Court of Appeal (WA)|2011-09-21|Before: Newnes JA

CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2011] WASCA 195 (21 September 2011)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2011] WASCA 195

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2010] WADC 116

Town planning - Planning and Development Act 2005 (WA), s 159 - Two subdivisions having road as common boundary - Developers required to contribute to cost of certain local infrastructure including upgrading road - One developer undertook upgrading of road as part contribution to local infrastructure - Other developer undertook correspondingly greater burden of cost of other infrastructure - Whether first developer entitled to claim contribution to cost of upgrading road from second developer - Whether second developer contributed to cost of upgrading road - Whether water and sewerage pipes in road reserve were service ducts 'in connection with the road'

Costs - Indemnity costs - Awarded on basis that case 'hopeless' - Relevant principles

Civil Properties Pty Ltd v Miluc Pty Ltd [2010] WADC 116

Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153

Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397

Furness Shipbuilding Co Ltd v London & North Eastern Railway Co (1934) 50 TLR 257

Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465

PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24

Re SCA Properties Pty Ltd (in liq) [1999] QSC 180; (1999) 17 ACLC 1611

Rosniak v Government Insurance Office (1997) 41 NSWLR 608

1 NEWNES JA: This appeal arises out of a claim by the appellant against the respondent for half of the cost of upgrading a street in Forrestfield called Apricot Street, on opposite sides of which lie subdivision developments carried out by the appellant and the respondent respectively. The claim was made pursuant to s 159 of the Planning and Development Act 2005 (WA) (the Act).

2 It was a condition of the approval of those subdivisions by the Western Australian Planning Commission (WAPC) that the appellant and the respondent each contribute to the estimated cost of certain local infrastructure, including the upgrading of Apricot Street. As it appeared that the appellant's subdivision would precede any other subdivision in the area, the appellant wished to undertake the immediate upgrading of Apricot Street in order to enhance the presentation of its subdivision. To that end, the appellant arranged with the local authority, the Shire of Kalamunda (the Shire), with the acquiescence of adjacent landowners, that the appellant would carry out the upgrading of Apricot Street and, to allow for the additional cost the appellant would thereby incur, its contribution in respect of other infrastructure would be reduced.

3 In accordance with that arrangement, the owners of the adjacent land, including the respondent, were relieved of any obligation to contribute to the cost of upgrading Apricot Street but their contributions to the cost of other infrastructure were correspondingly increased. The total monetary contribution required of each owner remained unchanged. The respondent subsequently subdivided its land and paid its contribution to infrastructure costs to the Shire.

4 Section 159 of the Act enables an earlier subdivider to recover from a later subdivider half of the cost of the construction or upgrading of a road adjoining both properties, if the later subdivider has not contributed to that cost. The appellant claimed that, as it had borne the whole of the cost of upgrading Apricot Street, pursuant to s 159 of the Act it was entitled to a contribution by the respondent to that cost.

5 In the District Court, Stevenson DCJ held that the respondent had, by its contribution to the overall infrastructure cost, contributed to the upgrade of Apricot Street within the meaning of the Act and therefore the appellant was not entitled to a contribution from the respondent: Civil Properties Pty Ltd v Miluc Pty Ltd [2010] WADC 116. The appellant appeals against his Honour's decision.

6 The area in which the relevant subdivisions are located fall within the Shire of Kalamunda's District Planning Scheme No 2 (as amended) (the Scheme) and, under the Scheme, come within an urban development zone designated 'Urban Cell 7'. Urban Cell 7 (U7) included two areas which were designated according to the likely timing of their development. Those areas were Agreement Area 1 (AA1) and Agreement Area 2 (AA2).

7 Pursuant to cl 6.13 of the Scheme, the land within an urban development zone (such as U7) was intended to be 'progressively developed for residential purposes and for commercial and other uses normally associated with residential development'. Clause 6.13 provided that before granting or recommending approval of any development involving the subdivision of land within an urban development zone, the Shire had to require the submission of an outline development plan for the whole of the urban development zone. The obvious purpose of doing so was to avoid fragmented development and to ensure that the development of the urban development zone as a whole was properly integrated and staged so that necessary infrastructure could be developed in an appropriate manner.

8 Where the Shire resolved to approve an outline development plan, the Scheme required that the Shire undertake a process of advertisement and consultation. If, following that process, the Shire wished to proceed with the outline development plan, it had to submit it to the WAPC, together with any objections, and request that the WAPC adopt it 'as the basis for approval of subdivision and development applications within the area covered by the plan' (cl 6.13(f)). The adoption of the outline development plan by the WAPC was necessary because the power to approve subdivision applications lay with the WAPC. The purpose of an outline development plan was to provide the framework for the determination by the WAPC of land use, subdivision applications and development applications for the area concerned (ts 206).

9 The Shire resolved to adopt and, on 15 February 1999, forwarded to the WAPC for its approval, an outline development plan for the land in U7 constituted by AA1 (ODP U7 - AA1). AA1 was bounded by Roe Highway, Berkshire Road, Apricot Street and Sultana Road East, Forrestfield. It lay on the northern side of Apricot Street.

10 By letter dated 28 April 1999, the WAPC wrote to the Shire to say that it had resolved to adopt ODP U7 - AA1 'as the basis for [the WAPC's] consideration of subdivision applications within the area covered by the plan', subject to certain conditions. Condition 2 provided that:

Prior to the determination of subdivision applications, satisfactory agreements for equitable developer contributions should be in place for public open space, construction of drainage within the public open space, landscaping and management of the public open space and for the upgrading of Berkshire Road and Apricot Street.

11 On 29 July 1999, the WAPC wrote to the Shire to say, relevantly, that it had resolved to adopt a modified version of ODP U7 - AA1 and to support the method of determining infrastructure contributions for AA1 as set out in attachment 2 to the letter. Attachment 2, headed 'Infrastructure Contributions: U7 [AA1]', set out the percentage contributions to infrastructure required from the four owners of the land comprising AA1, namely Lot 537, Lot 538, Lot 539 and Lot 2 (the last three being owned by the appellant and ultimately being the subject of subdivision applications). It was as follows:

Upgrading Berkshire Road adjacent to [AA1] 4 lane divided carriageway

Upgrading dual use path on Berkshire Road, half cost of roundabout on intersection of Berkshire Road and Apricot Street

Half cost upgrading Apricot Street adjacent to [AA1]

POS to be provided at 10% each landholding under s 20A of Town Planning and Development Act

12 The contribution table formed part of the outline development plan. As an application for subdivision would generate a need for infrastructure to be provided, it was intended that when the landowners concerned applied to subdivide their land they would be required as a condition of subdivision approval to contribute to the cost of the infrastructure when the subdivision occurred. The contribution table was the means by which that cost was to be allocated among the adjacent landowners (ts 209). As the estimated cost of the infrastructure works had not yet been determined, the actual financial contribution could not, at that stage, be allocated in accordance with the designated owner obligations. Accordingly, no monetary amounts were specified.

13 Shortly afterwards, on 20 September 1999, the Shire adopted an outline development plan for AA2 (ODP - AA2). That involved the land bounded by Berkshire Road, Apricot Street and Sultana Road East, Forrestfield. As I have mentioned, the AA1 land and the AA2 land lay on opposite sides of Apricot Street, which runs from Berkshire Road to Sultana Road. AA2 lay on the southern side of Apricot Street. (A diagram of the area (exhibit 1P-5) is attached to these reasons.) The respondent was the owner of one of the lots (Lot 504, subsequently Lot 540) in AA2.

14 By letter dated 24 December 1999, the WAPC advised the Shire that it had adopted ODP - AA2 as the basis upon which, subject to various conditions, it would consider subdivision applications within AA2. Those conditions included, by condition 2, a requirement that:

Prior to the approval of subdivision applications for the land, satisfactory agreements for equitable developer contributions should be in place for public open space, construction of drainage within the public open space, landscaping and revegetation of the creek line (for drainage purposes) and for the upgrading of Berkshire Road, Sultana Road and Apricot Street.

15 Condition 3 provided that the developer contributions were to include 100% of the cost of widening the portion of Berkshire Road adjacent to AA2, 50% of the cost of upgrading Apricot Street and Sultana Road adjacent to AA2, and 50% of the cost of construction of a roundabout at the intersection of Berkshire Road and Apricot Street.

16 It is significant that the amended ODP - AA1 and ODP - AA2 each stipulated that owners who subdivided their land were to contribute to the upgrading of Berkshire Road between Roe Highway and Apricot Street (including the construction of a roundabout at the junction of Berkshire Road and Apricot Street) and Apricot Street.

17 The appellant was the owner of three lots in AA1, being Lot 538, Lot 539 and Lot 2, comprising 78% of the total area of AA1. Over a period of time, the appellant sought approval to subdivide each of these lots.

18 The respondent was the owner of one lot within AA2, Lot 504, which comprised 8% of the total area of AA2. Some time later it sought approval to subdivide Lot 504.

19 The relevant subdivision approvals followed the adoption by the WAPC of the outline development plans for AA1 and AA2. The history of the subdivision approvals was as follows.

20 The appellant was advised by the WAPC, by letter dated 19 December 2001 (exhibit 1P-6), that the WAPC was prepared to approve the subdivision of Lot 538 in accordance with the appellant's proposed plan of subdivision, subject to certain conditions. Two of those conditions required the appellant to make arrangements with the Water Corporation so that connections to water and sewerage supply were available from the subdivided lots. That is relevant to a claim the appellant made against the respondent for the costs of installing 'service ducts' in the road reserve. In addition, condition 11 of the approval provided:

The subdivider shall contribute to infrastructure contributions for the U7 [AA1] as endorsed by the [WAPC] on 29 July 1999 to the satisfaction of the [WAPC].

21 Annexed to the conditions of approval was a section entitled 'Advice to Applicant'. Note 5 in that section was as follows:

With regard to Condition 11, the [Shire] advise that the infrastructure contribution is for upgrading/construction of Berkshire Road, the construction of a roundabout at the intersection of Berkshire and Apricot Roads [sic], the upgrading of the dual use paths, the upgrading of Sultana Road and the construction of drainage as outlined in Attachment C.

The applicant is further advised that the infrastructure contributions for Lot 538 shall be satisfied prior to the Shire issuing clearance for lots associated with the subject subdivision. ...

Costings for the roundabout at the intersection of Apricot and Berkshire Roads are estimated at a total cost of $315,000 with a contribution of $22,000 to be paid by the subdivider/applicant for the subdivision of Lot 538.

22 The appellant appealed to the Town Planning Appeal Tribunal against the imposition of certain of the conditions for the subdivision of Lot 538 but it did not appeal against Condition 11 or the conditions relating to water and sewerage supply. Consent orders disposing of the appeal were made by the Town Planning Appeal Tribunal on 30 July 2002. The consent orders included Condition 7, which was identical to the original Condition 11. The consent order also replicated note 5 in the 'Advice to Applicant', but in the consent order it was designated as note 3.

23 There was a meeting at the (then) Department for Planning and Infrastructure in late November 2002 attended by, among others, Mr McKellar and a representative of the Shire, Ms Butterworth, at which the requirement in the outline development plans for developers to contribute to local infrastructure was discussed.

24 On 10 December 2002, there was a meeting between Mr McKellar, of the appellant, and Mr Milward, on behalf of the Shire. There was a dispute as to what occurred at that meeting. According to Mr McKellar, he told Mr Milward that the appellant wished to carry out the upgrade of Apricot Street along the frontage of the appellant's land, for what he described as reasons of 'convenience and presentation' (ts 60). He said he told Mr Milward that the appellant was not prepared to bear the whole of the costs unless, under the Act, it could recover half of that cost from the owner of the land on the opposite side of Apricot Street, the respondent's predecessor in title. Mr McKellar said that Mr Milward agreed to that (ts 61).

25 Mr Milward's account was rather different. He said that at the meeting Mr McKellar sought the agreement of the Shire to the appellant carrying out the upgrade of Apricot Street adjacent to its land for the purpose of the presentation of its lots. Mr Milward could not recall whether there was any discussion of the appellant seeking to recover half of its costs from the owner on the opposite side of Apricot Street but said that, if that had been raised, he would have made it clear that the Act did not apply because of the contributions that all of the owners were making to infrastructure costs for the area (ts 165).

26 In a letter dated 10 December 2002, addressed to Mr Milward, Mr McKellar set out what he said was his understanding of the discussion at the meeting. The letter was resent on 13 December 2002, with the addition of par 5.3 which is irrelevant for present purposes. In the letter, Mr McKellar confirmed that certain understandings had been reached, which (relevantly) he said were as follows:

That Civil Properties Pty Ltd would pay to the Shire the balance of its U7 Agreement Area 1 fees for the Lot 538 subdivision in the amount of $6,712 (to make a total contribution for the Lot 538 subdivision of $22,200).
...
That Civil Properties would pay to the Shire the sum of $12,800 which the Shire will hold in trust for the following purposes:

3.1 pending approval by the Planning Commission of the subdivision of Lot 2 and Lot 539;

3.2 in complete satisfaction of agreed cash liabilities of Civil Properties Pty Ltd as to its U7 Agreement Area 1 scheme contribution;

3.3 pending completion of the matters referred to in paragraphs 4 to 9 inclusive below.

The Civil Properties shall, as part of Stage 2 of the Lot 539 subdivision (being proposed Lots 516 to 520 inclusive), construct the drainage basin sufficient for the drainage of the Lot 537 and 538 subdivisions.
That Civil Properties shall, as part of the Lot 2 subdivision:

5.1 upgrade to complete subdivisional standards Apricot [Street] to its full width;

5.2 upgrade to complete subdivisional standards Sultana Road to its full width;

5.3 complete the construction of the drainage basin within the Lot 539 and Lot 2 subdivision

In consideration of Civil Properties effecting the works referred to in paragraphs 4 and 5 above, the Shire shall relieve Civil Properties of having to contribute anything by way of cash to the U7 Agreement Area 1 Scheme, save for what has already been paid by Civil Properties and what is paid as referred to in paragraphs 1 and 3 above.
...
The Shire will correspond with the proprietors of the land to the east of Apricot [Street] to ensure that they will contribute as part of their agreement area, to one half the cost of the Apricot [Street upgrade]. Failing that, Civil Properties and the Shire to examine an arrangement to recover the cost under the provisions of Section 28 of the Town Planning and Development Act 1928.

27 It is apparent that par 8 of that letter purported to confirm what became the disputed part of the discussion of 10 December 2002.

28 There was no direct response from the Shire to that letter but, by letter dated 17 December 2002, Mr Milward, on behalf of the Shire, wrote to all of the owners of land in the U7 zone, including the appellant, in the following terms:

FORRESTFIELD U7 AGREEMENT AREA 2 - CONTRIBUTIONS

In accordance with Department for Planning and Infrastructure and Shire of Kalamunda requirements, contributions shown on the attached Table 1, are to be made by sub-dividers of the lots listed, for the upgrading of Berkshire Road and Apricot Street.

It appears that the subdivision of [AA1], to the west of Apricot Street will be completed ahead of Area 2. To facilitate the sub-division of Area 1, it is preferable to concurrently complete the upgrading of Apricot Street, to Sultana Road East. The developer of Area 1, has indicated a willingness to complete the upgrade of the roadworks required for Apricot Street, on the basis that his cash contribution towards his share of the upgrade of Berkshire Road, between Roe Highway and Apricot Street, is reduced by the value of the works necessary in Apricot Street. Instead therefore, of contributing $170,000 towards the Berkshire Road upgrade, the developer will upgrade Apricot Street and pay a contribution of $35,000, being the difference in the estimated cost of Berkshire Road and Apricot Street (see Tables 3 & 4).

If Area 1 works proceed on the basis of the above, there will be no obligation upon Area 2 owners to upgrade Apricot Street, but in exchange they will be asked to contribute an additional cash amount totalling $135,000 towards the upgrade of Berkshire Road, between Roe Highway and Apricot Street, and the construction of the roundabout at Berkshire Road and Apricot Street.

The amended contribution requirements would be as shown on the attached Table 2, entitled 'Forrestfield U7 [AA2] Contributions Amended Requirements'.

To ensure that all owners and possible future owners within Area 2, have an understanding of their contribution obligations, your agreement is sought to formalise the amended contributions as detailed above.

I would like to seek Council concurrence of these amendments, therefore your indication of agreement or otherwise before 14 February 2003, would be appreciated.

29 It is unnecessary to set out in full the tables attached to the letter. Suffice it to say that tables 1 and 2 dealt with the contributions to infrastructure required of the owners in U7 AA2. Table 1 set out the existing contributions that were required to be made. It commenced with the required infrastructure and the estimated costs of each item, as follows:

Berkshire Road - Widen to 10 m Roe to Apricot (50%) and Berkshire Road/Apricot Street - Construct 2 Lane Roundabout (50%)

Widen Berkshire Road to 9 m - Apricot Street to Lot 527 (East boundary) (100%)

30 Below that was set out in tabular form the respective contributions of the owners of land in the AA2 area to the total sum of $498,000. The respondent's contribution was assessed at $39,700. Table 2 contained the amended contributions. In that table, the AA2 landowners' contributions to item 1, the widening of Berkshire Road between Roe Highway and Apricot Street and the construction of the roundabout (the Berkshire Road upgrade), had been increased by $135,000 - from $170,000 (50%) to $305,000 (90%) - and item 3 ($135,000 toward the upgrading of Apricot Street) had been omitted.

31 Tables 3 and 4 dealt with the contributions to be made to infrastructure by the owners of AA1. Table 3 set out the infrastructure concerned and the existing contributions required to be made, and table 4 contained the amended contributions. Table 3 was as follows:

Apricot (50%) and Berkshire Road/Apricot Street - Construct 2 Lane Roundabout (50%)

Upgrade Apricot Street adjacent to Agreement Area 1 (50%)

32 In table 4, the AA1 owners' contribution to item 1 (the Berkshire Road upgrade) had been reduced by $135,000 - from $170,000 (50%) to $35,000 (10%) - and the contribution to item 2 (the upgrade of Apricot Street) had been increased by $135,000 - from $135,000 (50%) to $270,000 (100%). In each case, the appellant's total contribution for its three lots was assessed as $390,000.

33 That is to say, the effect of the amendments was that the AA1 owners' contribution to the estimated cost of the upgrading of Apricot Street was increased from $135,000 to $270,000, but their contribution to the Berkshire Road upgrade was correspondingly reduced from $170,000 to $35,000. Conversely, the contribution of the AA2 owners to the upgrading of Apricot Street was reduced from $135,000 to nil, but their contribution to the Berkshire Road upgrade was correspondingly increased from $35,000 to $170,000. The total infrastructure contribution of $500,000 plus GST for the owners in AA1 and of $498,000 plus GST for the owners in AA2 remained unchanged, as did the amount of the contributions payable by each of the individual owners in AA1 and AA2 respectively. The amount payable by individual owners was determined by the proportion that the area of their land bore to the whole of the land in the relevant agreement area.

34 I should mention that the total amount specified for each item of work in the tables was an estimate of the cost of the work and there was no process to require a greater contribution from landowners if the actual cost of the work, when it was carried out, exceeded the estimate or to reimburse landowners if the actual cost was less than the estimate (ts 204).

35 The appellant did not respond to the letter from Mr Milward and there was no response from any of the other landowners. Mr Milward subsequently referred the matter to the council of the Shire for its approval.

36 In the meantime, approval was given for the subdivision of the other lots which are relevant to the dispute. On 29 January 2003, the WAPC wrote to the appellant informing it that approval had been granted for the subdivision of Lot 539. One of the conditions of approval was that the appellant and the Shire enter into a legal agreement requiring the appellant to undertake 'required infrastructure works as part of the staged subdivision of the area'. Two other conditions required the appellant to make arrangements with the Water Corporation so that connections to water and sewerage supply were available from the subdivided lots.

37 On 7 April 2003, the general services committee of the Shire considered a request to amend the outline development plans relating to AA1 and AA2 to reflect the arrangement set out in Mr Milward's letter of 17 December 2002. The minutes of the committee state (relevantly) as follows:

In considering the Outline Development Plans for [AA1] and [AA2] ... the [WAPC] imposed requirements for developers to contribute to the provision of Major Infrastructure, including the upgrading of Berkshire Road between Roe Highway and Apricot Street, the construction of a roundabout at an intersection of Berkshire Road and Apricot Street, and the upgrading of Apricot Street. Provision was made for the cost of these three works to be shared equally between [AA1] and [AA2].
To achieve the completion of these works and allocate the costs appropriately between the various landowners, the contribution tables ... were prepared.
The subdivision of [AA1], is proceeding ahead of [AA2] and it is likely that the developers of [AA1] will reconstruct the full length of Apricot Street in order to service their new lots. These developers will therefore have contributed $270,000 towards the Apricot Street reconstruction, being $135,000 more than their required contribution. ...

If the reconstruction of Apricot Street is completed by the developers of [AA1], difficulties may be experienced in imposing a condition on developers of [AA2], requiring a contribution for the upgrade of a road, which has already been upgraded. To protect against this possibility, it is suggested that the Outline Development Plan requirements be amended, to provide flexibility for the [AA2] contributions, initially proposed for the upgrade of Apricot Street, to be directed towards the upgrade of Berkshire Road, between Roe Highway and Apricot Street and the construction of the roundabout at the intersection of Berkshire Road and Apricot Street.
Under these circumstances, the contributions from [AA1] and [AA2] developers, would be utilised for the works identified ... It should be noted that contribution amounts required from individual developers would not change.
If the timing of individual lot developments, does not occur as outlined above, resulting in a section of Apricot Street being reconstructed by a developer within [AA2], there will be a need to further reallocate the contributions reflecting a position somewhere between the two extremes, ...
The proposals [sic] to change the utilisation of the contributions paid by developers in [AA2], has been submitted to all landowners, and their comments have been sought. No comment has been received and they have been advised further that the matter will be considered by the General Services Committee in April.
If the provisions relating to the contributions, payable by the developers of [AA1 and AA2], are changed by the Council, approval for the changes will also be required from the [WAPC].

That the allocation of developer contributions for [AA1 and AA2], in the Forrestfield U7 Development, be amended to those shown at ... on the basis that it is anticipated that the developers in [AA1] will reconstruct the full length of Apricot Street.
That in the event of developers in [AA1 and AA2], both completing portions of the upgrade of Apricot Street, developer contributions be re-allocated to reflect the extent of work undertaken by each.
That the approval of the [WAPC] be sought for the amended usage of developer contributions.

38 The recommendation was adopted by the council of the Shire on 22 April 2003. There was no evidence as to whether the approval of the WAPC to the amendment of the outline development plans was obtained.

39 On 16 May 2003, the WAPC wrote to the appellant informing it that approval had been granted for the subdivision of Lot 2. Relevantly for present purposes, the approval was subject to 'satisfactory arrangements being made with the [WAPC] for the upgrading of Apricot Street and Sultana Road East, where it abuts the subject lot'. It was also subject to the appellant and the Shire entering into a legal agreement requiring the appellant to undertake that work. In addition, two other conditions again required the appellant to make arrangements with the Water Corporation so that connections to water and sewerage supply were available from the subdivided lots.

40 Approval for the subdivision of what subsequently became the respondent's land followed shortly afterwards. On 9 July 2003, the WAPC wrote to the agent for the respondent's predecessor in title informing them that approval had been given for the subdivision of Lot 504, in AA2. One of the conditions of approval was that 'contributions [be] made for the provision of infrastructure for the U7 [AA2] as endorsed by the [WAPC] on 25 [sic, 31] March 2003'.

41 In its letter of 31 March 2003 to the Shire, the WAPC had (relevantly) resolved in relation to AA2 to:

Incorporate a development contribution schedule including contributions for each landowner on a proportional land area basis for the upgrading of Berkshire Road ... between Apricot Street and Roe Highway, upgrading ... of Berkshire Road between Apricot Street and the north-west side of Forrestfield Senior High School, upgrading of Apricot Street and Sultana Road East adjacent to [AA2], and the construction of a roundabout at the intersection of Berkshire Road and Apricot Street.

42 On 8 August 2003, the appellant and the Shire entered into a deed relating to the appellant's liability to contribute to infrastructure. The deed assumed some significance in the proceedings and it is necessary to set out the salient parts of it. In the recitals, after referring to the approvals for subdivision of Lot 2 and Lot 1003 (subsequently Lot 539), the deed recited (relevantly) as follows:

In early 2002, the [appellant] and the Shire disagreed as to the quantum of and the requirement to contribute to or construct infrastructure works in the area of [AA1].
As a step towards resolving the disagreement referred to in recital H above, the [appellant] and the Shire agreed 'in principle' on 13 December 2002 that, in consideration of the [appellant] agreeing to:

(a) carrying out the upgrading of Apricot Street and Sultana Road East and the drainage basin works (as now referred to in the Lot 2 Conditions and the Lot 1003 Conditions)

(b) provide to the Shire security for the performance by the [appellant] of the upgrading of Apricot Street and Sultana Road East and drainage basin works by way of a caveat registrable over the subdivision,

the [appellant] need only make a cash contribution of $35,000 in complete satisfaction [sic, of] any developer contributions claimed by the Shire to be payable by the [appellant] under the [ODP U7 - AA1].

The [appellant] has paid to the Shire the cash contribution of $35,000 referred to in Recital I of this Deed.

The parties enter into this Deed particularise and make binding the 'in principle' agreement reached between them on 13 December 2002 and the terms by which the Shire shall advise the WAPC of satisfaction of the Lot 2 conditions and the Lot 1003 Conditions.

In consideration of the Shire agreeing to advise the WAPC of satisfaction of Conditions 11 and 13 of Approval 119334 and Condition 9 of Approval 120070 upon execution of this Deed by both parties, the [appellant] COVENANTS AND AGREES with the Shire that it shall within the periods set out in clause 9 of this Deed upgrade that part of Apricot Street and Sultana Road East which abut Lot 2 and as are shown on the sketches annexed hereto as Annexure C and Annexure D respectively ('the Roads') in accordance with clause 2 of this Deed.

Upon execution by all parties of this Deed the $35,000 paid by the [appellant] to the Shire shall vest in and be the property of the Shire absolutely and the Shire may thereafter expend the $35,000 on such upgrading works on local roads and local road drainage as the Shire thinks fit.

43 The provision in par I of the recitals that the upgrading of Apricot Street and the payment of $35,000 was to be in complete satisfaction of any contributions payable by the appellant under ODP - AA1 was consistent with the appellant's letter to the Shire of 13 December 2002. It was plainly intended to apply to any contributions required to be made by the appellant in respect of Lot 538, Lot 539 and Lot 2.

44 It was not in dispute that the upgrade of Apricot Street was carried out by the appellant and that it paid the total sum of $35,000 to the Shire. Nor was it in dispute that the respondent paid the sum of $39,700 specified in the contribution table for AA2 as the respondent's contribution to infrastructure.

45 The appellant subsequently claimed the sum of $97,108.20 from the respondent, being one half of the cost the appellant had incurred in the upgrade of Apricot Street, including the installation of water and sewerage ducts to enable the subdivided lots to be connected to water and sewerage services provided by the Water Corporation. The appellant alleged that, as the 'original subdivider', it was entitled under s 159(1) of the Act to recover that amount from the respondent, as the 'later subdivider', as the respondent had made no contribution to the cost of the upgrade.

Subdivider may recover portion of road costs from subsequent subdivider

(a) a person (in this section called the 'later subdivider') has subdivided land in which -

(i) a lot or lots has or have a common boundary with; or

an existing road to which there is access from the subdivided land;

(b) a person (in this section called the 'original subdivider') who previously subdivided land that also has a common boundary with that existing road, in connection with that subdivision, contributed to or bore solely the cost of providing or upgrading the existing road; and

(c) the later subdivider did not contribute to that cost,

the original subdivider may, in accordance with this Division, recover from the later subdivider a sum representing one-half of so much of the reasonable cost as was borne by the original subdivider of providing or upgrading the part of the existing road which has a common boundary with the lot or lots, or is joined by a subdivisional road, as referred to in paragraph (a).

'CPI' means the Table described as the Consumer Price Index (All Groups Index) for Perth published by the Commonwealth Statistician under the Census and Statistics Act 1905 of the Commonwealth, or if the same is not published, such other similar index as the Minister may reasonably determine;

'market value of land' means the capital sum, determined in accordance with section 155(3)(b)(ii), (iii) and (iv), which an unencumbered estate in fee simple in the land might reasonably be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require;

'road' has the meaning given by section 4(1) and includes a private road created under Part IVA of the Transfer of Land Act 1893 or as defined in the Land Administration Act 1997 section 3(1).

(3) In this section a reference to the 'cost of providing a road' is a reference to the aggregate of -

(a) the value, as at the date of the subdivision referred to in subsection (1)(b), of the portion of the land provided as a road, being such percentage of the market value of the total area of land comprised in that subdivision as the area of the road bears to that total area as at the date of that subdivision; and

(b) the reasonable cost of designing and carrying out the following works -

(ii) the formation, preparation, priming and sealing of the road; and

(iii) the provision of kerbing, drainage and service ducts in connection with the road,

escalated by the percentage by which the CPI last published prior to the date of the subsequent subdivision has increased over the CPI last published prior to the original subdivider subdividing the land referred to in subsection (1)(b).

47 Certain matters were not in issue. It was common ground at trial that, for the purposes of s 159 of the Act, the appellant was the 'original subdivider' and the respondent was a 'later subdivider'. It was also accepted that the appellant had carried out the upgrading of Apricot Street. The substantive point in issue was whether the respondent, as a 'later subdivider', had contributed to the cost or whether the cost had been borne solely by the appellant, within the meaning of s 159.

48 The primary judge found that the legal obligation of the parties to make contribution to infrastructure for U7 arose from the conditions imposed by the WAPC in respect of the relevant subdivision approvals. He held that the appellant had negotiated the alterations to its contribution to the infrastructure for U7 on the basis of the obligations to contribute which were set out in the schedule attached to the WAPC's letter of 29 July 1999 and imposed as condition 11 of the approval for the subdivision of Lot 538.

49 As I understand the reasons of the primary judge, he found that the contributions of the owners of land in AA1 and AA2 respectively were to be considered by reference to the specified infrastructure as a whole. His Honour considered it immaterial that the Shire, instead of receiving a cash contribution from AA1 and AA2 landowners for the upgrade of Apricot Street, agreed to allow the appellant to undertake that work and to offset that estimated cost against the contribution it would otherwise have been required to make to the Berkshire Road upgrade. This was done within and 'inside' the original contributions scheme that applied. His Honour held that it would be wrong to regard each owner's contribution as a contribution only to the specific work to which it was allocated in the amended tables. The allocation of contributions to specific items of work was simply a means of ensuring that the contributions were fairly distributed.

50 His Honour concluded that in that context it could not be said that the appellant bore the whole of the cost of the upgrade of Apricot Street. That work was simply one element of the total infrastructure work to which the appellant and the respondent had each contributed. As the respondent had made a contribution to the cost of the total infrastructure, it had made a contribution to the cost of the upgrade of Apricot Street. His Honour dismissed the appellant's claim.

51 The primary judge also dismissed the appellant's claim for half of the cost of installing water and sewer pipes in the road reserve, adjacent to the road. The appellant had claimed that those pipes were service ducts provided in connection with the road, within the meaning of s 159(3)(b)(iii) of the Act. His Honour found that the pipes did not fall within that provision, as they were for services unrelated to the road and were not necessary for the construction, maintenance or integrity of the road.

52 On the question of the costs of the action, his Honour found that the appellant must have known that the only reasonable interpretation which could be placed on the uncontested facts was that the respondent had, by its contribution of $39,700 in accordance with the amended contribution table for AA2, contributed to the upgrading of Apricot Street within the meaning of s 159 of the Act. The appellant had proceeded, however, to argue the case by attempting to confine the application of s 159 simply to the work the appellant had carried out in upgrading Apricot Street and had 'shut its eyes' to the context in which that had occurred.

53 The primary judge noted that in concluding that the pipes for the sewer and water services were not 'service ducts in connection with the road' within the meaning of s 159(3)(b)(iii), he had distinguished an earlier decision of the District Court on which the appellant had relied. His Honour concluded, however, that notwithstanding that earlier decision, there was plainly no merit in the case advanced by the appellant.

54 The primary judge concluded that the appellant had proceeded with the action in 'wilful disregard of known facts' and in circumstances where the claim was 'utterly misconceived'. He accordingly ordered the appellant to pay the respondent's costs of the action on an indemnity basis.

55 It is unnecessary to set out the grounds of appeal in full. As appeared in the course of argument on the appeal, the appellant contended, in substance, that:

the primary judge erred in law in finding (at [148]) that by the payment of $39,700 to the Shire in respect of the infrastructure contribution scheme the respondent had contributed to the cost of the upgrading of Apricot Street, within the meaning of s 159 of the Act;
the primary judge erred in fact in finding (at [115]) that the appellant had not expressly reserved its right to claim one half of its costs of upgrading Apricot Street from the AA2 landowners. His Honour should have found that the appellant had reserved that right at the meeting between Mr McKellar and Mr Milward on 10 December 2002, and by the appellant's letter to the Shire dated 13 December 2002;
the learned trial judge erred in law in finding (at [164]) that the pipes installed in the road reserve for the purpose of carrying sewer services and water services along Apricot Street were not 'service ducts in connection with the road' for the purposes of s 159(3)(b)(iii) of the Act; and
the learned trial judge erred in law in exercising his discretion to order the appellant to pay the respondent's costs on an indemnity basis.

56 The appellant submitted, in substance, that the primary judge had erred in finding that by the payment to the Shire of the sum of $39,700 towards estimated infrastructure costs the respondent had contributed toward the upgrading of Apricot Street within the meaning of s 159 of the Act. Section 159 required a later subdivider to contribute to the actual cost which the original subdivider had incurred in providing or upgrading a road if the later subdivider had not contributed to that cost. The appellant had borne the whole of the cost of upgrading Apricot Street. The respondent had not paid any amount to the appellant in respect of that cost. The appellant submitted that it followed from the plain words of s 159 of the Act that the appellant was entitled to recover half of the cost from the respondent, an amount of $97,108.20. It was irrelevant that the respondent had paid the sum of $39,700 to a third party, the Shire, as the respondent's contribution to estimated infrastructure costs.

57 The respondent, on the other hand, submitted that the cost the appellant incurred in upgrading Apricot Street could not be viewed in isolation but had to be considered in the context of the contributions required to be made by the AA1 and AA2 owners to the infrastructure as a whole. When so viewed, it was clear that by making the payment of $39,700 toward infrastructure costs, the respondent was contributing to the cost of, among other things, the Apricot Street upgrade.

58 The central question in the appeal is whether the respondent contributed to the cost of upgrading Apricot Street, within the meaning of s 159 of the Act, or whether that cost was borne solely by the appellant. It is clear that if the respondent made a contribution to the cost of the upgrade, the appellant is not entitled to recover any amount from the respondent under s 159.

59 The court was not referred to any cases which have considered the meaning of 'contribute' in the context of s 159 of the Act, or any analogous context, and my own researches have not revealed any. There is, however, nothing to suggest that the word bears anything other than its ordinary meaning. In the Macquarie Dictionary (4th ed) 'contribute' is (relevantly) defined to mean 'to give in common with others; give to a common stock or for a common purpose'. In the New Shorter Oxford Dictionary (4th ed) it is defined as 'supply or pay along with others to a common fund or stock'.

60 It is significant that while AA1 and AA2 were designated as separate areas in U7, the respective outline development plans for AA1 and AA2 contemplated that, among other things, both sets of owners would be required to contribute equally to the estimated cost of the Berkshire Road upgrade and to the upgrading of Apricot Street. That requirement was reflected in the conditions attached to the subdivision approvals subsequently granted by the WAPC to the appellant and the respondent respectively.

61 It was a condition of the approval of the subdivision of Lot 538 that the appellant contribute to the Berkshire Road upgrade; of Lot 539, that the appellant and the Shire enter into a legal agreement requiring the appellant to undertake required infrastructure works as a part of the staged subdivision of the area to the satisfaction of the WAPC; and of Lot 2, that satisfactory arrangements be made with the WAPC for the upgrading of Apricot Street. In relation to the respondent's subdivision of Lot 504, it was a condition of subdivision approval that contributions be made for the Berkshire Road upgrade and the upgrading of Apricot Street. Accordingly, the effect of the subdivision approvals was that both the appellant and the respondent were required to contribute to the estimated cost of the Berkshire Road upgrade and the upgrading of Apricot Street.

62 Had the position remained as it was prior to the appellant's arrangement with the Shire in December 2002, plainly it could not have been contended that the respondent did not contribute to the cost of the upgrade of Apricot Street.

63 As it happened, the appellant, for its own purposes, wished to carry out the upgrading of Apricot Street by way of a partial discharge of its obligation to contribute to the total infrastructure. Accordingly, as I have mentioned, the AA1 owners' infrastructure contribution ascribed to the upgrading of Apricot Street was increased to take in the whole of that work and their contribution ascribed to the Berkshire Road upgrade was correspondingly decreased. That was offset by a corresponding increase in the portion of the AA2 owners' contribution ascribed to the Berkshire Road upgrade and the omission of the contribution ascribed to Apricot Street.

64 In my view, in the circumstances it would be quite artificial to regard the costs incurred by the appellant in upgrading Apricot Street in isolation, as the appellant seeks to do. The work undertaken by the appellant was not undertaken in isolation. It was undertaken in the context of the obligation of the owners in both AA1 and AA2 to contribute to the Berkshire Road upgrade and Apricot Street upgrade, as contemplated by the respective outline development plans and as required by the subdivision approvals subsequently obtained by the appellant and respondent respectively.

65 The rearrangement of their respective contributions which came about at the instigation of the appellant did not change the obligation of those owners to contribute to that total infrastructure. The allocation to the appellant of the upgrading of Apricot Street was simply a practical means of enabling the appellant substantially to discharge its obligation. What each of the owners was required to contribute to, and what the appellant and the respondent respectively did contribute to, remained a common pool of infrastructure, which included the upgrading of Apricot Street.

66 It follows, in my opinion, that for the purposes of s 159 of the Act the appellant did not bear the whole of the cost of upgrading Apricot Street but that the payment by the respondent of the sum of $39,700 to the Shire included a contribution to the cost of that upgrade. The primary judge correctly found that the appellant was not entitled to a contribution by the respondent under s 159. I would dismiss this ground of appeal.

67 In my opinion, this ground is without merit. The finding depended upon an issue of credibility. In Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472, Brennan, Gaudron and McHugh JJ said:

More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage' or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable' (479). (footnotes omitted)

68 It was Mr McKellar's evidence that at the meeting on 10 December 2002 he told Mr Milward that the appellant was not prepared to bear the whole of the cost of upgrading Apricot Street unless it could subsequently recover half of the cost from the owners of the land on the opposite side of Apricot Street. That, it was submitted, was consistent with par 8 of Mr McKellar's letter to Mr Milward of 13 December 2002, to which Mr Milward did not reply.

69 At the trial, Mr Milward could not recall whether Mr McKellar had raised the issue of the appellant seeking to recover half the cost of the Apricot Street upgrade from the AA2 owners. But Mr Milward said that if it had been raised he would have told Mr McKellar that recovery under the Act was not appropriate and would not apply (ts 166). Mr Milward's letter of 17 December 2002, which indicated that the reallocation of the infrastructure to which the owners were to contribute resolved the obligations of all of the owners in respect of that infrastructure, appears to be consistent with Mr Milward's evidence and inconsistent with the recovery by the appellant of any of the cost of the Apricot Street upgrade. Mr Milward gave evidence that he did not reply to Mr McKellar's letter because he regarded the letter of 17 December 2002 as a response to it (ts 166 - 167).

70 The primary judge did not accept Mr McKellar's evidence. He found that Mr McKellar had not told Mr Milward that the appellant would seek to recover one half of the cost of the upgrading of Apricot Street from the respondent. That finding cannot be said to be inconsistent with incontrovertible facts or glaringly improbable. It was a finding which was open to his Honour and no basis has been shown for interfering with it.

72 As I have mentioned, it was a condition of the approval of the subdivision by the appellant of each of lots 538, 539 and 2 that arrangements be made with the Water Corporation to enable the lots in the subdivision to be connected to water and sewerage supply services. In compliance with that condition, the appellant installed water and sewer mains pipes under the road reserve along Apricot Street adjacent to Lot 2.

73 The appellant sought to recover half of the cost of that work, contending that the pipes constituted 'service ducts' under s 159(3)(b)(iii) of the Act. That provision entitles an 'original subdivider' to recover from a 'later subdivider' one half of the reasonable cost of designing and carrying out:

The provision of kerbing, drainage and service ducts in connection with the road.

74 As I have mentioned, the primary judge rejected that claim, finding that the pipes were not service ducts provided in connection with the road.

75 On appeal, the appellant submitted that the water and sewer pipes were service ducts 'in connection with the road' because they were underneath the land which comprised the road and carried services along it, using the road's function as a thoroughfare.

76 There is no definition of 'service ducts' in the Act. What is clear, however, is that in order to come within s 159(3)(b)(iii) the service ducts in question must have been provided 'in connection with the road'. The words 'in connection with' connote a relationship between one thing and another: see Furness Shipbuilding Co Ltd v London & North Eastern Railway Co (1934) 50 TLR 257; Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153; Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465, 479 - 480.

77 I do not think it is necessary to decide whether the pipes constituted 'service ducts'. Assuming for present purposes that they did, on the evidence they were not provided in connection with the road. They were provided for the purpose of enabling drainage and sewerage services to be provided to the individual lots created by the subdivisions. They served no purpose in relation to the road. They were installed pursuant to a requirement of the Water Corporation for purposes unrelated to the road. The fact that they were installed at the same time as the upgrade of the road occurred and located under the road reserve is not sufficient. They were no more provided in connection with the road than would ordinary overhead power lines be if they were located on the road reserve.

78 In my opinion, the primary judge correctly rejected the appellant's claim in respect of the cost of this work. I would dismiss this ground of appeal. Accordingly, it is unnecessary to deal with the respondent's notice of contention in relation to this ground.

79 The primary judge's decision to award indemnity costs to the respondent involved an exercise of discretion. It is therefore necessary for the appellant to establish an express or inferred error. See House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505.

80 The appellant says that, contrary to the conclusion of the primary judge, the facts upon which the case turned were not uncontested. The case depended upon a finding of fact as to whether, at the 10 December 2002 meeting with Mr Milward, the appellant had reserved its right to recover half of the cost of the upgrading of Apricot Street. It was further submitted that his Honour's finding that the question of contribution under s 159 of the Act was to be determined by considering the infrastructure as a whole, was not a finding which followed inevitably from the uncontested facts and it was a point on which there was no existing authority.

81 In relation to the claim for the service ducts, it was submitted that it had been found in a previous decision of the District Court that sewer and water mains did fall within the (relevantly) identically worded predecessor to s 159 of the Act. Counsel argued that, for the purposes of determining costs, it was not to the point that his Honour did not follow that case. What is clear is that the appellant's case was not unarguable or contrary to known facts.

82 It is well-established that a court has a wide discretion as to costs (albeit, a discretion to be exercised judicially) and that an appellate court will be slow to interfere with the exercise of that discretion. Whether or not an order for indemnity costs is appropriate must depend upon the facts of the particular case. There are not, and cannot be, any hard and fast rules. But an indemnity costs order is a departure from the usual order that costs are awarded on a party and party basis. Ordinarily an indemnity costs order is appropriate only where the unsuccessful party has been involved in some unreasonable conduct in relation to the proceedings, such as where the institution or continuation of the proceeding was plainly unreasonable or the proceeding was issued or maintained for an ulterior or collateral purpose: see Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616; PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24 [36]. An order for indemnity costs reflects the court's disapproval of the conduct of the unsuccessful party: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [25].

83 If a party brings a case which is hopeless it can normally be inferred that the proceeding was commenced or continued 'for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law': Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397, 401. But it is not necessary that such an inference be drawn; it is sufficient that the court's resources and the successful party's costs have been wasted on entirely frivolous litigation: Re SCA Properties Pty Ltd (in liq) [1999] QSC 180; (1999) 17 ACLC 1611 [70].

84 However, while indemnity costs may be awarded where an action has been commenced or continued in circumstances where the plaintiff, properly advised, should have known that the action had no prospect of success, a court must not be too ready to find that a case was hopeless. As Wheeler J pointed out in Quancorp Pty Ltd v MacDonald [1999] WASCA 101:

On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as 'hopeless' so as to justify an award of indemnity costs to the successful party. However, where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost. Persisting in a case which can only be characterised as 'hopeless' is an example of the type of conduct which may lead the court to a view that the party whose conduct gave rise to the costs should bear them in full [7].

85 It must also be borne in mind that what is apparent at the end of a trial may not have been so obvious beforehand. Whether or not a case was hopeless is not to be determined with the benefit of hindsight.

86 I do not consider that the appellant's case was properly characterised by the primary judge as 'utterly misconceived'. It was, in my view, a case that faced very substantial difficulties but it is a considerable step to find that a case was so devoid of merit that it should lead to an order for indemnity costs. For the reasons articulated by Wheeler J in Quancorp, it is a step that a court should be slow to take. An award of indemnity costs on the basis that a case was 'hopeless' (or 'utterly misconceived', which I

take to be synonymous) is to be reserved for the clearest of cases. The fact that a case is weak or marginal, or that it is unlikely to succeed, is not the same as a 'hopeless' case which merits the sanction of an indemnity costs order. I consider that the appellant's case fell into the former, not the latter, category.

87 In my respectful opinion, in this case it was not reasonably open to the primary judge to conclude that an order for indemnity costs was appropriate. I would uphold ground 4.

allow the appeal against the order of the primary judge that the appellant pay the respondent's costs of the action on an indemnity basis and set aside that order;
order that the appellant pay the respondent's costs of the action to be taxed;
otherwise dismiss the appeal.

89 MURPHY JA: Newnes JA has set out the background to the matters in dispute in this appeal and the relevant legislative provisions, and it is not necessary for me to repeat all those matters here. I wish, however, to emphasise certain matters which, to my mind, are of particular importance for the disposition of the appeal.

90 Under the Shire of Kalamunda's District Planning Scheme No 2 (Scheme), the areas of land in question fell within an urban development zone designated 'Urban Cell 7' or 'U7'. Urban Cell 7 included two contiguous areas which were designated 'Agreement Area 1' and 'Agreement Area 2'. The appellant owned three of the four lots in Agreement Area 1, being lot 538, lot 539 and lot 2. The other lot in Agreement Area 1, lot 537, was not owned by the appellant. In Agreement Area 2, there were nine lots, of which the respondent owned one, which was lot 504 (subsequently known as lot 540).

91 Of the appellant's three lots in Agreement Area 1, lot 538 and lot 539 abutted, relevantly, Berkshire Road (not Apricot Street). Lot 2 abutted, relevantly, Apricot Street. The respondent's lot, which was in Agreement

Area 2, abutted, relevantly, Apricot Street (but not Berkshire Road). Apricot Street and Berkshire Road intersected each other.

92 By letter dated 29 July 1999, the Western Australian Planning Commission (WAPC) informed the shire that it had adopted the shire's outline development plan, required by cl 6.13 of the Scheme, and supported the method for determining infrastructure contributions for Agreement Area 1, in accordance with an attached schedule. The schedule was headed 'Infrastructure Contributions: U7 Agreement Area 1'. This schedule (the 'Agreement Area 1 Contribution Schedule') set out proportions for contributions to infrastructure works in relation to Agreement Area 1 between the owner of the appellant's three lots and the owner of lot 537.

93 Amongst the infrastructure works specified in the Agreement Area 1 Contribution Schedule was the upgrading of Apricot Street, in respect of which the Agreement Area 1 owners were to contribute 50% (in respect of which the appellant's contribution was shown to be 78%).

94 The Agreement Area 1 Contribution Schedule also provided for Agreement Area 1 lot owners to contribute to the infrastructure costs of upgrading Berkshire Road, including the provision of a roundabout at the junction of Berkshire Road and Apricot Street.

95 By the end of 1999, WAPC had also approved an outline development plan for Agreement Area 2 in Urban Cell 7, which also included contributions to infrastructure in relation to:

the upgrade of Berkshire Road, including the provision of a roundabout at the junction with Apricot Street; and
the other 50% of the cost of upgrading Apricot Street.

96 In this regard, the judge found [103] - [104]:

On 20 September 1999, the council of the Shire adopted an outline development plan for U7 Agreement Area 2 (the land bound by Sultana Road East, Apricot Street, Berkshire Road and Western Power easement, Forrestfield). The ODP for AA2 was adopted by the WAPC by letter dated 24 December 1999 as the basis upon which it agreed to consider subdivision applications within AA2 subject to various conditions which included a requirement that:

'Prior to the approval of subdivision applications for the land, satisfactory agreements for equitable developer contributions should be in place for public open space, construction of drainage within the public open space, landscaping and revegetation of the creek line (for drainage purposes) and for the upgrading of Berkshire Road, Sultana Road and Apricot Street.' (Condition 2)

Condition 3 provided that the developer contributions to include 100 per cent of the cost of upgrading that portion of Berkshire Road adjacent to AA2 (widening of road pavement) and 50 per cent of the cost of upgrading Apricot Street and Sultana Road adjacent to AA2 and 50 per cent of the cost of construction of a roundabout at the intersection of Berkshire Road and Apricot Street. Other specified contributions were identified by Condition 3.

97 The first of the appellant's three lots for subdivision approval was lot 538. WAPC's approval was dated 19 December 2001. Approval was granted on the basis of certain conditions, one of which was that the appellant 'shall contribute to infrastructure contributions for the U7 Agreement Area 1 as endorsed by the [Commission] on 29 July 1999 to the satisfaction of the [Commission]'. That condition remained unaffected by a subsequent appeal by the appellant to the Town Planning Appeal Tribunal.

98 In November 2002, a representative of the appellant met with representatives of the shire and WAPC in relation to the appellant's then proposed subdivision applications for lot 2 and lot 539. There followed a further meeting between a representative of the appellant and a representative of the shire on 10 December 2002 in which the appellant put certain proposals to the shire in relation to the appellant's then proposed subdivision applications for lot 2 and lot 539, and in relation to outstanding issues concerning its subdivision of lot 538 (reasons [113]).

99 Although certain matters were in dispute as to what transpired at the meeting on 10 December 2002, in substance it was common ground that the appellant and the shire agreed in principle, in effect, that:

(a) after making cash contributions totalling $35,000, the appellant's financial obligations with respect to infrastructure in relation to lot 538 would be regarded as satisfied;

(b) the appellant would undertake and pay for certain specified infrastructure works, including the upgrade of the whole of Apricot Street, which works, together with the cash contribution of $35,000 referred to above, would avoid the need for it to contribute infrastructure costs, in relation to the forthcoming subdivisions of lot 539 and lot 2, in accordance with the Agreement Area 1 Contribution Schedule.

100 In its letter dated 13 December 2002 to the shire, the appellant described the effect of those arrangements in the following terms:

In consideration of [the appellant] effecting the works referred to [including the upgrade of Apricot Street], the shire shall relieve [the appellant] of having to contribute anything by way of cash to the U7 Agreement Area 1 Scheme, save for [the proposed agreed sum of $35,000]. (emphasis added)

101 The judge found that in consequence, the shire prepared and distributed to affected landowners, on 17 December 2002, new infrastructure contribution schedules with respect to the Agreement Area 1 and Agreement Area 2 (Amended Contribution Schedules) (reasons [65]).

102 The shire's letter of 17 December 2002 to affected landowners, including the appellant, explained the substance of the appellant's proposal and the Amended Contribution Schedules as follows (reasons [65]):

'Dear Sir/Madam

FORRESTFIELD U7 AGREEMENT AREA 2 - CONTRIBUTIONS

In accordance with Department for Planning and Infrastructure and Shire of Kalamunda requirements, shown on the attached Table 1, are to be made by sub-dividers of the lots listed, for the upgrading of Berkshire Road and Apricot Street.

It appears that the subdivision of Agreement Area 1, to the west of Apricot Street will be completed ahead of Area 2. To facilitate the sub-division of Area 1, it is preferable to concurrently complete the upgrading of Apricot Street, to Sultana Road East. The developer of Area 1, has indicated a willingness to complete the upgrade of the roadworks required for Apricot Street, on the basis that his cash contribution towards his share of the upgrade of Berkshire Road, between Roe Highway and Apricot Street, is reduced by the value of the works necessary in Apricot Street. Instead therefore, of contributing $170,000 towards the Berkshire Road upgrade, the developer will upgrade Apricot Street and pay a contribution of $35,000, being the difference in the estimated cost of Berkshire Road and Apricot Street (see Tables 3 & 4).

If Area 1 works proceed on the basis of the above, there will be no obligation upon Area 2 owners to upgrade Apricot Street, but in exchange they will be asked to contribute an additional cash amount totalling $135,000 towards the upgrade of Berkshire Road, between Roe Highway and Apricot Street, and the construction of the roundabout at Berkshire Road and Apricot Street ...' (emphasis added)

103 The appellant did not respond disputing the characterisation of the agreement or the monetary value assigned to the works to be undertaken by the appellant. Indeed, there was no response by any of the affected landowners.

104 The judge summarised the effect of the Amended Contribution Schedules as follows [119]:

As mentioned, in order to give effect to the plaintiff's request and the agreement negotiated with the Shire with respect to its contribution, it was necessary for the contribution schedules to be adjusted. In this regard, the 50 per cent upgrade of Apricot Street ($135,000) was deducted from AA2 [Agreement Area 2] and added to AA1 [Agreement Area 1]. By way of offset, the sum of $135,000 for the Berkshire Road upgrade was deducted from AA1 [Agreement Area 1] and added to AA2 [Agreement Area 2].

105 The Amended Contribution Schedules were formally approved by the shire at a council meeting on 7 April 2003.

106 The judge found, in effect, that the Amended Contribution Schedule in relation to Agreement Area 2 was the schedule the subject of WAPC's letter to the shire dated 31 March 2003 which, itself in due course, formed part of the conditions upon which the respondent obtained subdivision approval in respect of lot 504 (reasons [65] - [66], [80] - [81], [89], [93], [119], [124] and [126]).

107 The appellant's applications for subdivision in relation to its remaining lots in Agreement Area 1 (being lot 539 and lot 2) and the respondent's application for subdivision approval in Agreement Area 2 (lot 504) were dealt with by WAPC in light of the agreement in principle with the appellant made on 10 December 2002 and the consequential changes to infrastructure contributions reflected in the Amended Contribution Schedules.

108 WAPC granted the respondent subdivision approval for lot 504 by letter dated 9 July 2003. The judge found, in effect, that condition 2 of WAPC's approval required the respondent to make contributions in accordance with the Amended Contribution Schedule for Agreement Area 2. In satisfaction of that condition, the respondent, in due course, made the required contribution. (See reasons [86] - [89], [124] and [126].)

109 The appellant in this appeal contended (ground 2(b)(iv)), and the matter was not disputed by the respondent, that the respondent's payment went towards the cost of upgrading Berkshire Road.

110 In relation to the appellant's applications for the subdivisions of lot 539 and lot 2, WAPC granted approval on terms which reflected the substance of the appellant's agreement in principle with the shire on 10 December 2002. The judge found (reasons [120] - [121]):

As a result of the agreement between the plaintiff and the Shire, the WAPC subdivision conditions for Lot 539 and Lot 2 therefore did not require the condition concerning infrastructure contributions. Instead, the conditions required provision to compel the plaintiff and the Shire to enter into a legal agreement to require the plaintiff to undertake the agreed infrastructure works as part of the staged subdivision of the area. The agreement between the plaintiff and the Shire in this regard was reflected in the conditions which the WAPC attached to its approval of the subdivision of Lot 539 (Conditions 9 and 10) and Lot 2 (Conditions 11, 13 and 14).

The legal agreement required by the condition was entered into between the plaintiff and the Shire on 8 August 2003. Recital H and Recital I refer to the background to the agreement recorded in the deed between the parties. Clause 11 of the agreement provided that, upon payment of $35,000 by the plaintiff to the Shire, the Shire could expend the money 'on such upgrading works on local roads and local road drainage as the Shire thinks fit'.

111 The judge concluded (reasons [123] - [126]):

In my view, the [appellant] at all material times negotiated within the framework of the contribution schedules. The resultant agreement with the Shire, with respect to its contribution, did not result in any diminution in monetary value of its required contribution or the required contribution of other landowners.

Pursuant to the contribution schedule for AA2, the [respondent] remained at all material times liable to contribute $39,700, which it did in the discharge of its obligation to make infrastructure contributions pursuant to the outline development plan for U7.

In my view, it is immaterial that the Shire, instead of receiving a cash contribution from AA1 and AA2 landowners for the upgrade of Apricot Street, agreed to allow the [appellant] to undertake that work and credit the plaintiff with the value of that work. This was done within and 'inside' the original contributions scheme that applied. At all material times the [respondent] was obliged by the contribution schedules to contribute to the upgrade of Apricot Street. When the obligation was imposed as a WAPC condition for subdivision of land in U7 Areas 1 and 2, the nature of the contribution crystallised. The attribution of cost by the Shire at a later time to the works, at that time crystallised the [respondent's] contribution in monetary terms for the upgrade of Apricot Street. On both occasions there was no objection by the [appellant] to the contribution schedule procedure utilised by the Shire as part of the outline development plan necessary as a precondition to the right of any subdivision of land within the affected area.

Condition 2 of the [respondent's] approval to subdivide Lot 504 required the [respondent] to contribute to the provision of infrastructure for the U7 Agreement Area 2, as endorsed by the WAPC on 31 March 2003. The [respondent] made the required contribution in the sum of $39,700.

112 Newnes JA has summarised the four essential bases upon which the appeal was argued ([55] of his Honour's reasons).

113 As to the first, the parties fought the case below and this appeal on the basis that the substantive point in issue was whether the respondent, as a 'later subdivider' had contributed to the appellant's cost of upgrading Apricot Street within the meaning of s 159(1) of the Planning and Development Act 2005 (WA) (the Act).

114 The appellant contends, in essence, that the respondent did not contribute to the cost of the upgrade of Apricot Street because:

(a) Section 159(1), on its proper construction, requires that the later subdivider pay to the original subdivider cash amounting to 50% of the reasonable costs borne by the original subdivider in upgrading the relevant road; and

(b) on the proper construction of s 159(1), if the later subdivider purports to contribute by any means other than a cash payment of 50%, there could be no contribution within the meaning of s 159(1)(c) unless the original subdivider consented to and accepted the alternative means in full satisfaction of the claim which it would otherwise have under s159(1).

115 The second proposition was advanced, as I understood it, as an aspect of the proper construction of s 159(1) rather than as a submission concerning the consequence of the application of any general law doctrines such as waiver or estoppel.

116 In my view, the appellant's submissions ought not be accepted.

117 The appellant did not suggest that had the original contribution schedules continued to apply to Urban Cell 7, and thereby to subdivision approvals in relation to Agreement Area 1 and Agreement Area 2, the costs assigned to the appellant in relation to its share of the upgrade of Apricot Street would have been recoverable from the respondent under s 159(1).

118 In substance, nothing changed to alter that position.

119 Section 159(1) is expressed in objective terms. Its operation does not depend upon the consent or agreement of the original subdivider. Each of the elements in s 159(1)(a), (b) and (c) is capable of objective determination. Unless a plaintiff establishes each of the elements, it has no right of recovery. The third element, in subpar (c) of subs (1), requires the plaintiff subdivider to establish that the later subdivider 'did not contribute' to the cost referred to in subpar (b) of subs (1).

120 The words 'contribute to' are wide enough, in my view, to encompass more than cash payments made directly to the original subdivider. In ordinary usage, a person may 'contribute' to the cost of something by sharing the financial burden of it. If a person expends money on a thing, and another person assumes a liability for or towards an obligation which would otherwise have fallen on the first person, and discharges it, the assumption and discharge of the liability may be seen as contributing to the financial burden involved in the expenditure, provided the two are sufficiently connected and both serve a common object. The extent to which the two are connected and serve a common object involves questions of fact and degree.

121 The agreement in principle of 10 December 2002, which was given effect to by the subsequent subdivision approvals in respect of lot 539 and lot 2, involved the appellant, in effect, being relieved of a liability (estimated at $135,000) to contribute expenditure for the upgrade of Berkshire Road, in exchange for a liability to incur certain expenditure on designated work, including, relevantly, 100% of the expenditure on the upgrade of Apricot Street.

CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2011] WASCA 195 (21 September 2011)

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CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2011] WASCA 195 (21 September 2011)

Legislation Cited (5)

Cases Cited (7)