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Town planning - Reservation of land for public purposes under Metropolitan Region Scheme - Entitlement to compensation for injurious affection - Notice of intention to sell land and claim compensation - Pre-requisite to compensation that the land is first sold or a development application, made in good faith, is refused - Whether reference in s 36(4)(a)(ii) of the Metropolitan Region Town Planning Scheme Act 1959 to "selling land" is to a conditional contract for sale or the actual conveyance of the land by transfer - Relevance of actual intention to develop to the requirement of good faith in development applications

Metropolitan Region Town Planning Scheme Act, s 36, s 36C, s 37

Town Planning and Development Act 1928, s 11, s 12, s 13

City of Nunawading v Day [1992] VicRp 12; [1992] 1 VR 207

Garms v Birnzwejg [1990] 2 Qd R 336

Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290

1 This appeal arises out of an originating motion brought by the appellant pursuant to s 39(1)(d) of the Commercial Arbitration Act 1985. The appellant thereby sought the determination of certain questions of law that arose in the course of an arbitration. Relevantly to this appeal, those questions of law were:

"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.

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 the 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 The learned trial Judge in effect answered question 1 in the affirmative and answered question 3(a) "Yes" and questions 3(b) and 3(c) "No". The appellant appeals against his Honour's decisions in this respect.

3 The questions in issue are pure questions of law and do not depend for their resolution on any facts. Nevertheless, an agreed statement of facts was placed before his Honour. Briefly, the appellant is the owner of certain undeveloped land at Brigadoon. In 1996 the land was reserved for "parks and recreation" under the Metropolitan Region Scheme (the "Scheme"). On 14 April 1997, the appellant entered into an agreement to sell the land. On 15 April 1997 the appellant gave the respondent notice of its intention to sell the land and to claim compensation under s 11(1) of the Town Planning and Development Act 1928 ("the Town Planning Act"). The respondent contended that the notice should have been given before the agreement to sell the land was made, and the failure to do so meant that the appellant is not entitled to compensation. The appellant disputed this contention. These facts gave rise to the first question asked.

4 On 23 May 1997, the appellant applied for permission to develop the land. The respondent made no decision in regard to the application within the time allowed under the Scheme. By virtue of the terms of the Scheme, the application was deemed to have been refused. It is common cause that when the appellant applied for development permission it did not intend to develop the land in accordance with the application that was made. The appellant contends, nevertheless, that it is entitled to payment of compensation for injurious affection arising out of the refusal of its application for permission to develop the land. These facts give rise to questions 3(a), (b) and (c).

The relevant provisions of the Town Planning Act

5 The Town Planning Act contains provisions that are relevant to the questions that have been asked. These provisions govern the payment of compensation for injurious affection and give the responsible authority power to acquire land.

6 Section 11(1) of the Town Planning Act provides, generally, that, subject to the Act, any person whose land is injuriously affected by the making of a town planning scheme shall be entitled to claim compensation from the responsible authority. By s 11(4), any dispute as to compensation is to be resolved by arbitration under the Commercial Arbitration Act.

7 Section 12 provides that compensation is not payable for injurious affection in certain cases and provides further that land "shall not be deemed to be injuriously affected" by reason of the making of certain provisions in a town planning scheme. For the purposes of these reasons, however, it is sufficient to observe that land affected by a town planning scheme that permits development on land for no purposes other than a public purpose is capable of being injuriously affected by that scheme, and compensation is payable in those circumstances. It is common cause that the appellant's land has been reserved solely for public purposes and has been injuriously affected by the Scheme.

8 Section 13(1) of the Town Planning Act confers power upon the responsible authority to acquire land. It provides:

"The responsible authority may, for the purpose of a town planning scheme, in the name and on behalf of such authority -

(a) purchase any land comprised in such scheme from any person who may be willing to sell the same; or

(b) with the consent of the Governor, take compulsorily, under and subject to Part 9 of the Land Administration Act 1997 ... , any land comprised in such scheme ... "

Accordingly, by s 13(1), the responsible authority may, "for the purpose of a town planning scheme," either purchase land in the scheme from any person who may be willing to sell it, or may compulsorily acquire the land.

9 I turn now to the Metropolitan Region Town Planning Scheme Act ("the Scheme Act"), this being the statute which directly governs the questions, the subject of this appeal.

10 Section 3 of the Scheme Act provides, generally, that the Act is to be construed "in conjunction with the Town Planning Act, as if the provisions of this Act were incorporated with and formed part of that Act".

11 Section 36 of the Scheme Act is of particular significance to the questions, the subject of this appeal. In summary, the section provides for the application of s 11 and s 12 of the Town Planning Act to the Scheme. By s 36(1), s 11 and s 12 of the Town Planning Act are to be construed as if the respondent were the "responsible authority" referred to in those sections. Importantly, as will be seen, s 36 defers the obligation to pay compensation for injurious affection when such an obligation arises under s 11 of the Town Planning Act. Moreover, s 36(2)(a) confers additional powers upon the respondent relating to the acquisition of land. I discuss these provisions in greater detail below.

12 Section 36(2)(a) provides:

"(2)(a) The scheme may provide that where compensation for injurious affection is claimed ... [the Commission] may at its option elect to acquire the land so affected instead of paying compensation."

Section 36(2)(a) accordingly empowers the respondent to elect to acquire land injuriously affected, instead of paying compensation for it. By that subsection, however, the power of so electing to acquire land is conditioned upon the Scheme providing for such an election. In other words, the power to so acquire land is not derived solely from the Scheme Act. For the power to exist, the Scheme must provide for it.

13 By s 36(2)(b) if the respondent wishes to make an election to acquire land it must give notice in writing of its election to acquire the land within three months of the claim for injurious affection being made.

14 Section 36(2a) provides for the determination of the value of the land where the respondent and the owner of the land are unable to agree upon the price. In essence, the value is then to be determined by arbitration, or by a court, or by some other agreed method.

"Subject to subsection (4) of this section, 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."

This subsection, accordingly, defers payment of compensation. Here is the first relevant reference to a "sale" of the land. Under s 36(3) compensation is only payable upon either the land being "first sold following the date of the reservation" (s 36(3)(a)), or upon an application for development under the scheme being refused or granted subject to unacceptable conditions (s 36(3)(b)). For convenience, I shall refer, collectively, to a refusal and to a grant subject to unacceptable conditions under s 36(3)(b) as a "development refusal".

16 It is to be noticed that s 36(3)(a) provides that compensation for injurious affection is payable only once. Such compensation is payable when land is first sold. Moreover, in the case of a sale of land, compensation is payable to the person who was the owner of the land at the date of reservation. In the case of a development refusal, compensation is payable to the person who was the owner of the land at the date of the application for development permission.

17 Section 36(4) is the section which gives rise, directly, to both questions 1 and 3. It provides:

"Before compensation is payable under subsection (3) -

(a) where the land is sold, the person lawfully appointed to determine the amount of the 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 receive 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."

Thus s 36(4)(a)(ii) contains the notice requirement that is critical to question 1, and s 36(4)(a)(iii) and s 364(b) contain the good faith requirements that give rise to question 3.

18 Section 36(5) provides that a claim for compensation under s 36(3) shall be made at any time within six months after the land is sold or a development application is refused.

The respondent's submissions as to the purpose of the notice and the learned Judge's decision concerning question 1

19 Both parties agreed that the purpose of the notice requirement under s 36(4)(a)(ii) was not connected with the respondent's power to acquire land under s 36(2)(a). That needs some explanation.

20 By s 36(5), a claim for compensation can only be made "within 6 months after the land is sold" or within 6 months after there has been a development refusal. Section s 36(2)(b) requires the respondent to make its election to acquire land within three months of the claim for injurious affection being made. Thus the election to acquire land can only be made after the land has been sold (by an agreement of sale having been entered into - on the respondent's contention, or by conveyance - on the appellant's contention). That in turn means that where land is sold, any acquisition under s 36 would affect the rights of a third party, namely, the purchaser, irrespective of whether the land has been conveyed or not. Both parties accepted that the Scheme Act does not contemplate such an acquisition and accepted that the respondent's power to elect to purchase land under s 36(2)(a) of the Scheme Act only arises where a claim for compensation is based on a development refusal.

21 It follows, therefore, that the notice requirement under s 36(4)(a)(ii) (which concerns the sale of land) has no application to any right on the part of the Commission to make an acquisition under s 36(2)(a), the latter right being applicable only to land affected by a development refusal (and not to land that is sold).

22 The respondent submitted that the purpose of the s36(4)(a)(ii) notice requirement was to provide it with the opportunity to negotiate with the owner of land for the purposes of acquiring that land voluntarily pursuant to s 13(1)(a) of the Town Planning Act. In this regard, s 37(1) of the Scheme Act confers power upon the respondent to act under s 13(1)(a) of the Town Planning Act by purchasing land from any person willing to sell it.

23 The respondent argued that the Parliament intended, by s 36(4)(a))(ii), to ensure that the respondent would be alerted to the willingness of owners of land, who give notice under that section, to sell their land. In those circumstances, the respondent, should it so desire, would be able, timeously, to act pursuant to s 3(1)(a) of the Town Planning Act and buy that land. This argument underpins the respondent's submission that "sold", as the term is used in s 36(4)(a), means an agreement to sell. According to the respondent, this rationale is the explanation for the requirement that the owner give notice in writing to the responsible authority before agreeing to sell the land. Were "sold" to be construed as "conveyed", that rationale would be defeated.

24 The learned chambers Judge upheld the respondent's argument. His Honour concluded that largely for this reason (that is, the acceptance of the respondent's submissions as to the purpose of the notice requirement under s36(4)(a)(ii)), and inferences his Honour drew from the structure of the Scheme Act as a whole, question 1 should be answered in the affirmative. That is, for compensation to be payable under s 36, notice of intention to sell had to be given before the owner entered into an agreement for the sale of land.

25 There is ample authority for the proposition that the words "sell" and "sale" are inherently ambiguous. They are capable of meaning either an agreement to sell or a completed sale in the sense of a conveyance. Which of the two meanings was intended by s 36(4)(a)(ii) depends upon a construction of the Scheme Act as a whole, and I proceed now to that task.

26 Section 36(4)(a)(ii) does not prescribe the time by which the owner is entitled to "sell the land" after the giving of notice. Plainly, if an agreement for the sale of land were to be entered into within minutes of the giving of the s 36(4)(a)(ii) notice, the purpose contended for by the respondent could not be achieved. Practically speaking, the respondent would need some days, at least, to decide whether it would wish to acquire land pursuant to s 13(1)(a) of the Town Planning Act. The time reasonably necessary would depend on many factors, such as the size and nature of the land in question, market conditions at the time, the price sought by the owner, and the particular purpose in regard to the Scheme the respondent would have in mind in wishing to acquire the land.

27 Accordingly, if any weight is to be given to the purpose contended for by the respondent, the Scheme Act would have to be construed as implicitly providing for a reasonable time between the giving of the notice and the entering into of an agreement to sell. Otherwise, the achievement of that purpose would depend in each case on the willingness of the owners in question, of their own volition, to interrupt their negotiations and delay concluding agreements so as to afford the respondent an appropriate time within which to make up its mind. There would be no incentive for owners to behave in such a way, and the prospect of them voluntarily giving notice in good time is virtually nil.

28 It follows that the purpose contended for by the respondent could only be effected if the omission of any fixed notice period in s 36(4)(a)(ii) were to be cured, by construing the section as implying that the notice must be given within a reasonable time before entering into an agreement for the sale of land. That in itself, however, suggests that the respondent's contention is not correct. After all, on the respondent's contention, owners would lose their rights to compensation should they not comply with the notice requirement before entering into of an agreement of sale. If Parliament in fact intended such a consequence to follow, it is to be expected that it would prescribe the period between the notice of intention to sell and the entering into of the agreement of sale with specificity, and would not leave that critical issue to be resolved by reference to such an uncertain standard as a reasonable time.

29 Moreover, the introduction of such a notice requirement would be a serious interference with the common law rights of ownership. If owners were to be required to wait for a reasonable time to expire before entering into an agreement of sale, they could be prejudiced in many ways. Negotiations for the sale of land may be long and arduous. They are inevitably affected by market conditions which can quickly change. Time is often of the essence in regard to whether a deal can be concluded or not. The purchaser may lose interest. The market may fall in the interim. The sale may be lost, or a sale might only be able to be effected at a lower price. Confidentiality is often crucial in land sales, and knowledge that one particular owner of land intends to sell may cause others in the vicinity, to the detriment of that owner, to sell as well. Owners of land would be obliged to remain, in effect, in limbo, pending a decision on the part of the respondent whether or not to proceed to act under s 13(1)(a).

30 It has long been the general rule that statutes dealing with acquisition of land "are not to be construed as interfering with vested interests unless that intention is manifest": Clissold v Perry [1904] HCA 12; (1904) 1 CLR 363 (per Griffith CJ at 373). In my view, such an intention could hardly be said to be "manifest" from the language of the Scheme Act. This, in my view, is an important factor that militates against the respondent's construction.

The philosophy of s 36 as regards the payment of compensation

31 The next major consideration in the construction of s 36(4)(a)(ii) is the underlying philosophy of s 36 insofar as it applies to the payment of compensation.

32 It seems to me that s 36(3) reveals an intention on the part of Parliament that compensation be payable, generally speaking, only when a particular category of loss is incurred by the owner of land. That intention underpinned the deferment of payment of compensation for injurious affection brought about by s 36 when the Scheme Act came into operation.

33 By s 36(3), compensation becomes payable only upon the land being "first sold" following the reservation, or upon a development refusal (in consequence of the reservation) being issued. If "sold" is construed as "conveyed", the loss sustained on conveyance would be constituted by the owner receiving payment of a lesser sum (being the purchase price of the land) than would have been the case had the land not been reserved. A loss in these terms can readily be described as concrete or tangible. The loss sustained when a development refusal prevents owners from developing their land in accordance with their genuine intent, is also a loss in concrete or tangible terms. The owners are thereby prevented from carrying out their intent of exercising their rights of ownership and cannot utilise their land as they wished to do.

34 Owners of land suffer loss merely by the reservation of land for public purposes. That loss is constituted simply by the reduction in the market value of the land caused by the the reservation and the inability of the owner to use the land for purposes conflicting with the reservation (even where the owner does not intend to develop the land in any way). The loss sustained on reservation occurs without the owner taking any action in connection with the land, and while the owner still holds the land in the form it was in immediately prior to the reservation. When compared to the kind of loss sustained on conveyance or development refusal where owners are prevented from developing land in accordance with their genuine intent, the loss suffered on reservation is less concrete or tangible. The point to be noticed is that Parliament, by s 36(3), provided that compensation was not to be payable upon that kind of loss being sustained.

35 It seems to me that loss caused by the entering into of an agreement of sale at a price lower than the price the land would have fetched but for the reservation, is a loss that falls into the same category as loss sustained on reservation. Until the owner actually receives payment of the purchase price for the land (ordinarily upon conveyance), the loss suffered upon the agreement of sale being entered into differs little in character from the loss suffered upon the land being reserved. In a limited sense each of those losses can be described as "paper" losses inasmuch as they do not result in the owner of land actually receiving less for the land on sale, or being unable to use the land as genuinely intended.

36 The difference in the kind of loss suffered upon the entering into of an agreement, on the one hand, and upon conveyance, on the other is emphasised when regard is had to the not infrequent phenomenon of a conditional agreement for the sale of land. It is not uncommon for conditions attaching to agreements for the sale of land to fail, with the result that the land is not conveyed pursuant to the agreement in question. The similarity that then exists between loss caused by the reservation of land and loss caused by the failed agreement of sale is even more marked. In both instances, the owner has suffered a particular kind of loss, but the owner has not in consequence received less for the land or suffered any reduction in income.

37 In my opinion, the philosophy underlying the deferment of payment of compensation as provided for by the Scheme Act is that compensation for injurious affection should only be payable when the owner of the land involved suffers a significantly more tangible loss than that which occurred when the land was reserved. In my view, the construction advanced by the appellant is more consistent with this approach. That is to say, I prefer the argument that Parliament intended the Scheme Act to provide that payment for compensation should be only be made when the owner of land actually receives less money for the land than he or she would have received had there been no reservation, or when the genuine intention of the owner to develop the land is frustrated by a development refusal brought about by the reservation. On this basis "sold" in s 36(3) should be construed as meaning "conveyed".

The language used in s 36 and its form and structure

38 In my view, as a matter of the ordinary meaning of the words used, the reference to "first sold following the date of the reservation"in s 36(3)(a) is more consistent with "sold" meaning "conveyed", rather than "being the subject of an agreement of sale".

39 A conditional agreement of sale is again a striking illustration of this. Assume that reserved land is the subject of a conditional agreement of sale and the condition fails with the result that the agreement is terminated with the status quo being maintained (that is, without the land being conveyed and without any money passing). Assume, further, that many years later a second agreement for the sale of the same land is entered into and then conveyed pursuant to that agreement. As a matter of common sense, it would be difficult to argue that the land was "first sold" by the first agreement. Moreover, the probabilities are that compensation payable on such a basis would not represent the true loss suffered by the owner.

40 Generally, as the heading to the section expressly provides (and as the subject matter of the section confirms), s 36 is concerned with the "application of sections 11 and 12 of the Town Planning Act to the Scheme". There is nothing in the language used in the section that suggests that it is intended to have any bearing on the rights of the respondent under s 13(1)(a) of the Town Planning Act.

41 The notice provision in s 36(4)(a)(ii) is directly connected by the words of the section with the compensation payable under s 36(3). Section 36(4)(a)(ii) is juxtaposed between s 36(4)(a)(i), which deals with the amount of compensation to be paid to the owner of land (upon the requirements of s 36(3) being satisfied), and s 36(4)(a)(iii), which contains a further condition (namely, the good faith requirement) that has to be satisfied before compensation is payable. Moreover, there is no reference in s 36(4) or, indeed, s 36 as a whole to s 13(1)(a) of the Town Planning Act.

42 The inferences that arise from these matters are, firstly, Parliament intended the notice provision in s 36(4)(a)(ii) to have a bearing on the compensation payable under s 36(3) and, secondly, Parliament did not intend that notice provision to have any connection with s 13(1)(a) of the Town Planning Act.

43 Both parties attempted to rely on s 36C of the Scheme Act. This section concerns valuations made by a body known as the Board of Valuers, constituted by s 36B.

44 Section 36C(1) provides that the owner of land that is subjected to injurious affection who gives notice of his intention to sell the land and claim compensation is required (unless the respondent waives the requirement) to apply to the Board for a valuation of the land "as not so affected" and the Board shall thereupon make such a valuation. Section 36C(2) provides:

"Subject to subsection (3a), a valuation made by the Board pursuant to subsection (1) shall be communicated to the applicant and to the Commission and, for the purposes of section 36, a valuation so made is final."

Section 36C(3) provides that upon receipt of a valuation made by the Board, the respondent shall advise the owner "of the minimum price at which the land may be sold without affecting the amount of compensation (if any) payable to him under s 36". Section 36(3a) provides:

"Where any land with respect to which a valuation has been made under this section is not sold within a period of one year from the making of the valuation, the Board may, at the request of the owner of the land, if in the circumstances of the case it thinks it just to do, review the valuation and either confirm the valuation or vary it."

45 Section 36C contains a number of obscurities and both parties accepted that it was difficult to construe. Not least of these difficulties is the reference in s 36C(2) to a valuation by the Board being final "for the purposes of s 36". The appellant submitted that "for the purposes of s 36" is a reference to s 36(6) which provides:

"(6)(a) Subject to this section, the compensation payable for injurious affection ... , where no part of the land is purchased or acquired by the Commission, shall not exceed the difference between -

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

(b) The value referred to in paragraph (a)(i) and (ii) shall be assessed as at the date the land is sold as referred to in subsection (3)(a) or ... "

It is indeed difficult to conceive of any other part of s 36 to which s 36C(2) could be referring when it provides that a valuation by the Board is final "for the purposes of s 36". Under s 36C(1) the Board is required to value the land "as not so affected" by the reservation and s36(6)(a)(ii) concerns "the value of the land as not so affected". This appears to be the link between the two sections. If this is correct, it follows that the Board is required to value the "unaffected" land as at the date the land is "sold" (as required by s 36(6)(b)).

46 The appellant submitted, on this basis, that s 36C can only operate after the date of sale is known and, in the circumstances, s 36C does not support the proposition that the notice required under s 36(4)(a)(ii) is to be given before an agreement for sale is made.

47 The respondent, on the other hand, referred to s 36C(3a) and pointed out that it appeared from that section that a valuation could take place up to a year before the land is sold. The respondent submitted that the Board was required to give a valuation as at the date the Board sat as valuers and, as I understood the submission of counsel for the respondent, the valuation so made would not be a valuation of the value of the land in terms of s 36(6)(a)(ii).

48 I do not think it necessary to decide on the true meaning of s 36C. It is sufficient to say that I do not regard the section as being helpful in any way in the construction of s 36(4)(a)(ii).

49 It is readily arguable that there is no compelling reason to give the respondent the protection that would be afforded to it were its contentions to be upheld. After all, s 13(1)(a) of the Town Planning Act read with s 37(1) of the Scheme Act gives it ample power to acquire land voluntarily. Should the respondent wish to acquire such land in reliance on s 13(1)(a), it would merely need to communicate with the owner and ascertain whether the owner would be willing to sell the land. Were it Parliament's intention to oblige owners desirous of selling their land to inform the respondent of their intentions before selling, then in my view that intention would have been more clearly expressed. It would not have to be construed by inference and implication from a subsection in a different statute dealing with other subject matter, in a way that would detract from the common law rights of owners of land.

50 The appellant contended that the purpose of the notice was to give the respondent notice of the sale to enable it to undertake an investigation, contemporaneously with the sale (that is, the conveyance) in regard to the issues of "reasonable steps" referred to in s 36(4)(a)(iii) and "good faith" in s 36)(4)(b) (these being matters directly related to the payment of compensation under s 36(3)). The fact that notice would then be given, say, minutes before the conveyance took place, would not be material. On this argument, the purpose of the notice would be to ensure that the respondent was aware of the sale (that is, the conveyance) before receiving a claim in respect of the land sold. This, it was said, was significant as under s 36(5) a claim for compensation under s 36(3) could be made at any time within six months after the land was sold. The purpose of the notice, on the appellant's argument, was to enable the respondent to investigate the transaction immediately, and to prevent an owner from giving notice say 6 months after conveyance when the facts would be more difficult to establish.

51 While this is not an entirely satisfactory answer to the inquiry concerning the true purpose of the notice, it is in my view a more attractive solution than that advanced by the respondent.

52 In my view, the construction advanced by the appellant is to be preferred. I have come to the conclusion that this construction interferes least with the common law rights of owners, it accords with the accepted canons of construction, it is consistent with the general philosophy underlying the date on which compensation becomes payable for injurious affection, it is more consistent with the ordinary meaning of the language used in the section, and gives appropriate weight to the context in which s 36(4)(a)(ii) appears in the Scheme Act. I would therefore uphold the appeal in respect of the answer given to question 1 and answer that question in the negative.

53 In my view, for the reasons I have expressed above, the philosophy of the Act regarding loss is more consistent with the respondent's contention than that of the appellant.

54 Where an applicant who genuinely wishes to develop land is refused permission to develop, it will be required to continue holding the land without being able to use it as it wished. That consequence would result in an owner suffering what might be termed a loss in concrete terms, bearing some equivalence to a loss caused by an owner receiving less money on conveyance of the land pursuant to an agreement of sale than would have been the case had there been no reservation.

55 On the other hand, where an application for development is refused and the owner never intended to carry out the development, the loss is less tangible and immediate. The loss then is similar to the kind of loss suffered upon reservation of the land - loss that Parliament considered should not trigger the payment of compensation.

56 In my view, the term bona fide in s 36(4)(b) has to be construed in this context. Thus, in my opinion, where an applicant does not genuinely wish to carry out a development and nevertheless applies for permission to so develop land, the application is not bona fide within the meaning of s 36(4)(b). This is what the learned Judge held and I agree, with respect, with his Honour in this regard.

57 I would therefore dismiss the appeal with regard to question 3.

58 WALLWORK J: I agree with the reasons for judgment and the conclusions of Ipp J. There is nothing I wish to add.

59 OWEN J: I have read the reasons to be published by Ipp J. I agree with them and his Honour's conclusions. I have nothing further to add.