Mason v Head, Transport for Victoria [2021] VSCA 19

1 The reservation of land (or part of land) for public purposes pursuant to a planning scheme may blight the potential use of land and adversely affect the value of land.

2 Conversely, in some circumstances where part of land is reserved, the effect of the reservation may be to increase the value of the balance of the land by reason of the designation of the reserve for a purpose which will directly benefit adjacent land, for example, where the reservation is for the development of a port or irrigation facility.

3 This case is concerned with the interpretation of provisions contained in the Planning and Environment Act 1987 ('P&E Act') governing the rights of owners of land to compensation in circumstances where the value of land is adversely affected by the imposition of a reservation for public purposes pursuant to a planning scheme.

4 The Court is asked to determine questions reserved by order of Richards J pursuant to s 17B of the Supreme Court Act 1986. The questions are as follows:

(1) In circumstances where:

(a) the land the subject of the proceeding was reserved for a public purpose under a planning scheme;

(b) Roger Mason, the registered proprietor of the land at the time that the reservation was imposed, died without having sold the land; and

(c) the applicants became the registered proprietors of the land as beneficiaries under Mr Mason's will,

are the applicants precluded from claiming compensation under s 98(1)(a) of the Planning and Environment Act 1987 (Vic) on the basis that they were not owners of the land at the time of the imposition of the planning reservation?

(2) In circumstances where the applicants became registered proprietors of the land the subject of the proceeding as beneficiaries under the will of the former registered proprietor, have they 'acquired' the land within the meaning of s 108(2) of the Planning and Environment Act 1987 (Vic)?

5 The first question concerns the interpretation of s 98(1) of the P&E Act which provides for a right of compensation to the owner or occupier of land who suffers financial loss in consequence of the reservation of the land for a public purpose pursuant to a planning scheme.

6 The fundamental question raised is whether the owner or occupier must be the owner or occupier of the land at the date that the relevant reservation is imposed or whether ss 98, 99 and 108 read together contemplate that a claimant must simply be the owner or occupier at the date the right to compensation arises.

7 For the reasons that follow, we take the view that the proper construction of the statutory provisions leads to the conclusion that it is sufficient that the claimant be the owner or occupier at the date the right to compensation arises.

8 Such claim will however be limited to financial loss suffered as the natural, direct and reasonable consequence of the reservation.

9 The respondent contends that the decision of the Court of Appeal in Halwood Corporation Ltd v Roads Corporation[1] stands in the way of this construction and is authority for the proposition that only the owner or occupier of land at the date of the imposition of a reservation for public purposes pursuant to a planning scheme can claim compensation pursuant to s 98(1) of the P&E Act. It is submitted that the decision in Halwood is not plainly wrong and that this Court should not depart from it.

10 For the reasons that follow, we have concluded that whilst the decision in Halwood was plainly correct, the aspect of the Court's reasoning upon which the respondent relies was plainly wrong. In these circumstances, we would grant leave pursuant to s 17B of the Supreme Court Act 1986 to enable question 1 to be considered.

11 The second question relates to the construction of s 108(2) of the P&E Act. It turns on the meaning of 'acquired' in that provision. For the reasons we set out below, we have come to the conclusion that in the circumstances of this case the applicants have not since the reservation 'acquired' the land within the meaning of that word understood in its context. We would also grant leave for the consideration of this question pursuant to s 17B.

12 Accordingly, both the questions reserved for consideration should be answered in the negative.

13 Roger and Lesley Mason married in 1968. In 1983, Roger purchased a farm property known as Darebin Park at Woodstock.

14 Roger and Lesley lived on, and farmed, the property until Roger passed away in November 2011. They raised their four children there.

15 On 6 August 2010, amendment VC68 was introduced into the Whittlesea Planning Scheme placing a public acquisition overlay over part of Darebin Park, thereby reserving it for a public purpose, which was identified as a transport corridor for the proposed outer metropolitan ring road.

16 Roger died in November 2011. By his will, he bequeathed a life interest in the property to Lesley and the interest in the remainder to his four children in equal shares.

17 Lesley and the children are the applicants in this proceeding.

18 On 7 July 2017, the applicants gave notice of their intention to sell the property and foreshadowed a claim for compensation pursuant to s 98 of the P&E Act for loss on sale.

19 In response, the respondent advised that the applicants did not have a claim for compensation by reason of s 108(2)(a) of the P&E Act, having acquired the land after the date of the reservation.

20 On 20 December 2017, the applicants entered into a put and call option deed to sell the property for $56 million. The prospective purchaser under the option has not exercised its call option. The time at which the applicants are able to put the property to the prospective purchaser under the option deed arises in October 2021.

21 It is common ground that compensation will be payable upon the compulsory acquisition of the reserved land. The applicants have received informal advice that it is unlikely that this will occur until after 2030. Lesley is now in her mid seventies and has formed the view she cannot wait for the proposed compulsory acquisition.

22 A valuation obtained by the applicants indicates that in the absence of the reservation, the market value of the land as a whole is between $95 and $105 million.

23 By an amended originating motion dated 17 February 2020, the applicants have sought declarations that:

(a) they are 'owners' of Darebin Park for the purposes of ss 98, 99, 101, 106 and 108 of the P&E Act;

(b) they are not, by reason of s 108, ineligible to claim compensation from the respondent under s 98(1)(a) of the P&E Act;

(c) pursuant to ss 98(1)(a) and 99(b) of the P&E Act, they have a right to claim compensation and the respondent has a liability to pay compensation to the applicants on a sale of Darebin Park by them; and

(d) pursuant to ss 98(1)(a) and 99(a) of the P&E Act, they have a right to claim compensation and the respondent has a liability to pay compensation on the refusal to grant a permit for the use or development of the land, or part of the land, on the ground that part of Darebin Park is or may be required for a public purpose.

24 The relevant principles of statutory construction are well established. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory), Hayne, Heydon, Crennan and Kiefel JJ said:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[2]

25 In SZTAL v Minister for Immigration and Border Protection, the High Court (Kiefel CJ, Nettle and Gordon JJ) again emphasised the importance of text, context and purpose:

The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.[3]

26 In Project Blue Sky Inc v Australian Broadcasting Authority,[4] McHugh, Gummow, Kirby and Hayne JJ also gave guidance with respect to the proper construction of the statutory text, explaining that the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute and emphasising that the meaning of the provision must be determined by reference to the language of the instrument viewed as a whole.[5] Their Honours continued:

A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions.[6]

27 Section 35 of the Interpretation of Legislation Act 1984 further expressly provides that in the interpretation of the provision of an Act, a construction that would promote the purpose or object underlying the Act shall be preferred to a construction that would not promote that purpose or object.

28 Part 5 of the P&E Act provides for compensation.

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

(a) the land being reserved for a public purpose under a planning scheme; or

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

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

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

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

(3) A person cannot claim compensation under subsection (1) if -

(a) the planning authority has purchased or compulsorily acquired the land or part of the land; or

(b) a condition on the permit provides that compensation is not payable; or

(c) the land has been, or is required to be, provided to a development agency or the collecting agency under section 46GV(4); or

(d) the land has been, or is to be, acquired by a development agency in accordance with an approved infrastructure contributions plan.

(4) The responsible authority must inform any person who asks it to do so of the person or body from whom the first-mentioned person may claim compensation under this Part.

(5) In this section, land being reserved for a public purpose under a planning scheme does not include land referred to in subsection (3)(c) or (d).

30 'Owner' is relevantly defined by s 98AA and s 3 of the P&E Act as a person who is registered or is entitled to be registered under the operation of the Transfer of Land Act 1958 as proprietor of an estate in fee simple in the land.

31 Section 98(1) provides the source of a right to compensation to the owner or occupier of land in the event of financial loss caused as the natural, direct and reasonable consequence of reservation or other provision in a planning scheme giving effect to a public purpose.

32 Section 98(2) provides for a right to compensation in the event of financial loss suffered as the natural, direct and reasonable consequence of a refusal by the responsible authority to grant a permit to use or develop the land on the ground that the land is or will be needed for a public purpose.

33 Section 99 further governs the circumstances in which the right to compensation arises.

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

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

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

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

(iii) the responsible authority -

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

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

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

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

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

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

34 In this case, the right to compensation and the liability to pay compensation would potentially arise pursuant to s 99(b), that is, on the sale of the land in accordance with s 106.

35 Section 104 limits the amount of compensation payable and incidentally confirms that the value of compensation is to be assessed by reference to the value of the land at the date on which the liability to pay compensation first arises.

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

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

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

36 In this case, the date upon which the liability to pay compensation potentially first arises is on the sale of the land.

37 Section 106 makes further specific provision with respect to claims for loss upon the sale of land. It provides:

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

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

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

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

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

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

(3) In this section relevant authority means -

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

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

38 Section 107 provides for compensation upon the removal or lapsing of a reservation.

39 Section 108 makes specific provision as to the time at which the owner or occupier of land must be the owner or occupier of land in order to make a claim.

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

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

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

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

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

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

40 Six key elements emerge when these provisions are read together.

41 First, s 98(1) relevantly provides for a right to claim compensation by the owner in respect of financial loss which is suffered as the natural, direct and reasonable consequence of the reservation of land for public purposes. In this regard, we accept the respondent's submission that, read in context, the reference to land 'being reserved' is to be understood as a reference to the event of reservation rather than the continuing state of reservation thereafter. Each of sub-ss 98(1)(b), (c) and (d) plainly refer to specified events.[7] The right to compensation flows from those events.

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

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

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

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

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

47 The respondent submits on the basis of the authority of Halwood,[8] that s 98(1) should be read as circumscribing the class of owners who may claim compensation by limiting such persons to those who owned the land at the date of the event giving rise to compensation pursuant to s 98(1) - in this case, the imposition of the reservation.

(a) the plain language of the section contains no such qualification;

(b) no right to compensation arises until one of the events identified in s 99 occurs, that is, no enforceable right is created by s 98(1) alone;

(c) such a construction fails to give s 108(1) its apparent purpose, namely to identify the temporal connection which must be satisfied before an owner or occupier can claim compensation; and

(d) the implication of the suggested requirement is not necessary to provide for a coherent and workable scheme of compensation. The basal limitation on the right to compensation remains, namely that the entitlement is limited to financial loss suffered as the natural, direct and reasonable consequence of the reservation.

49 On the basis of the same authority, the respondent further submits that s 98 should be regarded as creating a right to claim compensation which is then 'triggered' by s 99, giving rise to a right to be paid and the liability to pay. This submission is based on the distinction drawn in Halwood (and earlier authorities) between 'substantive' provisions and provisions that are merely procedural.

50 There are four problems with the proposition that s 98(1) is the substantive provision conferring the right to compensation and that s 99 is merely a procedural 'trigger':

(a) Section 99 expressly provides that the relevant right to compensation arises when one of the events provided for occurs. Each of these events requires the initial reservation of the land to 'bite', ie to have an actual effect upon the use or realisation of the value of the land. The words 'a right to compensation ... arises' should be given their plain meaning unless there is a good reason not to do so.

(b) Conversely, no enforceable right is created by s 98 alone.[9]

(c) The provisions of s 99 are not simply procedural. They do not provide for payment of compensation for loss suffered at the time of reservation. They provide for compensation for loss which is assessed at the time at which the right to compensation arises.

(d) The provisions of s 108(1) plainly provide for a requirement of ownership at the date on which the right to compensation arises and not when the reservation occurs. The effect of s 99 and s 108(1) read together is thus to substantially qualify the right to compensation by reference to a temporal requirement.

51 It follows that unconstrained by authority we would hold that in the event of a loss upon sale the applicants are not barred from pursuing a claim pursuant to ss 98, 99 and 106 simply by reason of the fact that they were not the owners of the land at the date of reservation.

52 The respondent submits, in the alternative, that in the event that the right to claim compensation is not restricted to owners and occupiers at the date of the relevant reservation, the applicants' claim is nonetheless barred by s 108(2) because the applicants 'acquired' the land after the approval of a planning scheme provision reserving the land for public purposes.

53 We have already identified the purpose of s 108(2) as being to qualify the class of owners described in s 108(1) who may make a claim for compensation. More particularly, s 108(2) excludes a series of persons who may be regarded as having actual or constructive notice of the proposed reservation prior to their acquisition of land.

54 In Edensor Nominees Pty Ltd v Australian Securities and Investments Commission,[10] Hill, Sundberg and Mansfield JJ observed, after considering various dictionary definitions, that '[d]epending on its context the word "acquire" may mean to gain title or ownership of something or simply to obtain something.' The word 'acquire' may have an active or passive meaning, or both.

55 The obvious purpose of the statutory provision in the present case supports the conclusion that it is directed to the active acquisition of an interest. It is intended to preclude the making of claims by persons who actively acquire land in the knowledge that it is proposed to be reserved.

56 Having regard to this context, the word 'acquire' should be given its active meaning. It does not extend to the passive acquisition of land by way of testate succession.

57 The construction we prefer with respect to ss 98(1), 99 and 108 gives effect to the purposes of the Act. Section 1 provides:

The purpose of this Act is to establish a framework for planning the use, development and protection of land in Victoria in the present and long-term interests of all Victorians.

58 Section 4(1)(a) further provides that the objectives of planning include:

to provide for the fair, orderly, economic and sustainable use, and development of land;

59 Sections 4(2)(e) and (l) relevantly provide that the objectives of the planning framework established by the P&E Act include:

(e) to facilitate development which achieves the objectives of planning in Victoria and planning objectives set up in planning schemes;

...

(l) to provide for compensation when land is set aside for public purposes and in other circumstances.

60 If s 98(1) is read as imposing a particular ownership requirement in addition to conferring the right to claim compensation where there exists the requisite causal nexus between the imposition of a reservation and financial loss, two potentially adverse consequences follow:

(a) the right to compensation may be dependent in cases such as the present upon the adventitious adoption of single ownership, joint ownership or ownership through a trust company or other corporate vehicle for the purpose of utilising land as a farm. This has the capacity to work significant unfairness;[11]

(b) if owners of inherited land are placed in a position where there is a significant discouragement to sell or subdivide land prior to compulsory acquisition of part of that land, then the consequence will be that the orderly and economic use of that land will not be encouraged and the reservation of land will not facilitate development which achieves the objectives of planning in Victoria.

61 We turn to examine the authority upon which the respondent relies.

62 In Halwood,[12] Tadgell JA (with whom Brooking and Ormiston JJA agreed) referred to and approved elements of the reasoning in previous decisions made by single judges of this Court. It is desirable to say something about the line of authority to which his Honour referred before addressing the decision of the Court of Appeal in Halwood itself.

63 In Cape Developments Pty Ltd v City of South Barwon,[13] Gobbo J considered provisions of the Town and Country Planning Act 1961 (the predecessor to the P&E Act) which provided for compensation for loss suffered as the result of the reservation of land for public purposes. First, s 41(1) provided in wide terms for compensation for loss or damage suffered by an owner or occupier of land or the owner of any interest therein by or as a result of the operation of an interim development order or planning scheme where no part of that land was purchased or acquired by the responsible authority.

64 Secondly, s 42(1) limited the right to compensation to circumstances where land was reserved for a public purpose or a permit to use land was refused on the ground that land was or would be required for a public purpose.

65 Thirdly, s 42(2) provided that before any right to or liability for compensation arose, there must first be an application for a permit for the use or development of land and an adverse outcome (in specified respects) with respect to that application.

66 It was submitted for the planning authority in Cape Developments that compensation was limited to the loss suffered with respect to the land forming the subject of the permit application and that the effect of the reservation upon adjoining land of the owner was irrelevant.

67 Gobbo J rejected this submission. In so doing, he noted the submission made on behalf of the claimant that s 42(2) was not the source of entitlement to compensation but simply prescribed a procedural precondition to recovery of compensation. Gobbo J himself characterised the provisions conceptually in the following way:

In my view, the respondent's argument gives insufficient weight to the width of the language in s 41(1). It is this provision that confers a right to compensation; s 42(2) simply renders this right inchoate until one of the events prescribed has occurred. The right to compensation is not there limited though it is restricted by s 42(1)(a) for present purposes to reserved land or land required for a public purpose. Once there is a refusal or disallowed appeal within the meaning of s 42(2), the right to compensation crystallizes - that being a right conferred by a combination of the language of ss 41(1) and 42(1). Such a right exists in my view in relation to land even though it calls in aid the effect on adjoining land.[14]

68 Three observations can be made with respect to this analysis. First, it relates to different legislation from that with which we are concerned. Secondly, it recognises that the ambit of the right to compensation was to be discerned by reading the provisions as a whole. Thirdly, his Honour's characterisation of the provisions responded to the specific terms of the legislation there in issue. Section 42(2) commenced:

Except in any of the circumstances mentioned in sub-paragraph (iii) of paragraph (c) of sub-section (1), no right to or liability for compensation in relation to any land shall arise under section 41 out of the operation of any interim development order or planning scheme until after an application has been made to the responsible authority for a permit for the use or development of the land and -

(a) the responsible authority refuses to grant the permit or the tribunal directs that the permit shall not be issued ...

69 In City of Nunawading v Day,[15] J D Phillips J (as his Honour then was) was confronted with a claim for compensation pursuant to s 98 of the P&E Act in circumstances where the Administrative Appeals Tribunal had dismissed an appeal against failure by the responsible authority to determine a series of applications for permits which were inconsistent with a concept plan contained in the planning scheme. His Honour held that dismissal of an appeal against failure did not engage the terms of s 98(2) of the P&E Act.[16] In the course of describing the statutory scheme, his Honour observed:

In the course of the foregoing, I have rejected Mr Porter's submission that the refusal of the permit application on the ground that the land is needed for a public purpose is but a 'trigger' to the claim for compensation, and nothing more. That may well be true in relation to s 99, but it is not so in relation to s 98(2); and the difference in kind between s 98 and s 99 gives rise, I think, to the difference in the wording of the ground of refusal described in s 98(2) and the not dissimilar wording of the ground appearing three times in s 99(a). Both expressions tended to be equated in argument and it is useful to look at the position under s 99(a) in order to demonstrate why the wording is different and in particular why it is more definite in s 98(2).

Any claim for compensation under s 98(1)(a), s 98(1)(b) and s 98(1)(c) involves a reservation or proposed reservation of land for a public purpose. As explained in argument, the 'reservation' of land under the planning scheme is quite different to the zoning of land. Reservation marks out a public purpose for the land in question and it calls into play Pt III of the planning scheme. Under that Part, cl 33(1) provides that where land is reserved, it may be used for the purpose for which it was being used immediately before the scheme was approved, for any purpose for which land is reserved or for such other purpose as the responsible authority may absolutely or conditionally permit - but for no other purpose. I was told that, in the case of reserved land, where a permit is sought for use, the responsible authority will ordinarily consider whether or not what is proposed will impinge upon the effectuation of the intention behind the reservation and, if it will not, then a permit is granted; it has the chance to authorise use, notwithstanding the reservation. In other words, reservation does little more than subject all changes in use to the requirement that the responsible authority first grant a permit; it does not finally commit the land in question to the purpose behind the reservation.

Reservation alone, or even proposed reservation, can nevertheless justify a claim for compensation under s 98(1) and it is appropriate that s 99 should then provide a 'trigger' to give rise to the right to claim compensation and the liability to pay compensation. That is the purpose of s 99(a) and s 99(b). Obviously, reservation or proposed reservation can affect the price on sale - and hence s99(b). But it must have been thought appropriate too to allow the landowner to obtain compensation without having to go through the motions of a sale - and hence s 99(a). Because of the nature of a reservation and perhaps because proposed reservation can also attract compensation, s 99(a)(i) was framed in somewhat more generous terms than s 98(2). The right to compensation and the liability to pay compensation arise if the responsible authority refuses to grant a permit for use or development of the land 'on the ground that it is or may be required for a public purpose'. This is in contrast with the ground specified in s 98(2), which is 'that the land is or will be needed for a public purpose'. There may be no material difference between 'required' and 'needed'; the point I make is that the wider expression found in s 99(a) is appropriate where the subject matter of the claim is the loss suffered through reservation or proposed reservation; for in that case the permit refusal is no more than a 'trigger' to the claim that has already been described in s 98(1). That is not the case under s 98(2).[17]

70 After referring further to the operation of s 98(2) and the relevant trigger in s 99(d), his Honour then stated:

Thus, in my opinion, s 98 and s 99 are different in kind and in effect. The first defines the subject matter of a claim for compensation and the second is but the 'trigger' to the right to compensation in the claimant and the liability to pay compensation in the respondent; its terms are irrelevant to the definition of the subject matter of the claim. The distinction that I have drawn between the two sections is in line with the view of Gobbo J in Cape Developments [1982] VR, at 1018-19 about the earlier legislation, the Town and Country Planning Act 1961. As his Honour said there of s 42(2) (which was the predecessor of s 99), that 'was not the source of entitlement to compensation, but simply prescribed a procedural pre-condition to recovery'. I think that that applies equally to s 99, as distinct from s 98. In my view, those two sections cannot be equated and in the present cases what is relevant to s 98(2) and s 99(d), and not s 99(a).[18]

(1) The observations are dicta. They did not form the basis of the decision in the case.

(2) The focus of his Honour's attention was the operation of s 98(2).

(3) The words attributed to Gobbo J come from his Honour's summary of the claimant's argument in the Cape Developments case. They do not accurately reflect Gobbo J's ultimate articulation of the concepts underlying the previous legislation.

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

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

(6) Furthermore, we consider that the distinction made in City of Nunawading v Day between procedural and substantive provisions does not reflect the limited notion of 'procedural' articulated by the High Court in John Pfeiffer Pty Ltd v Rogerson.[19] In the context of a case concerning choice of law, the High Court stated that

matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in [McKain v RW Miller & Co (SA) Pty Ltd [1991] HCA 56; (1991) 174 CLR 1, 26-27], 'rules which are directed to governing or regulating the mode or conduct of court proceedings' are procedural and all other provisions or rules are to be classified as substantive.[20]

Section 99 of the P&E Act is concerned with issues of substance in that it provides for enforceable rights. It is, in our view, a substantive provision.

72 In Halwood at first instance,[21] Batt J (as his Honour then was) determined a claim made pursuant to ss 98(1) and 98(2) by a developer who purchased land knowing that part of the land was subject to a reservation for public purposes. The vendor had previously been refused a permit to use the land on compensable grounds but had made no claim for compensation.

(1) 'Owner or occupier' as referred to in s 98(1) of the P&E Act means owner or occupier at the time of the imposition or proposal of the reservation.

(2) Any incipient right to compensation possessed by the vendor did not pass to the purchaser pursuant to the provisions of the Transfer of Land Act 1958 or the Property Law Act 1958.

(3) Where land subject to a reservation is purchased with knowledge of the reservation, any financial loss suffered by the purchaser cannot in law be suffered as a 'natural, direct and reasonable consequence' of the reservation in the terms either of ss 98(1) or 98(2).

74 In characterising the relationship between ss 98 and 99, his Honour stated:

Section 98 of the Act (as modified, where appropriate, by s 109)[[22]] specifies the rights to and liabilities for compensation, that is, it specifies the subject matter of claims that may be made for compensation, whereas s 99 merely specifies the pre-condition or 'trigger' to the right to claim and to the liability to pay compensation.[23] The occurrence of the precondition crystallises the 'inchoate right' to compensation into a claim.[24] (Under s 98(2) the right, for the reasons explained below, is never inchoate, but instantaneously mature.) Section 98 is substantive, whilst s 99 is procedural and temporal.[25]

75 It can be seen that his Honour followed the decision in City of Nunawading v Day in describing s 99 as providing no more than a trigger and in characterising s 98 as substantive and s 99 as procedural and temporal.

76 However, we note that, for reasons with which we respectfully agree, Batt J's third conclusion concerning the causation requirement was dispositive of the claim pursuant to the P&E Act irrespective of this characterisation of s 99.

77 Further, his Honour's elucidation of the requirement that the loss be a natural, direct and reasonable consequence of the event giving rise to the liability for compensation has proven influential and has been cited many times in subsequent decisions of Victorian courts.[26]

78 On appeal, Batt J's conclusion was affirmed by the Court of Appeal.[27] The leading judgment was given by Tadgell JA, who summarised the effect of the judgment at first instance as follows:

His Honour was at pains to analyse the relationship between ss 98 and 99 of the Act. There was no disagreement between the parties that this was a necessary exercise; but there was essential dispute that his Honour's analysis was correct. The learned judge concluded, from a consideration of the two sections in the context of Pt 5 as a whole, that an owner's or occupier's substantive right to compensation derives from s 98, and that s 99 imposes no more than procedural or temporal prerequisites or 'triggers', at least one of which is to be satisfied or activated, before an obligation to make or an entitlement to receive payment of compensation arises. It followed from that analysis, as the judge decided, that what Pt 5 is designed to compensate is financial loss flowing from the imposition of a prescription to which s 98(1) refers, or from the refusal of a permit on the ground referred to in s 98(2). The decision was that, upon the facts to be assumed, a claimant could not be said, so far as s 98(1) was concerned, to have suffered loss which flowed from the imposition of the relevant reservation rather than from the purchase of already blighted land; and also (and so far as s 98(2) was concerned, too) that any loss suffered could not be said to have been suffered 'as the natural, direct and reasonable consequence of' any of the specified causative agencies.[28]

79 Tadgell JA went on to characterise the relationship between ss 98 and 99 as follows:

Batt J relied for his analysis on City of Nunawading v Day [1992) 1 VR 211, in which J D Phillips J, speaking of ss 98 and 99 of the Act, said, at 226, that:

... reservation does little more than subject all changes in use to the requirement that the responsible authority first grant a permit; it does not finally commit the land in question to the purpose behind the reservation.

Reservation alone, or even proposed reservation, can nevertheless justify a claim for compensation under s 98(1) and it is appropriate that s 99 should then provide a 'trigger' to give rise to the right to claim compensation and the liability to pay compensation. That is the purpose of s 99(a) and (b).

With respect, that statement appears to me to be accurate save that I should prefer to say that the right to claim is given by both subss (1) and (2) of s 98, and that s 99 provides a 'trigger' to give rise to a right to be paid and a liability to pay. In the case of a claim made under s 98(l)(a), (b) or (c) the 'trigger' available to the claimant by virtue of s 99 might be one of two kinds: either (i) the claimant's failure to obtain a permit in circumstances described in s 99(a) or (ii) a sale in circumstances described in s 106(1) - imprecisely referred to in s 99(b) as a sale 'under' s 106.[29]

80 His Honour then cited with approval the observations of J D Phillips J in City of Nunawading v Day as to the differences between ss 98 and 99.[30]

81 His Honour rejected the submissions made on behalf of the appellant to the effect that:

• Section 99 is designed to ensure that no right to compensation can arise under s 98(1) before one of the causative agencies described in ss 99(a)-(c) occurs causing financial loss to crystallise.
• The reference to land 'being reserved' in s 98(1)(a) should be read as referring to the continuing state of reservation.

82 After rejecting both these submissions, his Honour observed:

The evident purpose of s 98(1)(a), in my opinion, is not to prescribe a qualifying characteristic of land which entitles its owner or occupier to claim compensation, but to specify substantively the owner or occupier of land who may claim compensation for financial loss as a consequence of a designated act in relation to the land, namely the land's reservation for a public purpose under a planning scheme. To adopt the dichotomy referred to above, it is the act of reserving the land, rather than the land's condition or state of reservation, that is the prescribed criterion. J D Phillips J pointed out in the Nunawading case, at 226, that reservation alone can justify a claim for compensation under s 98(1), and I respectfully agree. This is sufficient to gainsay the contention that no right to claim compensation arises until compensation can be quantified and becomes payable by virtue of the happening of an event described in s 99.[31]

83 His Honour then referred compendiously to the other provisions of pt 5 of the P&E Act and expressed the view that none of them was inconsistent with the view that s 98 to the exclusion of s 99 is the source of entitlement to a claim for compensation under pt 5 and that the entitlement to a claim under s 98(1)(a) is confined to those who are owners or occupiers at the time of the imposition of the relevant reservation.[32]

84 Tadgell JA further rejected an argument directed specifically to the effect of s 108.[33] He commenced this discussion in terms which make clear that he regarded the entitlement to claim under s 98(1)(a) to be confined to those persons who were the owners or occupiers at the date of the relevant reservation event:

Counsel for the appellant referred below and on appeal to a number of provisions in pt 5 of the Act which he said support a view contrary to that which I have just expressed. Batt J dealt with them extensively. I do not propose to traverse all the ground again. Having considered all the arguments, I am satisfied that none of the provisions relied on for the appellant is inconsistent with the conclusion that s 98, to the exclusion of s 99, is the source of entitlement to a claim for compensation under pt 5, and that the entitlement to claim under s 98(l)(a) is confined to those who were owners or occupiers at the time of the imposition of the relevant planning reservation.[34]

85 However, in dealing with the claim under s 98(2), his Honour then went on to affirm Batt J's decision with respect to the non-compensable nature of the loss claimed based on the absence of the requisite causal link:

It is an inevitable conclusion on the assumed facts that any loss suffered by the owner was a consequence at least of the combined effect of the reservation and the owner's decision to purchase reserved land. The ground assigned for refusal of a development permit was that the land was subject to the reservation for a public purpose. It is therefore not possible to say, according to an ordinary use of the English language, that any loss was suffered 'as the natural, direct and reasonable consequence' of a refusal to grant a permit.[35]

86 Again, we respectfully agree with this conclusion and applying the same reasoning the ultimate decision in Halwood with respect to the claim under s 98(1) was correct.

87 However, despite the eminence of the judges comprising the Court in Halwood, we do not find the analysis of the relationship between s 98(1) and s 99 to be persuasive. This is so for four main reasons. First, it is one thing to say that s 98(1) specifies the category of owner who may claim compensation in consequence of the reservation for land for public purposes. Plainly it does so. The right to claim compensation is limited to those who suffer financial loss as a natural, direct and reasonable consequence of the reservation. However, it is quite another thing to read into s 98(1) the requirement that the right to make such claims is restricted to owners and occupiers at the date of reservation. There are no words expressing this requirement in s 98(1) and it is not necessary to imply such words in order to make the statutory scheme work satisfactorily. The implication does not sit comfortably with ss 98(3) and 108, which expressly delimit the category of relevant owners and occupiers and do so in part by reference to a temporal limitation.

88 Secondly, a right to compensation does not arise until the requirements of s 99 are met.

89 Thirdly, s 99 does not simply postpone the payment of compensation for a loss suffered at the date of reservation. It both provides that the right to compensation arises upon a subsequent event and contemplates that the compensable loss (if any) falls to be ascertained at that time.

90 Fourthly, Tadgell JA's characterisation of ss 98(1) and 98(2) as giving rise to a right to claim and s 99 as providing a trigger giving rise to a right to be paid and a liability to pay, does not resolve these problems. The fact of a loss in respect of which compensation is payable is not ascertainable until one of the events identified in s 99 occurs. As discussed, s 98(1) is not of itself sufficient to give rise to a right to compensation; rather, the right to compensation arises from the combined operation of s 98(1) and s 99. The question whether a compensable loss has been suffered will only be able to be answered at the date of the happening of one of the events specified in s 99.

91 We accept that we should depart from the earlier decision of this Court in Halwood[36] only if we are compelled to the conclusion that such decision was wrong.[37] In this case, however, we have a strong conviction that the decision in Halwood was incorrect insofar as it held that only an owner or occupier at the date of the reservation of land could make a claim for compensation of the type which the applicants contemplate.[38]

92 This is not a case where competing alternative constructions are each problematic in some respects. In our view, the decision in Halwood inserted an implied requirement into s 98(1) which is not to be found in the statute. As we have emphasised, however, so to hold does not remove the basal requirement that an owner or occupier must establish financial loss as the natural, direct and reasonable consequence of the reservation.

93 Accordingly, we would grant leave pursuant to s 17B of the Supreme Court Act 1986 and answer both questions 'No'.

[1] [1998] 2 VR 439 (Brooking, Tadgell and Ormiston JJA) ('Halwood').

[2] [2009] HCA 41; (2009) 239 CLR 27, 46-7 [47] (citations omitted).

[3] [2017] HCA 34; (2017) 262 CLR 362, 368 [14] (citations omitted).

[5] Ibid 381-2 [69] (citations omitted).

[7] See Halwood [1998] 2 VR 439, 449 (Tadgell JA).

[8] [1998] 2 VR 439.

[9] While, as the respondent observed, s 98 is headed 'Right to Compensation', that heading was inserted into the P&E Act prior to 1 January 2001 and does not form part of the Act (see ss 36(2A) and (3) of the Interpretation of Legislation Act 1984). Moreover, we are not persuaded that the heading throws any light on the purpose or object of the section (cf ss 35 and 36(4) of the Interpretation of Legislation Act 1984).

[11] See the observations of Emerton J in Capela v Minister for Energy, Environment and Climate Change [2018] VSC 360, [67].

[12] [1998] 2 VR 439.

[13] [1982] VicRp 102; [1982] VR 1011 ('Cape Developments').

[14] Cape Developments [1982] VicRp 102; [1982] VR 1011, 1019.

[16] Section 99(a)(iii) now addresses this situation.

[17] City of Nunawading v Day [1992] 1 VR 211, 225-6 (emphasis in original).

[19] [2000] HCA 36; (2000) 203 CLR 503, 542-3 [97]-[100] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[21] (1995) 89 LGERA 280.

[22] Section 109 relates to the payment of compensation by authorities other than the planning authority and responsible authority as defined under the P&E Act.

[23] City of Nunawading v Day [1992] l VR 211, 226-7; cf Cape Developments Pty Ltd v City of South Barwon [1982] VicRp 102; [1982] VR 1011, 1018-19; [1982] VicRp 102; (1981) 49 LGRA 268, 275-6.

[24] King v Minister for Planning & Housing [1993] VicRp 11; [1993] 1 VR 159, 183; (1991) 76 LGRA 288, 312.

[25] Halwood Corporation Ltd v Roads Corporation (1995) 89 LGERA 280, 286 (citations in original).

[26] See for example Secretary to Department of Transport v Provan's Timber Pty Ltd [2020] VSCA 210, [89] (Tate, Kyrou and McLeish JJA); Secretary, Department of Economic Development, Jobs, Transport & Resources v Manor Lakes (Werribee) Pty Ltd [2017] VSCA 114, [63]-[76] (Warren CJ, Osborn and Ferguson JJA); Melbourne City Link Authority v Teford Pty Ltd [2001] VSCA 54, [24], [28] (Batt JA, Tadgell JA agreeing at [1], Chernov JA agreeing at [31]); Kilpatrick v Head, Transport For Victoria [2020] VSC 53, [30] (Garde J); Provan's Timber Pty Ltd v Secretary to the Department of Economic Development, Jobs, Transport and Resources [2019] VSC 390, 61-2 [220]‑-[222] (Emerton J); Secretary to the Department of Economic Development, Jobs, Transport and Resources v Caradi Pty Ltd [2018] VSC 696, 78 [322] (Quigley J); Barilla v Roads Corporation (2017) 54 VR 198, 205 [35] (Emerton J); Secretary to the Department of Economic Development, Jobs, Transport and Resources v Stella (2016) 215 LGERA 314, 322-325 [33]-[41] (Bell J); Roads Corporation v Love [2010] VSC 32; (2010) 31 VR 451, 476 [113]-[115] (Osborn J); Roads Corporation v Schembri (2009) 28 VR 229, 233-4 [24]-[28] (Osborn J).

[27] Halwood [1998] 2 VR 439 (Brooking, Tadgell and Ormiston JJA).

[29] Ibid 447-8 (Tadgell JA) (emphasis in original).

[36] [1998] 2 VR 439.

[37] Nguyen v Nguyen (1990) 169 CLR 245, 269 (Dawson, Toohey and McHugh JJ).

[38] Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86, 100 (Gleeson CJ); Director of Public Prosecutions v Patrick Stevedores Holdings Pty Ltd [2012] VSCA 300; (2012) 41 VR 81, 180 [113] (Maxwell P, Weinberg JA and Ferguson AJA); R v BDX [2009] VSCA 28; (2009) 24 VR 288, 314 [154]-[156] (Vincent and Weinberg JJA).