metropolitan region as a whole [5] [6].

16 When the STM pipes were laid, the constructing authority did not find it necessary to acquire any easement or other proprietary right in the land because of the wide statutory powers available to enable the laying and subsequent maintenance of the pipes, although an intention to resume the corridor was announced.

17 In 1968, Derek Crouch, the stepfatherinlaw of a director of Avon, purchased a substantial area of rural land within the boundaries of what is now the City of Canning. The STM pipes then ran through the land. This land was later developed as the Ranford Estate.

18 On 16 October 1973, the Town of Canning Town Planning Scheme No 16 (TPS 16) was gazetted. It specified a rural zoning for the Ranford Estate.

19 On 26 February 1982, a contract was executed by which Avon acquired the land from Mr Crouch and became 'entitled to possession of the property and to the receipt of the rents and profits therefrom as and from (the date of the contract)'. This entitlement was subject to any reservations on the certificate of title and any rights subsisting over the land or any part thereof. The transfer of the land to Avon was registered in 1986.

20 The Water Corporation came to assert that it had title in respect of the land containing the STM pipes. It asserted this title as far back as the early 1980s, and its assertion was then assumed to be correct by both Avon and by the City. The City did not assess Avon to rates for the STM corridor land, nor did Avon receive land tax assessments for that land, although its title was registered.

21 Avon applied to develop its land. Both Avon and the City treated the STM land as the Water Corporation's and not Avon's when considering the residential subdivision of the balance of the area owned by Avon, and which later became the Ranford Estate. On the basis that the STM land was not Avon's land, and not part of the subdivision, a special arrangement was made for it to be landscaped at the expense of Avon and for Avon to have a 50% credit toward public open space. For the purposes of the subdivision a partial cancellation of the certificate of title was required in March 1989, but (as the arbitrator said) 'the error was reflected even in the Office of Titles, which cancelled also Avon's title to the STM land'. Not until 9 August 1989 was this corrected by the reinstatement of entries showing Avon's title. Avon was not notified that this had occurred.

22 The development of the Ranford Estate proceeded from 1991 with the land subdivided into 1,400 residential lots, public open space and drainage areas and a primary school site.

23 On 9 November 1984, TPS 16, amendment 292 came into effect; and on 23 November 1984, TPS 31 came into effect.

24 On 22 November 1991, TPS 16 was further amended (amendment 597).

25 On 18 February 1994, TPS 40 was gazetted. TPS 40 revoked TPS 16 and all amendments to it: cl 1.6. As a result, TPS 16 was not in force when s 68 of the Planning and Development Act came into operation, and it is not a planning scheme as defined in that Act. It was by virtue of the reservation of the STM land as Local Authority Public Purpose Reserve in TPS 40, that Chaney J in State Administrative Tribunal held the relevant land was injuriously affected.

26 In October 2001, Mr Adam Brown, a town planner and project manager with Avon, requested information from the Department of Land Administration about part of the STM land. He then learned that Avon held title. Avon began to consider what course was appropriate to turn the land to good account.

27 On 20 December 2002, Avon applied regarding the proposed erection of group dwellings on part of two lots within the STM land. The first applications were approved by the City but subsequently refused by the Western Australian Planning Commission.

28 On 9 July 2004, Avon proposed a second group of applications for residential buildings on each of five lots. The City approved the applications. Heenan J, on the Water Corporation's application, quashed the approvals: see Water Corporation v City of Canning [2005] WASC 109.

29 A third application came before the State Administrative Tribunal in 2006.

30 On 17 July 2006, the applications in the fourth group were made, and it is those applications which led to the present proceedings. On 30 January 2007, the City approved the applications subject to the imposition of conditions. Avon then alleged the conditions were unacceptable within the meaning of s 177(1)(b)(ii) of the Planning and Development Act and proceedings ensued.

31 In the arbitration, the City argued that the applications were not made in good faith. The arbitrator found that they were and, further, that the conditions imposed by the City were unacceptable to Avon within the meaning of s 177(1)(b)(ii). Neither of those findings is now challenged.

32 The arbitrator next dealt with the City's contention that the STM land had been reserved in earlier planning schemes and with the arguments (including limitation arguments) that flowed from that contention. The arbitrator rejected those arguments. First, he referred to his findings that planning schemes preceding TPS 40 had not reserved the land. Second, he held that the question of liability to compensate, as distinct from the assessment of compensation, was for the State Administrative Tribunal. The tribunal had 'attributed the reserved state of the land squarely to TPS 40, with a consequential right to compensation under s 174 of the [Planning and Development Act]'. The arbitrator also referred to remarks of Martin CJ, on the application for leave to appeal from the decision of the tribunal, to the effect that the current reservation can be the cause of diminution in the value of the land and the relevant loss even if the land has previously been reserved. Counsel for Avon had relied upon those remarks: it is not clear whether the arbitrator also relied on them.

33 In the arbitration, the City relied upon several earlier planning schemes or amendments as reserving the land: in chronological order TPS 16; amendment 292 to TPS 16; TPS 31; and amendment 597 to TPS 16. On the application for leave to appeal, the City relies only on amendment 292.

34 With regard to the City's reliance on amendment 292, the arbitrator accepted submissions made on behalf of Avon. There are two particular matters on which he relied. First, that amendment 292 is an amendment to TPS 16, and its interpretation must take account of cl 7 of TPS 16. Second, the significance of colours used in the scheme maps to designate regional and local authority reservations.

Regional Reservations: The lands shown as 'Regional Reservations' on the Scheme Maps are lands reserved by the Metropolitan Region Authority pursuant to the Metropolitan Region Scheme and are shown on the Scheme Maps in order to comply with the Metropolitan Region Town Planning Act, 1959, as amended. The said lands are not reserved by this Scheme.

36 The STM land is coloured yellow on the maps relied upon by the City: the legend to the scheme map shows that land coloured yellow signifies a regional reservation and not a local authority reservation. That is, in showing the STM land in yellow, TPS 16 was not purporting to reserve the land but rather to show an existing regional reservation.

37 Next, the arbitrator dealt with ownership. He held that by reason of the contract of 26 February 1982, Avon became an owner within the meaning of TPS 16 and TPS 40. TPS 16, in cl 6, defined 'owner' to include

every person who, jointly or separately, whether at law or in equity

(a) is entitled to the land for any estate in fee simple in possession; or

...

(d) is entitled to receive or is in receipt of, or, if the lands were let to a tenant, would be entitled to receive, the rents and profits thereof, whether as a beneficial owner, trustee, mortgagee in possession or otherwise.

38 Specifically, the arbitrator referred to Avon's entitlement to rents and profits from the date of the contract, even though the transfer was delayed for four years.

39 There is no dispute that Avon was the registered proprietor of the land at the time that the City granted approval to develop pursuant to TPS 40, subject to conditions that Avon found to be unacceptable.

40 The arbitrator also dealt briefly with the City's reliance on statutory provisions under which the Water Corporation had 'some kind of anomalous statutory title'. He held that the provisions under which the Water Corporation had property in the trunk mains did not confer title to the space from which they had displaced the soil.

The arbitrator identified, as the real question, the effect on the value of the STM land of the pipes laid in the ground [32]. This required consideration of the application of what is generally called the Pointe Gourde principle (from Pointe Gourde Quarrying & Transport Co Ltd v SubIntendent of Crown Lands (Trinidad) [1947] AC 565, 572). In Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 (Mount Lawley [2004]) the reserved land was:

to be valued without regard to any increase or decrease in its value which is attributable wholly or in part to the reservation ... the reservation cannot be isolated from the circumstances in which it was created. It is necessary to identify the entirety of the process which led to the reservation, and then to exclude the effect of that process in the valuation exercise [66].

[I]n the case before me, the City's action was neither anterior to, nor disconnected from, the actions of the Water Corporation. Indeed, the Corporation had put itself forward persistently as concerned that the land should be devoted to the purposes of the Serpentine Trunk Main. The anterior action was that of the Corporation, but it was adopted by the City when the reservation was imposed.

41 The arbitrator found, as a fact, that the preservation of the trunk main was 'the very purpose of the reservation. It was not merely a purpose, it was the operative purpose which produced the reservation' (original emphasis) [42]. On that finding, and on his analysis of the authorities, he concluded at [43] [44]:

[W]hen s 179(2)(c) of the PD Act requires me to assess the value of the STM land (at the date of the grant of approval on unacceptable conditions, ie at 30 January 2007) as not affected by the existence of the reservation, I am required to do so on the hypothetical basis that the value was also not affected by the trunk mains, that is, effectively, that they did not exist in the land.

I should add that I have not overlooked the point raised by counsel for the City who suggested that if, in fact, the trunk mains did not exist, the area would be left without water. But I consider this is to mix inadmissibly reality and a fiction imposed by the law only to deal with a particular problem.

42 The application for leave was heard and determined separately, following Gordian Runoff Limited v Westport Insurance Corporation [2010] NSWCA 57; (2010) 267 ALR 74 [102] [113] where it was held that an application for leave should be dealt with and finalised before the hearing of the appeal save in exceptional cases.

43 The City seeks leave to appeal from the decision of the arbitrator on eleven grounds, although there are multiple matters raised within many of the grounds.

44 Both parties submitted that the court should separately consider the grant or refusal of leave in relation to each of the grounds of the appeal, and I am satisfied that is the correct course: Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127.

45 The City further submitted, although without abandoning any of its grounds, that the grounds could be considered in two groups; unless at least one of grounds 1, 8, 2, 6 and 7 justified a grant of leave, it would be unnecessary to deal with the others. Should I be satisfied, however, that leave should be granted in relation to any of those grounds, I would need also to consider the grant of leave in relation to grounds 3, 4, 9, and 10. Counsel described grounds 5 and 11 as 'having a relation' to the other substantive grounds.

46 In support of its application for leave, the City filed a five volume application book including nearly 400 pages of written and oral submissions made to the arbitrator. In addition, the court was referred to comments made in argument in the Court of Appeal on the application for leave to appeal from the decision of the SAT, and in the application for costs.

47 The content of the grounds raised, and the volume of material the City relies on outside the award itself, threatens to turn this application and any appeal into a general rehearing.

48 There is a limited appeal to this court under s 38 of the Commercial Arbitration Act 1985 (WA). The role of the court is circumscribed. An appeal lies 'on any question of law arising out of an award': s 38(2). It is further limited by the requirement in s 38(4), that an appeal may only be brought by the consent of all parties, or by leave of the court. Avon does not consent to the applicant bringing an appeal.

49 By s 38(5):

The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that

(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and

(b) there is

(i) a manifest error of law on the face of the award; or

(ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.

50 None of the City's grounds specifies on which limb of s 38(5)(b) it relies. In its submissions, the City relies upon both alternatives for each ground.

51 The effect of a grant of leave is to permit an appeal to the court under s 38(2), confined to a question of law arising out of the award.

52 In relation to the similarly expressed right of appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) and s 105 of the State Administrative Tribunal Act 2004 (WA), it is now well established in that the existence of a question of law is 'not merely a qualifying condition to ground the appeal, but also the subject matter of the appeal itself': TNT Skypak International (Australia) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119; (1988) 19 ATR 1067, 1070; Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232; (2003) 38 AAR 55 [17] [18]; Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522; Price Street Professional Centre Pty Ltd v Federal Commissioner of Taxation [2007] FCAFC 154; (2007) 67 ATR 544 [35]; Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361. Despite the different statutory context, the intended limitation in s 38(5) of the Commercial Arbitration Act has the same purpose, and in my opinion the right of appeal is similarly confined. And see Westport Insurance Corporation v Gordian Runoff Limited [2011] HCA 37; (2011) 244 CLR 239 [27].

53 The distinction between questions of law and questions of fact depends on the context in which that distinction is being made. There is no satisfactory test of universal application: Collector of Customs v Agfa Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389, 394 Where an appeal is confined to a question of law, the five propositions stated in Collector of Customs v Pozzolanic [1993] FCA 322; (1993) 43 FCR 280, 287 are the most useful guide.

54 In this case, the fifth proposition is of particular relevance: whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law: see also Hayes v Federal Commissioner of Taxation [1956] HCA 21; (1956) 96 CLR 47, 51 52; Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1, 7 8; Ergon Energy Corp Ltd v Commissioner of Taxation [2006] FCAFC 125; (2006) 153 FCR 551 [47]. That proposition has itself been refined. Where the facts found are capable of falling within or without the description used in the statute, the decision which side of the line they fall on will generally involve the weight given to particular factors, and matters of degree, and will be a decision of fact and not law: Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521; (1999) 59 FCR 6, 16. Whether the facts reasonably admit of more than one conclusion as to whether or not they fall within the language of the statute is a question of law: Ergon Energy [48].

55 Next, the question of law must be one 'the determination of which could substantially affect the rights of one or more of the parties'. Questions of law, however important, should not go forward for decision if, as between the immediate parties, the matter is largely academic. It must be a matter of practical importance: Ipswich Borough Council v Fisons PLC [1990] 1 Ch 709, 721; Pioneer Shipping Ltd v BTP Tioxide Ltd [1980] 1 QB 547, 564; Gold City Developments Pty Ltd v Portpride Pty Ltd [2010] WASC 148 [29].

56 The error of law must be manifest on the face of the award, or there must be strong evidence that the arbitrator made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.

57 After I heard argument in this matter, the High Court handed down its decision in Westport Insurance (delivered 5 October 2011). The parties provided further submissions on the implications of this decision in November 2011.

58 In Westport Insurance, French CJ, Gummow, Crennan, and Bell JJ, in a joint judgment, said of the requirement of manifest error in s 38(5)(b)(i), that it required that 'the existence of error be manifest on the face of the award, including the reasons given by the arbitrator, in the sense of apparent to that understanding by the reader of the award' [42]. They expressly disapproved of earlier authority 'requiring the error of law itself to have a particular quality or character so as to include within par (b)(i) facile errors and to exclude those of complexity' [45].

59 The majority did not expressly comment on the authorities regarding the need for courts to exercise restraint in intervening in matters which have gone before an arbitrator. But the quality or character of the error is to be considered at the stage of the exercise of the court's discretion whether to grant leave, and is not part of the question whether an error of law is manifest on the face of the award: Westport Insurance [47].

60 The requirement that the error be 'on the face of the award' cannot be ignored. The City refers to several documents, in particular its submissions to the arbitrator. I can have regard to those documents only to the extent they are incorporated in the award: Champsey Bhara & Co v Jivraj Balloo Spinning & Weaving Co Ltd [1923] AC 480, 487; Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253.

61 In Gianfriddo v Garra Constructions Pty Ltd [1971] VicRp 34; [1971] VR 289, 290 291, Smith J summarised the cases in relation to the implied incorporation of documents into an award and stated five principles. While his Honour's comments remain relevant, many of the cases he refers to precede the obligation now found in s 29 for an arbitrator to give reasons. The present position was stated by Beech J in Zurich Bay Holdings Pty Ltd v Iluka Midwest Ltd [2009] WASC 237 [14], and especially at [16] where his Honour said:

As Pullin JA explained in New Generation v WAPC, the change in the law effected by the Commercial Arbitration Act requiring an arbitrator to give reasons for an award affects the approach to determining the intention of the arbitrator. Under the previous regime there was a presumption against an intention to incorporate reasons in the award. That no longer holds. A number of factors will influence whether a document was intended by the arbitrator to have been incorporated in the award. If the arbitrator's reasons cannot be understood without reading the document the reasons will be regarded as incorporating the document: New Generation v WAPC [49]; Alvaro v Temple [2009] WASC 205 [37]. A mere recital or narrative statement referring to a document will be insufficient to incorporate the document into the award: Ukrainian Association of Western Australia in Perth (Inc) v Squire Constructions Pty Ltd [[2004] WASC 4 [25]; Gianfriddo v Garra Constructions Pty Ltd [1971] VicRp 34; [1971] VR 289 290 291; Anaconda Operations Pty Ltd v Fluor Pty Ltd [2003] VSC 275 [44] [49].

62 The second basis under s 38(5) for the grant of leave has two elements. The error need not be manifest on the face of the award but may be demonstrable by evidence. The requirement that there be 'strong evidence' suggests that there must be, at the stage of the leave application, a strong prima facie case of error: Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203, 226.

63 There is also a requirement that the determination of the question may add or be likely to add substantially to the certainty of commercial law. Those are general words and should not be restricted. But the application of settled principle to the facts of a particular case may be a matter which will concern only the parties, and any issue which might be determined in such an appeal would not add to, or be likely to add to, the certainty of commercial law: New Generation Enterprises Pty Ltd v Western Australian Planning Commission [2007] WASCA 89 [46].

64 The combined requirements of s 38(5)(a) and (b) have been described as a threshold to the exercise of the court's discretion to grant leave. Even if those requirements are satisfied, the City must still show that the discretion should be exercised in its favour: see Westport Insurance [29]; Promenade Investments (225 226); Qantas Airways Ltd v Joseland & Gilling (1986) 6 NSWLR 327, 333; and see D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109 [17].

65 I will follow the lead offered by senior counsel for the City and consider the grounds in the order set out in his oral submissions, except that grounds 1 and 2 need to be considered together.

66 In dealing with each ground, I have had regard to the oral submissions and the written submissions filed. In relation to some grounds, I have had difficulty in reconciling the City's written submissions with the ground stated.

(a) by disregarding the fact of existing STM pipes in his calculation of 'the value of the land as not so affected' for the purposes of s 179(1)(b) Planning and Development Act 2005, when he should have held that that value is to be calculated assuming the STM pipes were present;

(b) by awarding compensation in respect of the STM pipes when, for the purposes of s 173(1) Planning and Development Act, he should have held that a claim lies in respect of only the reservation of the land; and

(c) by awarding compensation in respect of something done by another entity for another purpose, namely the Minister with responsibility for the Metropolitan Water Supply Sewerage and Draining Act for the purpose of supplying water.

1. In the alternative to Ground 1(a), if the 'the value of the land as not so affected' properly disregards the STM pipes, then the Arbitrator erred in law by failing to also disregard water supply to the Ranford Estate.

67 In oral submissions, senior counsel for the City identified the construction and application of s 179 of the Planning and Development Act as at the heart of the first and most important of the claims of manifest error. That issue of construction underlies grounds 1 and 2.

68 Section 179 provides:

(1) Subject to this Division, the compensation payable for injurious affection due to or arising out of the land being reserved under a planning scheme, where no part of the land is purchased or acquired by the responsible authority, is not to exceed the difference between

(a) the value of the land as so affected by the existence of such reservation; and

(b) the value of the land as not so affected.

69 The City had argued the matter before the arbitrator on the basis that s 179 was not to be construed by reference to the Pointe Gourde principle; alternatively, Pointe Gourde did not apply to the Serpentine Trunk Main in this case; alternatively, if the principle applied, the laying of the STM pipes could not be regarded as steps in the process of creating the reservation.

70 The arbitrator applied the Pointe Gourde principle to the reservation of the STM land in TPS 40 by valuing the land on the hypothetical basis that the trunk mains did not exist in the land.

71 The Pointe Gourde principle has been explained and applied in many subsequent decisions: in particular, Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426, 434; The Crown v Murphy [1990] HCA 42; (1990) 64 ALJR 593 [8] [9]; Housing Commission (NSW) v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259; Mount Lawley [2004] and Mount Lawley Pty Ltd v Western Australian Planning Commission [2007] WASCA 226; (2007) 34 WAR 499 (Mount Lawley [2007]).

72 The correct approach where this issue arises was identified by the Court of Appeal in Mount Lawley [2007]. First, it is the statutory embodiment of the principle to which the court must have regard [15]. This point was also made by Beech J in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [206] [207], when considering s 241 of the Land Administration Act 1997 (WA) where his Honour said:

Recent cases have emphasised that a question about how a section like s 241(2) applies to a case must be approached as a matter of construction of the particular statutory provision, in the context of the statute as a whole. In construing statutes, the court must give effect to the purpose of the legislation. The primary guide to understanding the purpose of legislation is the natural and ordinary meaning of the words of the legislation. Courts should not 'slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation': Walker HCA [31]. It is the terms of the relevant legislation that are determinative. It should not be assumed that legislation reproduces or attempts to reproduce an understanding of 'principles' stated in other cases such as Pointe Gourde: Walker HCA [47]. See also to the same effect Mount Lawley (2007) [15]; Trandos v WAPC [70].

Nevertheless, as the Court of Appeal observed in Mount Lawley (2007) [15], the cases concerning the Pointe Gourde principle and various statutory emanations of it are helpful. Of course, the various different statutory contexts of the cases must be kept in mind.

73 The language of s 179 of the Planning and Development Act differs from that considered in Mount Lawley [2007], where the court was required to determine the value of the land 'without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme (the Metropolitan Region Town Planning Scheme Act 1959 (WA) s 36(2a) and s 36(2b))'. It differs also from the Land Administration Act 1997 (WA) s 241, considered by Beech J in McKay, which required regard to the value of the land 'discounting any increase or decrease in value attributable to the proposed public work'. There is, at present, no authority on the application of s 179.

74 The next step identified by the court in Mount Lawley [2007] was (in the statutory context of that case) to identify 'the scheme' by reference to the definition in the Metropolitan Region Town Planning Scheme Act. The Planning and Development Act directs the body assessing compensation to the effect of the existence of the reservation of the land under the local scheme.

75 The identification of the reservation was, for the purposes of this arbitration, determined by the decision of the State Administrative Tribunal that the land was injuriously affected by reason of it being reserved for a public purpose under the TPS 40. Under s 176(2), the arbitration was to determine any question as to the amount, if any, to be paid as compensation for the injurious affection by reason of that reservation.

76 The final step identified by the court in Mount Lawley [2007] reflected the particular statutory directive under the Metropolitan Region Town Planning Scheme Act to disregard any increase or decrease in the value of the land attributable wholly or in part to the scheme. This required the body assessing compensation to identify those increases or decreases which were to be disregarded, and might involve identifying 'steps' in the scheme.

77 Section 179 poses a different question. In the circumstances of this case, it required the arbitrator to assess the value of the land both as affected and as not affected by the existence of the reservation under the scheme. It was common ground between the parties that this required consideration of whether there is a connection, and the kind of connection, between the reservation and the presence of the Serpentine Trunk Main. But whether there is a connection is only one factor in the question posed by the Act.

78 The arbitrator assessed the value of the land as if it did not contain the STM pipes, because the action of the City in reserving the land was not disconnected from the actions of the Water Corporation. The City had adopted the anterior action of the Water Corporation in laying the mains by reserving the land for the purpose of preserving the STM pipes. Accordingly, he held that the value of the land as not affected by the reservation, having regard to the entirety of the process, was its value as if those pipes did not run beneath the land. In so doing, he removed from consideration the statutory context within which, regardless of the reservation, a person could not construct any structure upon a Water Corporation main or reticulation pipe.

79 The correct construction and application of s 179, in the context of the various authorities explaining the proper measure of compensation in resumption cases, is a matter of considerable importance. In my opinion, there is a sufficiently arguable case that the arbitrator has erred in the manner asserted for a grant of leave in relation to ground 1.

80 Senior counsel for the City formulated the following question of law arising out of ground 1:

Does section 179(1) of the Planning and Development Act 2005 on its correct interpretation require the prior existence of the Serpentine Trunk Mains to be disregarded, in assessing the compensation for injurious affection due to or arising out of the land in question being reserved, given that the purpose of the reserve was to preserve the Serpentine Trunk Mains?

81 The last phrase in that formulation comes from the arbitrator's finding of fact, upon which Avon relies, that the purpose of the reserve was to preserve the water main. The question so formulated involves the interpretation of s 179, and the application of that section, properly construed, to the facts as fully found. It is a question of law.

82 The question of law so formulated, however, is only part of the issues the City seeks to raise in this ground. While senior counsel confined his oral argument, the written submissions filed by the City are extensive. In those submissions, the City asserted a series of six propositions relating to ground 1, the first five of which were apparently directed to ground 1(a):

(1) As a matter of language, s 179(1)(b) does not permit the STM pipes to be disregarded.

(2) The arbitrator failed to properly apply the High Court's San Sebastian distinction between two categories of prior event ...

(3) The arbitrator failed to apply the binding authority of Mount Lawley;

(4) The arbitrator confused what was the relevant prior event for the purpose of the jurisprudence, focusing ultimately on water authorities' comments rather than on the STM pipes themselves;

(5) The arbitrator treated identity of purpose (between the prior event and the subsequent reservation) as a sufficient basis to disregard the prior event.

83 I think it is inadvisable to express a view beyond that which is necessary to dispose of the application for leave. I would not wish to be understood as agreeing with each of the propositions outlined in the City's written submissions.

84 I wish to say something further about ground 1(c):

The Arbitrator erred in law by awarding compensation in respect of something done by another entity for another purpose, namely the Minister with responsibility for the Metropolitan Water Supply Sewerage and Draining Act for the purpose of supplying water.

85 Proposition 6 in the City's written submissions is that the arbitrator 'impermissibly awarded compensation, payable by the City, for acts of another entity'. This proposition was expanded in written submissions to the effect that a 'step' will not be disregarded unless it is attributable to the same public authority that is resuming the land, citing Walker Corporation [54].

86 In oral submissions, ground 1(c) was argued as part of the general argument directed to s 179 and the Pointe Gourde principle (ts 20). Counsel stated that he was not putting an argument that unless the same legal person was involved there cannot be a Pointe Gourde connection. Counsel submitted, in effect, that a difference in legal personality is a strong indication against the application of the Pointe Gourde principle, and that the arbitrator had ignored this factor in his reasoning. That may be an argument that can be put in support of ground 1(a). The proposition set out in par (c) is, as the City apparently accepted in argument on the application for leave, not supportable. Leave should not be granted with regard to that part of ground 1.

87 I do not ignore that, in its written submissions, the City argued that the fact that the STM pipes were installed, maintained, and owned by an agency other than the City was a stand-alone basis for holding that the City was not liable under s 173(1) of the Planning and Development Act. This argument is quite independent of s 179. The City submitted that the argument was not considered by the arbitrator. This submission, however, falls outside the terms of ground 1(c), as it was argued before me.

88 I am satisfied that grounds 1(a) and (b) are discrete, and found an appeal on a question of law. Further, the alleged error is manifest on the face of the award in the sense explained in Westport Insurance.

89 If the arbitrator has erred in the manner alleged, that error substantially affects the rights of the parties. I am satisfied that the discretion should be exercised in favour of the grant of leave, but confined to pars (a) and (b).

In the alternative to Ground 1(a), if the 'the value of the land as not so affected' properly disregards the STM pipes, then the Arbitrator erred in law by failing to also disregard water supply to the Ranford Estate.

90 Because of the way in which the point had been argued before the arbitrator, he expressed his conclusion with regard to s 179(2)(c) by reference to the 'hypothetical basis' that the STM pipes did not exist in the land [43]. The arbitrator then referred to an argument put on behalf of the City that if in fact the trunk mains did not exist, the area would be left without water. He dismissed this argument as an attempt to 'mix inadmissibly reality and a fiction imposed by the law only to deal with a particular problem' [44]. In doing so, he likened the Pointe Gourde principle to a deeming provision.

91 The City argues that it is a manifest error to disregard the reduction in value caused by the STM pipes while failing to disregard the increase in value attributable to the water supply. The City submits that the Ranford Estate would not have become a residential estate if not for the STM pipes. It further submits that the arbitrator did not find as a fact that water would actually be available were the STM pipes not present, but assumed another hypothetical source of water. I assume this refers to the arbitrator's comment (at [44]) that water could have been provided otherwise than in close connection with the reservation.

92 In my opinion, on a fair reading of his reasons, the arbitrator did accept that the Ranford Estate would have access to water although he made no specific finding about the source or the cost. The ground of appeal does not, however, challenge the arbitrator's findings of fact, but how s 179 should be applied.

93 It is sufficiently arguable that the arbitrator has applied the Pointe Gourde principle inconsistently in his application of s 179. I would grant leave on this ground. The alleged error is manifest on the face of the award. Should ground 1 succeed, ground 2 would fall away but that, in my opinion, is not a basis to deny leave. Were ground 2 to succeed, it could substantially affect the rights of the parties.

The Arbitrator erred in law by failing to deal with the pleaded issue of whether, for the purposes of s 175(a) Planning and Development Act, the restrictions on use of the land containing the STM pipes within the planning scheme (TPS 40) were also contained in another Act in operation in the area, namely s 50A of the Metropolitan Water Supply Sewerage and Drainage Act 1909; and by failing to find that no compensation was payable to Avon by the City.

96 The primary point in ground 8 is that the arbitrator did not deal with the effect of s 175(a), when it was pleaded. Before Westport Insurance the courts had held that it is the duty of an arbitrator to consider and deal with all matters the subject of the reference; the arbitrator's reasoning must address the central contentions advanced by the parties, and deal with every 'submission worthy of serious consideration': Alvaro v Temple [2009] WASC 205 [46]; Villani v Delstrat Pty Ltd [2002] WASC 112 [40]; Peter Schwarz (Overseas) Pty Ltd v Morton [2003] VSC 144 [34]. Failure to do so is an error of law.

97 In Westport Insurance the court considered the obligation on an arbitrator under s 29 of the Commercial Arbitration Act 1984 (NSW) to give reasons. The majority accepted that 'no wholly satisfactory formula can be found to flesh out the requirement in s 29(1)(c)', and what is required by way of reasons in a given case will depend upon the circumstances of that case: [53], [54] (French J, Gummow, Crennan & Bell JJ), and [170] (Kiefel J). There is nothing in the reasons of the High Court to cause me to doubt the continued relevance of the decisions referred to in the previous paragraph.

98 Section 175(a) provides that 'no compensation is payable in respect of the injurious affection if or so far as the relevant provisions of the planning scheme are also contained in any Act'.

99 Ground 8 requires consideration of s 50A of the Metropolitan Water Supply, Sewerage, and Drainage Act 1909 (WA) which provides:

(1) A person shall not, without the prior consent of the Corporation, erect, construct or place any building, wall, fence or obstruction in, upon, under or within the prescribed proximity to a main or reticulation pipe of the Corporation used for the purposes of water supply and then only upon and subject to such terms and conditions as the Corporation thinks fit to impose for the protection of the pipe from interference or damage.

Penalty: $2 000 and in the case of a continuing offence, a further penalty not exceeding $200 for each day the offence continues after the Corporation serves notice of the offence on the offender.

(2) The Corporation may demolish and remove any building, wall, fence or obstruction which is erected, constructed or placed in contravention of subsection (1) and which interferes with or injuriously affects a pipe in the supply of water, and perform any works necessary for restoring or reinstating the pipe.

(3) In addition to any penalty that may be imposed on an offender under subsection (1) the offender shall also pay to the Corporation the expense incurred by it in removing any building, wall, fence or obstruction or in re-opening, restoring, repairing or reinstating a pipe pursuant to subsection (2).

100 The City did not refer to the precise terms of TPS 40 that it says are also contained in s 50A, although in oral submissions counsel referred the court to the page of the application book containing TPS 40, cl 2.1.4 and cl 2.1.5.

101 Under cl 2.1.4 to cl 2.1.7 of TPS 40, a Local Authority Reservation may be used for the purpose for which the land is reserved under the scheme, but not for any other purpose; a person may not commence or carry out any development or construct, extend or alter any building or structure without the approval of the City. The City may either refuse its approval, or grant its approval without conditions or with such conditions as it thinks fit.

102 Thus, the Metropolitan Water Supply, Sewerage, and Drainage Act by s 50A, prohibits construction in, upon, under or within the prescribed proximity to a main or reticulation pipe. TPS 40 prohibits construction on the reserved land. Both allow construction with approval. The body which may grant approval differs in each case. In oral submissions the City relied on the very general proposition that there is a provision in the planning scheme to the same effect as that which is contained in s 50A, and that under s 175 there can be no compensation for a reserve which replicates an extant restriction.

103 The City's arguments before the arbitrator were many and varied. He dealt with many of them, some in more detail than others, but may have felt that he faced the second labour of Hercules. His reasons do not reveal that he considered whether the relevant provisions (or restrictions) of TPS 40 were also contained in s 50A of the Metropolitan Water Supply Sewerage and Drainage Act so as to engage s 175 of the Planning and Development Act. But the substance of ground 8 and the argument put orally before me, does not appear to be the point that was pleaded before the arbitrator.

104 In its written submissions on the application for leave, the City refers to par 40A of its reamended statement of defence as the relevant plea:

[The] Claimant is not entitled to compensation in respect of the STM pipes because the installation of the STM pipes is also contained in another Act and in Orders having the force of an Act in operation in the same area of land for the purposes of s 175 of the PD Act. (emphasis added)

105 The City also relies on par 39 of its written opening, where the City said that 'the fact of the STM pipes is provided for in the various water statutes' (emphasis added).

106 Neither the plea nor the written opening expresses the content of s 175(a) with any accuracy. Neither refers to the restrictions on the use of the land, but rather to the installation of or the fact of the pipes.

107 The City had also pleaded, in par 37 of its defence, that the limitation on development over and near the STM pipes was a result of specified water supply Acts, including s 50A. This plea, however, was in a part of the defence headed 'Disregard of STMs pipes not permissible under s 179(1)(b) PD Act'. It did not refer to s 175.

108 Avon's pleaded response to both par 37 and par 40A was, in effect, that the City was prevented from asserting those matters because the State Administrative Tribunal had determined that for the purposes of pt 11 Avon's land was injuriously affected by reason of being reserved under TPS 40.

109 On the material before me, I am not satisfied that the arbitrator failed to deal with the application of s 175 as it was pleaded and apparently argued. The arbitrator found that the presence of the pipes was to be disregarded in assessing the 'as not affected' value of the land. Paragraph 40A of the defence did not raise the issue of restrictions on the use of the land due to the presence of the pipes and the extent to which the restrictions in TPS 40 were found also in another Act.

110 To some degree, the practical effect of this ground is subsumed in ground 1. If the City succeeds in relation to ground 1, so that the value of the land as not affected by the reservation takes account of the presence of the STM pipes, that 'not affected' value must also take into account any restrictions on the use of the land because the pipes are there. Further, the existence of restrictions on the use of the land arising from another Act may be a factor to be considered in determining whether the valuation of the land, as not affected by the reservation, should have regard to the presence of the pipes.

111 I recognise that s 175 raises a discrete issue. But the error asserted in ground 8 is failure to deal with a pleaded issue, and I am not satisfied that there is a sufficiently arguable case that the arbitrator erred in that way. I would not grant leave on this ground.

The Arbitrator erred in law by failing to hold that the portions of the Reserved Land upon which each of the two STM pipes stood were vested in the Minister or the Water Corporation pursuant to ss 3 and 84 of the Water Agencies (Powers) Act 1984; and erred in law by failing to find that Avon was not entitled to claim under s 173(1) Planning and Development Act in respect of the land so vested.

112 Ground 6 contains two distinct questions: first, did the arbitrator err in law in failing to hold that the two portions of the land upon which the STM pipes stood were vested in the minister or the Water Corporation; second, did he err in failing to find that Avon was not entitled to claim in respect of the land so vested. The City contends that the errors are manifest, alternatively that the question of the effect of statutory vesting on compensation under the Planning and Development Act would substantially assist certainty in the industry.

113 The written submissions in support of ground 6 go further and assert that that under the Metropolitan Water Supply, Sewerage, and Drainage Act, s 5 and s 19, which were in force at the time of the installation of the STM pipes, the minister owned the pipes and so much of the land as was used for them. It submits that subsequent amendments to that Act, and other water supply legislation, have affected which body owns the pipes and the land but not the legal position that the pipes and the land are statutorily vested in and the property of a public body.

114 Section 5 of the Metropolitan Water Supply, Sewerage, and Drainage Act is the interpretation section. Relevantly, it defined 'waterworks' as including 'pipes, or other works for the supply and distribution of water, and all lands acquired, held, or used by the minister for the purposes of this Act in relation to water supply'. The term 'works' was defined to include waterworks.

115 Section 19 gave the minister the power to maintain, alter, repair, construct, provide and extend works. Subsection (2) provided:

All works from time to time constructed, or in the course of construction, or provided, or in the course of being provided, by the Minister under the authority of this Act, shall vest in and be the property of the Minister.

116 The City submits that at the time the pipes were laid the land used for the pipes came within the definition of works, and vested in and was the property of the minister.

117 Under the Water Agencies (Powers) Act 1984 (WA), which was in force from 1984, the definition of the term 'works' may be construed as including the land upon which the works are constructed. The City, in its written submissions, says that in light of the earlier statutory vesting of the land 'used' for the pipes, the term must be so construed.

118 To say that the land is vested in the minister raises many questions, due to the protean quality of the term 'vesting': Attorney General for Quebec v Attorney General for Canada [1921] 1 AC 401, 409; Perth Corporation v Crystal Park Ltd [1940] HCA 35; (1940) 64 CLR 153, 162 (Rich ACJ), 168 (Williams J). The term 'property' similarly describes a range of legal and equitable estates and interests, so that the content of the term, when used in the Metropolitan Water Supply, Sewerage, and Drainage Act, becomes a question of statutory construction.

119 The issue is even less clearly defined when the further question is asked: what is the extent of the land vested in and the property of the relevant authority? The City submits that the vesting of land in which the pipes are situate, will include so much of the land as is necessary to bed the pipes. There being twin pipes, the vesting may include the land between them. As the City submits, the approach taken by the arbitrator resulted in there being no finding of fact.

120 The arbitrator did consider these issues. At [31] he referred to whether the statutory provisions conferred some kind of 'anomalous statutory title'. He further referred to authority that a utility may be in occupation of the soil in which its pipes are embedded without having an estate or interest in the land: Commissioner of Main Roads v North Shore Gas Co Ltd [1967] HCA 41; (1967) 120 CLR 118, 132.

121 More importantly, after referring to the City's argument, the arbitrator continued:

In any case, the real question here relates to the effect on the value of the STM land of the pipes laid in the ground, whatever the precise legal category to which should be assigned the Water Corporation's rights in respect of them.

122 The arbitrator then considered whether the valuation of the land, as not affected by the reservation, should disregard the pipes. As I read his reasons, he did not determine whether the Water Corporation or some other authority owned the land in which the pipes were laid, or the extent of any property rights they might have in the land, because he found that for the purpose of the valuation exercise the existence of the pipes should be disregarded.

123 It was not a matter, as argued in the second limb of this ground, of compensating Avon for injurious affection to land which it did not own because it was vested in the minister or a public authority. It was a hypothetical assessment of the difference in value of Avon's land as affected by the reservation and as not so affected.

124 I would not, in my discretion, grant leave in relation to ground 6. It proceeds from a misunderstanding of what the learned arbitrator decided. Further, in my opinion the issue sought to be argued will be determined otherwise in the appeal.

125 The remainder of the grounds were not argued in detail on the application for leave, although there were detailed written submissions filed.

The Arbitrator erred in law by failing to consider whether Avon's use of the Reserved Land caused a reduction in the value of that land; by failing to find that such use did reduce the value of the Reserved Land; by failing to find that such use was not within the expression 'injurious affection due to or arising out of the land being reserved under a planning scheme' in s 179 Planning and Development Act.

126 Under the heading 'Causation', the City asserts a further three errors (the first two of which are related). In its written submissions, the City says that it alleged that certain action and inaction by Avon in the period 1991 to 2000 had the effect of devaluing the reserved land. It says that these matters 'were particularised in the Defence and amplified in opening and closing'. The City argues that it was a manifest error of law to ignore the earlier actions and failures by Avon which reduced the value of the land.

127 The matters relied upon in par 53(c) of the amended defence are: first, that Avon itself submitted a structure plan in 1991, before the land was reserved under TPS 40, under which the reserved land was to be used as public open space and a pathway; second, that Avon could have obtained 100% credit for the reserved land as public open space rather than only 50% credit; third, that Avon dumped spoil on the reserved land; and finally, 'other possibilities to be led at trial'.

128 Whether any of those matters reduced the value of the reserved land at the time when the land was to be valued (that is, the date on which the approval was granted to Avon subject to conditions that were unacceptable) is a question of fact. The City submits that 'plainly' the earlier actions and failures to act by Avon did cause a reduction in value of the land. But it is not possible, on the face of the award, to say what findings were required on the valuation evidence that was led.

129 Ground 7 does not give rise to an appeal on a question of law. It raises questions of mixed law and fact. Leave may not be granted under either limb of s 38(5).

The Arbitrator erred in law by holding that Amendment 292 of Town Planning Scheme 16 (TPS 16) did not create a valid reserve of the STM land and, in particular:

(a) Failed to apply principles of statutory interpretation of the Interpretation Act 1984;

(b) Failed to consider extrinsic material received into evidence;

(c) Held that the scope of Amendment 292 was limited by the preexisting form of TPS 16 (the scheme being amended);

(d) Failed to take into account s 6 and Schedule 1 of the Town Planning and Development Act 1929 which allowed a reserve in the intended form to be created,

and consequently failed to apply the law and facts then operative, including:

(i) the limitation period applicable to claims for compensation under TPS 16;

(ii) the fact that there was a 'first sale' of the land in 1986

(iii) the absence of any reduction in value of land of [Avon] caused by the making or amendment of a planning scheme;

(iv) that Avon did not then own an interest in the Reserved Land, and thereby erred in law by failing to find that the Avon was not entitled to compensation.

130 Ground 3 is a jumble of different elements. In effect, the first part of it contends that as a matter of construction the arbitrator should have held that the land was reserved under TPS 16, by force of amendment 292. The various allegations regarding failure to apply principles of statutory interpretation and failure to take into account provisions of the Town Planning and Development Act 1928 (WA) add little.

131 TPS 16 was gazetted on 16 October 1973. Under cl 4, specified scheme maps are attached to and form part of the scheme.

132 Part II of TPS 16 dealt with reserved land. Clause 7, in pt II, dealt with lands reserved by the Metropolitan Region Authority pursuant to the Metropolitan Region Scheme. These were shown on the scheme maps as regional reservations. Clause 7 stated that 'the said lands are not reserved by this scheme'.

133 The second class of reservations were local authority reservations:

[L]ands reserved by this scheme for Local Authority purposes or for the purposes shown on the said Maps. These lands are already vested in or shall be acquired by the Council.

134 Clause 9 provided for the use of land subject to a local authority reservation.

135 Clause 10 imposed restrictions on development on a local authority reservation without the consent of the council. The council might consent to the carrying out of any works, or refuse its consent, or grant its consent upon conditions: cl 11.

136 Clause 12 provided for claims for compensation for injurious affection by reason of the reservation of the land, including where the council refused consent, or granted its consent subject to conditions which were unacceptable to the person who had applied for consent. An application for compensation was to be made within six months of the decision of the council. Unless otherwise provided in the scheme, claims for compensation were to be made not later than six months from the date on which notice of approval of the scheme was published in the Government Gazette. The scheme did not provide for compensation on the first sale of the land.

137 Part III of TPS 16 dealt with the zones. There were 24 zones created within the scheme area.

138 The scheme map for TPS 16 showed regional reservations and local authority reservations. The extracts from the maps included in the appeal papers are difficult to follow. It does appear, however, to support the arbitrator's statement (at [8]) that land coloured yellow signified a regional reservation for a public purpose.

139 TPS 16 amendment 292, on which the City relies, was gazetted on 9 November 1984. In its preamble it stated that it amended TPS 16 by:

1. Rezoning land within the Canning Vale locality of the City of Canning as depicted on the Amending Plan adopted by Council on 11 April 1983, and modified by the Council on 19 December 1983.
2. Consequential amendments to the existing Scheme Text.

140 The scheme text was amended in the definitions. There was a further amendment in the list of zones to add two new zones: Special Rural A and Special Rural B. The zoning tables were amended to provide for the two new special rural zones. A new cl 53C set out the provisions to apply in the new zones.

[T]he Scheme Map is amended by adding to the list of zones in the legend thereon V 'Special Rural Zone "A"' and the 'Special Rural Zone "B"', and the notation is coloured 'Blue green' and 'blue green with a brown border' respectively to indicate land within those zones. The Scheme Map is further amended by adding to the list of Reserves in the legend thereon 'Recreation and Drainage Reserves' and the notation coloured bright green to indicate the land so reserved.

142 The City put forward, as part of amendment 292, a map adopted by the council of the City in 1983. It has three parts to it. The first part is titled 'Land Use Map' (showing the purposes to which the subject lots are currently used); the second part is titled 'Existing Zoning' (showing the zoning before the amendment). The third part is titled 'Scheme (Amendment) Map' (showing the new zoning after the amendment).

143 The Scheme (Amendment) Map shows areas now zoned Special Rural A and Special Rural B. It also appears to show land reserved or zoned for public purposes and a zone for local park and recreation. In accordance with the amendment to the scheme map legend, it shows recreation and drainage reserves, coloured bright green.

144 I assume from the way the matter has been argued that the map is part of the scheme, even though amendment 292 contains no provision equivalent to cl 4 of TPS 16 which identifies those maps which are to be part of the scheme, and does not purport to amend cl 4 of the scheme.

145 The City argues that the effect of amendment 292, expressed in the Scheme (Amendment) Map, is to reserve the STM land for public purposes. The City submits that while the arbitrator expressly dealt with its argument that the land was reserved in 1984 under amendment 292 of TPS 16, 'the arbitrator failed to deal with some of the most fundamental contentions of the City in relation to [that amendment]'. It argues that the STM land was, for the first time, reserved for public purposes by amendment 292. Upon gazettal, the STM land was designated by a yellow strip as reserved for public purposes. The City argues that a change in the zoning status was intended, yet despite that 'clear intention' the arbitrator found that the amendment miscarried and did not validly create a reserve.

146 The arbitrator did not accept the City's submission that amendment 292 had effected a reservation. There are two particular matters on which he relied and in particular, the significance of the colours used in the scheme maps to designate regional and local authority reservations. The STM land was coloured yellow on the maps relied upon by the City: the legend to the Scheme (Amendment) Map stated that land coloured yellow signified a regional reservation. Construed literally, if one can construe a map literally, the Scheme (Amendment) Map showed the STM land as a regional reservation (which the City did not have power to effect, but which it showed on its scheme maps in order to comply with the Metropolitan Region Town Planning Scheme Act).

147 The City submits, correctly, that planning schemes are written laws. Further, that scheme maps are part of the scheme. It submits that the arbitrator relied on an alleged mistaken understanding by the City that the land was a regional reserve, and that such a consideration is inadmissible in statutory interpretation. In particular, it refers to the status of the planning scheme under s 7(3) of the Town Planning and Development Act, that when approved by the minister and published in the Gazette it shall have full force and effect 'as if enacted'.

148 The City submits that the relationship between the Metropolitan Region Scheme Map and the TPS 16 amendment 292 map must be resolved as would two sections of the same Act. Both should be given effect, and read consistently one with the other, unless they are irreconcilable. The City argues that the intention to create a reserve is 'irrefutable' because there was no regional reservation under the Metropolitan Region Scheme.

149 Finally, the City submits that the arbitrator's reasons were 'to such a degree referential' to the submissions of the parties that without reading the submissions it is not possible to understand what is being decided. Accordingly, the court should have regard to those submissions to determine that the error was on the face of the award: Gianfriddo v Garra Constructions Pty Ltd.

150 Even though a town planning scheme takes effect as if enacted, that does not put the amendments beyond a challenge. While substantial effect should be given to these words, their operation is restricted by three criteria: first, any clear statutory condition precedent to the exercise of the power must be satisfied; second, the regulations must be read as part of the Act and if, when so read, some inconsistency is found with sections of the Act other than those which define heads of power, that inconsistency must be resolved; third, a purported exercise of power which was patently irrelevant or absurd to the head of power would not be saved: Foster v Aloni [1951] VicLawRp 69; [1951] VLR 481; Institute of Patent Agents v Lockwood [1894] AC 347; Minister for Health v The King; ex parte Yaffe [1931] AC 494. See Bonton Pty Ltd v City of South Perth [1982] WAR 213, 221 222; Costa v Shire of Swan [1983] WAR 22.

151 It was not open to the City to effect a regional reservation but, reading the map literally, that is what it purported to do. The City's argument, if given full effect, is that any error on a scheme map must be given legislative effect. This is so even where TPS 16, by cl 7, was not intending to have legislative effect when it showed regional reservations on scheme maps. I agree that it is necessary to resolve the apparent inconsistency, but that cannot be done by ignoring the fact that the Scheme (Amendment) Map did not show the STM land as a local authority reservation.

152 In my opinion, the arbitrator's construction of TPS 16 amendment 292 was plainly correct. There is, objectively, no apparent intention by that amendment to reserve the STM land.

153 The remainder of ground 3 is consequential on accepting the correctness of the main argument that amendment 292 reserved the land. It is unnecessary to deal with these consequential contentions. I note, however, that to support its limitation arguments the City submits that amendment 292 did not reserve the STM land as a local authority reserve, but as 'a reserve which relied on the powers under schedule 1 of the Town Planning and Development Act'. Just what such a reserve would be, and what limits would be imposed on its use or development, are not to be found within TPS 16. This submission illustrates the artificiality of the City's position.

154 I am not satisfied that an error by the arbitrator, in the manner alleged, is manifest on the face of the award. Nor am I satisfied that there is strong evidence of such an error. I would refuse leave on ground 3.

The Arbitrator erred in law by holding that at the date of first reservation in 1984 Avon was owner of the Reserved Land by virtue of the thenexecutory contract of sale of land to Avon (Exhibit 3), which was conditional upon Reserve Bank, which approval was not operative as at the date of reservation. The Arbitrator should have held that Avon held no interest in the land under the contract at that date; accordingly that Avon then and subsequently held no entitlement to claim compensation.

155 This ground is premised on the City's claim that the land was first reserved in 1984 by TPS 16. For the reasons given in relation to ground 3, I do not accept that premise. I would refuse leave.

The Arbitrator erred in law by failing to consider whether the limitation period under clause 2.7.7 of TPS 40 had expired before the commencement of the Planning and Development Act; by failing to find that that limitation period had expired; by failing to hold the Planning and Development Act 2005 did not revive entitlement; and by failing to hold that Avon was not entitled to compensation.

156 TPS 40 has limitation provisions in cl 2.1.11.2 and in cl 2.7.7. Ground 9 refers only to cl 2.7.7, but there is an unstated premise that the limitation period in cl 2.1.11.2 is invalid.

157 Section 11(1) of the Town Planning and Development Act provided:

Any person whose land or property is injuriously affected by the making of a town planning scheme shall, if such person makes a claim within the time, if any, limited by the scheme (such time not being less than 6 months after the date when notice of the approval of the scheme is published in the manner prescribed by the regulations), be entitled to obtain compensation in respect thereof from the responsible authority.

158 TPS 40 provided, in cl 2.1.11.1, that where the Council refused planning consent for the development of land identified as a local reserve, or granted consent subject to conditions that are unacceptable to the applicant, the owner of land injuriously affected thereby, may claim compensation for such injurious affection. Clause 2.1.11.2 required claims for compensation to be lodged not later than six months after the date of the decision of the Council.

159 Under the general and administrative provisions, the scheme further provided in cl 2.7.7:

Unless otherwise provided in the Scheme claims pursuant to Section 11 of the Act to compensation for injurious affection by reason of the Scheme shall be made not later than 6 months from the date on which notice of approval of the Scheme is published in the Government Gazette.

160 In its written submissions the City argues that, to comply with s 11, a scheme must specify a time limit, and it must be a time starting from the publication of the relevant scheme. It submits that cl 2.1.11.2 is invalid as falling outside the type of limitation provision envisaged by s 11, so that there is only one operative limitation period. The result is that all claims for compensation under TPS 40 are governed by cl 2.7.7 and had to be made within six months from the date on which notice of approval of the scheme was published in the Government Gazette.

161 It is surprising that the legislative body which enacted this scheme takes such a point. The point is also, in my opinion, without merit. The restriction which the City seeks to find in s 11 of the Town Planning and Development Act does not arise from the text of the Act. All s 11 requires is that the time, if any, limited by the scheme is not less than six months after the date when notice of the approval of the scheme is published. It does not otherwise specify from when that time is to run or how the limitation is to be expressed.

162 The further point argued by the City is that s 177 of the Planning and Development Act is not intended to revive entitlement to compensation that has expired. Although it is strictly unnecessary to determine this question, I do not agree with the City's contention.

163 The Planning and Development Act provides a right of compensation when the requirements of pt 11, div 2 have been met. Section 173(1) provides an entitlement to obtain compensation for any person whose land is injuriously affected by the making or amendment of a planning scheme. 'Planning scheme' includes a local planning scheme; and 'local planning scheme' means 'a planning scheme of effect or continued under Part 5': s 4.

164 Section 68, in pt 5, provides that any town planning scheme in force under the Town Planning and Development Act on the day on which s 68 comes into operation continues in force as a local planning scheme under the Act, and has effect as if it were enacted by the Act. TPS 40 was in force when s 68 came into operation.

165 Further, s 174 provides, relevantly, that land is injuriously affected by reason of the making or amendment to a planning scheme if the land is reserved 'whether before or after the coming into operation of this section' under a planning scheme for a public purpose.

166 Section 177 then provides when compensation is payable, and to whom. It does so by providing that no compensation is payable until specified events occur. None of those events had occurred before the event which triggered Avon's claim.

167 Section 178(1) prescribes the time within which the claim to compensation for injurious affection is to be made by reference to the events specified in s 177(1). As a mater of construction, whether there was previously an entitlement to obtain compensation is of no consequence in the regime enacted by pt 11. The limitation argued by the City does not arise from the text of the Act.

168 The City argues that the arbitrator accepted that the reserve was created under TPS 40 in 1994, and did not deal with the City's contention about its limitation period under cl 2.7.7. Even if the arbitrator failed to deal with the point argued by the City and erred in that way, because of the view I have formed as to its merit, I would not exercise my discretion to grant leave.

Having correctly accepted (at [47]) that Avon's alleged highest and best use of the STM land as at January 2007, being 113 residential lots, must be considered in light of:

(1) Avon having submitted a structure plan in 1991 in which the STM land was not proposed for residential purposes;

(2) Ranford Estate having been substantially built in accordance with that Structure Plan before 2007;

(3) The STM Land comprising 19 lots as at January 2007;

(4) The consequent need to amalgamate and resubdivide the STM Land into 113 lots to effect the alleged highest and best use; and

(5) The requirement that the Western Australian Planning Commission (WAPC) must approve that amalgamation and resubdivision,

the Arbitrator erred in law by finding that WAPC would approve amalgamation and resubdivision:

(a) by relying on an irrelevant consideration, namely WAPC's attitude (expressed in respect of a previous development proposal by Avon) that the WAPC had no statutory role to play in respect of building development on the Reserved Land, when that earlier proposal and attitude did not involve amalgamation or subdivision; and

(b) by inferring from that irrelevant consideration that the WAPC was in fact indifferent to or content with residential development on the STM land, and would therefore hypothetically consent to amalgamation and resubdivision.

169 The substance of ground 10 is that the arbitrator erred in law in finding that the Western Australian Planning Commission would approve amalgamation and re-subdivision of the land by relying on, and drawing an incorrect inference from, an irrelevant consideration. This is not a claim that the arbitrator relied on an irrelevant consideration in the public law sense, which is a failure to comply with the Act under which the decision maker is acting. It is a claim that he relied on irrelevant matters in making a finding of fact.

170 The finding identified by the City in its written submissions (the City did not expand on this ground in oral submissions) is at [61]. The arbitrator was there dealing with an argument put forward by the City that the 'as affected' value of the STM land was 'either about $1 million or about $3.5 million' (rather than nominal) on the basis that either the Western Australian Planning Commission or the Water Corporation would buy it. The arbitrator referred to the fact that the Water Corporation had failed to make an offer over a period of years, and continued:

Nor has the WAPC shown any interest indeed its attitude (both active and passive) with respect to past applications by Avon suggests it would be content to see the land used, not as open space, but for some form of residential construction.

171 In the context in which that remark was made, it does not support the argument the City seeks to erect on it.

172 The arbitrator had earlier (at [46] [49]) referred to the evidence of Ms Jennifer Smithson, a town planning expert called on behalf of Avon. Ms Smithson had expressed the opinion that any rezoning of the land or modifications to the structure plan required to implement the highest and best use of the land could reasonably be argued on planning grounds, and should not unreasonably be opposed by either the City or the Western Australian Planning Commission. It was apparently on the evidence of Ms Smithson (which he accepted) that the arbitrator found that the amalgamation and resubdivision would be approved. That finding of fact cannot be challenged.

173 The City has not demonstrated that it has a reasonably arguable ground in ground 10.

174 The final two grounds were said by senior counsel in his submissions to be 'in relation to' the substantive grounds. No oral argument was advanced in support of them.

The Arbitrator erred in law by deciding a matter not submitted to him for determination by the parties, namely, the question of whether by virtue of s 176(2) Planning and Development Act, no question of liability to pay compensation fell for determination, whereas it was agreed by the appellant (herein 'the City'), Avon and the Arbitrator in the Arbitration Agreement, further or alternatively it was contended by the City and not disputed by Avon in the arbitration, that some matters of liability (including those identified in grounds of appeal 6 and 7) fell for determination; and erred in law by failing to accord the City an opportunity to address that question on notice that it was to be determined; and further erred by holding that all issues of liability were outside the scope of the arbitration.

175 Although expressed as one ground, under the heading 'Excess of jurisdiction', this ground also raises multiple matters.

176 It is not entirely clear from the terms of ground 5, or from the written submissions in support of it, which particular finding by the arbitrator is being attacked. First, I note that the City's references to liability do not arise out of the use of that term in the Act. The arbitrator used that term quite specifically. At [9], he said:

The structure of decision erected by s 176 of the PD Act does not allow the Arbitrator to review the issue of liability defined by s 176(1). (emphasis added)

177 He proceeded to determine that the conditions imposed by the City were unacceptable in the required sense (s 177(2)(b)(ii)), and that Avon's applications were made in good faith (s 177(3)). Later, at [29], he said:

[T]he next step is to consider the assessment of compensation. But first I should note that a number of arguments were put on behalf of the City which do not arise on the views I have taken. Limitations arguments, for instance, depended on earlier planning schemes operating ... In any case, the question of liability to compensate, as distinct from the assessment of compensation, was for the SAT. And it attributed the reserved state of the land squarely to TPS 40, with a consequential right to compensation under s 174 of the PD Act. So far as it was sought to argue that, even so, a previous reservation (followed by the expiry of a limitation of time imposed upon recovery of compensation) might nevertheless have diminished the value of the land, counsel for Avon relied, in addition to the argument I have already upheld that there was no relevant previous reservation, on the remarks of Martin CJ, arguendo, on the application for leave to appeal.

178 The arbitrator then determined the City's argument regarding ownership of the land by Avon; the argument regarding the vesting of title (see ground 6); and the effect on the value of the STM land of the pipes laid in the ground, whatever the precise legal category to which the Water Corporation's rights in respect of them should be assigned. So while he declined to determine the issue of liability defined by s 176(1), I do not accept that he declined to determine 'all issues of liability'.

179 I am not satisfied that there is a prima facie case of error of law manifest on the face of the award, or a strong argument of error. I would not, in any event, in the exercise of my discretion grant leave in relation to ground 5 independently, when I have not granted leave in relation to any of the substantive grounds of appeal which that ground 5 is said to be 'in relation to'.

The Arbitrator erred in law and exceeded his jurisdiction by failing to afford the City procedural fairness in that he failed to have regard to the 'Respondent's Written Opening' dated 11 June 2010 in so far as that document was adopted with modifications as part of the City's closing.

180 The City submits that there was a hearing which took place 10 months after the conclusion of the arbitration hearing, after the arbitrator had delivered reasons but before the publication of the award. It submits that, in that hearing, there was an exchange between counsel and the arbitrator which demonstrates that the arbitrator 'had failed to appreciate, or had forgotten, that the City adopted its Opening in its Closing'. About six weeks later, by letter, the arbitrator advised the parties that he would not give further reasons.

181 The City submits that the award must include the matters placed before the arbitrator for decision and, as I understand this submission, that the exchange between the arbitrator and counsel, and the letter subsequently sent by the arbitrator, are part of the reasons for the award. It therefore contends that it is manifest on the face of the award that the arbitrator failed to have regard to the City's written opening.

182 The submission that the exchange with counsel is part of the reasons for the award does not sit easily with s 29 of the Commercial Arbitration Act, under which the award is to be made in writing, signed by the arbitrator, and include a statement of the reasons for making the award.

183 Further, I would not regard a comment made after the delivery of reasons, in the course of an oral exchange with counsel, as strong evidence that the arbitrator failed to have regard to the City's opening and so erred.

184 The submissions before me do not demonstrate a manifest error on the face of the award. I cannot see how an alleged error of law expressed at this level of generality is likely to add substantially to the certainty of commercial law. It involves the application of settled principles to the quite peculiar facts of this case. Even if there were strong evidence of error (which I do not accept) I would not grant leave.

185 For these reasons I would grant leave in relation to grounds 1(a) and (b) and ground 2, but would otherwise dismiss the application for leave to appeal.