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[2004] WASCA 149
Court of Appeal (WA)
2004-07-13
Mr P, Steytler J, Templeman J, Simmonds J, Kechnie J
Original judgment source is linked above.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : MOUNT LAWLEY PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2004] WASCA 149
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Citation Number : [2002] WASC 307
Town planning - Reservation and acquisition of land - Value of land required to be assessed under s 36 of Metropolitan Region Town Planning Scheme Act 1959 (WA) without regard to attributes of planning scheme - Need to consider events leading to reservation and attributes of the land - Whether difference between election to acquire and compulsory acquisition
Town planning - Reservation and acquisition of land - Valuation - Need for valuations not influenced by exigencies of litigation - Whether concept of special value applicable under s 36 of Metropolitan Region Town Planning Scheme Act 1959 (WA) - Whether market value includes costs of development application, holding the land until settlement, and of acquiring replacement property - Whether interest payable by planning authority as part of purchase price - Whether interest on purchase price able to be ordered under s 32 of Supreme Court Act 1935 (WA)
Town planning - Election to acquire land - Whether validly made - Whether omission in notice of election can be remedied by later notice, after expiry of time fixed by s 36(2)(b) of Metropolitan Region Town Planning Scheme Act 1959 (WA), relying upon s 55 of Interpretation Act 1984 (WA)
Town planning - Claim for injurious affection - Whether damage arising from severance claimable under s 36 of Metropolitan Region Town Planning Scheme Act 1959 (WA) - Whether claim for injurious affection can proceed in absence of development application
Appeals - Difficulties of appeal court in assessing evidence - Extensive, complex, controversial evidence at trial - Inadequate reasons in trial judgment
Appeals - Delay in judgment of trial Judge coupled with inadequate reasons
Interpretation Act 1984 (WA), s 55
Public Works Act 1902 (WA), s 2
Supreme Court Act 1935 (WA), s 32, s 142
Appellant (Applicant) : Mr W S Martin QC & Mr P L Harris
Respondent (Respondent) : Mr G T W Tannin SC & Mr B P King
15 Lorimer Street Pty Ltd v Secretary to the Department of Infrastructure (1997) 97 LGERA 239
Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430
Boland v Yates Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209
Broken Bay Peninsular Pty Limited v Minister Administering the National Parks and Wildlife Act 1974 [1997] NSWLEC 165
Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306
Closer Settlement Ltd v The Minister (1942) 17 LGR(NSW) 62
Cobham v Frett [2000] UKPC 49; [2001] 1 WLR 1775
Commonwealth v Morison [1972] HCA 39; (1972) 127 CLR 32
Cornell v Town of East Fremantle [2003] WASC 163; (2003) 131 LGERA 20
Crisp & Gunn Co-operative Ltd v Hobart City Corporation [1963] HCA 55; (1963) 110 CLR 538
Curwen v James [1963] 1 WLR 748
Environmental Protection Authority; Ex parte Chapple (1995) 89 LGERA 310
Flannery v Halifax Estate Agencies Ltd [1999] EWCA Civ 811; [2000] 1 WLR 377
Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) [2002] VSCA 189; (2002) 6 VR 1
Folkstone v Metropolitan Region Planning Authority [1968] WAR 164
Goose v Wilson Sandford & Co, unreported; England and Wales Court of Appeal (Civil Division); 13 February 1998
Hadid v Redpath [2001] NSWCA 416
Hill v Western Australian Planning Commission [2000] WASC 101; (2000) 107 LGERA 229
Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196
Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462
MacDougall v Western Australian Planning Commission [2003] WASC 138; (2003) 129 LGERA 243
Marine Board of Launceston v The Minister of State for the Navy [1945] HCA 42; (1945) 70 CLR 518
Marshall v Director-General, Department of Transport [2001] HCA 37; (2001) 205 CLR 603
Mifsud v Campbell (1991) 21 NSWLR 725
Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic [1990] FCA 22; (1990) 21 FCR 193
NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1
Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083
Pledge v Roads and Traffic Authority [2004] HCA 13; (2004) 78 ALJR 572
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656
Queensland v Murphy [1990] HCA 42; (1990) 95 ALR 493
R v Maxwell, unreported; CCA SCt of NSW; 23 December 1998
Re Powter; Ex parte Powter (1945) 46 SR (NSW) 1
Ricciardello v Caltex Oil (Australia) Pty Ltd [1991] ANZ ConvR 445
Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246
Sisters of Charity of Rockingham v The King [1922] 2 AC 315
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418
St John Ambulance Association of Western Australia Inc v East Perth Development Authority [2001] WASC 85; (2001) 114 LGERA 112
Trandos v Western Australian Planning Commission [2001] WASCA 346; (2001) 117 LGERA 257
Turner v Minister of Public Instruction [1956] HCA 7; (1956) 95 CLR 245
Venture Management Ltd v Commissioner of Taxation (1991) 4 WAR 283
Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520
Wilson v Liverpool City Council [1971] 1 All ER 628
Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VicRp 55; [1970] VR 427
Abbey Orchard Property Investments Pty Ltd v Sydney City Council (1978) 37 LGRA 230
Arkaba Holdings Ltd v Commissioner of Highways [1970] SASR 94
Attorney-General v Horner (1884) 14 QBD 245
Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621
Beer v Bowden [1981] 1 WLR 522
Bond Corporation Pty Ltd v The Western Australian Planning Commission [1999] WASC 157; (1999) 108 LGERA 235
Bond v Nottingham Corporation [1940] Ch 429
Bronzel v State Planning Authority (1979) 21 SASR 513
Burns Philp Hardware Pty Ltd v Howard Chia Pty Ltd (1987) 8 NSWLR 642
Central Control Board (Liquor Traffic) v Cannon Brewery Co Ltd [1919] AC 744
Clissold v Perry (Minister for Public Instruction) [1904] HCA 12; (1904) 1 CLR 363
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd [1981] HCA 4; (1981) 146 CLR 336
Commonwealth v Reeve [1949] HCA 22; (1949) 78 CLR 410
Consett Iron Company Ltd v Clavering Trustees [1935] 2 KB 42
Crompton v Commissioner of Highways (1973) 5 SASR 301
Doolan Properties Pty Ltd v Pine Rivers Shire Council [2000] QCA 76
Duffy v The Minister for Planning [2003] WASCA 294; (2003) 129 LGERA 271
Email Ltd v Robert Bray (Langwarrin) Pty Ltd [1984] VicRp 2; [1984] VR 16
Emerald Quarry Industries Pty Ltd v Commissioner of Highways (1976) 14 SASR 486
Emerald Quarry Industries Pty Ltd v Commissioner of Highways (SA) [1979] HCA 17; (1979) 142 CLR 351
Fraser v City of Fraserville [1917] AC 187
Grampian Regional Council v Secretary of State for Scotland [1983] 1 WLR 1340
Hoyt's Pty Ltd v O'Connor [1928] HCA 7; (1928) 40 CLR 566
Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639
Konowalow & Felber v Minister for Works [1961] WAR 40
Kozaris v Roads Corporation [1991] VicRp 17; [1991] 1 VR 237
Langham v Mayor of the City of London [1949] 1 KB 208
Lear v Blizzard [1983] 3 All ER 662
London & North Western Railway Company v Evans [1893] 1 Ch 16
Magenta Nominees Pty Ltd v Webb, unreported; FCt SCt of WA; Library No 980622; 29 October 1998
Maynard v Dabinett [1999] NSWCA 295; (1999) 29 MVR 512
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426
Moylan v Nutrasweet Co [2000] NSWCA 337
Nelungaloo Pty Ltd v Commonwealth [1947] HCA 58; (1948) 75 CLR 495
Nuland Developments Pty Ltd v Parramatta City Council (1978) 37 LGERA 258
Overton Investments Pty Ltd v Department of Urban Affairs & Planning [1998] NSWLEC 67
Pallot v Harrison, unreported; SCt of WA (Owen J); Library No 950261; 12 May 1995
Pamalco Pty Ltd v Minister Administering National Parks & Wildlife Act 1974 (No 3) (1991) 71 LGRA 441
Lasseter v Blacktown City Council [1994] NSWLEC 24
Board of Valuers; Ex parte Bond Corporation Pty Ltd, unreported; SCt of WA (Miller J); Library No 980713; 5 November 1998
Rees v Minister for Planning & Housing (1991) 76 LGRA 167
Rugby Joint Water Board v ShawFox [1973] AC 202
Taylor v Bullen [1850] EngR 844; (1850) 5 Exch 779
Minister v Stocks & Parkes Investments Pty Ltd [1973] HCA 29; (1973) 129 CLR 385
Thomas Bates & Son Ltd v Wyndham's (Lingerie) Ltd [1980] EWCA Civ 3; [1981] 1 WLR 505
Trandos v Western Australian Planning Commission (2000) 107 LGERA 11
Tzouvelis v Victorian Railway Commissioners [1968] VicRp 13; [1968] VR 112
Wimpey Construction UK Ltd v The Minister (1983) 43 LGRA 75
WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489
Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156
1 This is an appeal from a decision, given pursuant to s 36(2b) of the Metropolitan Region Town Planning Scheme Act 1959 (WA) ("the Scheme Act"), that the value of some 309 hectares of rural land, which had been reserved for parks and recreation and a controlled access highway by amendment to the Metropolitan Region Scheme ("MRS"), was $2.918 million. The trial Judge held that "value", in this context, should include certain outgoings and expenses paid by the owner in respect of the land. His Honour awarded interest on the various components of the value so found.
2 The land has been owned since 1963 by the appellant Mount Lawley Pty Ltd. That company is owned beneficially by members of the Copley family. The land has been held within the family for over 100 years. The appellant contends that the land should not have been valued as rural land, but as urban land, on the basis that it would have been rezoned but for the reservation, and that its value is some $15,000,000.
3 The respondent, the Western Australian Planning Commission, is established by s 4 of the Western Australian Planning Commission Act 1985. The respondent's functions include reviewing the MRS and making recommendations for its amendment to the Minister for Planning and Infrastructure. It seeks to uphold the valuation of the reserved land on a rural basis. It contends that the environmental significance of the land required it to be preserved, and is such that the land would never have been rezoned urban. It also contends that the trial Judge should not have treated the various outgoings as components of value and that his Honour should not have awarded interest. These issues are the subject of a cross-appeal.
4 The reserved land is part of a larger area ("the Mount Lawley land") of some 320 hectares comprising Lots 46 and 47 Maralla Road and Lexia Avenue, located to the west of a recently developed suburb known as Ellenbrook, in the Shire of Swan. It is located in what has come to be known as Perth's north-eastern corridor, this being one of the areas identified in the 1980s for the expansion of the Perth metropolitan area. It is some 25 kms to the north-east of the city of Perth.
5 The Mount Lawley land has never been developed. It is bushland in pristine condition, disturbed only by firebreaks and tracks leading to bores established by the Water Corporation. The land has substantial areas at 48 - 49 metres Australian Height Datum ("AHD"), mainly in a flat central area, where there are some shallow and seasonal wetlands. The reserved portion of the land is fringed by undulating dunes, ranging from 50 to 70 metres AHD. The vegetation is mainly banksia woodlands.
6 In 1990, a number of landowners, including the appellant, submitted a proposal for the rezoning of a substantial part of the north-eastern corridor from Rural to Urban Deferred, under the MRS. The ultimate objective was the creation of an urban development at Ellenbrook. Later in these reasons, we shall refer in more detail to the rezoning application and to the appellant's involvement in the proposal. It is sufficient for present purposes to record that on 16 October 1992, by Amendment 879/33 to the MRS, some 2209 hectares of the north-eastern corridor were rezoned from Rural to Urban Deferred, and some 309 hectares of the Mount Lawley land ("the reserved Mount Lawley land") were reserved for Parks and Recreation. This included an area of some 7.9 hectares, which, by 14 December 1994, had been re-reserved for a Controlled Access Highway ("the CAH land") by Amendment 950/33 to the MRS (see exhibit 2045). The balance of the Mount Lawley land, some 12 hectares ("the unreserved Mount Lawley land"), fell within the area rezoned Urban Deferred, which, by 14 December 1994, had been rezoned again, to Urban (see exhibit 2045).
7 By letter dated 22 September 1995 the appellant lodged with the respondent a claim for compensation for injurious affection of Lots 46 and 47 arising from Amendments 879/33 and 950/33. The claim was made under s 11(1) of the Town Planning and Development Act 1928 (WA) ("the Planning Act"), s 36(1) of the Scheme Act, and cl 8 of the MRS.
8 It was common ground between the parties to this appeal that this was not a valid claim, as the required procedure calls first for a development application to be made, and then for it to be either declined, or approved subject to unacceptable conditions. In any event the respondent declined this claim by letter dated 6 October 1995.
9 On 7 December 1995, the appellant applied to the respondent through the Shire of Swan for approval to begin development of earthworks for urban development and sand mining associated with a proposed residential subdivision and associated development on Lots 46 and 47 (exhibit 1098). This application referred to the zoning of the land involved as "Parks and Recreation" in the MRS, but in Plan 3 of the Structure Plan the application appears to show that the land involved included land in the path of the proposed highway that led to the reservation of the CAH land.
10 It was common ground between the parties that the respondent did not reply to the application within 60 days of its receipt. Thus, by s 35E(6) of the Scheme Act, and cl 31(2) of the MRS, the application was deemed to have been refused. It was refused formally by letter dated 10 April 1996.
11 On 13 February 1996 (exhibit 187), the appellant claimed compensation for injurious affection in respect of the Mount Lawley land. The claim referred to the reservations for parks and recreation and for the controlled access highway, and said:
"(c) The reservation in each case significantly reduced the value of the land and caused severance damage to the balance of Lot 47 held by the claimant by reason of the absence of separate road access."
12 Compensation of $65,000 per hectare "average" was claimed for 309 hectares "including severance to the remaining portion of Lot 47 and the value of the mineral sands within Lots 46 and 47". The 309 hectares corresponded to the area of the reserved Mount Lawley land. The total amount claimed was $20.085 million (309 x $65,000).
13 By s 36(2) of the Scheme Act and s 12(2a)(b) of the Planning Act, the respondent was obliged to respond to the appellant's claim for injurious affection either by agreeing to pay compensation or by electing to acquire the subject land. By s 36(2)(b) of the Scheme Act, the election was to be made by notice in writing given to the appellant within three months of the claim for injurious affection.
14 By letter dated 9 May 1996 (exhibit 188) the Ministry for Planning notified the appellant that the respondent had "elected to purchase the portion of the above property [referring to land at Lots 46 and 47 Maralla Road and Lexia Avenue, Ellenbrook] reserved for Parks and Recreation in lieu of paying compensation". No mention was made of the CAH land. The letter stated that the date of the election was 7 May 1996.
15 By letter to the appellant dated 24 September 1999 (exhibit 2092), the Ministry for Planning referred to the letter dated 9 May 1996, and notified the appellant that, "insofar as there was an error in that letter concerning the description of the property which is the subject of the election to purchase", that error was "hereby corrected" by replacing the relevant paragraph in the earlier letter. In the replacement paragraph, it was said that the respondent had "elected to purchase the whole of Lot 46 and portion of Lot 47 reserved under the [MRS] both for Parks and Recreation and for Controlled Access Highway in lieu of paying compensation". The date of the election was said to be 7 May 1996, as before.
16 The appellant does not accept the validity of the respondent's purported correction of its error and contends that the respondent has not elected to acquire the CAH land.
17 The appellant and the respondent were unable to agree on the price to be paid for the reserved Mount Lawley land. That being so, by s 36(2a) of the Scheme Act, the price was to be "the value of the land as determined in accordance with subsection (2b)".
18 Subsection 36(2b) of the Scheme Act provides as follows:
"(2b) The value of the land referred to in subsection (2a) shall be the value thereof on the date the Commission elects to acquire the land under that subsection, and that value shall be determined -
(ii) by the Supreme Court - if the value of the land claimed by the owner thereof is more than $1 000_;_
or
(c) by some other method agreed upon by the Commission and the owner of the land,
and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme."
19 The "Scheme" is defined in s 6 of the Scheme Act as:
" ... a town planning scheme for the metropolitan region or any part thereof, including the provisions therein for regulating and controlling the use of the land the subject of the Scheme and the purposes for which the land may be used and includes -
(a) the provisions of the Scheme;
(b) all maps, plans, specifications and other particulars contained in the Scheme and colourings, markings or legend thereon;
(c) the Scheme as varied or amplified by any amendment that has the force of law; and
(d) a subsequent scheme that has the force of law and any such subsequent scheme as varied or amplified by any amendment that has the force of law;
...".
20 The reserved Mount Lawley land (and the CAH land if acquired) was therefore to be valued without regard to any increase or decrease in value attributable wholly or in part to the amendments which effected the reservation.
21 The basis for the valuation has been the principal issue in the appeal and cross-appeal. The other issues include the following:
• whether the respondent validly elected to acquire the CAH land;
• whether the election to acquire is equivalent to a compulsory acquisition;
• whether the value should include any special value to the owner, such as the cost of various outgoings and expenses incurred by the appellant in relation to the land;
• whether the appellant is entitled to interest on the price to be paid by the respondent;
• whether the appellant is entitled to compensation for the effect of severance on the unreserved Mount Lawley land.
22 At the trial, the appellant sought to support its valuation evidence by evidence from town planning and other technical and scientific experts. The respondent did likewise. The result was that the trial ran from 29 February to 19 June 2000. All the evidence was recorded electronically. It included nearly 800 exhibits and over 6,000 pages of transcript. There was then an adjournment until 12 September 2000, while closing submissions were prepared: some 800 pages from the appellant and 300 pages from the respondent. The submissions were presented over four days, until 15 September.
23 On 27 February 2002 the trial Judge sat again to hear submissions arising from the decision of the High Court in Marshall v Director-General, Department of Transport [2001] HCA 37; (2001) 205 CLR 603.
24 The Judge delivered his judgment on 13 December 2002. Considering all that had gone before, his Honour's reasons were, with respect, extraordinarily short: some 24 pages of text. He justified that, in part, by holding that much of the evidence given at trial was irrelevant.
25 The delay in delivering judgment and the inadequacy of the reasons were at the forefront of the appellant's submissions on the appeal. It is, in this respect, fair to say that, although the respondent contends that the Judge reached the correct conclusion, it accepts that his Honour's reasons were in some respects inadequate. We therefore deal with these matters before turning to the merits of the appeal.
26 The appellant's contentions are set out in ground 20 of the grounds of appeal. It reads as follows:
"(a) ... following a trial which lasted for 67 days (with more than 6,000 pages of transcript and almost 800 exhibits) and having taken in excess of 2 years to deliver his judgment, the Trial Judge erred in failing to provide adequate findings and reasons to enable a proper understanding of the basis upon which his determination of value had been reached and in particular failed to:
(i) identify with specificity the evidence he found to be irrelevant;
(ii) identify with specificity what evidence he relied upon and what evidence he rejected in reaching his decision;
(iii) weigh the merits and demerits of each party's evidence; and
(iv) demonstrate that all the facts, evidence and pleadings had been carefully assessed.
(b) It should be inferred from the inadequacy of the reasons contained in the judgment and the lengthy delay in providing the judgment that the trial Judge had overlooked large parts of the pleadings, essential evidence and argument in the case and that his findings were unsafe, resulting in a substantial miscarriage of justice."
The starting-point, in considering these grounds, is that the giving of reasons is a normal (albeit not universal) incident of the judicial process: Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 667; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 269 - 270, 278; and Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 441. That is because "the duty is a function of due process, and therefore of justice": Flannery v Halifax Estate Agencies Ltd [1999] EWCA Civ 811; [2000] 1 WLR 377 at 381, per Henry and Laws LJJ and Hidden J. Fairness requires that the parties should know why they have won or lost. A requirement to give reasons is likely to produce a more soundly based, rational judgment: Flannery (ibid); and see Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) [2002] VSCA 189; (2002) 6 VR 1 at 31. The requirement also furthers judicial accountability: Soulemezis, at 279, per McHugh JA; and Beale, at 442, per Meagher JA.
27 Where there is a right of appeal, the reasons must be sufficient to give effect to that right. The basis for the decision must be apparent, as otherwise the losing party cannot know whether there has been a mistake of law or of fact. Just what that will involve depends upon the nature of the case. Some cases turn upon a simple contest of credibility between two witnesses. Others involve detailed and complex factual and legal issues requiring close reasoning and analysis.
28 Reasons need not be lengthy and elaborate: Re Powter; Ex parte Powter (1945) 46 SR (NSW) 1 at 5; Beale, at 443; nor do they need to refer to all the evidence led in the proceedings: Mifsud v Campbell (1991) 21 NSWLR 725 at 728. However, relevant evidence should be referred to (albeit not necessarily in detail) and, where there is conflicting evidence of significance to the outcome, both sets of evidence should be referred to. Where one set of significant evidence is preferred over another, the trial Judge should set out findings sufficient to explain why: Beale, at 443. Similarly, where a dispute involves a form of "intellectual exchange, with reasons and analysis advanced on either side", the Judge "must enter into the issues canvassed before him and explain why he or she prefers one case over the other": Flannery, at 382.
29 Inadequacy of reasons does not necessarily amount to an appealable error. An appeal court will only intervene when no reasons have been given in circumstances in which they were required, or when the inadequacy is such as to give rise to a miscarriage of justice: Beale, at 444. Nor does an appealable error arising from inadequate reasons necessarily result in a new trial. The appeal court is entitled to consider the matter and, if it can do so (where, for example, only one conclusion is reasonably open on the available evidence), it may itself decide the matter: Beale, at 444.
30 Delay, at least where it is substantial, adds another dimension in considering the adequacy, or otherwise, of reasons. It does not, of itself, indicate that the trial has miscarried or that the judgment is unsafe and, hence, give rise to a ground of appeal. However, a comparison between the judgment and the issues in the trial may indicate that its effect has been such as to constitute a miscarriage: R v Maxwell, unreported; CCA SCt of NSW; 23 December 1998. Also, where there has been substantial delay, statements of a general assertive character, which might otherwise be accepted as encompassing a detailed consideration of the evidence, might be treated with reserve. In Maxwell, a delay of the order of 10 months was said to have been "such as to require a more comprehensive statement of the evidence than would normally be required in order to manifest, for the parties and the public, that the delay has not affected the decision": at 25, per Spigelman CJ, Sperling and Hidden JJ.
31 In this case, the trial Judge had available a full transcript of the evidence and the argument and, of course, the various exhibits. However, even then, a long delay can give rise to disquiet, not only because of the lengthy period of uncertainty with which the litigants are required to live pending the judgment, but also because of the suspicion, on the part of the losing party, that the task may have become too much for the trial Judge and that he or she had been unable, in the end, to grapple adequately with the issues. Thus, in Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 (a case involving a delay of nearly eight months in giving judgment) Lawton LJ said:
"[Counsel] submitted that this long and, in my experience, unprecedented delay resulted in the Judge making material findings which were not justified by the evidence. I am not satisfied that this was so. But the fact that responsible and experienced counsel, acting for a public corporation, felt it incumbent upon him to make this submission shows that long delays in delivering judgment can cause disquiet and suspicion amongst litigants who lose - and those who win may feel they have been deprived of justice far too long. Delays of this length should not occur unless there are compelling reasons why they should; and, if there are such reasons, it would be prudent of a judge to refer to them briefly."
32 Similarly, in Goose v Wilson Sandford & Co, unreported; England and Wales Court of Appeal (Civil Division); 13 February 1998, Peter Gibson, Brooke and Mummery LJJ said (in a substantial case involving a delay of over 20 months from the end of the hearing), at [112] and [113], that:
"A judge's tardiness in completing his judicial task after a trial is over denies justice to the winning party during the period of the delay. It also undermines the loser's confidence in the correctness of the decision when it is eventually delivered. Litigation causes quite enough stress, as it is, for people to have to endure while a trial is going on. Compelling them to await judgment for an indefinitely extended period after the trial is over will only serve to prolong their anxiety, and may well increase it. Conduct like this weakens public confidence in the whole judicial process. Left unchecked it would be ultimately subversive to the rule of law. Delays on this scale cannot and will not be tolerated. A situation like this must never occur again.
Because of the delay in giving judgment it has been incumbent on us to look with especial care at any finding of fact which is now challenged. In ordinary circumstances where there is a conflict of evidence a judge who has seen and heard the witnesses has an advantage, denied to an appellate court, which is likely to prove decisive on an appeal unless it can be shown that he failed to use or misused, this advantage. We do not lose sight of the fact that the judge had transcripts of the evidence, as well as very extensive written submissions from counsel. But the very fact of the huge delay in itself weakened the judge's advantage, and this consideration had to be taken into account when we reviewed the material which was before the judge. In a case as complex as this, it is not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he has come to study the evidence (both oral and written) and the submissions he has received with greater care, he will then go back to consider the effect the witnesses made on him when they gave evidence about the matters that are now troubling him. At a distance of twenty months, Harman J denied himself the opportunity of making this further check in any meaningful way."
33 What was said in Goose has been applied in Australia: see, for example, Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 at [8]; Hadid v Redpath [2001] NSWCA 416 (a case involving a delay of about one year) at [29]; and NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1 at [53] and [56].
34 In Cobham v Frett [2000] UKPC 49; [2001] 1 WLR 1775, a case involving a delay of over 12 months, the Privy Council said (at 1783) that:
"It can be easily accepted that excessive delay in delivery of a judgment may require a very careful perusal of the judge's findings of fact and of his reasons for his conclusions in order to ensure that the delay has not caused injustice to the losing party."
Their Lordships went on to say (at 1783 - 1784) that, in their opinion:
"[I]f excessive delay, and they agree that 12 months would normally justify that description, is to be relied on in attacking a judgment, a fair case must be shown for believing that the judgment contains errors that are probably, or even possibly, attributable to the delay. The appellate court must be satisfied that the judgment is not safe and that to allow it to stand would be unfair to the complainant."
35 In NAIS, at [4], Hill J said that the basis on which an appeal court would order a new trial in a case of excessive delay (where the appellant has satisfied the appeal court that to allow the judgment to stand would be unsafe) is that the appellant has not had a fair trial. His Honour added (ibid) that it may not be appropriate to order a new trial in a case where the appeal court on an appeal may itself make findings of fact. Marshall J, in that case, had no doubt ([37]) that "an unreasonable delay, which results in prejudice to a losing party, may amount to a denial of procedural fairness to that party".
36 In this case, as we have noted above, evidence was received by the trial Judge between 29 February 2000 and 19 June 2000. Closing submissions were presented between 12 and 15 September 2000. More than 17 months later, on 27 February 2002, submissions were heard in relation to a decision of the High Court delivered in 2001. Then, on 13 December 2002, almost 10 months later, the judgment was delivered, after a total delay of almost two years and three months.
37 It is hardly surprising that this inordinate and inexcusable delay (for that is undoubtedly what it was) led to disquiet and suspicion of the kind referred to in such cases as Rolled Steel and Goose. Nor is it surprising that we were presented (by responsible and experienced counsel) with submissions (of a kind which no appellate court ever wishes to see) criticising the delay, and its apparent consequences, in trenchant terms. The making of those submissions was even less surprising given that, notwithstanding that the delay was explained by the trial Judge by saying that it had been occasioned by the need to thoroughly absorb and review the evidence and submissions, the judgment runs, as we have said, to only 24 pages of text and makes no attempt to refer to much of the relevant evidence or to set out, in any adequate way, the trial Judge's reasons for preferring significant sets of evidence over other significant sets of evidence. Moreover, this was a factually and legally complex case which involved an intellectual exchange with reasons and analysis advanced on either side. However, the trial Judge, in significant instances, did not enter into the issues canvassed before him in any adequate way or provide explanations for his decisions which treated those intellectual exchanges with the respect which they plainly warranted.
38 For example, in relation to the trial Judge's treatment of the demeanour of witnesses, his Honour said only the following (at [6] and [7]):
"In some cases the demeanour of witnesses assumes great importance in assessing the evidence. In this case the demeanour of witnesses has played a minimal part in my decision. All witnesses presented well. The witnesses as to the narrative history were recalling events and on occasion suffered from fallibility of memory. Where it has been necessary to prefer a version of one witness to another, or to doubt the reliability of a witness's evidence in a particular, I have done so by reference to the witness's evidence, compared with the contemporary documents, those documents having a higher probability of accuracy.
There was challenge to some witnesses on both sides as to their bias or partiality. For example, Mr Molony's arrangements with the applicant include a success fee. I have taken the question of bias generally into account, but gave it comparatively little weight. With the exception of Mr Copley, and Public Service representatives of the respondent, such as Mr Hillyard, expert witnesses on both sides are paid for their experience and expertise. I have not found any witness to be mendacious, although there are some whose opinions I do not completely accept."
Nowhere did his Honour analyse, in any depth, or sometimes at all, why he preferred a version of one witness to another. Nor did he identify which were the witnesses whose reliability he doubted, or in what particulars, or why. He did not say in respect of which witnesses he had found bias, or why, or what he meant by saying that he had "generally" taken it into account. Nor did he say who were the witnesses whose opinions he did not completely accept, or why, or in what respects. While he did later make some comments about particular evidence or opinions, particularly in respect of the valuation evidence, it is by no means clear that it was only to that evidence that these earlier comments were intended to refer.
39 A further example arises out of [8], [9] and [10] of his Honour's judgment. In [8] and [9] he referred to objections to "certain evidence" which he upheld. He said he did so "in general terms". However, he did not identify, with any degree of precision, the evidence successfully objected to or in what "general terms" the objection was successful. Instead, he went on to say that the appellant's case theory was based on propositions including the following:
"(a) The election to acquire is equivalent to a compulsory acquisition;
(b) The Mount Lawley land which was zoned rural prior to the reservation would have been rezoned urban in due course but for the reservation;
(c) The background history of failed negotiations and proposed land exchanges affects the question of the determination of the value of the Mount Lawley land;
(d) The conservation significance of the Mount Lawley land, if substantial, must be disregarded under the Pointe Gourde principle (Pointe Gourde Quarrying and Transport Company Limited v Sub-Intendent of Crown Lands [1947] AC 565);
(e) The motivation of the respondent and Governments of the day is relevant to the issue of valuation;
(f) The highest and best use of the Mount Lawley land but for the reservation was an urban community as illustrated by a hypothetical development."
He said, at [10], that he rejected each of those propositions and that, in consequence, much of the evidence led at trial was irrelevant. He did not specify what evidence was irrelevant and, indeed, propositions (b) and (f), at least, are factual, proposition (b) being central to the appellant's case. If those factual propositions were to be rejected, this should only have been done after an analysis of the evidence upon which they relied (said by the trial Judge to be irrelevant as a consequence of his rejection of the propositions), saying which parts of that evidence were accepted and which were not, and why. However, his treatment of the evidence is merely assertive in character and lacks any substantive analysis.
40 No good purpose can be served by giving further examples, although others could be provided. Nor is it necessary to decide whether this ground of appeal, had it stood alone, would have been determinative. That is because we have been able to resolve the appeal on other grounds. However, we should make three additional comments. The first is that, in some instances, this ground has been relevant in an assessment of the strength of other grounds (cf Laminex at [9]). The second is that, had it been necessary to decide whether or not this ground was, of itself, determinative, we would, very likely, have found it to be so. The third is that, during the course of oral submissions, counsel for the respondent very properly did "not seek to excuse or defend the delay", acknowledging that there was "no basis to do that".
41 There are 19 other grounds of appeal. However, there is much overlapping and repetition. Indeed, many grounds were grouped in the appellant's submissions and answered by the respondent in a similar way.
42 It is not necessary, therefore, to deal with each ground of appeal separately. Rather, we have identified the issues they reflect and have related our judgment to those issues.
43 The balance of our judgment proceeds as follows. First, we deal with the issue of whether or not the election to acquire by the respondent validly related to all of the reserved Mount Lawley land, or only to the balance after subtracting the CAH land. Our conclusion on the election issue takes us to the most significant issue in relation to the appellant's claim for compensation based on the price of the land the respondent validly elected to acquire. This issue involves the application of the Pointe Gourde principle, as embodied in s 36(2b) of the Scheme Act, in the determination of the proper basis for the valuation of that land. This requires us to analyse that principle in some detail, before considering the events and circumstances leading up to the parks and recreation reservation, including the environmental review of the land, with which we deal separately. We then consider the High Court authority of Queensland v Murphy [1990] HCA 42; (1990) 95 ALR 493, on which in this connection extensive reliance was placed by the respondent in the appeal, before indicating our conclusion on the issue of the proper basis for valuation of the land the respondent validly elected to acquire, and then examining the valuation evidence.
44 Our judgment then proceeds to consider the issue, also relevant to the valuation of the land the respondent validly elected to acquire, of whether or not such an election was equivalent to a compulsory acquisition so as to require account to be taken of any items of "special value" to the appellant or otherwise separately allowable under the law of compulsory acquisition. We consider separately the possibility for application of "special value" on other, general valuation, grounds. This enables us to discuss, among other things, whether or not the appellant is entitled to interest on the price to be paid by the respondent.
45 Our judgment then proceeds to deal with the claims for compensation under other heads than the price of the land the respondent validly elected to acquire, being injurious affection to the CAH land and the unreserved Mount Lawley land and severance damage to the latter land.
46 The final section of our judgment is a summary of our conclusions on all of these issues, and our disposition of this appeal.
47 As we have said, there is an issue about the validity of the respondent's purported election to acquire the CAH land.
• On 7 May 1996, the Executive, Finance and Property Committee of the Ministry for Planning, acting under delegated power from the respondent, decided to purchase the whole of the reserved Mount Lawley land and the CAH land.
• By letter dated 9 May 1996 Mr Hillyard, on behalf of the Ministry for Planning, notified the appellant of the decision to purchase the portion of the Mount Lawley land "reserved for Parks and Recreation". The letter did not refer to the CAH land.
• The appellant's then solicitors wrote to the respondent on this subject, by letter dated 25 September 1996 (exhibit 2090), noting that the respondent had elected to purchase only that part of the reserved Mount Lawley land reserved for parks and recreation, adding that they assumed the respondent intended to pay compensation for (rather than elect to acquire) the CAH land.
• On 4 October 1996, Mr Hillyard replied to the solicitors' letter (exhibit 2091) indicating that the Ministry had been told by the appellant to deal with Kevin Sullivan & Associates in all matters concerning "the Commission's purchase of the reserved portions of the above properties (ie, Parks and Recreation and Controlled Access Highway)", so as to overcome the respondent's concerns about receiving communications from the appellant itself, its then solicitors and the Sullivan firm. Kevin Sullivan & Associates was a firm of real estate agents and valuers retained by the appellant in relation to its plans for the development of the reserved Mount Lawley land.
• Some three years later, on 24 September 1999, Mr Hillyard wrote to the appellant (exhibit 2092) saying that "if and insofar as there was an error in his letter of 9 May 1996, such error or omission was hereby corrected", by replacing the reference to the purchase of the reserved Mount Lawley land with a reference to the purchase of that land and the CAH land.
49 At the trial, the appellant contended that there was no election to acquire the CAH land within the three-month period provided by s 36(2)(b) of the Scheme Act. That provision is as follows:
"The Commission shall, within 3 months of the claim for injurious affection being made, or where such a claim is made before the date of the coming into operation of the Metropolitan Region Town Planning Scheme Act Amendment Act 1968, within 3 months of that date, by notice in writing given to the claimant, either elect to acquire the land or advise that it does not intend to acquire the land."
50 In our view, s 36 of the Scheme Act, although not altogether clearly expressed in this respect, means that, if there is no written notice at all under s 36(2)(b) within the three-month period there referred to, the claim for injurious affection proceeds in accordance with the section, that is to say, on the basis that the land is not to be acquired by the respondent under that paragraph. In our view also, where a written notice under that paragraph is given, its election or advice may be express or implied.
51 The appellant's claim for injurious affection of the Mount Lawley land for the purposes of that paragraph was dated 13 February 1996 (exhibit 187). The only election by written notice from the respondent to the appellant within that three-month period was Mr Hillyard's letter dated 9 May 1996, which made no reference to the CAH land.
52 On the basis of our analysis of s 36(2)(b) above, the respondent might be taken either to have given no written notice as to the claim for compensation for injurious affection to the CAH land, or to have impliedly advised that it did not intend to acquire that land. In both cases, this assumes that the appellant had made two claims for compensation for injurious affection, one in respect of the CAH land and one in respect of the balance of the reserved Mount Lawley land, a matter to which we return.
53 The respondent sought to overcome this difficulty by relying on s 55 of the Interpretation Act 1984, which provides as follows:
"Where a written law confers a power or imposes a duty upon a person to do any act or thing of an administrative or executive character or to make any appointment, the power or duty may be exercised or performed as often as is necessary to correct any error or omission in any previous purported exercise or performance of the power or duty, notwithstanding that the power or duty is not in general capable of being exercised or performed from time to time."
The trial Judge held that s 55 did apply. He said that it "fits exactly the circumstances of this case" ([36]). He referred to the evidence of Mr Hillyard who "frankly acknowledged that he did not pay enough attention to the wording of the letter" of 9 May 1996 ([33]). The Judge noted that the respondent had resolved to purchase both the reserved Mount Lawley land and the CAH land, and that its opinion had not changed, "cf Venture Management v Commissioner of State Taxation (1991) 4 WAR 283 at 295" ([36]). That being so, his Honour held, s 55 of the Interpretation Act permitted the correction of the error.
54 In ground 4 of its grounds of appeal, the appellant contends that s 55 has no application.
55 The respondent argued before us that the decision of the Executive, Finance and Property Committee at its meeting of 7 May 1996 should be treated as an "act or thing of an administrative or executive character" for the purposes of s 55 so that an erroneous notice, given before the expiry of a statutory time limit, could be corrected by a later notice, even though the time limit had by then expired. It appears to have been submitted that this is to make the validity of what was done turn on the timely decision and its timely but incorrect communication.
56 In our view, the respondent's submission ignores the requirement in s 36(2)(b) for a "notice in writing" to be given to the claimant. Although we accept that there was an error within s 55, in our view s 55 did not permit its correction beyond the expiry of the three-month time limit prescribed by s 36(2)(b) of the Scheme Act. That is a statutory limitation period. If a notice is to be effective, it must be given within that period.
57 In our view, the decision of Franklyn J in Venture Management Ltd v Commissioner of Taxation (1991) 4 WAR 283, relied upon by the trial Judge and pressed on us by the respondent, is not relevant. There his Honour, at 295, concluded that s 55 did not extend to a case where the Commissioner had not sought to correct an error, but rather to change his opinion and issue a new assessment to stamp duty based on facts available to him at the time of the original assessment. His Honour did not there say anything which, as we read his judgment, bears upon the question whether an error in giving a valuation notice, of the kind made in this case, can be corrected after the expiry of the statutory time limit fixed for the giving of that notice.
58 We should make two comments, in passing. The first is that, in reaching the conclusion that s 55 has no application in the present case, we do not accept the appellant's submission that the section is intended only to overcome any doctrine that, on the purported exercise of a governmental power, the exerciser has no further such power in that case, or, as it is put, the exerciser is functus officio. On the supposed doctrine, see Robert Orr and Robyn Briese, "Don't Think Twice. Can Administration Decision Makers Change Their Minds?" (2002) AIAL Forum No 35, 11. The second is that the erroneous notice was not regarded either by the appellant or the respondent as being a nullity. Both have treated it as being a valid election, at least in relation to the reserved Mount Lawley land except for the CAH land. Had they not done so an issue might have arisen as to whether the respondent was estopped from claiming the notice was not binding on it in any form: see Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic [1990] FCA 22; (1990) 21 FCR 193.
59 We should also add that, on the face of s 36(2)(b) of the Scheme Act, it might be argued that an election is an all or nothing matter. The appellant's claim for injurious affection was for the whole of the Mount Lawley land (about 320.9 hectares), including both the reserved Mount Lawley land (309 hectares) and the unreserved Mount Lawley land (about 11.9 hectares), although the quantum was determined by multiplying a sum per hectare ($65,000) by a number of hectares (309) corresponding to the area of the reserved Mount Lawley land. However, there were, of course, different public purposes for the CAH land and the remaining portion (reserved for parks and recreation) of the reserved Mount Lawley land and, on that basis, we are of the view that the appellant's claim was capable of being approached as two severable claims, one in respect of the reservation of the CAH land and one in respect of the remaining portion of the reserved Mount Lawley land. That was the approach taken by the appellant's solicitors in their letter dated 25 September 1996.
60 The consequence of our conclusion is that the claim relating to the CAH land must be regarded as an aspect of the appellant's claim for compensation for injurious affection and severance damage in relation to land which the respondent had not elected to acquire. In essence, that is what the appellants contend in ground 7(d) of its grounds of appeal.
61 The trial Judge held that no such claim could be made. We deal later with the appeal against that aspect of his decision.
62 The most significant issue in relation to the magnitude of the compensation claim in respect of the land which was the subject of a valid election emerges from grounds 2, 3, 9, 13, 14, 15, 16 and 18 of the appellant's grounds of appeal. It is the appellant's contention, reflected in these grounds, that the trial Judge incorrectly applied the Pointe Gourde principle, as embodied in s 36(2b) of the Scheme Act. Adopting the approach summarised above, we do not set out the grounds. It is sufficient to state the legal principle applicable in this area - which is well established - and consider how that principle should be applied to the facts of the present case.
63 The principle was stated thus in Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, at 572:
"It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition."
64 That case was followed in Australia in Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196. The principle was restated in a joint judgment of the High Court in Queensland v Murphy at 496:
"One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed ... The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption ...".
65 In the present case, it is the statutory embodiment of the Pointe Gourde principle in s 36 of the Scheme Act which is relevant.
66 As we have noted above, the reserved land is to be valued without regard to any increase or decrease in its value which is attributable wholly or in part to the reservation. However, as the High Court held in Queensland v Murphy, the reservation cannot be isolated from the circumstances in which it was created. It is necessary to identify the entirety of the process which led to the reservation, and then to exclude the effect of that process in the valuation exercise.
67 The decision of the English Court of Appeal in Wilson v Liverpool City Council [1971] 1 All ER 628 provides an example of that approach. There, the Council had resumed land for housing. The value of the land at the date of resumption was much greater than it was before it first became known that the land might be resumed for that purpose. The compensation legislation contained a provision similar to s 36(2b) of the Scheme Act: no account was to be taken of any increase in value due to the prospect of development. Counsel for the claimant landowner submitted that the Pointe Gourde principle should not apply unless the relevant scheme was "precise and definite", as it was only when the subject land was actually resumed. Lord Denning answered that proposition in the following way (at 634):
"I do not accept counsel's submission. A scheme is a progressive thing. It starts vague and known to few. It becomes more precise and better known as time goes on. Eventually it becomes precise and definite, and known to all. Correspondingly, its impact has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known, so its impact increases until it has an important effect. It is this increase, whether big or small, which is to be disregarded as at the time when the value is to be assessed."
"Whenever land is to be compulsorily acquired, this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project compulsory powers of acquisition will not arise at all, and it would I think be a great mistake if we tended to focus our attention on the word 'scheme' as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so-called Pointe Gourde rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition."
68 Thus, in Wilson's case, the land was valued without regard to any enhancement in value resulting from foreknowledge of the Council's development proposal.
69 In taking this kind of approach, we are not differing from that actually taken by the Court in Trandos v Western Australian Planning Commission [2001] WASCA 346; (2001) 117 LGERA 257. There, Anderson J, with whom Wheeler J and Einfeld AJ agreed, said (at [70]):
"This, of course, was not a compulsory acquisition pursuant to a scheme that has tended to increase the value of the land as in Point Gourde. It is a case of a scheme reservation which has, if anything, blighted the land. I must say I do not see why it is necessary or appropriate to try to apply the so-called Point Gourde principle to the case. The case is entirely covered by s 36(2b), in my opinion. Applying that section, the land was to be valued without regard for the fact that within 20 or 25 years it would be required for roadworks and without regard for the fact that it was reserved for that purpose in the Metropolitan Region Scheme."
However, Anderson J approached the issue by seeking to identify the planning steps leading to the relevant action, for the purpose of disregarding their effects on value, leaving for determination the characteristics of the land which would otherwise have prevented the development proposed by the appellants there, as the highest and best use. There were, in that case, factors (relating to the road network in which the subject land was located) which would have prevented approval of any such development, having regard to the "the dictates of orderly and proper planning", as Anderson J described it at [73].
70 This approach, which is similar to that required at common law by the authorities on the Pointe Gourde principle, was, in our respectful opinion, correct, as s 36(2b) should be seen (as s 124 of the Public Works Act 1912 (NSW) was seen in San Sebastian) as a statutory embodiment of the common law principle. In San Sebastian, the words, in s 124, "without reference to any alteration in such value arising from the establishment of railway or other public works upon or for which land was resumed" were held to require consideration of the steps taken towards the public purpose embodied in "the railway or other public works" in order to determine whether the market value had been depressed or enhanced by the market's foreknowledge of that purpose. In our view, the relevant language of s 36(2b), "without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme" (emphasis added) should, in the light of what was said in San Sebastian, be approached in the same way.
71 It is important to note that it is effects on value of the Scheme, including the steps taken towards it as it evolves, that are to be disregarded. What is a step can be a matter of some nicety, as we will explain below. The steps taken in implementation of a Scheme may, however, be relevant to the extent they reveal characteristics or conditions of the land that bear on valuation of it. As we will explain (when Murphy is reached below), this is a matter of some importance to this case.
72 In order to apply the Pointe Gourde principle, as embodied in Scheme Act s 36(2b), we need first to consider the events and circumstances leading to the reservation. We particularly need to consider the Public Environmental Review (PER) which was the immediate precursor to the reservation of the reserved Mount Lawley land. As we have foreshadowed, we then need to consider the authority of Queensland v Murphy on which the respondent placed considerable reliance in concluding that the land was properly valued as rural and that the market would have valued the land on no other basis. We conclude with our assessment of the proper basis for the valuation of the land.
73 Until the Ellenbrook project was proposed, no detailed consideration had been given to the use or potential use of the Mount Lawley land. Nor was there any real investigation of its environmental significance. For example, in the report published by the Environmental Protection Authority ("EPA") in 1983 entitled "Conservation Reserves for Western Australia. The Darling System - System 6", the Mount Lawley land was not identified as having any environmental significance. However, in 1986 - 1987, in the course of a review of Perth's corridor plans, the environmental significance of the land was recognised. In the document "Planning For the Future of the Perth Metropolitan Region: Report of the Review Group of the State Planning Commission of Western Australia" (November 1987) (exhibit 2231), there is a reference to an area including the Mount Lawley land. The reference, in a plan captioned "The Preferred Strategy" (page 10), shows that area as part of a proposed "Metropolitan Park System". Later in the document (pages 136 - 137), it indicates that the area is included as "proposed extensions to the existing Parks and Recreations reservations" by reference to a number of factors. These are listed as:
• opportunities to provide connections and linkages between existing and proposed areas of open space;
• existing major vegetation systems, wildlife habitats and ecosystems and significant landscapes;
• the likely direction of future metropolitan growth and urban expansion; and
• the implications for future land acquisition and the opportunities to incorporate privately-owned land by means of management agreements and similar arrangements.
74 Subsequently, there was a measure of ambivalence in relation to the area that included the Mount Lawley land. Thus, in the document of the Department of Planning and Infrastructure, "Metroplan - a Planning Strategy for the Perth Metropolitan Region" (December 1990) (exhibit 2233), there is a plan (at page 21) showing the area including the Mount Lawley land as part of a zone coded "Rural/Non-Urban" at the north-western boundary of a north-south zone coded "Future Urban". The area including the Mount Lawley land is shown outside the zones coded "Region Open Space System". This document records that it is meant to provide "a framework for urban growth to accommodate another one million people" (page 17). It refers to the "Preferred Strategy" from the November 1987 document as containing "broad principles" that "in many respects" Metroplan has "reaffirmed". However, it also records that:
" ... significant changes have been made to the urban expansion areas nominated in the 1987 report to reconcile, where possible, the wishes of local communities with the need to plan for the long-term growth of the Region. An additional 8,500 hectares of potential new urban land have been included, bringing the total to 37,500 hectares - about a 30 per cent increase on the 1987 proposals." (Page 18).
75 It was against this sort of background that, on 1 February 1990, a number of landowners, including the appellant, submitted a proposal for the rezoning of a substantial area of the north-eastern corridor from Rural to Urban Deferred under the MRS, for the purpose of carrying out the development which became known as Ellenbrook. The application was prepared on behalf of the owners by Feilman Planning Consultants (exhibit 869). The proposal indicates that "preliminary research and discussions with the authorities" had shown that there were "no significant environmental impediments to urban development". However, the proposal also refers to a report on "environmental aspects of the site" prepared for the purposes of the proposal and recommending that "the wetlands in the north west corner of the site be further investigated with a view to conservation of some or all of them".
76 It was that proposal which prompted the then Minister for Planning and Urban Development, David Lawrence Smith MLA, as part of an ongoing review of the MRS, to focus on the north-eastern corridor. He regarded the Ellenbrook project as significant because of its potential to provide a major source of housing in the metropolitan area. It was Mr Smith's perception that the land otherwise available would be insufficient (TS 857).
77 On 4 October 1990, Feilman Planning Consultants referred the Ellenbrook proposal to the EPA. The Acting Director, Evaluation Division, of the EPA replied on 17 October 1990 (exhibit 522), saying that the authority had decided that the likely environmental impacts were sufficient to warrant formal assessment of the proposal under the provisions of the Environmental Protection Act 1986. The level of assessment was set at a Public Environmental Review (PER).
78 On the same day, Barry Carbon, the Chairman of the EPA, wrote to David Hatt, the Chief Executive of the Department of Planning and Urban Development, to inform him that the likely environmental impacts of the Ellenbrook project were sufficient to warrant formal assessment at the level of a PER. Mr Carbon said:
"There are a number of significant environmental issues associated with the proposal which have not yet been determined. Most importantly, the acceptability of urban development over a major groundwater resource must be resolved, along with other issues such as the delineation of the priority 1 boundary, the existing sand quarry in the south-east of the development area and management of drainage waters generated by the development." (Exhibit 1238)
79 As a matter of law, the EPA had no authority then to require that the PER be conducted. The requirement was apparently based on Pt IV of the Environmental Protection Act 1986 (WA) in s 38(1)(b)(ii) as it was at the time, which provided for the referral to the EPA of any proposal "that appears likely, if implemented, to have a significant effect on the environment". The term "proposal" was defined in s 3 to mean:
"project, plan, programme, policy, operation, undertaking or development or change in land use, or amendment of any of the foregoing ...".
The Ellenbrook project fell within this definition, but the proposal to rezone the relevant area of the north-east corridor (and that is all the proposal then amounted to) did not. That is because a rezoning, of itself, can have no effect on the environment: Environmental Protection Authority; Ex parte Chapple (1995) 89 LGERA 310.
80 In July 1991, Feilman Planning Consultants - apparently unaware of this point - produced the first draft of the PER on behalf of the Ellenbrook project proponents (exhibit 873). The draft covered a wide range of environmental issues. Relevantly, for present purposes, reference was made to the fact that the project site included a number of areas which could be grouped within the term "wetland" although, it was said, "free water is a rare occurrence in them".
"Careful consideration was given to the possibility of preserving a large area of wetlands (400-500 hectares), however, the costs of this would be very high and very necessary resources unavailable. Reservation of a large area with low levels of management will result in relatively rapid degradation due to the influence of feral animals, fire and weed infestation. Reservation of a smaller area (approx 100 ha), selected on the basis of conservation values and management practicability, was seen as a preferable option and possibly within the means of the relevant agencies."
82 Following the preparation of the first draft of the PER, there were meetings in August 1991 between officers of various agencies including the EPA, the Water Authority, the Department of Planning and Urban Development and the Department of Conservation and Land Management. It is clear from the minutes of the meetings (exhibits 284 and 285) that there was some tension between the planning agency and the EPA in relation to the implementation of the Ellenbrook project. Evidence to this effect was given at the trial by Mr Smith. He referred to a "power grab" from the Department for Environmental Protection in relation to planning matters he considered to be within his portfolio (TS 880).
83 On 6 November 1991, the Metropolitan Planning Council resolved to advertise an amendment to the MRS whereby land in the Ellenbrook project area which was the subject of Rural zoning and State Forest reservation would be rezoned to Urban Deferred and Parks and Recreation reserve (exhibit 2120). (The proposal in relation to the state forest did not proceed.) The Metropolitan Planning Council was a body charged with coordinating the functions of the statutory bodies interested in a decision relating to the MRS (TS 802).
84 In November 1991, two officers of the Department of Planning and Urban Development submitted a report to the Metropolitan Planning Council in relation to the proposed amendment to the MRS (exhibit 493). The report referred to the Government's commitment to the development of 60,000 lots in the metropolitan area over the succeeding four years to help meet the forecast demand. The report referred also to a report by the State Planning Commission entitled "Planning for the future of the Perth Metropolitan Region" published in 1987. This report was said to have indicated the need for 171,000 new dwellings by 2001 and a further 194,000 by 2021. It was noted (at page 3) that:
"The preferred strategy showed urban expansion at Ellenbrook and reported that the area had a total potential for 40-50,000 people (15-20,000 dwellings)."
"The Urban Expansion Policy Statement released in November 1990 identified land around Perth suitable for urban development. Ellenbrook, which is located in the Belhus locality is classified as category A2, land which meets the basic criteria for urbanisation."
85 The report continued by noting that the Ellenbrook project was considered to be "the most significant and immediate opportunity for development in the north-east sector".
86 The report went on to describe the site of the Ellenbrook project. It stated that no rare or endangered species of flora or fauna had been found on the site although it was considered that some areas of vegetation were of value for conservation. There was also reference to the "wetlands", a number of which were said to have significant conservation value such as to warrant reservation.
87 The report referred to the fact that careful consideration had been given to the possibility of preserving 400 - 500 hectares of wetlands but that this had been rejected for the reasons given in relation to the earlier report. However (at page 5):
"Reservation of a smaller area (approx. 100 ha), selected on the basis of conservation values and management practicability, is seen by the conservation authorities as a preferable option and possibly within the means of the relevant agencies."
88 On 4 December 1991, the Metropolitan Planning Council resolved to advertise the proposed amendment. The map depicting the proposal was signed by the Minister on 9 January 1992. It shows some 90 - 100 hectares of the Mount Lawley land as reserved for Parks and Recreation. The balance is shown as Urban Deferred, as is the surrounding area of the Ellenbrook project.
89 The proposed amendment to the MRS was gazetted on 31 January 1992.
90 By a letter dated 4 February 1992, the secretary of the Department of Planning and Urban Development informed the appellant that there was a proposal to amend the MRS in a way which affected its land (exhibit 147). A copy of the plan showing the proposed amendment was enclosed with the letter. The appellant was informed, further, that the purpose of the amendment was to rezone land for future urban development in accordance with the government's metropolitan strategy and the urban expansion policy. Before finalisation of the amendment a number of issues were to be addressed. They were said to be:
• the resolution of environmental issues, including the identification of all land to be set aside for wetland protection;
• arrangements being made to the satisfaction of the Water Authority to ensure that the land could be serviced adequately with water, sewerage and drainage;
• arrangements being made to ensure equitable landowner contributions towards roads and transport services within the Ellenbrook project area;
• arrangements being in place to ensure that land to be set aside for public open space and Parks and Recreation purposes, including wetland protection, would be ceded to the Crown free of cost upon subdivision, with the cost being shared by all the landowners on an equitable basis.
91 On 11 March 1992, Mr Hatt prepared a briefing note for his Minister in relation to the Ellenbrook project (exhibit 268). The note informed the Minister that the proposal was to rezone approximately 2,208 hectares of Rural zoned land to Urban Deferred with a further 90 hectares to Parks and Recreation reservation. The Ellenbrook project area, with the exception of the north-west corner (ie, the Mount Lawley land), was said to have been identified as "Category A2" in the Commission's Urban Expansion Policy Statement. That was land which could be expected to be urbanised over the medium to long term - up to 30 years - because of the various constraints and issues affecting it. However, because those issues were being addressed in relation to the Ellenbrook project, development might occur sooner.
92 A little later in the briefing note, the Minister was told that the north-west corner of the amendment site, which contained wetlands, was not identified in the Urban Expansion Policy Statement. The EPA was currently assessing the proposal. The Minister was told that the area might be deleted from the amendment before finalisation.
93 The Minister was also told that the EPA had required the preparation of a further PER by the proponents. That PER was to address all the environmental aspects of the Ellenbrook project. The first PER was said to have been considered unsatisfactory by the EPA because further study of flora and fauna in the area was required.
94 There was then reference to the Ellenbrook Conservation Group: a group of local landowners concerned about the effect of the proposed land use in the Ellenbrook project area. The group had requested that 950 hectares of wetlands and native vegetation be set aside as an A class nature reserve. The note concluded:
"Apart from the loss of potential housing land, the problem with reserving such a large area of wetlands would be the high costs of appropriate management. Low-level management may result in gradual degradation of the areas, especially as urbanisation increases in the locality. Accordingly, the amendment proposes to include a 90 ha area of land with relatively high conservation values for Parks and Recreation as proposed by the Planning Consultants in their submission on the amendment .... As mentioned above, the Department's own environmental audit is still being carried out. The extent of the land to be set aside for wetland protection will be re-examined in the light of the audit and the PER."
95 In due course, the new PER was approved by the EPA. It was released for public review on 14 April 1992 (exhibits 314 and 2213).
96 By then, the appellant had withdrawn from the negotiations with the other promoters of the Ellenbrook project. On 4 May 1992, the appellant withdrew also from the proposed Amendment 879/33 to the MRS (exhibit 151).
97 Although the notice of withdrawal from the Ellenbrook project did not refer to the appellant's withdrawal from the PER, the appellant could no longer have been a proponent for that purpose. That was recognised by the respondent. In about September 1992, the respondent sought advice from the Crown Solicitor as to whether it could become a proponent. In a letter dated 25 September 1992, the Senior Assistant Crown Solicitor advised the respondent that it could not.
98 At the trial, Mr Smith gave evidence that, as Minister, he had been aware of the appellant's withdrawal. He was asked about its effect on the management of the project from his departmental perspective. He answered (TS 864):
"It left us in two quandaries: one, that we had a metropolitan scheme amendment under way which really included their land, and if they were not to be proponents there was a question of whether that was appropriate or not. There was also a need for a public environmental review of the area, and if the major conservation area was to be on the Mount Lawley land, there was also the question of the appropriateness of that, if they weren't a proponent for any development.
So what was done?---To be honest, I guess we ignored the problem and proceeded as if they were proponents."
99 For reasons to be set out below, it is not appropriate to refer to the PER in any detail. It is sufficient to note that public comment was invited, public hearings were held and all interested persons and parties were given an opportunity to contribute.
100 On 14 August 1992, the EPA published, in Bulletin 642, its report and recommendations relating to the Ellenbrook project urban rezoning (exhibit 635). The purpose of the report was to give the public a 14-day period "when anyone may appeal to the Minister against the EPA's recommendations."
101 In the summary to the report, the EPA referred to a number of "key issues of concern" identified by the public and by the EPA in the assessment of the Ellenbrook project proposal. These included the "lakes", said to have been protected on an interim basis by the Environmental Protection (Swan Coastal Plain Wetlands) Regulations 1991. The "lakes", so identified, were the seasonal wetlands in the north-west of the site: both on the Mount Lawley lands and in neighbouring land outside the Ellenbrook project area. They were subject to the Environmental Protection (Swan Coastal Plain Lakes) Policy 1992 ("the Lakes Policy").
102 The Lakes Policy, still in its draft form in August 1992, had been formulated "to protect lakes on the Swan Coastal Plain from being further degraded and destroyed" (exhibit 1149). The policy area included the coastal plain from the Moore River in the north, to Eagle Bay in the south. It was noted in the policy that, following European settlement, more than two-thirds of the lakes on the Swan coastal plain had been severely degraded or destroyed and that those remaining faced a similar danger.
103 The criterion for the inclusion of lakes in the Lakes Policy was somewhat vague. It was set out in cl 4(3) in the following terms:
"The lakes referred to in subclause (1) have in most cases been selected for inclusion in this policy on the basis that they consist of areas of standing water of 1,000 square metres or more as at the first week of summer in any year (as verified as at the first week of December 1991)."
"(a) prohibiting the carrying out of activities which cause the destruction and degradation of lakes; and
(b) requiring persons who cause the destruction or degradation of lakes to undertake, in certain cases, the rehabilitation of those areas of lake."
105 The activities referred to in (a) above included filling, excavation and mining, the discharge of effluent and construction or alteration of drainage systems.
106 The draft Lakes Policy was gazetted on 29 April 1992, having been approved by the Minister under s 31(d) of the Environmental Protection Act 1986. By s 33(1) of the Act, a draft policy, so approved, has the force of law. Thus, by a combination of the Lakes Policy and the Environmental Protection Act 1986, none of the prohibited activities was permitted, unless authorised under the Act.
107 At trial, the appellant sought to identify and classify the relevant wetlands. It did so for two reasons. First, it did so in an attempt to determine whether there were any lakes on the reserved Mount Lawley land which fell within the Lakes Policy criteria. This was thought to be necessary because no reliable mapping had been carried out and there was no record of the extent of the wetlands as at 1 December 1991, the date for the application of the policy criteria. Secondly, the appellant wanted to determine the extent to which any hypothetical development of the reserved land might have been restricted by the Lakes Policy. This was thought to be relevant to the valuation exercise. The possibility of the policy affecting the urbanisation of the land is indeed relevant to the valuation exercise, because of conditions of the land of environmental significance. This is a matter we consider further below.
109 The report noted that, of the options proposed, the EPA considered that the protection of all lakes in the Ellenbrook project area, incorporating approximately 450 hectares, was environmentally acceptable. This formed the basis of the second recommendation in the report. The recommendation was:
"The Environmental Protection Authority recommends that, prior to rezoning to 'Urban Deferred' in the Metropolitan Region Scheme, the proponents should set aside for conservation an area of approximately 450 hectares in the north west corner of the project site ... to be vested in the National Parks and Nature Conservation Authority. The final boundary should be determined to meet the requirements of the Minister for the Environment on advice from the Department of Conservation and Land Management and the Department of Planning and Urban Development."
110 In the body of the report, reference was made to four conservation scenarios considered in the PER. These included:
(1) the conservation of over 400 hectares of the land in the Ellenbrook project area as well as about 90 hectares immediately to the north containing four additional wetlands;
(2) the conservation of those wetlands which had been identified as "lakes" under the Lakes Policy and one "lake" on land to the north, outside the proposed development area;
(3) the conservation of those "lakes" within the project area included in an area of some 450 hectares;
(4) the preservation of a 90 hectare area of the Lexia wetlands. Under that proposal, the remaining lakes would be filled or used as part of the overall drainage management of the site.
111 It is also worthy of note that the discussion of these four conservation options was immediately preceded by a reference to the EPA's concentration of its "conservation efforts on the Swan Coastal Plain" being based "primarily" on an area that did not include the land the subject of the PER. The EPA acknowledged that decisions on the use of such areas "should normally be the primary responsibility of the planning process, both at the State and local level". However, such areas "subject to development proposals" that "have potentially very high conservation values ... are viewed carefully by the [EPA]". This section of the report adds that (page 18):
"It is because that [sic] some of the land within the Ellenbrook proposal has such high conservation value that it is essential that decisions on whether or not, and if so how, the land should be developed, should await expert advice provided by the [EPA's] environmental assessment process."
112 There was other evidence about the consideration of the environmental significance of the land given on behalf of the respondent at trial. For example, Kieran James McNamara, the Director of Nature Conservation for the Department of Conservation and Land Management ("CALM"), said that the preservation of a large area of vegetation around the wetlands would be "a desirable outcome" (TS 5111).
113 Jeffrey Maxwell Kite, the leader of the Environmental Planning section of the Waters and Rivers Commission ("WRC"), said that the attitude of the WRC was that wetlands of the kind said to be a feature of the Mount Lawley land should be preserved. The reason given by Mr Kite was that (TS 5190):
"70 to 80 per cent of the wetlands of the Swan coastal plain have already disappeared or been largely changed. The conservation category wetlands are the ones the [WRC] views should be protected from all kinds of developments."
114 It should be noted, however, that the WRC has no statutory powers relating to the protection of wetlands, although it has "a major advisory role" (TS 5179).
115 The authority with the greatest influence is the EPA. Garry John Middle was the manager of its Environmental Planning branch from 1994 - 1999. In 1991, in his role as a senior environmental officer, Mr Middle wrote a report in which he evaluated those wetlands on the Swan coastal plain which were within the Shire of Swan (exhibit 2864). In the report, Mr Middle noted that, because the wetland area might be developed for housing, the area should be studied in more detail.
116 Mr Middle said in his evidence that in 1992, before the Scheme was amended, there was a view within the EPA that some of the wetlands on the Mount Lawley land (the Lexia wetlands) could be regionally significant, but that there was no attempt to determine their significance until there was a proposal which might affect them. This led to an assessment that the wetlands were "regionally significant", but nothing more than that (TS 5415).
117 There was also evidence from Timothy Hugh Auret, a town planning consultant called by the respondent. Mr Auret had been an employee of, and a consultant to, the former State Planning Commission. In one or other of those capacities, Mr Auret was responsible for preparing the structure plans for various areas in the Perth metropolitan region, including the north-east corridor (TS 3500). In so doing, Mr Auret was required to have regard to the views of all relevant government agencies, such as the EPA, CALM, the Main Roads Department, WRC, and Western Power (TS 3496). As a structure planner, Mr Auret accepted the "strategic directions" he was given by others. It was then a matter of "getting the infrastructure right to support land use" (TS 3505).
118 Mr Auret said he was aware of the environmental audit which had been carried out by the V & C Semeniuk Research Group as to the conservation value or environmental significance of the Lexia wetlands. The conclusion of that work was that 950 hectares, including the wetlands, "were in pristine condition and worthy of conservation" (TS 3512). However, having regard to planning considerations, Mr Auret's view was that such an area could not be protected against encroaching urbanisation. He felt it would be possible to protect a smaller area, bounded by a system of high dunes which created a basin (TS 3514). The final plan was a compromise: "it wasn't compromised by urbanisation, but by the technicalities of freeway design" (TS 3515).
119 In his cross-examination, Mr Auret was asked whether, but for the conservation factor to which he had referred, it would have been responsible planning to allow the reserved Mount Lawley land to have become Urban or Urban Deferred. He answered "without question" and said that that was because the land was broadly in the urban corridor then being planned and "it was about the highest and best drained land" (TS 4067). Mr Auret thereby confirmed his earlier evidence that it was "superb urban land" (TS 4065).
120 All these considerations appear to support the conclusion that the decision to reserve some 450 hectares of the Mount Lawley land reflected a planning compromise. The competition was between an executive government wanting to make land in the north-east corridor available for housing; and environmentalists, who recognised that the Mount Lawley land had characteristics which were once common on the Swan coastal plain, but which were now less so, as a result of development and ill-usage.
121 The planning compromise is reflected in a statement published by the Minister for the Environment on 13 October 1992, marking the conclusion of the PER (exhibit 163). In the statement, the Minister gave permission for the proposed Ellenbrook development to proceed, subject to conditions set out or referred to in the statement. These included the reservation of 450 hectares of the Mount Lawley land for Parks and Recreation.
122 The Minister's approval therefore permitted the rezoning of land in the Ellenbrook project area (other than that to be reserved) from Rural to Urban Deferred. The Minister noted in his statement that the "lifting" of the Urban Deferred zoning to Urban zoning would be conditional upon the following:
"1 The additional survey work recommended by the Environmental Protection Authority being finalised and outcomes determined;
2 Any conservation requirements resulting from the additional works being made the subject of a planning control area pending resolution of their acquisition either via the subdivision process or purchase;
3 Acquisition of the 450 hectares in the north-west corner of the project site being finalised; and
4 Any acquisition of land being determined on the basis of the pre-Public Environmental Review zoning." (Emphasis supplied)
123 The acquisition of land is not a matter for the Minister for the Environment. However, condition 4 is entirely consistent with the application of the Point Gourde principle: it recognises that, where land is acquired post-reservation, it is to be valued on the basis of its highest and best use, disregarding the impact of any steps taken in the reservation. The statement by the Minister was, of course, made in the context of a rezoning from Urban Deferred to Urban, not from Rural to Urban Deferred. Later in these reasons we set out what Urban Deferred means in a process of urbanisation of previously rural land.
124 In the context of the history of the reservation, the PER assumed considerable significance at the trial. We therefore turn now to deal with this (and with issues relating to access) separately.
125 At the trial, the appellant contended that, having withdrawn from the Ellenbrook project, it was not bound by the PER, which was said to have been unlawful in any event. Thus, the appellant contended further, both its withdrawal and the PER should be left out of account in the application of the Pointe Gourde principle.
126 The trial Judge did not accept those contentions. He held that these two matters were "basic facts" which precluded the appellant from establishing that the reserved Mount Lawley land would have been rezoned Urban Deferred but for the reservation.
127 As to the first of the two "basic facts", the appellant's withdrawal from the Ellenbrook project, the Judge said (at [56]):
"This breaks a necessary causal link in the chain of reasoning. The [appellant's] case about what may have thereafter occurred is speculative only."
128 The Judge referred to the proposed joint venture a little later in his reasons (at [72] - [73]) when he said:
"The [appellant] had difficulties doing anything in conjunction with the joint venture. The negotiations failed. For whatever commercial reason, the [appellant] pulled out before any joint venture involving it was consummated. To reason that, had the joint venture proceeded, land swaps could have occurred and the Mount Lawley land would have developed as an urban zone with Ellenbrook fails at source. The failure, for whatever reason, to enter into a joint venture agreement years earlier, can have no effect on the value of the land in 1996 or on the possibility of rezoning in 1992 to 1996.
I take a simpler view of the significance of the failure of the joint venture negotiations than the [appellant]. My principal view is that this aspect is irrelevant to the value of the land in 1996."
129 One of the consequences of the appellant's withdrawal from the negotiations which led to the Ellenbrook joint venture and the reservation of the Mount Lawley land is that access to the land is now very limited: it is inadequate for subdivisional purposes.
130 The Judge took this factor into account in considering the value of the land. Proceeding on the basis that the land would have remained within a rural zone, his Honour concluded that a prudent purchaser would be unlikely to pay a premium to allow for the possibility of rezoning and would downgrade the development potential even further, having regard to access problems ([133] - [141]).
131 In grounds 16 and 18 the appellant attacks the Judge's conclusions both as to the significance of its withdrawal from the Ellenbrook joint venture and in relation to access. We touch upon this again below.
132 As to the second of the "basic facts" identified by the Judge as being inimical to the rezoning of the reserved Mount Lawley land, the PER, the appellant had, at the trial, identified a number of issues relating to its legality. This issue had arisen on the pleadings. The respondent alleged in par 2A of its Defence that the Mount Lawley land was unsuitable for (inter alia) rezoning. The respondent relied on a number of matters, including the "strong public opposition to any development of the land", which emerged during the PER (Defence par 2A(h)). In its Reply the appellant alleged that the purported assessment of the land by way of PER was unlawful (par 2.6.1); and further, that the appellant was not a proponent of or party to the PER (par 2.6 - par 2.7).
133 The trial Judge overlooked the fact that the legality of the PER was in issue. His Honour therefore seems to have taken the view that the inclusion of the issue in the appellant's list of common issues, and in the extensive written submissions, was inappropriate. Thus, he said (at [47]):
"However these issues do not arise. They are not pleaded. Any court action challenging the 1992 PER or the MRS reservation of the Mount Lawley land has not proceeded. The fact of the PER is pleaded by the [appellant] without comment. This action like every other action is confined by pleadings."
134 Consistently with the trial Judge's view that the PER was a fact which could not be ignored, his Honour held (at [59]):
"Therefore, much evidence which challenged the conclusion in the PER or sought to put more detailed evidence about the conservation significance of the Mount Lawley land is simply irrelevant. This applies to evidence adduced on both sides."
135 It was the appellant's contention that the trial Judge was right to regard the evidence relating to the PER as irrelevant, but for a different reason. The appellant's contention was that the PER was a step in the process of reservation and should therefore be ignored when applying the Pointe Gourde principle.
136 We accept that the PER was a step in the process of reservation. So much is clear from the chronology. Further, Mr Hatt's briefing note dated 11 March 1992 to the Minister puts it beyond doubt (exhibit 268 referred to above). The note demonstrates very clearly that the PER would form the basis upon which the decision would be made as to the extent of the land to be reserved for Parks and Recreation.
137 In our view, it does not follow from the fact that the PER was a step in the process of reservation that the PER was irrelevant, insofar as it identified matters relating to the conservation significance of the Mount Lawley land. As we shall explain in more detail when setting out the correct approach to the valuation exercise, it is necessary to have regard to factors which bear upon the likelihood of all or some of the Mount Lawley land remaining Rural, just as it is necessary to have regard to the suitability of that land for urbanisation.
138 In our view, therefore, the trial Judge fell into error in regarding as "simply irrelevant" the very substantial body of evidence relating to the PER, including the scientific and technical evidence adduced in support of and in opposition to the respondent's contentions about the environmental significance of the Mount Lawley land. We return to examine some of that evidence below.
139 Different considerations apply to the appellant's withdrawal from the Ellenbrook project and the PER.
140 It must not be overlooked that the reservation of the Mount Lawley land was part of the larger Amendment 879/33, by which some 2208 hectares were zoned Urban Deferred. In other words, the reservation and the rezoning were part of the same "Scheme" for the purposes of s 36(2b) of the Scheme Act.
141 It follows that, when the reserved Mount Lawley land is valued, as it must be, "without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme", it must be valued without regard to the fact that a substantial area of land was zoned Urban Deferred and, subsequently, developed.
142 Viewed in this light, the fact that there is now only very limited access to the Mount Lawley land becomes irrelevant. Put another way, the land must be valued on the basis that Amendment 879/33 and what followed from it never occurred. It was from the amendment and what followed it that the limited access issues of concern here arose.
143 We therefore uphold the appellant's ground of appeal in which it contends that the trial Judge erred in attaching significance to the appellant's withdrawal from the Ellenbrook joint venture. However, we reject the grounds of appeal in which the appellant contends that the PER was irrelevant, albeit for reasons which differ from those given by the trial Judge.
144 This last conclusion requires us to consider whether the environmental characteristics of the land that were highlighted under the PER were such that a rezoning of the Mount Lawley land would never have occurred. If that were the case, then, as the respondent contended in argument before us, Queensland v Murphy would require us to uphold as the proper basis for valuation the Rural zoning utilised by the trial Judge. The trial Judge also referred to that case. We turn to consider it now.
145 In Murphy the subject land, which was zoned Rural, was resumed for the purposes of an environmental park. One of the features of the land was a world-renowned turtle rookery.
146 The relevant authority had refused an application to subdivide the land on grounds which included the detrimental effect of the proposed development on the turtle rookery. This was said to be "a tourist attraction of worldwide significance and ... the principal breeding ground for sea turtles in mainland Eastern Australia" (at 494).
"A characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute."
148 In relation to the assessment of compensation for the resumption, the High Court said (at 499 - 500):
"Because the land was zoned rural at the time of its resumption, it was for the [owners] to show that there was some chance that a compromise proposal accompanied by an environmental impact study report and a statement of impact might have resulted in the lifting, in whole or in part, of the restrictions flowing from the Rural zoning. To do this it would be necessary, at the very least, to provide some material or evidence as to some proposal which might thus have met with approval, for it would not be open to the Land Appeal Court to speculate at large as to such proposals."
149 The appellant accepts that if the land was the home of unique or rare flora or fauna, it would have no development potential. But despite the investigations conducted by the respondent, even during and for the purposes of this litigation, no such evidence has been produced. Rather, the respondent bases its case on grounds of general environmental significance: the desirability of preservation having regard to the pristine condition of the bush - especially the wetlands - and the fact that much similar land in the Swan coastal plain has been lost over the years.
150 Queensland v Murphy was cited to the trial Judge, who considered it did not "expound any new principle of law". Rather, it simply applied "settled principles", including "the Pointe Gourde principle as adopted for Australia in [San Sebastian]" ([80]). He said that "in the present case the environmental features and the wetlands made it unlikely that such a rezoning would have occurred" ([82]).
151 Earlier, his Honour had referred to the respondent's contention in the following way (at [67] - [68]):
"MRS 879/33 Amendment was obviously made to enable urbanisation in the area. Equally obvious was the intention to preserve against urbanisation areas considered to be environmentally significant.
This preservation is no[t] part of a general scheme. It is reflective of a condition of the land. It is not then the reservation which has caused a diminution of the value of the land. There is no relevant relationship between the rural zoning and the public purpose in reservation of the land: Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196 at 206 - 207."
152 In the passage in the San Sebastian case to which the Judge referred, Jacobs J said:
"There are, however, many situations where the relation between the zoning and the proposed public works is not as clear cut as it was in Chapman v The Minister (1966) 13 LGRA 1. One can take an example away from the present case. Assume an area of land on the outskirts of existing settlement, and assume a planning authority concerned to designate land uses in a planning scheme. The land is designated open space. Thereafter it is resumed for the purpose of a public reserve. The fact that the land was zoned as open space may have depreciated its value. Does the resuming authority pay compensation at the depreciated value of open space or at some other value? The question cannot be correctly answered without knowing whether there was any connexion between the zoning as open space and the subsequent resumption. If the zoning was done with the intent or in anticipation that the land should be resumed for a purpose such as a public reserve or if the zoning was proposed or dictated by the resuming authority then s 124 requires that the zoning be ignored. It is only a step in the process of subsequent resumption. But in other circumstances the resumption may be unconnected with the act of zoning. It may be that the resuming authority selects the land for resumption as a public reserve because it is zoned open space; if it does so it is doing no more than ensuring that it, as well as others, conforms to the planning scheme. In those circumstances there is no relevant relationship between the zoning and the public purpose. No public purpose, existing or anticipated, intended, or urged by the zoning authority, leads to the zoning; rather, the zoning leads to the public purpose and consequent resumption."
153 The trial Judge seems to have been of the view that the second part of the example given by Jacobs J was analogous to the present case: "the resumption ... unconnected with the act of zoning". However, in our view, this conclusion, while correct, is, with respect, irrelevant to the issue of whether or not rural zoning was the highest and best use of the land. Nor does it address the question whether or not the environmental and conservation characteristics of the land were akin to the turtle rookery in Queensland v Murphy.
154 Depending on the view taken of the scientific and technical evidence on the characteristics of the land, Queensland v Murphy may well be distinguishable from this case on the basis that there is no prior ineluctable quality of the land akin to the turtle rookery in Murphy. We also note in that regard that the EPA itself had in fact, as we have indicated earlier, seriously considered as a possible conservation option the preservation of only 90 hectares of lakes (and the filling of the remainder, or their use for drainage purposes) as part of a process of assessment of the level of significance of the environmental and conservation values of the land. We further note in this regard the evidence, to which we have also referred earlier, that the reservation was the result of a political compromise in the planning process between the forces of urbanisation and those of environmental protection.
155 Of course, any conclusion that the reserved Mount Lawley land possessed no prior ineluctable quality which would have prevented its development does not establish that it would, absent the Scheme, have achieved Urban status. Partly for that reason, we are unable to accept the appellant's principal contention, which may be summarised in the following way:
• the Mount Lawley land, being situated in the Perth's north-eastern corridor, clearly had an urban potential;
• if the fact of the reservation, and steps in the process of reservation, including the PER, are left out of account, there is nothing standing in the way of a rezoning from Rural to Urban Deferred;
• the rezoning of the Mount Lawley land was, in fact, inevitable, for reasons we will shortly return to; and
• the fact that the adjacent land in the north-east corridor, lying to the east of the reserved Mount Lawley land was rezoned to Urban Deferred, demonstrates that the reserved Mount Lawley land would also have been rezoned, but for the reservation.
156 As we have said, this argument leaves out of account the fact that, on any view, the reserved Mount Lawley land was possessed of environmentally significant characteristics, even if not of the prior ineluctable quality previously referred to. These characteristics were recognised by the appellant itself, in the Ellenbrook project proposal. The argument also leaves out of account the evidence that the proximity of Rural land to an Urban zone is not conclusive of its Urban potential, evidence of the sort represented by the treatment of the area including the Mount Lawley land in the December 1990 "Metroplan" (exhibit 2233), to which we have previously referred. Also, the valuation exercise required by s 36(2b) of the Scheme Act requires the relevant Scheme to be left out of account. Thus, as we have said, not only must the reservation be ignored, but also the fact that other land the subject of Amendment 879/33 was rezoned to Urban Deferred.
157 As to the appellant's argument, to which we have previously referred, that would have us conclude that rezoning was inevitable, this argument is based on the fact that at least some of the uses permitted by the reserved Mount Lawley land's Rural zoning would degrade the very environmental and conservation characteristics of the land that underlay the impetus to reserve it. From this, we were invited to conclude that, if the land had not been reserved, it would have been zoned Urban, or at least Urban Deferred.
158 There is some evidence in support of that contention in the briefing note to the Minister for Planning (exhibit 268) previously referred to on the impact of urbanisation of the adjacent area. There is also some evidence in support of it in the cross-examination of Mr Auret, to whom reference has already been made, and to which reference was made in this connection by the appellant (see TS 4071 - 4072). These two items of evidence in our view are not, however, sufficient for the purposes of the appellant's argument.
159 This is because, in order to show that the land should be given a higher value than Rural, the appellant must show that there was a sufficient prospect of the rezoning of the land. The degradability of the environmental and conservation characteristics of the land does not on its face necessarily establish this: degradation at least in the immediate future might not be feasible (because of the uses immediate degradation would require) or in prospect (if degradation depended on proximity to land not yet necessarily urbanised, the position if the Scheme is disregarded). There was nothing in the evidence to which we have referred that establishes that degradability, as opposed to degradation, would (absent this Scheme) have meant that there was a sufficient prospect that rezoning would have been approved.
160 The evidence of Mr Auret rather points to a variety of responses to degradability, only one of which was rezoning. The relevant passage is as follows (TS 4071 - 4072):
"Let us suppose, to go back to your earlier postulate, that it had stayed rural?---Yes.
Leaving it rural would not secure the protection of the conservation significance?---I beg to differ. Under current environmental legislation and other legislation in place, I can take you to other parts of the metropolitan region in private ownership where through management agreements the land is being as effectively conserved under private ownership.
If you enter into an agreement with someone, you can use your land how you like but there's usually some consideration exchanged with a benefit. We are dealing with a situation where a private landowner's land is simple rural?---Yes. If it is rural and it has got significant conservation attributes on it, a cave, a sacred site, whatever, his ownership does not entitle him to desecrate or degrade that land any more. Those times have gone.
So he can't run cattle on it?---He could be stopped. He could be stopped.
Supposing he wanted to run sheep and cattle or horses on the land - - -?---If in the process he was going to cause some pollution problem or whatever, under existing legislation, Department of Agriculture, Environmental Protection, he can be stopped just as you can be stopped driving a smoky car along the road.
Can you point to any power which enables a rural landowner to be prevented from conducting rural pursuits on his land?---I can point to legislation which says you've got to seek development approval to use your land for a whole host of agricultural and rural purposes.
The fact of the matter is that even attenuated agricultural or rural use would largely degrade the conservation significance of this land?---Yes, I have to accept and concede that land and private ownership is - if a private owner is determined to degrade the land one way or another, he will eventually succeed in actually doing it.
So the conservation purpose can only be securely fulfilled if the land is reserved?---That's the general view. If for the long term sustainability of conservation - - -
Yes?--- - - -that's the general view."
161 The briefing note to which we have referred points to a (smaller) reservation area under the Scheme by which the larger reservation was ultimately made. This was said to be because, in the language previously quoted, "low-level management [of the land] may result in gradual degradation of the area, especially as urbanisation increases in the locality" (exhibit 268; emphasis supplied).
162 After allowing for the Pointe Gourde principle, the valuation in cases like these must be carried out by reference to the hypothetical vendor and purchaser perfectly acquainted with the land and all of its characteristics, including those which render it suitable for development and, as well, those which militate in favour of reservation. For this reason, all of the scientific and technical evidence relating to the reserved Mount Lawley land was relevant to the valuation issue. It would be necessary to take those matters into account in determining what, if any, premium the hypothetical purchaser would be prepared to pay, over and above the Rural value, in order to reflect the development potential.
163 As we have noted, the trial Judge concluded that the highest and best use of the reserved Mount Lawley land was Rural. He did not consider the evidence relating to the characteristics of the land because he regarded that evidence as irrelevant.
164 Viewed objectively, it may be that in the hypothetical and artificial market which must be assumed for the purposes of the valuation exercise, the obstacles to rezoning of the reserved Mount Lawley land might have been regarded as so substantial that no premium would have been paid for its acquisition. Conversely, the reserved Mount Lawley land might have been regarded in the same market as being so suitable for urbanisation that its rezoning to Urban Deferred, and ultimately to Urban, would be a foregone conclusion.
165 Whether either of those extreme positions (or indeed any intermediate position) is correct can be determined only by reviewing and weighing the very considerable body of evidence adduced at trial and bearing on that issue. Without such an assessment of the evidence, leading to a final determination of the potential of the Mount Lawley land, including its future zoning, it would not be possible to say whether any of the valuers in fact proceeded on the correct basis.
166 We have considered whether the actual outcome represented by Amendment 879/33 should simply be employed to determine these issues. Doing this would, however, seem to be taking account of the very scheme (as we have explained for this case, the whole of Amendment 879/33) that s 36(2b) and Point Gourde say we must disregard. Further, if it were the case that actual outcomes can be used to determine the effect of potentialities in such a way, Murphy would have been resolved rather more simply, by reference to the actual outcome of the rezoning application in that case, rather than by reference to considerations of the significance of the rookery.
167 It has been said that the Court should "never speculate where it knows" (Harman LJ in Curwen v James [1963] 1 WLR 748 at 753, on assessment of damages in light of subsequent events), a passage quoted in Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306, a decision of the Queensland Court of Appeal, per McPherson JA at 314 and per Williams JA at 320, which involved the determination of compensation where land was accidentally rezoned from a category permitting commercial development to Rural, and which was rezoned back again as soon as the error was identified. However, we read that case, involving the near certainty of rezoning, as support for the view that the appellant should be permitted to lead evidence that there was at least a strong possibility of a rezoning to urban (see Brown, D, Land Acquisition 5th ed, LexisNexis Butterworths, Chatsworth, 2004, at 131). Further, the appellant should, by reason of s 36(2b) of the Scheme Act and Pointe Gourde, be permitted to lead evidence (as it did) that what happened (a response to the land's environments characteristics by way of a reservation of the reserved Mount Lawley land) was not what would have been expected by the market. And, correspondingly, the respondent must be permitted to lead evidence (as it did) that rezoning would likely not have occurred, even ignoring this reservation and the steps leading up to it.
168 The appellant had, of course, led considerable evidence to show that the land had characteristics making it ideal for urbanisation, that its environmental characteristics were not of such an order that reservation as opposed to urbanisation was inevitable, and pointing to an incompatibility between the conservation of its environmental characteristics and the uses permitted by its Rural zoning. This evidence was both from experts viewing the land from a scientific and technical perspective, and also from persons viewing the land from the perspective of planning decision-makers, including the Minister responsible for the respondent.
169 The respondent led considerable evidence of both sorts to show that the land's characteristics were such that, while the land was physically capable of urbanisation, for planning purposes it would at the very least likely only be seen as having a future for environmental and conservation purposes, but that those purposes did not require the land's immediate reservation, provided at least its zoning did not change.
170 On the appeal, the appellant sought to meet the respondent's case by pointing to the lack of a consensus in the scientific and technical evidence, the fact that subsequently part of the land reserved for Parks and Recreation was re-reserved for a Controlled Access Highway, and the planning history that showed an ambivalence as to how to deal with this land, and a preparedness to consider its zoning as Urban Deferred absent such a reservation as was made here.
171 As to the scientific and technical evidence, it is enough for us to refer to evidence of the dune, vegetation and wetland or dampland characteristics of the Mount Lawley land and of the significance of those characteristics relative to other lands in the Swan coastal plain to which our attention was called by counsel for the appellant in appendix 4 to his written submissions. Evidence was given by Dr Vic Semeniuk, called by the respondent, whose witness statement (exhibit 2013) refers to him as a wetland scientist, a geomorphologist, a coastal scientist and a sedimentologist. He testified that the dunes of the Mount Lawley land were of international significance, in significant part because they were vegetated alongside the wetlands they helped to form. By this he seems to have meant the land's "star" dune setting, as he described it, involved the formation of the related wetlands as basins between the arms of the dunes, with a resultant array of wetlands, from dampland through to wet sumpland (TS 3963 - 3964). There was also evidence from Edward Arnold Griffin, also called by the respondent, who was a consultant botanist. He testified that there was a significant differentiation of dampland communities in the Mount Lawley land (TS 4300).
172 However, arrayed against this evidence was testimony from a number of witnesses called by the appellant. One was Dr Brian Warren Logan, a geoscience consultant. He testified that he was not sure it was possible to say that there was a star dune configuration (TS 1639). Another witness was Dr James Reginald Davies, a consultant hydrologist. He testified that Dr Semeniuk's characterisation of the "stratigraphy" as "outstanding" was "misleading" (TS 1761). Stratigraphy, as we gather from an exchange between counsel for the plaintiff and the trial Judge (TS 421), refers to "the subsurface geology in sedimentary or strata form layers of the land, and it has significance for water flow and protection of subterranean water reserves". Dr Paul Van Der Moezel, an environmental consultant, testified that it was very difficult to say whether or not the diversity of vegetation types in the Mount Lawley land was sufficient to show the land's regional significance (TS 1956). Dr Alan Tingay, an environmental consultant, testified that the wetlands in the Mount Lawley land when compared with those in other areas were not unique (TS 2007), while suggesting that in particular the array of wetlands in the Mount Lawley land did not make them unique (TS 2281).
173 This body of evidence (it is only a representative sample) readily illustrates the difficulty for an appellate court, faced with no real evaluation of it by the trial Judge, in attempting to reach any conclusion on the question of whether or not there was a unique configuration of characteristics of the Mount Lawley land of an environmental sort such as might prevent the rezoning of that land as Urban or Urban Deferred.
174 The re-reservation for a controlled access highway clearly shows no prior ineluctable quality of that land to prevent such a use in the area the subject of that re-reservation. However, it does not of itself permit an appellate court to go any further than that, so as to assign a possibility for rezoning.
175 All of this, and other matters to which we have earlier referred, demonstrate the difficulty for an appellate court in deciding whether or not the trial Judge erred in concluding that the highest and best use of the land was Rural and, if so, what conclusion should have been reached by him in that regard.
176 In Pledge v Roads and Traffic Authority [2004] HCA 13; (2004) 78 ALJR 572, Callinan and Heydon JJ referred to the difficulty faced by an appellate court in circumstances such as those of the present appeal. At [43] their Honours said:
"'The "rehearing" does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. ...
The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to "give the judgment which in its opinion ought to have been given in the first instance". On the other, it must, of necessity, observe the "natural limitations" that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the "feeling" of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.'"
177 In the present case, the appellant has accepted that it would not be appropriate to remit the matter to the trial Judge to make findings of fact so long after the trial had concluded. A fortiori, in our view, it would not be appropriate for this Court, which has had no opportunity to see or hear any of the witnesses, to attempt that exercise if regard is had to the conflicting nature of the material evidence, including the conflicting opinions expressed by a number of the expert witnesses at the trial.
178 We were referred by the appellant to the case of Broken Bay Peninsular Pty Limited v Minister Administering the National Parks and Wildlife Act 1974 [1997] NSWLEC 165 (30 October 1997, Cowdroy AJ). That case, which has some factual parallels to this case, was commended to us as demonstrating an approach which we might adopt in this case. There, the applicant had sought over many years to secure permission to have certain land rezoned Urban to permit residential development on it. However, the land "contained in an area of spectacular scenic beauty" as well as "dense natural vegetation of bushland", and was adjacent to a national park ([2]). It was determined by the Court that, but for the "agitation" of the National Trust and a community group, through the National Parks and Wildlife Service and the New South Wales Department of Lands, there was a "prospect" that was "real" of residential development of the land ([69]). This was later in the judgment in Broken Bay rather more strongly expressed by saying that the land "would have been available" for that purpose "had it not been for the continued and sustained interest successfully maintained to ensure that the land was brought into public ownership" ([84]). (There was no proper examination of the corresponding question in the present case because of the way the trial Judge approached the evidence, as we have indicated.) The Court in Broken Bay went on to say that, in valuing the land on the basis of a hypothetical subdivisional plan, "consideration must be given to environmental considerations" ([92]). In that respect, the Court then assessed the evidence led in relation to the account, if any, taken under the hypothetical plan for "archaeological", "visual impact", "vegetation" and "fauna protection" matters ([95] - [105]).
179 However, Broken Bay is readily distinguishable from this case because the trial Judge there had himself determined on the characteristics of the land such that he could determine the prospects for rezoning in accordance with a hypothetical subdivisional plan and its allowance for the environmental considerations, in the broad sense of those considerations he employed. We do not have such a determination by the trial Judge in this case, as he did not enter into the matter. And, as we have indicated, the evidence to which we had our attention drawn simply does not permit us, as an appellate court, to determine that there was any particular conclusion which he must have drawn had he entered into it.
180 We should emphasise that in this case Pointe Gourde, or its statutory form in s 36(2b) of the Scheme Act, does not permit this task to be avoided. That is because it is the "Scheme" that is ignored (including all that led up to it), not the conditions of the land to which the Scheme was a response: see Murphy, above.
181 The difficulty for an appellate court involved in the task carries through to any assessment of the valuation evidence in this case. We deal with that evidence next.
182 It must be emphasised that, in cases such as this, the Court is engaged in a valuation exercise. As Hayne J observed in Boland v Yates Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at [174]:
" ... the inquiry was one of valuation, not calculation ... one of valuation not assessment of damages; and ... it was an inquiry about which reasonable minds may well differ widely".
183 For that reason, the Court relies on the competence and integrity of professionally qualified valuers who, although retained by one or other of the parties, are under a duty to the Court to present evidence which "should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation": see Seaman Civil Procedure Western Australia at [36A.3.1B] and the authorities there cited. The Court is not itself a valuation agency.
184 The skill of the valuer lies in assessing (in this case) the market value of the reserved Mount Lawley land, had it been offered for sale on 7 May 1996. That value would reflect the highest and best use to which the land could be put, consistent with its zoning: Boland v Yates at [271].
185 As we have noted, in carrying out the valuation the valuer will take into account any potential the land may have for a higher and better use than permitted by the current zoning. In so doing the valuer should exercise an independent judgment about the likely perception of such matters in the relevant market.
186 Five valuers gave evidence at the trial. Two had been instructed by the appellant and three by the respondent.
187 Both valuers instructed by the appellant assumed that the reserved Mount Lawley land had already been zoned Urban. Both valuers called by the respondent were constrained by their instructions to the effect that the land should be valued on the basis of a Rural zoning, with no or limited development potential.
188 The remaining valuer, Ian John Rae, who had been instructed by the respondent but was called by the appellant, adopted a more intermediate position. We turn first to consider his evidence.
189 Mr Rae is a qualified valuer of (at trial) 15 or 16 years' standing. During that period he had carried out valuations across a broad spectrum of property types, all in Western Australia. In 1996, Mr Rae was employed as a valuer by Raine & Horne International.
190 On 4 June 1996, Mr Rae's firm was instructed by letter from Mr Hillyard, the acting property manager of the Ministry for Planning (see exhibit 426). Mr Hillyard asked for the valuation of the Mount Lawley land in accordance with s 36(2b) of the Scheme Act on the following basis:
"(a) Whole of the property being Lots 46 & 47.
(b) Whole of Lot 46 and the portions only of Lot 47 reserved for 'Parks and Recreation' and 'Controlled Access Highway'.
In undertaking your valuation you should be aware that Lots 46 & 47 are subject to an Environment Protection Policy in respect of the Lexia Wetlands .... Further, in determining the highest and best use appropriate to the subject land consistent with s 36(2b) ... regard should be given to the position of the EPA in any assessment of development proposals under part IV of the Environmental Protection Act."
191 To that extent, therefore, an attempt was made to constrain Mr Rae. This was admitted by Mr Hillyard, who instructed all the respondent's valuers (TS 6062).
192 Mr Rae produced a valuation as at 7 May 1996 (exhibit 427). He set out his instructions. He then set out the location and description of the subject land, its topography and various matters relating to title. Mr Rae then referred to the actual zoning of the Mount Lawley land before turning to environmental, heritage and cultural issues.
193 Under the heading "Environmental" Mr Rae referred to the assessment carried out in 1992 by the EPA and to the report and recommendations resulting from the assessment in Bulletin 642. He set out the various recommendations contained in that report and noted that in arriving at his assessment of the market value of the subject land he had been instructed to consider the position of the EPA under Pt IV of the Environmental Protection Act 1986.
194 In this context, Mr Rae referred to the ministerial statement of October 1992 and in particular to the condition that any acquisition of land should be determined on the basis of the pre-public environmental review zoning.
195 Mr Rae then summarised the history of the process which led to Amendment 879/33 to the MRS becoming effective on 16 December 1992 and being duly incorporated into the Scheme itself.
196 Given that sequence of events, Mr Rae considered that the effective date should be August 1992, that being the date of release of EPA Bulletin 642. Mr Rae said:
"At that time, the subject landholding was zoned 'Rural' in the MRS and the landholding was included in MRS Amendment No 879/33 which proposed that the majority of the land be rezoned to 'Urban Deferred' status in the MRS.
Similarly, a portion of the subject landholding was to have been set aside for 'Parks & Recreation' purposes and our enquiries confirm that the significance of this portion of the landholding had been recognised in the early stages of preparation of MRS Amendment No 879/33."
"As a result of our research and investigations, we believe that the most appropriate means of assessing the market value of the subject landholding as at the date of election to purchase, is on the basis of the 'pre-Public Environmental Review' zoning of the land, as originally suggested by the Minister for the Environment in October 1992.
The zoning of the land prior to the completion of the Public Environmental Review was 'Rural' and the land had obvious 'Urban' potential." (Emphasis supplied)
197 Mr Rae defended his view in cross-examination. He said he was not influenced by the fact that the landowner had attempted to have the land rezoned. His view that the land had obvious Urban potential resulted from the fact that an advertisement for the amendment to the MRS had been approved (TS 943) which showed the land as Urban Deferred apart from the 90 hectares proposed for Parks and Recreation. He said he had expected that conditions would be imposed which required environmental issues to be dealt with before the rezoning could proceed. However, the location of the land suggested to Mr Rae that, had it not been for the reservation, the land would have been "at the front of an urban development cell - ie, Ellenbrook" (TS 944).
198 Mr Rae accepted that his opinion - that but for the reservation the land had Urban potential - meant, in essence, that the land could be developed if permitted, but that there were environmental aspects that might cause the EPA to oppose rezoning (TS 945).
199 Mr Rae did not exclude from his valuation the 90 hectares appearing on the advertised plan for Amendment 879/33. In his valuation he referred to this as "an area of Parks & Recreation Reservation" which appears to correspond with the so-called Lexia wetlands. He made the normal assumption that a landowner would be compensated for a Parks and Recreation reservation or acquisition (TS 947). Indeed, an owner contemplating a large scale rezoning from Rural to Urban Deferred would appreciate that before any upgrade to Urban, and certainly before any development could take place, it would be necessary to set aside areas of the land for use as roads, schools, parks, public utilities and a whole range of public purposes. In this case, the advertised proposal on which Mr Rae relied featured a set-aside of 90 hectares, or just over 28 per cent of the Mount Lawley land. We note in passing that this was significantly more than what the evidence established was the normal 10 per cent for public open space.
200 The lack of certainty, and the inevitable delay before redevelopment could take place, explain the much lower value of Urban Deferred land than land with an Urban zoning. Mr Rae identified this difference in his valuation.
201 On the basis that the Mount Lawley land had a potential for urban use, albeit deferred, Mr Rae valued it by reference to sales of comparable properties in the Urban Deferred category. Such properties had achieved prices ranging between $30,000 to $70,000 per hectare. This compared with Urban land which achieved sales in the range $90,000 to $250,000 and Rural land, at $10,000 to $15,000 per hectare.
202 Applying a mid range between $45,000 and $50,000 per hectare, which Mr Rae believed to reflect the fair and reasonable estimation of the market value of the reserved Mount Lawley land, he arrived at a value of $14,675,000 for the whole of Lot 46 and the reserved portions only of Lot 47, ie, including the CAH land.
203 These valuations were based purely on comparable sales of en globo Urban Deferred land. They were not based on any notional subdivision. Although, as we have noted above, an attempt was made to constrain Mr Rae by his instructions to have regard to the Environmental Protection Policy and the EPA's position, he effectively ignored that constraint by valuing on the "pre-public environmental review" basis.
204 The meaning of the zoning category "urban deferred", utilised by Mr Rae, is apparently nowhere defined as a matter of law. However, evidence which touched upon that meaning in this case (it was not challenged) was given by two witnesses. The first of these, John Alexander Griffiths, a town planning consultant called by the appellant, provided the following answers to questions put to him (TS 2536):
"If that had not happened and the Mount Lawley land, and perhaps the Sanwa land for that matter, had been rezoned urban deferred, that of course would not have entitled the owners to undertake an immediate urban development?---No. Urban deferment implies that you then begin the process of demonstrating urban potential.
What is that process?---The process is the preparation of more detailed structure plans, environmental research, leading to the demonstration that the land can be easily and economically and socially developed.
From your experience and practice, is there any significance attached to an urban deferred zoning, a transition from rural to urban deferred?---It is the major step. It represents an acceptance by the authorities and by the professionals involved that urban development will happen. All that happens after the urban deferment is a resolution of issues of detail."
205 The relevant evidence of the second of the two witnesses, David Smith, MLA, whose evidence has earlier been referred to in other respects, emerges from the following exchanges (TS 862):
**"**Why was the Mount Lawley land considered to be of lower value?---Because it was, as I said, quite easy to identify in terms of being a wetland where there would be major problems in terms of its residential development. I think from memory it was deferred urban - it was zoned urban deferred but - - -
Could I just - - -?---That's not an indication of deferral of when the land might be developed. It's a deferral of the major issues involved in the rezoning and development of the land. So although it was zoned urban deferred it clearly had a fairly high conservation value and was likely to be required for reservation. The real issue was how much of it was going to be required.
Yes?---I personally had a view, as I said, when I looked at the maps that I didn't think the area that was to be preserved at that stage was sufficient but I guess my role still remained trying to protect as much of the area as I could for future residential development and leaving the running on the environmental values and promoting that cause to the Minister for the Environment.
Leaving out of account the significance of the Mount Lawley land as wetlands for conservation, were there to your knowledge any other reasons which would count against it being developed for residential purposes?---No, they were purely environment grounds. Obviously the wetland indicated that it was low-lying and would require some fill if it was going to be developed for residential purposes. I seem to recall bandicoots and particular flora being mentioned. I think it was a plant rather than a flower."
206 We conclude from this evidence that the zoning category "urban deferred" is a substantial step towards urbanisation, if not determinative of it. It is a sufficiently substantial step to justify a review of environmental considerations that might tell against urbanisation of the sort represented by the PER. However, the difficulties which, as an appellate court, we face in evaluating the evidence are such as to preclude us, for the reasons which we have explained, from reaching any conclusion whether or not the Mount Lawley land would have been rezoned to Urban Deferred, or to assign a particular probability to this possibility if it was one.
207 The appellant also called Timothy David Anderson and Philip John Logan to give valuation evidence.
208 Mr Anderson is a licensed valuer with over 20 years' experience. His valuation (exhibit 68) was based on the assumption that the whole of the Mount Lawley land was already zoned Urban (TS 2829) and could be developed in accordance with one of four subdivisional options prepared by John Griffiths (to whom we have previously referred) of Development Planning Strategies Pty Ltd, the appellant's town planning consultant (TS 2824). Mr Anderson therefore based his valuations on discounted cash flow analysis, albeit cross-checked by reference to sales of en globo land.
209 Mr Griffiths had, in the course of his evidence, expressed the "clear and unequivocal opinion that the [Mount Lawley] land would have been urban", having regard to the surrounding land use and future land use. Further, Mr Griffiths said, the physical characteristics of the land were capable of supporting urban development using conventional engineering works commonly used elsewhere in the metropolitan region; and the area of the land was sufficient in size to sustain economic engineering services and to create a viable social infrastructure to service the resulting population (TS 2462).
210 As we have mentioned, Mr Griffiths prepared four subdivisional structure plans for the Mount Lawley land. He did this in order to establish its development potential. Option A provided for 2794 dwellings and a population of 8250. Option B provided for 3331 dwellings and a population of 10,275. Each option made provision for such requirements as primary schools, feature lakes, retail, commercial and community centres and offices. Provision was also made for roads, cycleways and public open space. Options C and D were as for A and B, but took the CAH land into account (TS 2514).
211 Mr Griffiths' view as to the use to which the Mount Lawley land might be put had there been no reservations was the subject of correspondence between him and Mr Anderson. In a letter dated 4 July 1997, Mr Griffiths wrote to Mr Anderson saying:
"Based on my extensive experience with the planning and history of the area, I have no doubt that if the MRS reservation was not in place then urban development would have been appropriate and practical on the land reserved." (Exhibit 2738)
212 It is understandable, in the light of the advice he received from Mr Griffiths, that Mr Anderson should have valued the Mount Lawley land on the basis that it had an Urban zoning. However, we repeat our view that it is not possible for us to determine whether or not it was appropriate to assume that the Mount Lawley land would be rezoned Urban.
213 Mr Anderson's valuation exercise proceeded on a discounted cash flow analysis of two hypothetical developments proposed by Mr Griffiths. This is the so-called "Turner approach": see Turner v Minister of Public Instruction [1956] HCA 7; (1956) 95 CLR 245. It proceeds in a way described by Roper J in Closer Settlement Ltd v The Minister (1942) 17 LGR(NSW) 62 at 65 in the following terms:
"In arriving at the value of land which is suitable for subdivision a familiar and appropriate method ... is to estimate from whatever comparable sales of land in subdivision are available the price which would be realized by the land when sold; then to estimate the costs involved in the subdivision and the length of time that the realization would take, making provision for the payment of rates and taxes and for interest on money outstanding; and an estimated net return on the subdivision is obtained. It is of course clear that a person purchasing land in globo for the purpose of subdividing it would not pay the sum of money which is the present equivalent of the estimated return. Many factors in the calculation are speculative: the land in subdivision may not realize the prices which are at present expected, and the subdivision may take longer to realize than is at present anticipated. To compensate for the risk involved in the venture the purchaser would certainly discount the estimated returns."
214 In 15 Lorimer Street Pty Ltd v Secretary to the Department of Infrastructure (1997) 97 LGERA 239, Byrne J, after citing the above passage said (at 252):
"The weakness of the Turner approach is that it applies an apparently scientific formula to a great number of subjectively established variables. The operation of the formula is such that small variations to these variables can have a very great impact upon the result: see Turner v Minister of Public Construction [sic] (at 268) per Dixon CJ. This has caused valuation judges of great eminence and experience to warn against a too ready reliance upon this approach."
215 His Honour then referred to a substantial body of authority before observing (at 253):
"One feature which runs through these warnings is the danger of applying the approach where the hypothetical development is not to be carried out within a reasonably short time: see Cienda Pty Ltd v SA Urban Land Trust (1988) 66 LGRA 360 at 363, per Jacobs J (King CJ and Bollen J concurring) (SA). It is for this reason that the approach is considered inappropriate when the subject land is not ripe for subdivision or development. Ripeness in this context, however, is a matter of degree and this restriction upon the approach is not to be applied in any mechanical way. What is in question is whether the value of the approach is so diminished by the uncertainties involved in the use of current estimates to future conditions that it lacks utility: see Coastal Estates v Bass Shire Council (at 576-577), per Gobbo J."
216 In our view, that question might well be thought to apply to Mr Anderson's valuation, although it must be said that, despite some large assumptions, his valuation was close to that of Mr Rae, at $14.625 million for option C and $15.185 million for option D (ie, the reserved Mount Lawley land, including the CAH land). Again, we note that the basis for Mr Anderson's valuation is an assumed Urban zoning.
217 The second of the valuers called by the appellant was Philip John Logan, a valuer of 25 years' standing.
218 In his report (exhibit 65), Mr Logan identified the Mount Lawley land as:
"A large tract of vacant land having potential for urban development if not reserved for public purposes."
219 Mr Logan expanded on this proposition in the body of his report when dealing with valuation considerations. He said (at page 9):
"In our opinion, disregarding public conservation requirements, the history of [the north-eastern] corridor and commencement of urban subdivision at Ellenbrook clearly demonstrates that the subject property would have had potential for urban development as at 7 May 1996. Nevertheless, at this date a prudent purchaser/developer would have had to anticipate the time and costs associated with bringing this land forward for urban development as well as the practical issues of comprehensive urban design, similar to [Ellenbrook Joint Venture] landholding, which demand careful estate planning, integrated lot variety, high quality estate presentation and landscape treatment as well as careful evaluation of development production for this corridor."
220 On this basis, Mr Logan carried out a discounted cash flow analysis based on the concept subdivisional plans which had been provided to him by Development Planning Strategies Pty Ltd: ie, those prepared by Mr Griffiths.
221 Mr Logan noted that one of the options incorporated "a pragmatic approach to the use of low-lying wetlands by adopting a substantial portion of the 'lake' area as Public and Regional Open Space, encompassing approximately 25 per cent of the property which is well in excess of the normal 10 per cent public open space allocated within an urban estate". Mr Logan continued:
"It should be noted however, that those areas of land set aside in this structure plan as regional open space would be acquired by the Western Australian Planning Commission at market value based on the land's highest and best use."
222 In our view, Mr Logan's approach to valuation raises the same difficulty as Mr Anderson's, in that it assumes an Urban zoning. He was asked in cross-examination whether there was a risk that the land might not be rezoned for a higher use. He answered (TS 3323):
"Well, I can't see in this particular location that there was a risk."
223 Mr Logan confirmed his position later in his cross-examination when he said (TS 3331):
"I valued [the Mount Lawley land] as at May 96 on the basis that it was by that stage urban and that a proposed subdivision plan similar to the option B or option D would have progressed over a 2 year period."
Mr Logan also produced values similar to those of Mr Rae at $50,000 per hectare. However, we are, once again, in no position to conclude whether or not his assumption of an Urban zoning was the appropriate one to use.
224 Two valuers were called to give evidence on behalf of the respondent. They were Keith Wilson and Geoffrey Robert Elliott. Both were experienced valuers. However, each was constrained by his instructions to value only on the basis that the Mount Lawley land was zoned Rural and had no or limited development potential.
225 Mr Wilson's report (exhibit 2001) of 8 December 1999 supplied valuations for each of two "scenarios" that were set out in the report of William Burrell of Taylor Burrell planning and design (exhibit 2011). The first such scenario was that the highest and best use of the reserved Mount Lawley land was "agricultural and pastoral activities", but "subject to environment management provisions over 47.3 hectares, assuming a 200 metre environmental buffer", to allow for the land's "environmental values". The second such scenario was a "Special Residential development" under a Rural zoning in an "environmental protection zone", a development over about 174 hectares, and with a "wetland conservation area" of about 127 hectares. On the first scenario, Mr Wilson's report valued the reserved Mount Lawley land at $1,544,870 on an en globo basis. On the second scenario, Mr Wilson's report valued that land on a discounted cash flow basis at $5,400,000.
226 Mr Elliott's report (exhibit 2005), like Mr Wilson's, is a valuation under the two scenarios provided by Mr Burrell's report. Mr Elliott, like Mr Wilson, drew on sale values of other en globo rural land to arrive at his valuation on the first scenario (General Rural land). Mr Elliott's valuation on that basis was $2,300,000 ($7500 per hectare). He testified that he would have valued the land on that basis at $12,000 per hectare if "environmental or conservation" features were left out of account (TS 5010). Mr Elliott, also like Mr Wilson, used a discounted cash flow analysis to arrive at his valuation on the second scenario ("Special Residential development"). Mr Elliott's valuation on that basis was $6,000,000.
227 The trial Judge, as we have indicated, took Rural zoning as the measure of the highest and best use of the reserved Mount Lawley land. He ignored valuations based on Mr Burrell's second scenario, on the bases that neither party had relied on that scenario, and that no "Special Rural zone was ever in contemplation for the land" ([148]). He also considered that environmental factors needed to be taken into account, and so did not rely on Mr Elliott's testimony in which he left them out of account. The trial Judge concluded by adopting Mr Elliott's valuation of $2,300,000 on the basis that the Court should adopt "the more liberal estimate" in the absence of "special reasons" not to do so ([152]).
228 For the reasons we have already given, we are of the view that the trial Judge had not laid the proper foundation on which to rest his use of General Rural zoning allowing for environmental factors. Thus, we are unable to accept his adoption of Mr Elliott's valuation.
229 We note in passing that Mr Wilson had produced an earlier draft valuation on the respondent's instructions. According to Mr Hillyard, the instructions were in the same terms as those given to Mr Rae.
230 In the draft (exhibit 1154) Mr Wilson said that he had inspected the Mount Lawley land in the company of two representatives of the appellant. He said that Mr Molony (a director of the appellant) told him (page 3):
" ... the owners had received two Queen's Counsel opinions which confirmed that the placement of the parks and recreation reserve over the subject land effectively replaced the EPA influence and that the appropriate approach to the assessment of compensation would be to disregard the existence of the MRS reserve and look at the highest and best potential of the property, assuming the land was unaffected."
"These comments are different from our usual approach which has been to specifically disregard the existence of the MRS reserve, but take cognisance of any influences affecting the land, including the influence of the EPA.
By disregarding the existence of the MRS reservations and the influence of the Environmental Protection Authority, it could be argued that the land would have otherwise been suitable for residential subdivision in the medium term, in keeping with the remainder of Ellenbrook which is already being subdivided for residential development.
On the other hand, if the land is designated an EPA wetland conservation area and would not otherwise be available for residential development, then its value would be assessed on its potential for rural pursuits." (Emphasis appears to be that in original)
231 Mr Wilson went on to value the land on various bases, including "residential subdivision in the medium term". On that basis he valued the reserved Mount Lawley land and the CAH land at $15.6 million. However, he did so using a hypothetical subdivision, assuming an Urban zoning.
232 It follows that we have been unable to accept the opinion of any of the valuers who gave evidence at the trial. Consequently, and after much anxious consideration, we have come reluctantly to the conclusion that it will be necessary to order a retrial of the valuation issue. This is obviously a result which both parties would have preferred to avoid, given the sorry history of the matter and having regard to the additional costs and further delay such a course will entail. We share that view. However, we do not think it possible to do justice between the parties without a proper trial of the complex issues relating to the suitability of the Mount Lawley land for urbanisation and its environmental significance.
233 While the trial Judge said (at [88] of his reasons):
"If this judgment is subject to appeal, and my decision as to relevance is judged to be wrong, then the Full Court has both the evidence and the contentions of the parties in accessible form",
that delegation of the responsibility which was peculiarly his own overlooks the fact there was competing evidence in a number of material respects and, in particular, that conflicting opinions were expressed in circumstances in which it is simply not possible for this Court, having been deprived of the advantage of the trial Judge in seeing and hearing the witnesses, to evaluate that evidence with a sufficient degree of confidence.
234 In reaching that conclusion, we have had regard to the instruction given by the High Court in Pledge v Roads and Traffic Authority at [43] per Callinan and Heydon JJ:
"Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of 'weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect'. In Warren v Coombes, the majority of this Court reiterated the rule that:
'[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.'
...
[Other cases do not] derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute."
235 In our view, in the circumstances of this case, and for the reasons we have given, the only proper way to correct the error of the trial Judge is by ordering a retrial.
236 It remains necessary to address further issues in the appeal which are related to valuation. These go to the question whether there should be included in a proper valuation certain elements included by the trial Judge that formed the basis of the cross-appeal. They also go to the exclusion of other elements by the trial Judge, which are said by the appellant to have been wrongly excluded. To deal with those included and excluded elements, we must first consider, as we will explain, whether the approach we should adopt to that question is one treating an election to acquire as a compulsory acquisition.
237 The appellant contends that the respondent's election to acquire the reserved Mount Lawley land under s 36(2)(a) of the Scheme Act should be regarded as a compulsory acquisition. It contends that, if this is so, it would be entitled to be compensated for expenditure, including rates, land tax and metropolitan region improvement tax, and the cost of insurance, fire prevention and maintenance. The appellant would be entitled also to interest on the unpaid price, from the date of the election to acquire down to settlement. The appellant contends, further, that the election to acquire its land was binding on both parties thereby, in effect, creating a statutory contract.
238 The trial Judge did not accept the appellant's contention that the election to acquire the reserved Mount Lawley land was in the nature of a compulsory acquisition. Instead (at [22]), his Honour adopted and applied the reasoning of Scott J in Hill v Western Australian Planning Commission [2000] WASC 101; (2000) 107 LGERA 229, especially at [21] - [22]. Scott J there held that there was "a fundamental distinction between the compulsory acquisition of land under the ... [Land Administration Act 1997] and the acquisition of land under the ... [Scheme Act]".
239 The trial Judge went on to consider the relationship between the parties, following the election to acquire. He held (at [28] of his reasons) that equity would hold the respondent to its election (although he made no analysis of the law in that respect). However, he preferred to base his conclusion upon the proper construction of s 36 of the Scheme Act which, he said, by its plain meaning had the result that the election by the respondent to acquire was irrevocable. He said (ibid) that the election was "simply another method of giving compensation for injurious affection, something which the respondent is obliged to do in any event".
240 However, his Honour found that the election was not binding on the appellant. He said (at [29]) that the Scheme Act imposes no relevant duties on a landowner and that, in the absence of any duty, it had no obligation to accept the acquisition. In [30] of his reasons, his Honour dismissed the appellant's contention that s 36 of the Scheme Act gave rise to an open unilateral contract. He held that s 36 provided for "a limited statutory device" and that a contract came into existence only when the landowner accepted the election to acquire at a value determined by the Court.
241 These conclusions have given rise to two grounds of appeal. The first is ground 10, by which the appellant contends that the Judge erred in concluding that an election to acquire under s 36(2)(a) of the Scheme Act is not analogous or equivalent to a compulsory acquisition. The second is ground 11, by which the appellant contends that the Judge erred in holding that the respondent's election to acquire was not binding on the appellant.
242 It is instructive, in considering the contentions advanced by grounds 10 and 11, to consider the legislative history, as it bears upon the construction of s 36 of the Scheme Act, and also the legislative context in which its relevant provisions were enacted.
243 A convenient starting point is the report prepared, in 1955, for the government of Western Australia by Messrs Gordon Stephenson and J A Hepburn in respect of a plan for the metropolitan region of Perth and Fremantle. The authors recognised that, where all forms of development were prohibited on a particular parcel of land, the land should be reserved, requiring its subsequent acquisition (page 249). They said that, while it would obviously be more advantageous for the Regional Planning Authority to make the acquisitions immediately, this would be difficult to achieve without a considerable sum of money being available. They went on to say (at page 250):
"It is important, however, to ensure that as and when these reservations are required the necessary land can be bought without any value accruing to it by reason of additional substantial development. Such development could be prevented on payment of compensation for injurious affection, but this is only putting off eventual acquisition at increased value and, in many cases, the compensation for injurious affection may well amount to the whole of the existing value of the land.
Consequently, it is considered that where development threatens a reservation for regional purposes, and provided no minor adjustment in detail is possible, the land should be acquired.
In the case of some of the longer term regional proposals there is nothing to prevent the present use of the land being carried on for a number of years, and it is anticipated that in some of the outer areas this may well be the case.
It is very necessary that the regional planning authority should have power to acquire or resume land required for the purposes of the plan, in the same way that a local authority has power under the Town Planning and Development Act at the present time."
"Where land is required for a public purpose, and is shown as such in a town planning scheme, zoning does not always meet the case. Even though the land may not be required for the public purpose for many years, and the present use may continue to be enjoyed during that time, the ultimate use will exclude private development.
In a town planning scheme such land should be classified as a reservation which carries with it the inherent obligation on the part of the planning authority to purchase it. As a planning scheme envisages development for many years ahead it is likely that a number of reservations will not actually be required for their planned use until perhaps one or two decades have passed, and it is possible that they need not be acquired until just before that time. However, because the reservation virtually prevents the use of the land for other than its existing use and perhaps a limited extension, it is necessary to make provision for the reservation or any part of it to be acquired if the owner desires to develop it and the reservation prevents such development."
244 Then, in 1955, the Planning Act was amended by the Town Planning and Development Act Amendment Act 1955 (No 63 of 1955). Section 3 of the amending Act introduced a new s 7A, which provided for the making of interim development orders pending consideration of a proposed town planning scheme. During the operation of an interim development order a person could not carry out or cause to be carried out any development within the metropolitan region contrary to the terms of the order.
245 By s 7A(12)(a) of the amending Act, no compensation was payable for injurious affection to land as a result of the operation of an interim development order, except in the case of a refusal of a development application made pursuant to the order or the granting of permission subject to conditions on the ground that the proposed scheme was to include that land within a reservation for public purposes and any appeal had been disallowed.
246 By subs (12)(b), the Crown was given the option of purchasing the land injuriously affected, and could be required to do so at the request of the claimant, at a price not exceeding the value of the land at the time of the refusal of permission or of the grant of permission subject to conditions, but without regard to any increase in value attributable to the proposed scheme. This was the first occasion upon which legislation gave to the Crown a right to elect to acquire land in lieu of the payment of compensation for injurious affection.
247 The Scheme Act came into effect on 19 February 1960. By s 25(a) of that Act the Metropolitan Region Planning Authority ("the Authority") was required to formulate and to promulgate a Metropolitan Region Scheme "having due and particular regard to" the recommendations in the Stephenson Hepburn report. Section 3 required the Act to be construed in conjunction with the Planning Act (as it then was), as if the provisions of the Scheme Act "were incorporated with and formed part of that Act", with the provisions of the Scheme Act to prevail to the extent of any inconsistency. Thus, s 11 and s 12 of the Planning Act, dealing with compensation for land injuriously affected by the making of a town planning scheme, were to be read together with the provisions of the Scheme Act. Indeed, s 36(1) of the Scheme Act makes various amendments to the provisions of s 11 and s 12 of the Planning Act for the purpose of applying those provisions to the provisions of the MRS.
248 Then, s 36(2) of the Scheme Act (as it then was - it is now s 36(2)(a)) provided that:
"The Scheme may provide that where compensation for injurious affection is claimed as a result of the operation of the provisions of subparagraph (i) or (ii) of paragraph (b) of subsection (2a) of section twelve of the Town Planning Act, the Authority may at its option elect to acquire the land so affected instead of paying compensation."
249 Also, by s 37, the Authority (now the respondent Commission) was deemed to be the responsible authority for the purposes of the Planning Act in relation to a scheme and was given all of the powers, rights, duties and authority conferred or imposed on a responsible authority. Thus, by s 13(1) of the Planning Act, the respondent could either purchase or compulsorily acquire any land comprised in a town planning scheme, for the purposes of that scheme.
250 The then responsible Minister, in the course of the second reading speech in respect of the Scheme Bill, said, of the compensation and acquisition provisions of the Scheme Act, that:
" ... I would state that the compensation provisions of the Bill are the same as those existing under the present Town Planning Act, which were recently brought up to date by Parliament. Provision is, however, made for the authority to acquire land as an alternative to paying compensation for injurious affection. This provision is made, because in many of the regional proposals, such compensation could well amount to the full value of the land.
The authority is given power to purchase land but not to resume land until the plan is approved, and then only as a result of the approved plan. If land is acquired by the authority under an interim development order, or the plan, it may be leased or otherwise used until it is required for the purpose for which it was acquired." (Hansard, 13 August 1959, page 983)
251 In 1962, the Authority submitted a report on the MRS. Paragraphs 20 to 22 of that report read as follows:
"20. It might be said that upon the coming into operation of the Scheme property subject to reservation suffers an immediate depreciation of value insofar as its development is subject to a particular degree of control and its tenure is limited in time. Sec 11 of the Town Planning and Development Act appears to envisage that the total amount of such depreciation might have to be met by way of compensation for injurious affection. It is a matter of conjecture as to what amount of money would be likely to be involved, but it might well be quite beyond the financial resources of the Authority to meet it in face of its wide-spread commitments to acquire property reserved. The depreciation in value is, however, in many instances hypothetical. It becomes real only when property is sold at a value depressed by the reservation, or when development is frustrated by a refusal of consent under the Scheme.
21. The Authority has accordingly submitted that liability for compensation for injurious affection be limited to two circumstances:-
(a) where a sale is affected at a depressed value attributable to reservation under the Scheme; or
(b) where consent to development of property is refused on the grounds of reservation under the Scheme.
22. In either situation it is submitted that any compensation payment so made, based on the difference between unrestricted market value and value restricted by the Scheme, be registered as a caveat on the title of the subject property and that in determination of the value on subsequent acquisition, regard be had to any amount of compensation so paid. In either case the Authority may, as the legislation now stands, elect to complete acquisition of property rather than meet a compensation claim."
252 The recommendation of the Authority, made in [21], was implemented by an amendment to s 36 of the Scheme Act by means of the Metropolitan Region Town Planning Scheme Act Amendment Act 1962 (No 44 of 1962). That Act introduced subs 36(3), subs 36(4) and subs 36(5). Those subsections now (after other, minor amendments) read as follows:
"(3) Subject to subsection (4), where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until -
(a) the land is first sold following the date of the reservation; or
(b) the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant.
(4) Before compensation is payable under subsection (3) -
(a) where the land is sold, the person lawfully appointed to determine the amount of the compensation shall be satisfied -
(i) that the owner of the land has sold the land at a lesser price than he might reasonably have expected to receive had there been no reservation of the land under the Scheme;
(ii) that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell the land; and
(iii) that the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land;
or
(b) where the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant, the person lawfully appointed to determine the amount of compensation shall be satisfied that the application was made in good faith.
(5) A claim for compensation under subsection (3) shall be made at any time within 6 months after the land is sold or the application for permission to carry out development on the land is refused or the permission is granted subject to conditions that are unacceptable to the applicant."
253 At the time of the introduction of these provisions, the then Minister, after referring to the 1962 report, said (Hansard, 5 September 1962, page 820):
"The Bill also amends the compensation provisions in respect of the metropolitan region scheme. This amendment arises from a consideration of the financial resources of the metropolitan improvement fund and problems of planning authorities in other States where claims for compensation have totalled many millions of pounds--far beyond the resources of the responsible authorities. It has been said that many of these claims were due to the uncertainty of the owners in respect of their right.
As indicated in the report submitted by the authority, it is quite impossible to contemplate the acquisition immediately, or over a short period of time, of land which will not be required for many years ahead and the cost of which will, in the aggregate, run to many millions of pounds. However, as the Act stands, the authority could be confronted with a heavy claim for compensation in respect of the whole of the land reserved under the scheme and far beyond its financial ability to meet. Nevertheless, it is necessary that the land be reserved in the scheme for this future need; and the reservation imposes an obligation in respect of compensation.
It can properly be argued that reservation under the scheme depreciates the value of land. However, the depreciation is, in many cases, hypothetical and becomes real only when the land is sold at a price which reflects this depreciation, or when development is frustrated by a refusal of consent under the scheme. The amendment proposes that compensation for injurious affection be limited to two circumstances: where a sale is effected at a depressed value attributable to reservation under the scheme, or where consent to develop is refused on the ground of reservation under the scheme."
254 The text of the MRS was published in 1963. Clause 20(1) provided that compensation for injurious affection was claimable where the Authority either refused approval for the development of reserved land on the ground that the land was reserved for public purposes or approved a development subject to conditions unacceptable to the applicant. Clause 20(3) empowered the Authority, in lieu of paying compensation, to purchase the land "at a price not exceeding the value of the land at the time of refusal or of the conditional approval".
255 In 1968, the Scheme Act was further amended by the Metropolitan Region Town Planning Scheme Act Amendment Act of that year. That Act introduced s 36(2)(b) of the Scheme Act requiring the Commission (then the Authority), within three months of a claim for injurious affection being made, either to elect to acquire the land or to advise that it did not intend to do so. It also introduced subs (2a) and subs (2b) the current terms of which (reflecting further, inconsequential amendments) have been set out earlier in these reasons.
256 In the course of debate which followed the second reading speech in respect of the Bill which introduced those amendments, the then Minister for Town Planning said, of a suggestion which had been made in the course of debate:
"I am a little concerned that if we try to adopt Mr Medcalf's suggestion, and we applied the whole of the Public Works Act to this particular aspect, then we would force the authority into issuing resumption orders on all properties, when the individual would much prefer to keep his land for the time being and take the chance of getting a better value at a later stage. I do not think we should take that option from the individual." (Hansard, 1 October 1968, page 1273)
257 It seems to us that, when construed against this legislative background, and, indeed, when read according to the natural and ordinary meaning of the words used in s 36 of the Scheme Act, there is nothing in the provisions of that section which requires a landowner, who has made a claim for compensation for injurious affection, to agree to sell his land to the Commission, if it should elect to acquire the land under s 36(2) of the Act. Rather, on the ordinary language of the section, it would be open to the landowner, if he wished to do so, to withdraw his application for compensation and to retain the land. On the other hand, the requirements of the Act in respect of the making of an election by the Commission seem quite plainly to be intended to render that election binding upon it.
258 There is nothing in the provisions of s 36 of the Scheme Act which has the effect of giving to the Commission the power to acquire land compulsorily. Indeed, the intention of the legislature not to give any such power to the Commission is apparent from the responsible Minister's speech when the Bill was introduced. Moreover, as the legislative history reveals, there was no need to give to the Commission any such power under s 36. The Commission already had that power under s 13 of the Planning Act, read together with the relevant provisions of the Scheme Act. Under s 13(1)(b) of the Planning Act, as it then stood, the responsible authority (which, by virtue of s 37(1) of the Scheme Act, included the Authority (now the Commission)) may, for the purposes of a town planning scheme, with the consent of the Governor, take compulsorily, under and subject to the Public Works Act (now Part 9 of the Land Administration Act 1997), any land comprised in such scheme. The provisions of the Public Works Act made detailed provision for the compulsory acquisition of interests in land.
259 Moreover, by s 37A of the Scheme Act, introduced in 1965, the Commission is given a power to acquire land compulsorily in the circumstances there set out, and, by s 37A(3), the provisions of Pt 9 and Pt 10 of the Land Administration Act are expressly applied, with such modifications as might be required and subject, of course, to the terms of s 37A itself.
260 There are other indications in the legislation that s 36 involves no compulsory acquisition. Thus, under s 202 of the Land Administration Act (and before that, under s 63 of the Public Works Act) the owners of interests in land which were taken compulsorily are expressed to be entitled to "compensation" (to be assessed in accordance with Div 5), whereas under s 36(2a) a "price" is to be paid for the land. Also, neither s 36(2) of the Scheme Act nor cl 20(3) of the Scheme itself refers either to the Land Administration Act or to the Public Works Act as the case may be. In contradistinction, as we have earlier mentioned, under s 37A(3), the provisions of Pt 9 and Pt 10 of the Land Administration Act are made applicable to the taking of any land compulsorily under that section.
261 Finally, in this respect, the construction which we have preferred is supported by authority in the form of Hill v Western Australian Planning Commission, above, and MacDougall v Western Australian Planning Commission [2003] WASC 138; (2003) 129 LGERA 243. As we have noted above, in Hill, Scott J appeared to accept that the Scheme Act did not create a compulsory acquisition scheme. While his Honour did not say so expressly, he said, after referring to a contention to that effect which had been advanced on behalf of the Commission:
"In my view there is a fundamental distinction between the compulsory acquisition of land under the ... [Land Administration Act] and the acquisition of land under the provisions of the ... [Scheme Act]. The former provides for the assessment of compensation utilising the statutory method provided. The latter, under the provisions of s 36(2a) refers to the 'price' to be paid for the land 'acquired'. The difference between the two statutes is that the former focuses upon 'compensation' whilst the latter focuses upon the 'price' to be paid for the 'acquisition'."
262 In MacDougall, Templeman J (who, like Scott J, was not concerned with the question whether or not an acquisition under s 36 is compulsory, but was concerned with the question whether or not the value to be determined was the value to the owner or a more objective market value) likewise noted the distinction between the compulsory acquisition of land provisions under the Land Administration Act and the provision for acquisition under the Scheme Act, mentioning that the former focused upon compensation while the latter focused upon the price to be paid for the acquisition.
263 We therefore conclude that the trial Judge was correct in holding that the election to acquire is not equivalent to a compulsory acquisition and that the election is not binding on the appellant.
264 The conclusion at which we have arrived on this point means that the approach to valuation of the land on its compulsory acquisition is not of itself applicable to this case. However, the trial Judge applied a similar approach, to the extent that he considered that "value" for the purposes of s 36(2b) meant that certain elements should be included in the price, and the inclusion of these elements is the subject of the cross-appeal. He also excluded certain other elements claimed by the appellant and those exclusions, as we have earlier mentioned, are the subject of the appeal. We now turn to the trial Judge's approach to "value" for those purposes.
265 The trial Judge held (at [41]) that "the guiding principle in determining value remains the Spencer test: Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418". That is the test of market value. However, his Honour also said that "the concept of special value to the owner is relevant to this determination: Hill v Western Australian Planning Commission (supra)".
266 Having said that, however, the trial Judge went on to say that there was no evidence that any special value exceeded the market value. His Honour noted (at [45]) that the argument that special value included any preparation works on the land had been disapproved in Boland v Yates Corporation Pty Ltd, above. Despite this, his Honour went on to include, in the ambit of market value, the costs of the development application incurred by the appellant as a step in the process of claiming compensation. He held that the application had been made bona fide, albeit in the expectation that it would, in all probability, be refused (at [114]). The reason for allowing the appellant to recover the costs was that (at [115]):
"A prudent vendor would seek to recover those costs as a component of the sale of land and a prudent purchaser would recognise that component."
267 For the same reason, his Honour allowed the appellant's claim for interest on the acquisition price (payable after one month from the date of the election) and the claim for rates and taxes payable in respect of the reserved land since the election date.
268 As to interest, his Honour said (at [127] - [128]):
"The value of the land is to be determined in money terms. A vendor would wish to capitalise on the value of the land by converting it immediately and investing the capital sum. A vendor and purchaser in the present hypothetical situation would be agreeing on the sale of the Mount Lawley land on 9 May 1996, knowing that there will be an indeterminate delay before trial settlement. A prudent vendor would protect the value of the asset during the delay, either by demanding a premium or by adding an interest component.
A prudent purchaser, in order to obtain the land, even though not over-anxious, would accept a premium or interest as part of the price necessarily to be paid to obtain the land. A prudent purchaser and vendor would allow some time to complete formalities. Interest as a component of value will commence after one month from election."
269 And, as to rates and taxes (at [130]), he said:
"For essentially the same reason, I consider a prudent vendor would factor into any agreement for sale, as a portion of the value, the amounts of land tax and shire rates the vendor may be called on to pay during the period before settlement. A prudent purchaser would agree because, if settlement occurred expeditiously, the purchaser would be saddled with those expenses in any event."
Thus, his Honour added to the market value, determined objectively, those additional elements which reflect the value of the land to the appellant.
270 The trial Judge did not, however, allow the appellant's claim for the costs it would have incurred in buying a replacement property. These included stamp duty, conveyancing costs and fees charged by the Department of Land Administration ("DOLA"). His Honour made no mention of this claim in his reasons.
271 In ground 19 of its grounds of appeal, the appellant contends that the trial Judge should have allowed the notional stamp duty, conveyancing costs and DOLA fees on the basis that "a prudent vendor would take these costs into account when arriving at an acceptable price".
272 The respondent has cross-appealed against the award of interest, development application costs and holding costs.
273 In the cross-appeal, the respondent contends that the value of the land for the purposes of s 36(2) of the Scheme Act is, as a matter of law, the market value of the land at the date of the respondent's election under s 36(2b), and does not include the interest or other costs allowed by the trial Judge. Thus, market value would include any improvement to or development potential of the land, but would exclude expenditure such as the costs of preparing a development application and the costs of holding the land.
274 The appellant places reliance on the use of the unqualified term "value" of the land in s 36 for the purposes of determining compensation or price, as the case may be. We note in this regard the approach to the use of that term in legislation concerning compensation for actions injuriously affecting land in cases such as Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VicRp 55; [1970] VR 427 and Cairns City Council v CMB No 1 Pty Ltd per Williams J at 316 (characterising acquisition on election by authority like that in Scheme Act s 36(2)(b) as "compulsory acquisition") and Cullinane J (dissenting), at 325 (distinguishing the situation where, as in that case, the statute provides for market value to be the basis).
275 However, the question here is the meaning to be given to "value" in s 36 of the Scheme Act. It is therefore necessary to consider all of the indications as to that meaning to be gleaned from the language and the context. This is the approach used in relation to the claims of injurious affection in two decisions of the High Court, one under s 23(1)(c) of the Lands Acquisition Act 1955 (Cth), in Commonwealth v Morison [1972] HCA 39; (1972) 127 CLR 32, and the other under s 20(1)(b) of the Acquisition of Land Act 1967 (Qld) in Marshall v Director-General, Department of Transport, above, where the Court reviewed the approach in Morison.
276 One indication is to be found in s 36(9) of the Scheme Act, to which Scott J referred in Hill at [24]. That provision applies where compensation has been paid on the first sale after the reservation, but the reservation has been revoked subsequently, or its coverage of the land reduced. In those circumstances, after the land is first sold or subdivided following the revocation or reduction, the Commission may recover a "refund" from the owner, calculated as at the date of the revocation or reduction. The refund will correspond to that percentage of the "value" of the land as at that sale or subdivision which is represented by the proportion the original compensation bears to the unaffected "value" of the land as at the date of the original sale (s 36(12) read with s 36(7)(c) and s 36(6)(b)).
277 As Scott J pointed out in Hill at [24], "it would clearly be inappropriate for a refund to be calculated on the value of the land to the [original] owner in such circumstances".
278 Section 36(4)(a)(i) provides another indication that "value" should not be understood as value to the owner, in the compulsory acquisition sense. It is there provided that, before compensation for injurious affection is payable, the person lawfully appointed to determine the compensation must be satisfied, among other things, "that the owner of the land has sold the land at a lesser price than he might reasonably have expected to receive had there been no reservation of the land under the Scheme". If the land has been sold, it may be assumed that the owner received the true market price. Likewise, the price he might reasonably have been expected to receive without the reservation, would also be the market price. If, therefore the reservation had not affected the value (as in Murphy's case, above, for example) no compensation would be payable. However, if "value" in this context includes compensable expenditure such as that allowed by the trial Judge, the owner would be denied his compensation by operation of s 36(4)(a)(i).
279 Finally, we refer to the Report of the Metropolitan Region Planning Authority, prepared in 1962, which led to the introduction of what are now s 36(3), (4) and (5) of the Scheme Act. Paragraph 22 of that report, quoted earlier in these reasons, refers to the measure of compensation for injurious affection in terms of a market value differential.
280 In our view, "value" should be construed in the same way throughout s 36. It may be assumed that the legislature uses terms consistently within a statute. A variation in meaning here would differentiate between, on the one hand, compensation for injurious affection paid by the Commission when land is sold to a third party, and, on the other hand, the price paid by the Commission on its election to acquire in lieu of paying compensation. Such a differentiation would not bear any obvious relation to the purpose of providing compensation for the injurious affection.
281 To say that the appropriate value of the reserved Mount Lawley land is its market value is not the end of the matter. The term "market value" is a convenient way of referring to the value to be ascertained by applying the principle derived from the decision of the High Court in Spencer v The Commonwealth of Australia, above; that is, by posing the question (put by Griffith CJ at 432):
"What would a man desiring to buy the land have had to pay for it ... to a vendor willing to sell it for a fair price but not desirous to sell?"
As Callinan J pointed out in Boland v Yates, above, Griffiths J was there referring to a vendor and purchaser who were "conversant with the subject at the relevant time". Isaacs J referred to the notional parties as being "perfectly acquainted with the land, and, cognizant of all circumstances which might affect its value, either advantageously or prejudicially ..." (at 441). In Boland v Yates both Callinan J and Gleeson CJ (with whom Gaudron and Gummow JJ agreed) referred to the fact that land might have a "special value", reflecting "a value to the owner over and above the price which a hypothetical purchaser may pay" ([16] per Gleeson CJ; and see [292] per Callinan J).
282 It is not clear to us that compensation for injurious affection under s 36 can include any allowance for "special value" in that sense, and we do not read Scott J in Hill to be suggesting otherwise. However, we do not need to decide this as, in our view, there is no demonstration of any "special value" in that sense in this case.
283 The concept of "special value" arises from the opinion of the Privy Council in Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083, at 1088:
"That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land, but for the value of the land to them. No doubt the suitability of the land for the purpose of their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shewn would probably attend the use of the land in their business furnished material for estimating what was the real value of the land to them. But that is a very different thing from saying that they were entitled to have the capitalised value of these savings and additional profits added to the market value of the land in estimating their compensation. They were only entitled to have them taken into consideration so far as they might fairly be said to increase the value of the land. Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it." (Our emphasis)
284 As Callinan J said in Boland v Yates (at [354]), the concept of the dispossessed owner (being regarded as the prudent purchaser in this context) paying above the market price for the land, rather than losing it, "may not be an entirely reliable guide" to the assessment of the special value to the dispossessed owner. However, Spencer might be expected to cover most situations, because:
" ... it does not contemplate one who would lightly relinquish a property which had a particular value to him or her for less than that value."
285 Pastoral Finance was cited to the trial Judge. Although his Honour did not refer to it in his reasons, he apparently had it in mind when, as we have noted above, he said that the concept of special value to the owner was relevant to his determination of market value. It explains his reference to Hill's case where Scott J referred to the judgment of Callinan J in Boland v Yates.
286 In our view, it is likely to be a rare case in which there is a difference between the market value of land and its special value to the owner. That is because the factors of special value are likely to be components of the market value which are recognisable as such by a notional vendor and purchaser who are "conversant" or "perfectly acquainted" with the land and all its features.
287 Callinan J described "special value" in the following way in Boland v Yates at [292]:
" ... its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it."
Even if that test is applied to the additional components of value identified by the trial Judge in the present case, none of them qualifies.
288 The cost of preparing the development application represents an amount expended to produce information about the use of the land that might have been permissible absent the reservations. It is the kind of expenditure identified by Callinan J in Boland v Yates at [271] - [273] which demonstrates the potential of the subject land. It is therefore reflected in the market value. There is nothing in that expenditure reflecting a capacity of the appellant to exploit the land that is exclusive or almost exclusive to the appellant. See also St John Ambulance Association of Western Australia Inc v East Perth Development Authority [2001] WASC 85; (2001) 114 LGERA 112 at [87] - [99]. This is even more clearly the case for the holding costs of the land and interest on the sale price until settlement, and the costs the appellant would have incurred in buying a replacement property.
289 Those costs and that interest do not relate to attributes of the land, but rather, as the trial Judge acknowledged, to the particular sale transaction itself. They represent matters that do not go to increasing the value of the land, but rather to compensating the vendor for loss on delay in completion of that transaction and from being forced to find replacement property. The principle of s 36(2a) of the Scheme Act is that compensation is to be determined by fixing a price by reference to value as at the stipulated date, disregarding the stipulated items, and by the mechanisms indicated. That principle does not encompass compensation for other loss or damage, whether from dispossession or otherwise. Even in relation to resumption, the authorities from Spencer's case forward have clearly distinguished between claims for the value of the land and claims for "damage otherwise": Isaacs J, in Spencer's case at 438, quoted by Callinan J in Boland v Yates at [355].
290 The respondent pressed on us the argument, on which Templeman J in McDougall placed partial reliance in rejecting the view that interest could not be included in market value, that "pending settlement, the vendor is fully entitled to the use and enjoyment of his land as fully as he was before the election" (McDougall, at [211]). The respondent in its written submissions and argument before us also stressed the language of s 36(2b) of the Scheme Act, that "The value of the land referred to in subsection (2a) shall be the value thereof on the date the Commission elects to acquire the land under that subsection". This, it said, meant any matters arising thereafter, including expenditures (whether or not improving ones) and the effluxion of time to settlement, were to be disregarded.
291 The appellant replied to the first argument, correctly in our view, by submitting that in the present case, at least, such use or enjoyment is blighted by the reservation for Parks and Recreation purposes. However, as we have indicated, there is no scope for compensation for that blight on that use or enjoyment in the valuation provided for in s 36(2a) of the Scheme Act.
292 The appellant's reply to the second argument was that the reference to the point in time in subsection (2b) did not relieve the valuer from the need to take account of possibilities that should have been factored into a valuation then. Again, we consider that this is correct. However, this response fails to have regard for the distinction to be drawn between compensation by reference to the price of the land determined on its value as we have indicated, on the one hand, and compensation for loss or damage otherwise arising, on the other.
293 While we have, under the previous heading, concluded that the trial Judge erred in awarding interest on the acquisition price as an incident of value, that does not, in our view, finally dispose of the issue of interest.
294 In his judgment, the trial Judge referred, at [120], to authorities on compensation on just terms for compulsory acquisition in which the relevant statutes had been construed to provide for interest on the compensation amounts, even although there were no express statutory provisions to that effect. The appellant (cross-respondent) drew our attention to a number of those authorities, particularly Marine Board of Launceston v The Minister of State for the Navy [1945] HCA 42; (1945) 70 CLR 518, as well as authorities on valuation based on "fair rental", particularly Ricciardello v Caltex Oil (Australia) Pty Ltd [1991] ANZ ConvR 445 (Full Court WA).
295 In our view, s 36(2a) of the Scheme Act does not permit an inference to be drawn that interest should be paid on the acquisition price. That is because, as we have noted above, the section is concerned with compensation for diminished value: not for loss or damage arising otherwise. The point was made in Spencer's case by Isaacs J at 438, cited by Callinan J in Boland v Yates at [355].
296 The appellant pressed on us the approach to statutory construction referred to in Bennion, F A R "Statutory Interpretation" Butterworths, London, 1984, at 304, that a statute which interferes with an owner's right of enjoyment of land should be construed benevolently to the owner. However, we are not persuaded that such an approach is valid in the circumstances of this case. It would be inconsistent with the clear words of s 36(2a).
297 We turn to consider s 32 of the Supreme Court Act 1935, which provides as follows:
"(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect."
298 The trial Judge in this case, at [121], concluded that s 32 had no application on the basis that until the owner signifies acceptance of the acquisition, there is no debt on which interest under the provision arises. Templeman J in McDougall at [209] agreed.
299 However, in neither case was the attention of the Court drawn to the decision of the High Court in Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520. There the Court considered whether the Victorian counterpart to our s 32 permitted the Court to award interest on the amount for which the workers compensation authority was entitled by its statute to be indemnified by another who was liable in respect of the injury for which the authority had paid compensation.
300 So far as relevant, s 60(1) of the Supreme Court Act 1986 (Vic) provides that the Court:
" ... on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest ... from the commencement of the proceeding to the date of judgment over and above the debt or damages awarded."
301 The Court in Victorian WorkCover held that interest was payable under this provision, notwithstanding that the principal sum on which interest was payable could not be ascertained until certain matters, such as any contributory fault of the worker or his employer, had been resolved, and notwithstanding that that sum was not an amount that could readily be described as "damages".
302 The judgments of the Court rely heavily upon the judgment in Crisp & Gunn Co-operative Ltd v Hobart City Corporation [1963] HCA 55; (1963) 110 CLR 538. There, the expression in the Tasmanian Rules of the Supreme Court 1958, O XXIV, r 1, "action to recover a debt or damages", was held to cover an action for compensation for compulsory acquisition of land pursuant to statutory powers: see Victorian WorkCover at [31] and [41] per Gleeson CJ, Gummow, Hayne and Callinan JJ; and [101] per Kirby J.
303 The Court in Victorian WorkCover used the language of Crisp to describe the terms of the Victorian statute corresponding to the Tasmanian Rule as a "composite expression" that "embraces any proceeding in which a claim for money is made, in contrast to declaratory relief and claims for specific forms of relief such as mandatory injunctions, charging orders and orders for specific performance" (at [41], per Gleeson CJ, Gummow, Hayne and Callinan JJ; and see [102] per Kirby J).
304 In our view this description is apt to cover the present proceedings for the determination of value under s 36(2b)(ii) of the Scheme Act . It is true that the action for determination is not the same as an action for recovery; but in our view the action for determination encompasses a determination that the value so determined is recoverable. Crisp's case appears to offer support for this view.
305 Nor do we see anything in the Scheme Act that would preclude the award of interest under that provision: see Victorian WorkCover at [106] - [109] per Kirby J on this issue; and see the decision on the issue of interest on compensation for injurious affection in Cornell v Town of East Fremantle [2003] WASC 163; (2003) 131 LGERA 20. Indeed, if an award of interest was not open, there would be an anomaly to which the appellant (cross-respondent) referred us, in that interest would be payable on a claim for injurious affection arising where the respondent did not make a s 36(2) election, but not payable on the amount adjudged to be payable on an election. For the right to interest in the former context, we mention the judgment of Hasluck J in Cornell at [317], where his Honour based that right on s 32 of the Supreme Court Act 1935.
306 We therefore conclude that s 32 of the Supreme Court Act 1935 empowers the Court to make an award of interest on the acquisition price of land fixed under s 36(2b)(ii) of the Scheme Act. Our analysis also means that the Court has such power in respect of a claim for compensation for injurious affection in respect of the CAH land, a claim we reach below.
307 Because it will, for the reasons we have given, be necessary to order a retrial, it follows that the making of any such award will be a matter for the trial Judge.
308 While our conclusions so far dispose of the appeal and the cross-appeal with respect to that portion of the reserved Mount Lawley land which the respondent elected to acquire, and supply the valuation principles at least for the claim for injurious affection to the CAH land, there remain a number of issues peculiar to that land, and to the unreserved Mount Lawley land. We turn to those issues now.
309 In its re-amended statement of claim, the appellant sought compensation for injurious affection in respect of that part of its land which the respondent had not elected to acquire. This comprised the 7.9 hectares of the CAH land and the 11.9 hectares in the south-east portion of Lot 47, the unreserved Mount Lawley land (in respect of which there was also a claim in the nature of a severance claim). We understood these claims to be, in relation to the CAH land, a claim for injurious affection being a reduction in value resulting from the reservation, whereas, in relation to the unreserved Mount Lawley land, the claim was for injurious affection being at least a claim for a reduction in value resulting from the fact that that area had been severed from the balance of Lot 47 and could not, therefore, be developed as economically.
310 The trial Judge held (at [40]) that while a claim for compensation could have been made under s 11 of the Planning Act, there were two barriers to such a claim. The first barrier was the fact that no claim had been made within the period of six months from the date of reservation, as required by cl 8 of the Scheme Act [sic MRS] . The second was that the parties had not proceeded by way of arbitration as required under s 11(4) of the Planning Act.
311 In relation to the first barrier, the relevant provision is not cl 8 of the MRS: it is s 11(1) of the Planning Act. It is there provided that any person whose land or property is injuriously affected by the making of a Town Planning Scheme is required to make a claim not less than six months after the date when notice of the approval of the Scheme is published. This provision applies to amendments to the Scheme. However, it does not apply when a claim for injurious affection is brought pursuant to the Scheme Act. That is because s 36 of the Scheme Act requires s 11 and s 12 of the Planning Act, when applied to the provisions of the Metropolitan Town Planning Scheme, to be read and construed as if they included subsections (3), (3a), (4), (5) and (6) of s 36 of the Scheme Act.
312 Some of these provisions have previously been set out in these reasons. Relevantly for present purposes, s 36(3) of the Scheme Act provides:
" ... where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until -
...
(b) the responsible authority refuses an application ... for permission to carry out development on the land ..."
313 Subsection 36(5) provides that a claim for compensation under subsection (3) shall be made at any time within six months after the land is sold or the application for permission to carry out the development on the land is refused.
314 In the present case, the appellant lodged a development application with the Shire of Swan on 7 December 1995. This was received by the respondent on 14 December 1995.
315 Although the application referred to the zoning of the subject land as "Parks and Recreation" in the MRS, it is clear enough from the drawings which form part of the application, as we have previously indicated, that the proposed development included the CAH land. It did not, however, include the unreserved Mount Lawley land.
316 By cl 31(2) of the MRS, there is a deemed refusal of an application when it has not elicited a response within 60 days of its receipt by the respondent.
317 In the present case, the respondent did not reply to the development application within the 60-day period. On the 61st day, the appellant made its claim for compensation for injurious affection in the Form 4 prescribed by the MRS.
319 We have mentioned that the second of the barriers to the claim identified by the trial Judge was that the parties had not proceeded by way of arbitration.
320 It is the case that a claim for compensation for injurious affection brought pursuant to s 11 of the Planning Act - albeit brought under that section as incorporated in the Scheme Act - is to be determined by arbitration "unless the parties agree on some other method of determination". In the present case, the appellant's claim was pursued initially by originating motion dated 19 May 1997.
321 There was no formal agreement between the parties to proceed by way of litigation as the means of determination of the claim. However, in our view, there was clearly a tacit agreement to that effect. That agreement may be inferred from the fact that the respondent made no application to stay the litigation in order to allow the dispute to be determined by arbitration.
322 There is, therefore, no obstacle to the appellant's claim for injurious affection in so far as it relates to the CAH land which, as we have held above, the respondent had not elected to acquire.
323 That being so, compensation is payable in accordance with s 36(6) of the Scheme Act. So far as relevant, s 36(6) provides:
"(a) ... the compensation payable for injurious affection due to or arising out of the land being reserved under the Scheme for a public purpose, where no part of the land is purchased or acquired by the Commission, shall not exceed the difference between -
(i) the value of the land as so affected by the existence of such reservation; and
(ii) the value of the land as not so affected."
324 We do not consider that the reference to "no part of the land" being purchased or acquired causes any difficulty in the present case. That is because we consider it appropriate to deal separately with the land reserved for Parks and Recreation and that reserved for the CAH land. No part of the latter portion has been purchased or acquired, as we have explained.
325 Because it will be necessary for us to order a retrial in respect of the determination of the value of the reserved Mount Lawley land (other than the CAH land) under s 36(2b), and because the issue of compensation payable for injurious affection overlaps that which must now be retried, it seems to us that this issue, too, must be left to the trial Judge.
326 That leaves the injurious affection claim in respect of the unreserved Mount Lawley land, including the severance issue. In our view, it is not open to the appellant to make any claim for such compensation. There are two reasons. First, we think it clear that s 36 of the Scheme Act is intended to provide a basis for assessing compensation for injurious affection, not severance.
327 While it is true that severance damage has been regarded as a species of injurious affection - see Sisters of Charity of Rockingham v The King [1922] 2 AC 315 at 327 - 328 - we think it significant that s 36 contains no reference to severance. By comparison, s 241(7) of the Land Administration Act 1997, which provides for the assessment of compensation where land is resumed, does make specific provision for severance damages which may be recovered in addition to the value of the resumed land.
328 Our view is supported by the fact that both s 36(3) and (6) of the Scheme Act refer to the payment of compensation for injurious affection resulting from a reservation in respect of the land so reserved. Thus, neither provision contemplates the payment of compensation in respect of land which has not been reserved.
329 There is, however, a more fundamental obstacle. A claim for compensation for injurious affection, in the present context, arises when an application for permission to carry out development on the land has been refused. In the present case, the appellant did not make an application for permission to develop the unreserved Mount Lawley land. It follows that s 36(3), upon which the appellant's application was based, has no application.
330 It is well settled that there is no right to compensation at common law for injurious affection arising out of town planning schemes restricting the use to which land may be put: Folkstone v Metropolitan Region Planning Authority [1968] WAR 164. The claim relating to the unreserved Mount Lawley land must therefore fail.
• by s 36(2b) of the Scheme Act, the valuation exercise requires the Court to value the reserved Mount Lawley land (excluding the CAH land) without regard to the reservation or the rezoning effected by Amendment 879/33;
• that exercise requires an assessment to be made of the value of the land as it would have appeared to a hypothetical vendor and purchaser, both perfectly acquainted with the land and all its characteristics, on 7 May 1996, assuming no reservation and no rezoning of adjacent land under the Scheme represented by MRS Amendment 879/33 and 950/33;
• in making such an assessment, it is necessary to take into account any urban potential the land may have, and, as well, those characteristics which militate against rezoning;
• the question what was the potential for urbanisation of the land can only be answered by considering and weighing the evidence adduced by the parties in relation to the principal issues referred to in the immediately preceding point;
• the trial Judge did not consider any of that evidence because, wrongly in our view, he regarded it as irrelevant;
• in the absence of that judicial determination, and given that we are not in a position to make that determination ourselves, it is not possible to say whether any of the valuers has valued the land on a proper basis;
• the retrial should be conducted on the basis that the price for the acquisition of the reserved Mount Lawley land (excluding the CAH land) should be its market value, which would not include items such as interest, the cost of the development application, the holding costs of the land pending settlement and the costs incurred in acquiring a replacement property;
• the respondent is bound by its election to acquire the reserved Mount Lawley land (excluding the CAH land), but s 36 of the Scheme Act does not provide for a compulsory acquisition;
• under s 32 of the Supreme Court Act 1935, it is permissible to award interest on the price as above, and on the compensation for injurious affection referred to below;
• the respondent has not elected to acquire the CAH land;
• the retrial should encompass the question of what compensation is payable in respect of injurious affection to the CAH land, there being no obstacle to the appellant's claim in that regard;
• under s 36 of the Scheme Act or the common law the appellant is unable to claim compensation for injurious affection, whether or not including severance damage, in relation to the unreserved Mount Lawley land.
332 It follows, from our findings and conclusions, that both the appeal and the cross-appeal must be allowed in the respects to which we have referred. We will hear further from the parties as regards the orders which are necessary in order to give effect to our conclusions.
Mount Lawley Pty Ltd
Western Australian Planning Commission [2004] WASCA 149
(2003) 129 LGERA 271
(1999) 29 MVR 512
(1997) 97 LGERA 239
(1997) 48 NSWLR 430
(1972) 127 CLR 32
(2003) 131 LGERA 20
(1963) 110 CLR 538
(1978) 140 CLR 196
(1945) 70 CLR 518
(2001) 205 CLR 603
(1990) 21 FCR 193
(1990) 95 ALR 493
(2001) 114 LGERA 112
(1953) 94 CLR 621
(1979) 21 SASR 513
(2000) 203 CLR 194
(1981) 146 CLR 336
(1973) 5 SASR 301
(1976) 14 SASR 486
(1979) 142 CLR 351
(1928) 40 CLR 566
(2000) 107 LGERA 11
(1987) 8 NSWLR 642
(1904) 1 CLR 363
(1949) 78 CLR 410
(1996) 40 NSWLR 639
(1978) 37 LGERA 258
(1973) 129 CLR 385
(1999) 20 WAR 489
(1991) 24 NSWLR 156
(1999) 74 ALJR 209
(1997) 96 LGERA 306
(1995) 89 LGERA 310
(2002) 6 VR 1
(2000) 107 LGERA 229
(2003) 129 LGERA 243
(1991) 21 NSWLR 725
(2004) 78 ALJR 572
(1986) 159 CLR 656
(1987) 10 NSWLR 247
(1907) 5 CLR 418
(2001) 117 LGERA 257
(1956) 95 CLR 245
(1991) 4 WAR 283
(2001) 207 CLR 520
(1999) 108 LGERA 235
(1948) 75 CLR 495