(b) are the acquisitions for the purpose of exercising any such function?
108 In any event his Honour stated the s 186(1) Question accurately at [227] when he said:
"Is the decision of the council to compulsorily acquire the [respondents'] land for the purpose of exercising any of its functions under s 186(1)?"
109 The respondents submitted to his Honour that the compulsory acquisition of their land was not for the purpose of exercising a function of the Council but rather for the purpose of providing their land (or the benefit of their land) to a third party, Grocon, to enable that party to make a profit therefrom. On the other hand, the Council submitted that the purpose of the acquisition was to give effect to the Development Agreement and thereby achieve the objectives of the Civic Place Master Plan.
110 His Honour (at [229]) suggested that the choice posed was between the immediate objective and the middle distance objective of implementing the vision of the Master Plan. He continued:
"Choosing the middle distance object involves classifying it as the end and classifying the immediate object as the means to the end, the end being the real purpose. Choosing the immediate object as the purpose involves classifying the middle distance object as the motive or reason for the purpose."
111 After setting out the provisions of ss 23 and 24 of the LG Act, the primary judge referred to passages from two judgments of Gleeson CJ in support of the view that in determining the purpose of the proposed acquisition of the respondents' land, one should look at what is sought to be done with their land, being its transfer to Grocon, and not at the Council's middle distance objective or motive being the implementation of the Civic Place Master Plan through the Development Agreement.
112 The first passage relied upon was that of Gleeson CJ in Woollahra Municipal Council v Minister for the Environment (1991) 23 NSWLR 710 at 714-715. More relevant, however, is the second passage from the judgment of the Chief Justice in News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563 at 573 [18] where he said:
"The distinction between purpose and effect is significant. In a case such as the present, it is the subjective purpose of News and ARL in including the fourteen team term, that is to say, the end they had in view, that is to be determined. Purpose is to be distinguished from motive. The purpose of conduct is the end sought to be accomplished by the conduct. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken. Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not at a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. …"
113 The primary judge (at [236]) then referred to the decision of Else-Mitchell J in Collins v Willoughby Municipal Council [1968] 1 NSWR 151; (1967) 14 LGRA 256 which involved a compulsory acquisition under the 1919 Act. In that case the plaintiff owned land in the Chatswood Shopping Centre, which in turn adjoined land owned by the Council. On each parcel of land was an old semi-detached cottage. The council made application to the Governor for his approval of the resumption of the plaintiff's land "for the purpose of undertaking the improvement and embellishment of the area", this being a reflection of the provisions of s 321(1)(a)(iv) of the 1919 Act which permitted a council to acquire by any mode authorised under that Act any land for the purpose, inter alia, of "undertaking the improvement and embellishment of the area".
114 The council intended to invite tenders for a building lease of the whole site including its own and the plaintiff's land for a term of 99 years. The lease would require the lessee to erect a multi-storey commercial building containing a component of free public car parking accommodation. The proposed resumption was approved and duly notified in the Gazette. The plaintiff sought a declaration that the purported resumption was void. One of the grounds of attack was that the council's real purpose was not to improve or embellish the area but to turn the land owned by the plaintiff to profitable account by its sale or lease. Else-Mitchell J dismissed the suit.
115 After referring to cases such as Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87 and Minister for Public Works and Local Government v Duggan [1951] HCA 29; (1951) 83 CLR 424 which established that a council cannot resume land except under statutory authority and that it must exercise the power so conferred bona fide for the purpose for which it was conferred, Else-Mitchell J said (at 259):
"In view of the fact that the amendments made to the Local Government Act [1919] in 1951 include the sale or leasing of land as purposes for which land may be resumed, I think that a council can properly acquire land for the mixed purpose of improvement or embellishment and sale or leasing at a profit and it would therefore not seem to be material that some part only of the land acquired, and even an undefined part, is to be improved or embellished."
116 The primary judge (at [237]) then cited the following further passage from the judgment of Else-Mitchell J (at 260):
"No doubt prior to the 1951 amendments to the [1919 Act], land could not be resumed simply for the purpose of selling it to or vesting it in a third person and even since those amendments, a resumption which is effected with the sole object of giving it or selling it to some person who does not propose to apply it for any local government purpose may also be invalid."
117 The Council complained that the primary judge had failed to complete the quotation which continued in these terms:
"But where a local government purpose is sought to be achieved by a scheme which entails the disposal of the land acquired or some interest therein, it may nevertheless still be properly characterised as an 'undertaking' for that purpose by the council."
118 Under the 1951 amendments to the 1919 Act referred to by Else-Mitchell J, s 321 relevantly provided as follows:
"(1) The council may acquire, in any mode authorised under Part XXV of this Act, any land for the purpose of:
(a) undertaking -
(i) …,
(ii) …,
(iii) …,
(iv) the improvement and embellishment of the area;
(b) doing all or any of the following things -
(vii) …,
(viii) selling or leasing the whole or any portion of such land, in one or more lots, as elsewhere in this Act provided."
119 Prior to the 1951 amendments which repealed the old ss 321 and 322 and substituted a new s 321 which combined both of those provisions, s 321 empowered a council to control and regulate and to undertake:
"(d) the improvement and embellishment of the area."
120 Section 322 provided that a council might purchase or resume any land and might thereupon do all or any of the following things including:
"(h) sell or lease the whole of any portion of such land, in one or more lots, as elsewhere in this Act provided."
121 I shall return to this decision below, but would at this point note that it was not suggested by the Council that having acquired land for a statutory purpose, a council was entitled to sell or otherwise dispose of that land provided only that it was "operational land" and not "community land": cf LG Act, s 45(1).
122 The relevance of any sale of land so acquired is, in my view, confined to s 188(1), which prohibits a council from acquiring land by compulsory process without the approval of the owner if it is being acquired for the purpose of re-sale. That provision clearly assumes that it is not beyond the power of a council, having pursuant to s 186(1) acquired land otherwise than by compulsory process for the purpose of exercising any of its functions to re-sell that land in whole or in part.
123 The primary judge then referred (at [238]) to the decision of Pearlman CJ in Da Rous v Burwood Municipal Council [1996] NSWLEC 52 (5 March 1996), unreported. That case also involved a compulsory acquisition under the 1919 Act. For many years the council had been acquiring parcels of land around a stormwater canal that ran through a block of land that was generally vacant. It intended to subdivide and develop the land so acquired for residential purposes. Her Honour rejected an application for a declaration that a notification of compulsory acquisition of the applicants' land was invalid. She said:
"The scheme which the council embarked upon in 1964 was a comprehensive scheme to convert an unsightly and unpleasant wasteland into a pleasant residential subdivision… It was always intended that the ultimate use of the site would be for medium density residential housing and the site would be sold off by the council for that purpose.
The applicants contended that, in those circumstances, the real purpose of the acquisition of the subject lots was the purpose of resale … that is not the case. The council's purpose in acquiring the subject lots was to re-plan and re-subdivide them as part of a comprehensive scheme for transforming a wasteland into something beneficial to the community. Resale of the site, including the subject lots, was an incidental consequence of the scheme - the ultimate aim was medium density residential development which, for obvious reasons, the council would not itself occupy, but would sell off in whole to a residential developer or in lots to individual occupiers…
The nature of the site, and its constraints (particularly the absence of road access and the necessity to acquire land) made it financially impossible for private developers to develop it…
In the light of those facts, the council's power to acquire the subject lots is, in my opinion, to be found in s 321 [of the 1919 Act]. The facts support a conclusion that the purpose of the acquisition was the re-planning or re-subdivision of existing parcels of land ."
124 However, the primary judge (at [239]) considered that Collins and Da Rous were distinguishable from the present case for two reasons. First, those cases turned on the precise wording of s 321 and, in particular, s 321(1)(a)(iv) of the 1919 Act which, his Honour considered, had no equivalent in the LG Act. Second, they were factually remote. In Collins the multi-storey building had, at least in part, a public purpose of free car parking. In Da Rous the nature of the site and its constraints made it financially impossible for developers to develop what was an unsightly and unpleasant wasteland. Both cases in his Honour's view lay close to the limits of a council's power of compulsory acquisition.
125 His Honour next referred to the decision of the High Court in Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 56 ALJR 678. In that case the Board sought to compulsorily acquire land in a valuable city block on which it proposed to erect a large office building as a joint venture with the Government Insurance Office (the GIO). The purpose of the Board engaging in the joint venture was to secure finance to acquire further office accommodation for its employees. The Board was to retain title to only half of the office space in the building being that needed for its employees, the balance to be transferred to the GIO. A retail area at ground level was to be owned jointly by the Board and the GIO. The Board was charged under its Act with "the provision of such offices" as might be requisite. The plaintiff sought a declaration that the Board was not entitled to acquire the land by way of resumption. There was evidence that it was not desirable to build a smaller building on a smaller area of the land.
126 The issue before the High Court was whether the purpose for which the Board proposed to acquire the land was a purpose of the Act. Citing Thompson and Duggan, the Court in a joint judgment said (at 679):
"If the Board is seeking to acquire the land for an ulterior purpose, there will be an ostensible but not a real exercise of the power granted by the Act. The attempted exercise of power will be vitiated even if the ulterior purpose was not the sole purpose of the acquisition; it will be an abuse of the Board's powers if the ulterior purpose is a substantial purpose in the sense that no attempt would have been made to acquire the land if it had not been desired to achieve the unauthorised purpose. …
Clearly, if the purpose of the acquisition of the land in the present case was to provide office accommodation to the Board's employees now and in the future, the acquisition will have been for one of the purposes of the Act. The questions whether the land was acquired for another and unauthorised purpose, and if so whether the unauthorised purpose was a substantial purpose of the acquisition, are questions of fact."
127 Their Honours then concluded in these terms (at 680):
"The proper conclusion is that the Board's proposed acquisition was for the purpose of acquiring a city block on which it could erect a building in which it would provide accommodation for its own employees. The joint venture with GIO was simply a means to that end. The case is distinguishable from Thompson v Randwick Corporation , in which it was established that no attempt would have been made to resume the particular land in question if it had not been the desire of the Council to make a profit from the resale of those lands and to reduce the costs of construction of the new road in that way … On the other hand, the present case resembles C.C. Auto Port Pty Ltd v Minister for Works (1965) 113 CLR 365 where part of a block acquired to provide a bus terminus was to be used to develop a retail shopping centre and the acquisition was held to be valid. To apply the words of the judgment in that case to the present case, the provision of accommodation for the Board was ' both the initiating and the abiding purpose of the resumption ' - see at p. 381".
128 The primary judge (at [242]) considered that the issue could be tested by an example which he then set out:
"243. … A council wishes to acquire a new council building. Not having funds to do so, it resumes land in the vicinity and transfers it to a developer as the consideration for the developer providing the council with a new council building.
244. In my view, neither scenario in these examples could have been intended by the legislature under s 186(1). Land cannot be resumed simply for the purpose of selling or vesting it in a person who does not propose to apply it for any local government purpose: Collins at 260. In principle, the present case is no different. The applicants' land is to be resumed to provide council with new buildings for itself which Grocon is constructing, the Council is retiring substantial debt and receiving a substantial payment, and its land will be worth more because it will be in a precinct which is of greater amenity.
245. Accordingly, I would answer the s 186(1) question ' no '."