BETWEEN : BOND CORPORATION PTY LTD (ACN 088 684 133)

Valuation of land - Compensation for injurious affection - Requirement for notice in writing of intention to sell the land - Meaning of "sell" - Requirement that application for permission to develop be made in good faith - Meaning of "good faith"

Commercial Arbitration Act 1985, s 39(1)(d)

Metropolitan Region Town Planning Scheme Act 1959

Metropolitan Region (Valuation Board) Regulations 1967

Question 1 answered: "a conditional contract for the sale of land"

Brown v Heffer [1967] HCA 40; (1967) 116 CLR 344

Bull v Attorney-General NSW [1913] HCA 60; (1913) 17 CLR 370

Colonial Sugar Refining Co Ltd v Melbourne Harbour Trust Commissioners [1927] AC 343

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18

Dorellyn Pty Ltd v Allain [1984] 2 Qd R 93

GB & G Consolidated Pty Ltd v Melbourne & Metropolitan Board of Works [1972] VicRp 74; [1972] VR 641; (1972) 27 LGRA 327

George Weston Foods Ltd v WA Country Bakers Pty Ltd, unreported; SCt of WA; Library No 950285; 9 June 1995

Gregory v MAB Pty Ltd & Bradshaw (1989) 1 WAR 1

Haig v The Minister Administering The National Parks & Wildlife Act 1974, unreported; SCt of NSW; 4 November 1994

Hallwood Corporation Ltd v Roads Corporation [1998] 2 VR 439

Lombardo v Development Underwriting [1971] WAR 169

Mabo v State of Queensland (1988) 166 CLR 186

McWilliam v McWilliams Wines Pty Ltd [1964] HCA 6; (1964) 114 CLR 656

Minister for Immigration v Eshetu (1999) 73 ALJR 746

Morgan v Davis [1962] NSWR 1013

Nunawading City Council v Day [1992] VicRp 13; [1992] 1 VR 211

Ovenden v Palyaris Construction Pty Ltd (1974) 11 SASR 41

Palser v Grinling; Property Holding Co Ltd v Mischef [1948] AC 291

Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537

Plumor Pty Ltd v Handley (1996) 41 NSWLR 30

Risk on behalf of the Larrakia People v Williamson as Member of the Native Title Tribunal (1998) 155 ALR 393; 99 LGERA 391

Sandra Investments Pty Ltd v Booth [1983] HCA 46; (1983) 153 CLR 153

Taxation, Federal Commissioner of v Smorgon (1977) 16 ALR 721

Willoughby v Barrett-Lennard [1979] WAR 167

1 MILLER J: This is an originating motion pursuant to the provisions of O 81D r 3 of the Supreme Court Rules to determine pursuant to s 39(1)(d) of the Commercial Arbitration Act 1985 questions of law which have arisen in the course of an arbitration. Those questions of law are:

"1. Whether the reference to 'selling the land' in Section 36(4)(a)(ii) of the Metropolitan Region Town Planning Scheme Act 1959 (the 'Act') is to a conditional contract for the sale of land or a conveyance of land by transfer.

2. Whether the reference to 'owner of the land' in Section 36(3a)(b) of the Act is to the registered proprietor of the land at that time or the holder of the beneficial interest in the land.

3. (a) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation under the Metropolitan Region Scheme but only to trigger compensation under s.36(3) of the Act, does this preclude the person lawfully appointed to determine compensation, from being satisfied that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act.

(b) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation, but the development is of a type that could have been undertaken on reserved land, is this sufficient to establish that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act.

(c) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation but to increase the value of the land for a prospective purchaser by obtaining development permission, is this sufficient to establish that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act."

2 At the hearing of the motion I was advised that neither party now requires an answer to Question 2.

3 A Statement of Facts and Documents filed in the proceedings sets out all relevant background factual matters. The applicant was, between 15 December 1981 and 27 June 1997, the "proprietor owner" of a 608.604 hectare piece of land in Swan Location 2 in an area commonly known as the Brigadoon Estate. This land was part of a sub-division which had been approved subject to various conditions. As part of the sub-division two particular lots (the relevant land for the purpose of this proceeding) were created within Lot 101 on Plan No 15724, Certificate of Title Vol 1941 Folio 263 being lots 479 and 512. They were respectively 45.5 and 62.16 hectares in area, and until 1996 this land was zoned "special rural". However, on 22 November 1996 amendment 978/33 to the Metropolitan Region Scheme ("the Scheme") altered the zoning of that land to "parks and recreation" with effect from 14 November 1996. Meanwhile, by letter dated 7 November 1996 the applicant had given instructions to the firm of Koltasz Smith & Partners to prepare a report on the potential for development of the land. The report was received in or about February 1997.

4 On 7 April 1997 the applicant received a conditional offer to purchase the Brigadoon Estate, which included the subject land, from Maymerge (Australia) Holdings Pty Ltd. The applicant made a counter-offer on 10 April 1997 which was accepted on 14 April pursuant to which the land was sold for a price of $8,200,000, a deposit of $10,000 being paid forthwith with the balance of deposit of $790,000 payable within seven days and settlement to be effected within seven days of Foreign Investment Review Board approval. The contract contained other terms and conditions in relation to easements and method of payment of amounts specified within the contract and provided that the offer to purchase was subject to FIRB approval within 60 days from acceptance of the offer unless extended at the discretion of the vendor.

5 By letter dated 15 April 1997 the applicant's solicitor gave notice to the respondent of the applicant's intention to sell the land and to claim compensation under the Metropolitan Region Town Planning Scheme Act ("the MRTPSA"). That notice purported to be given under s 36(4) of the MRTPSA which provides that before compensation is payable under s 36(3) of the MRTPSA where land has been sold the person lawfully appointed to determine the amount of compensation shall be satisfied that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell. The letter from the applicant's solicitor recited that "by agreement dated 14 April 1997 the owner has entered into a contract for the sale of the land subject to conditions and intends to sell the land on or before 21 June 1997".

6 On 20 June 1997 the applicant lodged with the respondent (by notice dated 19 June 1997) a notice of intention to sell with a request for valuation of the land. That notice purported to be given in pursuance of the provisions of s 36 of the MRTPSA being a notice of intention to sell combined with an application for valuation.

7 On 27 June 1997 Maymerge (Australia) Holdings Pty Ltd became the registered proprietor of the land, FIRB approval of the transaction having been granted on 13 June 1997 and all other outstanding conditions before settlement having been fulfilled. Meanwhile, on 23 May 1997 Koltasz Smith & Partners lodged on behalf of the applicant an application with the Shire of Swan for approval under the Metropolitan Region Scheme to commence development of the land. That application described the proposed development as Guest House/Lodge Chalets with an approximate cost of the proposed development specified at $2,000,000 and the estimated time of completion two years. It is common ground that the application made by Koltasz Smith & Partners on behalf of the applicant was made for the purpose of triggering an entitlement to compensation under s 36(3) of the MRTPSA, there clearly being no intention on the part of the applicant as at 23 May 1997 to develop the land for guest house/lodge chalets purposes. Because no decision on the application for approval was communicated to the applicant within a 60 day period, by operation of cl 31(2) of the Metropolitan Region Scheme the application was deemed to have been refused. Some months later, by application dated 16 September 1997, the applicant by its solicitor claimed compensation for injurious affection to the land by reason of the deemed refusal of the application. The claim was for $428,000 by way of compensation for the 108 hectares of land reserved for parks and recreation "as part of the Brigadoon Estate having value as an englobo site". The final step on the applicant's part was an application on its own behalf dated 4 December 1997 for the sum of $428,000 by way of compensation for injurious affection of the land pursuant to s 11 of Town Planning & Development Act.

8 There is no dispute as to what are the relevant statutory provisions to which reference should be made in determining the questions of law which have arisen. The starting point are the provisions s 11 and s 12 of the Town Planning & Development Act 1928 ("TPDA") which provide that when land is injuriously affected by the making of a town planning scheme compensation shall be payable. Under s 12(2)(a)(b)(i) of the TPDA land shall not be deemed to be injuriously affected unless the scheme permits development on that land for no purpose other than a public purpose. Section 36(1) of the MRTPSA applies the provisions of s 11 and s 12 of the TPDA to the Metropolitan Region Scheme and the definition of "scheme" in s 6(c) of the MRTPSA includes "the Scheme as varied or amplified by any amendment that has the force of law". There is no doubt that the reservation of land for "parks and recreation" by the Metropolitan Region Scheme Amendment is a reservation of land for a public purpose, the land in question in this case thereby being injuriously affected (see Folkestone v Metropolitan Region Planning Authority [1968] WAR 164 per Virtue J at 167).

9 The provisions of s 36(3) and (4) of the MRTPSA are critical to the determination of the questions of law which arise in this matter and are therefore set out as follows:

"(3) Subjection to subsection (4), where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until -

(a) the land is first sold following the date of the reservation; or

(b) the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant.

(3a) Compensation for injurious affection to any land is payable only once under subsection (3) and is so payable -

(a) under paragraph (a) of that subsection to the person who was the owner of the land at the date of reservation; or

(b) under paragraph (b) of that subsection to the person who was the owner of the land at the date of application,

(4) Before compensation is payable under subsection (3) -

(a) where the land is sold, the person lawfully appointed to determine the amount of compensation shall be satisfied -

(i) that the owner of the land has sold the land at a lesser price than he might reasonably have expected to received had there been no reservation of the land under the Scheme;

(ii) that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell the land; and

(iii) that the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land;

(b) where the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant, the person lawfully appointed to determine the amount of compensation shall be satisfied that the application was made in good faith."

10 In relation to these provisions the applicant submits that it is the reservation of the land that confers the right to compensation, and s 36 specifies only procedural pre-conditions to the making of a claim, which simply "render the right to compensation inchoate until one of the events prescribed has occurred". It is submitted that it is at that time that the right to compensation crystallises. It is argued that in the absence of clear words to the contrary, the procedural requirements set out in s 36(4) should not be used to disturb the right to compensation which arises by the reservation, and the interpretation of the relevant sections that is to be preferred, is one which does not interfere with compensation rights and which produces the least hardship. Reliance is placed upon the generally accepted principle of interpretation that a statute should not be held to take away proprietary interests without just compensation unless the intention to do so is expressed in clear and unambiguous terms, and it is argued that s 11 and s 12 of TPDA (and s 36 of the MRTPSA) are beneficial provisions and as such should be given a liberal construction.

11 The respondent submits that it is clear from the provisions of s 36(3)(a) and s 36(4)(a)(ii) of the MRTPSA that an entitlement to compensation of an owner selling land which has been injuriously affected by the making of the Metropolitan Region Scheme may be lost where the owner did not before selling the land, give notice in writing to the respondent of his intention to sell the land. Reference was made by counsel for the respondent to the Metropolitan Region Scheme Report 1962 (par 22 and par 194) to support the proposition that when the Metropolitan Region Town Planning Scheme Amendment Act 1962 inserted s 36(3-5) into the MRTPSA it was contemplated that generally the Metropolitan Region Planning Authority would negotiate a purchase of land where notice of intention to sell was given. Certainly par 22 of the Report makes reference to the authority completing acquisition of property rather than having to meet a compensation claim, as does par 194 which suggest that compensation for injurious affection will arise only in limited circumstances where in general the alternative of acquisition of property will be available and practicable. Upon the introduction of the Metropolitan Region Town Planning Scheme Amendment Bill on 4 September 1962 the Minister on the Second Reading of the Bill said:

"The Bill also amends the compensation provisions in respect of the metropolitan region scheme. This amendment arises from a consideration of the financial resources of the metropolitan improvement fund and problems of planning authorities in other States where claims for compensation have totalled many millions of pounds-far beyond the resources of the responsible authorities. It has been said that many of these claims were due to the uncertainty of the owners in respect of their right.

As indicated in the report submitted by the authority, it is quite impossible to contemplate the acquisition immediately, or over a short period of time, of land which will not be required for many years ahead and the cost of which will, in the aggregate, run to many millions of pounds. However, as the Act stands, the authority could be confronted with a heavy claim for compensation in respect of the whole of the land reserved under the scheme and far beyond its financial ability to meet. Nevertheless, it is necessary that the land be reserved in the scheme for this future need; and the reservation imposes an obligation in respect of compensation.

It can properly be argued that reservation under the scheme depreciates the value of land. However, the depreciation is, in many cases, hypothetical and becomes real only when the land is sold at a price which reflects this depreciation, or when development is frustrated by a refusal of consent under the scheme. The amendment proposes the compensation for injurious affection be limited to two circumstances: where a sale is effected at a depressed value attributable to reservation under the scheme, or where consent to develop is refused on the ground of reservation under the scheme.

These provisions are designed to protect the interests of landowners as well as to secure that the scheme shall not be defeated by the inability of the fund to meet claims upon it. The authority is already empowered to purchase land; and, with the provisions now proposed, there should be no problem in dealing with a case of individual hardship should it arise." (Parliamentary Debates 4 September 1962 p 820)

There are other references in the Parliamentary Debates to like effect (see 18 September 1962 p 1057; 9 October 1962 p 1556), and accordingly it is argued by the respondent that there is a clear inference that the purpose of the requirement that a claimant give notice of intention to sell the land was to provide the respondent with the opportunity to negotiate to acquire that land.

12 On the other hand, counsel for the applicant argues that little weight should be attributed to what was said in the course of parliamentary debate upon the introduction of the provisions of s 36(iii)(v) into the MRTPSA, because clearly it might be the case that land is reserved, but decades might pass before such time as it is acquired for the purpose of the reservation. Further, it was pointed out that the provisions of s 13 of the Town Planning & Development Act (which are to be read with the provisions of the MRTPSA) give to a responsible authority for the purpose of a town planning scheme the power to compulsorily acquire land. By way of further emphasis of this point counsel for the applicant pointed out that the provisions of s 36(2) of the MRTPSA provide that the scheme may itself provide that where compensation for injurious affection is claimed as a result of the operations of s 12(2)(a)(b)(i) or (ii) of the Town Planning Act the commission may at its option elect to acquire the land so affected instead of paying compensation. The Scheme contains the following provision in relation to compulsory acquisition of land so affected:

(3) In lieu of paying compensation, the Authority may in accordance with the Scheme Act purchase the land affected by such decision of the Authority at a price not exceeding the value of the land at the time of refusal of approval or of the grant of approval subject to conditions that are unacceptable to the applicant."

13 After considering these introductory submissions I have concluded that it is by no means clear that resolution of the questions before me should be governed by general expressions of acquisition intention referred to by the Minister on the second reading of the Bill to amend the MRTPSA. The clear availability of alternative methods of acquisition indicate to me that such expressions of view are indeterminative of the issues before me. In the end, a plain reading of the sections of the MRTPSA is in my view sufficient to resolve the questions of law which have arisen.

14 Although reliance was placed by counsel for the applicant upon a number of Victorian cases as an indication of the need to ensure that the procedural requirements set out in s 36(4) of the MRTPSA should not be used to disturb the right of compensation with arises by the reservation which here occurred, those cases dealt with legislation which did not incorporate a provision similar to s 36(4). It is true that in Cape Developments Pty Ltd v City of South Barwon [1982] VicRp 102; [1982] VR 1011 Gobbo J (at 1018-1020) stressed that one would expect very clear language if the legislature intended to confine compensation for reservations so that such compensation might be "almost illusory", especially in the face of an evident policy to compensate for loss or damage flowing from a reservation or a requiring for public purposes. His Honour held that the language of the relevant legislation conferred a right of compensation which was rendered inchoate until one of the events prescribed had occurred. Similarly, in Hallwood Corporation Ltd v Roads Corporation [1998] 2 VR 439 Tadgell JA (at 447-448) stressed that there is a significant distinction between a right to claim compensation and a trigger which gives rise to a right to be paid compensation and a liability to pay. All of this can be accepted, but the statutory framework of the provisions under consideration in the Victorian cases differed significantly from that which exists under the MRTPSA.

Whether the reference to "selling the land" in Section 36(4)(a)(ii) of the Metropolitan Region Town Planning Scheme Act 1959 (the "Act") is to a conditional contract for the sale of land or a conveyance of land by transfer.

15 Counsel for the applicant contended that the phrase "selling the land" in s 36(4)(a)(ii) must be interpreted in the context of s 36 of the MRTPSA and not otherwise. In any event, he submitted the usual meaning of the word "sale" is that of a contract to sell, reliance being placed upon the decision in Development Underwriting (WA) Pty Ltd v Lombardo [1971] WAR 169 where Wickham J (at 199) pointed out that it is not necessarily correct to say that for all purposes the word "sell" (in this case in the context of consideration for the provisions of s 20 of Town Planning Act) has the same meaning as "agree to sell". Reference was also made to the decision in Gaye (No 1) Pty Ltd v Allan Rowlands Holdings Pty Ltd [1908] VicLawRp 69; (1993) 14 ALR 349; (1993) 67 ALJR 682; to the provisions of the Interpretation Act 1984 s 5 (where "sell" includes ... offer to sell and expose for sale) and to Scott v Willmore [1949] VicLawRp 21; [1949] VLR 113 where Herring CJ and Gavan Duffy J (at 115) pointed out that "sell" and "sold" are ambiguous words and may refer either to the execution of the contract of sale or the completion of the sale by payment and conveyance. In other words, the submission of the applicant was that if "sell" is interpreted to include agreement to sell then it means a completed sale as well as an agreement to sell. If therefore "sell" includes completion as well as agreement to sell, notice (it is argued) can be given at any time in the continuum from before the contract until the transfer.

16 Counsel for the applicant further argued that as s 36(3)(a) states that compensation is not payable until the land is "first sold" this must mean until conveyance. It was also put that because s 36(4)(a) in providing "where the land is sold" the person appointed to determine compensation must be satisfied that notice of intention to sell was given, it necessarily means that the word "sell" must be understood in the context of "first sold" and "sold" as used in s 36 and accordingly has the natural meaning of a final completion by conveyance. Reliance was placed by counsel for the applicant upon the Metropolitan Region Scheme Report 1962 par 183 where reference is made to reservations in the following terms:

"Different considerations arise in respect of compensation and reservations. As discussed earlier in this Report, the Authority believes it essential that legislative provision be made for compensation in respect of reservations to be contained to those areas where a sale at a depressed price has been effected or where consent for development has been withheld."

17 Counsel also relied upon passages in the Parliamentary Debates upon the introduction of the relevant legislation, but as I have previously pointed out, I find limited assistance to be gained by reference to those Debates.

18 Counsel argued that although in Western Australian it has clearly been held that "sell" means agreement to sell in respect of s 20(1) of Town Planning and Development Act (see Glass v Ralph [1966] WAR 91; Reid Murray Developments (WA) Pty Ltd v Hall [1968] WAR 3; Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33; Wilson International Pty Ltd v International House Pty Ltd (No 2) [1983] WAR 257; Agaiby v Pantham Nominees Pty Ltd (1985) 55 LGRA 405; Trifid Pty Ltd v Ratto [1985] WAR 19), the courts found it necessary for the history and development s 20(1)(a) to include agreement to sell within the definition of "sell": but these decision (it is said) are not applicable to s 36 of the MRTPSA.

19 It was pointed out by counsel for the applicant that s 36(6)(b) of the MRTPSA freezes the date of valuation for the purpose of that sub-section as "the date the land is sold". This (it is argued) supports the proposition that "sold" within the meaning of s 36(4) of the MRTPSA means "transfer" and certainly not a contract for sale. Further, the provisions of s 36C(1) were relied upon to support this interpretation, because there the Board is called upon the make a valuation of the land which is a "before reservation" value and must arise at transfer stage. Likewise, under the Metropolitan Region (Valuation Board) Regulations 1967 reg 3 requires an owner intending to sell land that is subjected to injurious affection due to or arising out of the land being reserved under the Scheme, if intending to claim compensation pursuant to s 36 of the Act, to give notice to the authority of his intention to sell and apply to the Board for a valuation of the land. This (it is argued) can only be done at the date the land is sold and if this is the required procedure for ascertaining the "before value" in these circumstances it makes no sense for notice to be given when there is a mere intention to sell the land.

20 Reference was also made by counsel for the applicant to the provisions of s 36(7), (9) and (10) of the MRTPSA in support of the proposition that "selling the land" within the meaning of s 36(4)(a)(ii) means a conveyance of land by transfer. Those provisions, which entitle the Commission to lodge a caveat against land where compensation has been paid for injurious affection clearly have application to the registered proprietor of the land in circumstances where there has been a revocation or reduction of the reservation and a refund is payable to the Commission. I am not however, persuaded that the scheme for repayment of compensation there set out has any real bearing upon the question at issue.

21 Likewise, counsel for the applicant referred to the provisions of s 36(17), (19) and (20) (which deal with the same subject matter) as indicative of an intention within the whole of s 36 for "selling the land" to mean a "conveyance of land by transfer". These provisions deal with the right of the commission to caveat land and to withdraw a caveat in certain circumstances. Again, in my view, they do not impact upon the question at issue.

22 Counsel for the respondent contends that on a clear reading of the provisions of s 36(3)(a) and (4)(a)(ii) of the MRTPSA an entitlement to compensation of an owner selling land which has been injuriously affected by the making of the Metropolitan Region Scheme may be lost where that owner did not before selling the land give notice in writing to the responsible authority of his intention to sell the land. Counsel pointed out that s 36(3) of the Act opens with the words "subject to sub-section (4)", and thus no clearer indication could be given than that the requirements as to notice contained within the provisions of s 36(4) must be complied with before an entitlement to compensation arises under the provisions of s 36(3).

23 It is argued that in this case the applicant failed to give to the respondent notice of its intention to sell the land until 15 April 1997, being a date after the contract for the sale of the land to Maymerge Australia (Holdings) Pty Ltd had been entered into, albeit at a time before the condition in relation to FIRB approval and before settlement of the sale of the land had taken place. Nothing turns upon the existence of the FIRB approval condition, it being conceded by the applicant that the agreement of the 14 April 1997 was a contract for the sale of land.

24 The respondent contends therefore that reference to "selling the land" in s 36(4)(a)(ii) of the MRTPSA is a reference to entry into a contract for the sale of the land whether that contract be conditional or not. It says that as the applicant failed to give notice of intention to sell the land before entering into the contract for the sale of land, compensation is not payable under s 36(3) of the Act. As I have already indicated, counsel for the respondent relies upon the provisions of Metropolitan Region Scheme Report 1962 and certain passages in the relevant Parliamentary Debates to underline the proposition that it was generally contemplated upon the introduction into the MRTPSA of the provisions of s 36(3-5) that the Authority would have the opportunity to negotiate a purchase of land where notice of intention to sell was given. There are certainly passages to that effect in both the Report and the Debates, although, as I have already indicated, neither is conclusive as to the interpretation to be placed upon the words "selling the land" in s 36(4) of the Act. Further, as counsel for the applicant has pointed out, other avenues for acquisition of land exists, so that it could not be said that absent notice of intention to sell the authority would be powerless to acquire land otherwise reserved under the Scheme. Nevertheless, it cannot be ignored that the opportunity to complete acquisition of property upon being given notice of intention to sell the land was at the time of preparation of the Metropolitan Region Scheme Report 1962 considered to be a relevant and important matter. As par 21 and par 22 of the Report say:

"21. The Authority has accordingly submitted that liability for compensation for injurious affection be limited to two circumstances:

(a) where a sale is effected at a depressed value attributable to reservation under the Scheme; or

(b) where consent to development of property is refused on the grounds of reservation under the Scheme.

22. In either situation it is submitted that any compensation payment so made, based on the difference between unrestricted market value and value restricted by the Scheme, be registered as a caveat on the title of the subject property and that in determination of the value on subsequent acquisition, regard be had to any amount of compensation so paid. In either case the Authority may, as the legislation now stands, elect to complete acquisition of property rather than meet a compensation claim."

25 The respondent argues that s 36 of the MRTPSA provides no mechanism for compulsory acquisition of land once notice of intention to sell is given, nor does it provide any mechanism by which existing contractual rights of a purchaser such as Maymerge Australia (Holdings) Pty Ltd in this case can be overcome. It argues that if the applicant had no requirement to give notice of intention to sell before incurring a contractual obligation, but needed only to do so before actual conveyance, the respondent would have no opportunity to acquire the land and there would be no point to the giving of a notice. The meaning therefore attributed to the term "selling" advanced by the respondent is argued to be more consistent with this apparent purpose.

26 Counsel for the respondent made reference to the provisions of s 36C of the MRTPSA in support of the respondent's arguments. Because under s 36C(1) the owner of land that is subjected to injurious affection due to, or arising out of the land being reserved under the Scheme for public purpose, who gives notice of his intention to sell the land and claim compensation shall, unless the commission waives the requirement apply to the Board, in the prescribed manner for a valuation of the land as not so affected and the Board is thereupon directed to make such a valuation, it is said that the element of contemporaneity tells in favour of the "selling" referred to in s 36(4) as being consistent with a notice of intention to sell. Further, it is said that s 36C(3)(a) in providing for review of the valuation if the land is not sold within 12 months after the initial valuation, contemplates sale will be effected after the initial valuation and therefore after the provision of the notice of intention to sell.

27 Section 36C(3) provides that after receipt of the Board's valuation the Commission shall advise the owner of the minimum price at which the land made be sold without affecting the right to compensation, and it is argued that this requirement can only have utility if the owner has not already entered into a contract for the sale of land, and not fixed the purchase price at the time when notice is given. This provision is said to further suggest that notice of intention to sell must be given before the terms of the contract of sale are concluded. Counsel for the respondent countered the argument of counsel for the applicant in relation to s 36(9)(et seq) by pointing out that this provision and those succeeding it arise only where land has been sold, there being no right to be paid compensation until the land is sold.

28 Counsel for the respondent conceded that the meaning of the term "sell" may, depending upon the statutory context, range in meaning from a pre-contractual offer, or exposing land for sale, to a conveyance or settlement of a contract for sale. Reference was made to the provisions of the Interpretation Act 1984 s 5 and to a long list of cases where (it was argued) it was established that the meaning of "selling the land" argued for by the respondent in this case accords with the more usual meaning of the term "sell": that is, entry into an agreement for sale (see Garms v Birnzwejg [1990] 2 Qd R 336; Chitts v Allaine [1982] Qd R 319; Scott v Willmore (supra); Rosenbaum v Belson [1900] 2 Ch 267; Joel v Barlow (1903) 22 NZLR 900; Development Underwriting (WA) Pty Ltd v Lombardo (supra); see also Glass v Ralph (supra), overruled in Landall Construction & Development Co Pty Ltd v Boagers (supra)). There is no need for me to refer to these cases in detail, but it is true that running through them is the general proposition that the meaning of the word "sell" does generally mean "entry into contract" rather than "settlement of a transaction of sale": see Garms v Brinzwejg (supra) per Macrossan CJ at 340. However, I am not persuaded that because in the general run of cases this interpretation is given to the meaning of the term "sell", it necessarily means the same meaning is to be given to the words "sell the land" in s 36(4)(a)(ii).

29 In the end, I am of the view that the requirement in s 36(4)(a)(ii), that before compensation is payable under s 36(3), where the land is sold the person lawfully appointed to determine the amount of the compensation shall be satisfied that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell the land means, and can only mean, gave notice of his entry into a contract for the sale of the land whether conditional or otherwise. Notwithstanding acceptance of the applicant's general propositions that an interpretation of sections in an Act will generally be called for which does not interfere with compensation rights and which produces the least hardship and that the statute should not be held to take away proprietary interests without just compensation, it does seem to me that the clear words of s 36(4)(a)(ii), when read with the provisions of s 36(3) of the MRTPSA, have the result that the owner of land before selling it must give notice of intention to sell, in the sense of notice of any contract for the sale of land into which it has entered. That is, notice is required to be given before the terms of a contract of sale are concluded. That conclusion seems to me to fit best with the structure of the MRTPSA, including (but not solely because of) the clearly intended opportunity for the authority to elect to complete acquisition of property rather than meet a compensation claim. For these reasons I would answer Question 1 in the motion as "a conditional contract for the sale of land".

3. (a) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation under the Metropolitan Region Scheme but only to trigger compensation under s.36(3) of the Act, does this preclude the person lawfully appointed to determine compensation, from being satisfied that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act.

(b) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation, but the development is of a type that could have been undertaken on reserved land, is this sufficient to establish that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act.

(c) If an application is made with no intention on the part of the applicant to develop the land subject to a reservation but to increase the value of the land for a prospective purchaser by obtaining development permission, is this sufficient to establish that the application was made 'in good faith' for the purposes of s.36(4)(b) of the Act."

30 Having regard to the conclusion I have reached in relation to Question 1, it is strictly unnecessary to answer this question. However, as it is posed in the motion it is appropriate that I should do so.

31 Counsel for the applicant argues that in the context of the MRTPSA it is the application that must be made in "good faith", and if the development which is the subject of the application is consistent with proper planning principles, it is made in good faith. It is argued that it is not for the Commission or for the person lawfully appointed to determine compensation to assess the bona fides of each development solely by reference to the alleged state of mind of the applicant. Reference was made to a number of cases including Cons Strickland & Nudding on behalf of the Maduwongga People v Minister for Lands for and on behalf of the State of Western Australia link [1998] FCA 868; (1998) 100 LGERA 50 where the question of negotiations "in good faith" between the government and native title parties was in issue. There, Nicholson J (at 66) said:

"The legal concept of 'good faith' frequently takes its meaning and colour from a statutory context, so that the opportunity for derivation of general principles from decided cases is limited. It frequently arises in the context of bankruptcy legislation: see Risk v Williamson (1998) 99 LGERA 391. Addressing the words 'acting in good faith' as they appear in s 121(1) of the Bankruptcy Act 1966 (Cth), Kirby J in Cannane v J Cannane Pty Ltd (In liq) [1998] HCA 26; (1998) 72 ALJR 794 at 815 said:

'It has been remarked that, in putting it broadly, the words "good faith", or their Latin equivalents, have received "two divergent meanings". Siano v Helvering 13 F Supp 776 at 780 (1936) in Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 190 at 198; [1993] FCA 408; 81 LGERA 104 at 112-113. See also South Australia v Clark (1996) 60 SASR 199 at 230; Municipality of Bhiwardi v Kailash Sizing Works (194) 2 SCC 596 at 599. The first is a broad or subjective view which requires inquiry into the actual state of mind of the person concerned, irrespective of the causes which produce it. The second involves the objective construction of the words by the introduction of such concepts as a n absence of reasonable caution and diligence. The particular interpretation apt to the use of the words in a given legislative context will depend on the decision-maker's elucidation of the purpose of the legislature.' "

32 The statutory framework in which Strickland (supra) was decided is so different to that with which I am here concerned that no direct assistance can be gained from it. There, Nicholson J considered that it was not for the court or tribunal to assess the reasonableness of each offer made by the government party in the context of native title negotiations. What was considered to be required was that the court or tribunal apply the test of "negotiating in good faith" in accordance with the common understandings encompassing subjective and objective elements, to the total conduct constituting the negotiations.

33 Counsel for the applicant argued that there is an onus on the respondent to show as a matter of fact that there was no good faith, relying upon Risk v Williamson (supra), another native title case in which this approach was taken. It was put this way by O'Loughlin J (at 413):

"It is apparent, even from a brief mention of these few cases, that there must be factual findings that will sustain the submission that 'good faith' is lacking. In the present case, I cannot imagine that anything short of 'knowledge' would be sufficient. In other words, it would have been necessary to place before the Tribunal facts that would justify a finding that the Government party's negotiating team, or those instructing the team, knew that it was the intention of the Government party not to negotiate with a view to obtaining the agreement of the native title parties."

34 However, I find nothing in this passage to suggest that in the context of s 36(4)(a)(iii) that onus is cast upon the commission.

35 Counsel for the applicant argued that in many cases where land is reserved under Part II of the Scheme it will be impossible for a bona fide application to be made. For example, an owner may be unable to make an application for development because the land reserved is not capable of development or the owner cannot afford the development. Likewise, land may be reserved for many purposes under the Metropolitan Region Scheme, and there may be no development possible with some reservations.

36 Counsel for the respondent argued that reference to an application being made "in good faith" in s 36(4)(b) of the MRTPSA should be understood as requiring that the application be made bona fide or genuinely: the requirement (it was argued) is that the application be made with the intention of actually developing the land. Reference was made to dictionary definitions, including the New Shorter Oxford English Dictionary definition of bona fides as being "good faith, freedom from intent to deceive ..." and bona fide as being "with good faith, acting in good faith, sincerely, genuinely". I was also referred to a number of cases dealing with the term including Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290 where the court (at 298) said:

" 'Good faith' in some contexts identifies an actual state of mind, irrespective of the quality or character of its inducing causes; something will be done or omitted in good faith if the party was hones, albeit careless: see, for example, Smith v Morrison [1974] 1 WLR 659. (Abstinence from inquiry which amounts to a wilful shutting of the eyes may be a circumstance from which dishonesty may be inferred: Jones v Gordon (187) 2 App Cas 616 at 625; English and Scottish Mercantile Investment Co Ltd v Brunton [1892] 2 QB 700 at 707-708; The Zamora No 2 [1921] 1 AC 801 at 803,821.) On the other hand, 'good faith' may require that exercise of caution and diligence to be expected of an honest person of ordinary prudence. This, counsel urged, was what was required by the present statutory context. The appellant then submitted that there was a plain absence of good faith in this sense on the part of the respondent."

37 Counsel for the respondent argued that this view of the phrase "in good faith" is applicable to the provisions of s 36(4)(b) of the MRTPSA, because it would protect the respondent from being the subject of "a barrage of claims" for all land affected by the Metropolitan Region Scheme. It was argued that the philosophy of the legislation was that compensation was payable only when land was sold or development was frustrated, and development could not be frustrated for these purposes until the time when it would have occurred but for the reservation under the Metropolitan Region Scheme. Support for this proposition was sought from the Parliamentary Debates (4 September 1962 p 820 and p 1214). The first of these passages I have already referred to earlier in this judgment.

38 It was therefore the respondent's submission that any application made only to "trigger compensation" under s 36(3) could not be regarded as having been made in good faith for these purposes; that any application made without any actual intention to develop but for the reservation was not made in good faith for these purposes; and the reference to good faith must comprehend a requirement as to the intention with which the application to develop it is made, even if other objective matters may be relevant. It was argued that the mere fact that the development is of a type that could have been undertaken on the reserved land, as suggested in Question 3(b), cannot be sufficient to establish that an application to undertake the development was made in good faith. Indeed, it was put that where the application to develop is made not to develop the land but in order to increase the value of the land, then no loss other than a hypothetical loss is suffered until such time as the land is sold for a lesser value, and the fact that an application to develop is made for this purpose is not sufficient to establish that it was made in good faith.

39 I accept the arguments of the respondent in relation to the issue of "good faith". Again, it seems to me that on a proper reading of the provisions of s 36(4)(b) the words "in good faith" do mean "genuinely" and exclude applications such as that made in the present instance purely for the purpose of triggering compensation.

40 I would therefore answer Question 3(a) yes and Question 3(b) and (c) no.