Plaintiff v Second Defendant

TORTS - Deceit - Statements allegedly made to induce the sale of land to the Minister - Whether there was an 'implicit representation' about the government's continuing position known to be false by the Minister - Pleadings to be strictly construed.

TORTS - Negligence - Whether the Minister had a duty to take care to ensure the accuracy of statements in regarding determinations concerning the future development of land - Meaning of determination - Intention of the government as opposed to intentions of the Minister - Reliance on statements made by the Minister - Loss suffered as a result of selling the land to the Minister - When cause of action accrued - Extension of limitation period for fraud or mistake - Whether the plaintiff's mistake as to the Minister's intentions was the 'gist of the action' or an 'essential ingredient' of its cause of action in negligence -- Negligence claim statute barred - Limitation of Actions Act 1958 (Vic), s 5, 27(c).

UNCONSCIONABLE CONDUCT - Whether there was 'special disadvantage' arising from alleged statements made by the Minister as to future land use policy - Limitations of actions for equitable relief by analogy - Application of the statutory time limit to the claim for relief from the consequences of unconscionable conduct - Limitation of Actions Act 1958 (Vic), s 5 - Supreme Court Act 1928 (Vic) s 82(1)(c).

DAMAGES - Whether plaintiff would have been entitled to damages on basis of 'true value' of the land as opposed to market value.

1 This case concerns the circumstances surrounding the sale in March 1998 of a large parcel of rural land just south of the township of Pakenham on the eastern outskirts of Melbourne (the 'land') to the Minister for Planning. The plaintiff, Candibon Pty Ltd, was the owner of the land, which formed part of a grazing property known as 'Greenhills'. Candibon had acquired Greenhills ten years earlier to develop or to hold for development. Why it sold the relevant part of Greenhills to the Minister, and why the Minister agreed to acquire it is the subject of considerable controversy. Candibon claims that the sale was the product of deceit, negligence and/or unconscionable conduct, and that the Minister failed to comply with his statutory obligations both before and after the sale.

2 The Minister acquired the land on the basis that it was rural land with limited potential for development, at least in the short term. Candibon claims that it disagreed with this assessment but agreed to sell the land to the Minister nonetheless, essentially because it believed that it had no choice in the matter. The land is now worth considerably more than it was in 1998 - on one account, by a factor of more than 50. Candibon is, it says, considerably worse off for having sold the land to the Minister in 1998 than it would have been had it held onto the land to the present or until 2004, when part of the land that was reserved for the construction of an extension to the Princes Highway would, in any event, have been acquired by the Victorian Roads Corporation ('VicRoads') for the construction of the Pakenham Bypass.

3 Candibon now seeks to set aside the sale, or to receive an accounting and/or compensation for having sold the land to the Minister. It advances its claims on two bases:

(a) pursuant to statutory entitlements arising under the Land Acquisition and Compensation Act 1986 (Vic) (the 'LAC Act'), which it claims applied to the acquisition of the land by the Minister; and

(b) pursuant to causes of action based on deceit, negligence and for relief from unconscionable conduct as a result of statements that it says were made by the Minister to induce it to sell the land to him and on which it relied to its detriment when agreeing to the sale.

4 In substance, the statements alleged to have been made by the Minister to induce Candibon to sell the land to him were that the government required Greenhills for the proposed freeway, and otherwise to be a buffer zone for the proposed freeway; that, contrary to Candibon's wishes, the government would not permit Greenhills to be developed for residential or commercial uses or to be rezoned to permit development for those uses; that the government wanted ownership of Greenhills and that the Minister was to compulsorily acquire Greenhills if Candibon was not prepared to sell it to the government by private agreement.

5 The defendants deny that the statements were made as alleged and say that there was in any event no deceit, negligence or unconscionable conduct on the part of the Minister having regard to the particular circumstances in which the land was purchased. They deny that the LAC Act conferred the statutory entitlements that are alleged and they raise limitation defences in respect of all the causes of action other than deceit.

6 The issues immediately arising in the proceeding are:

(a) Did the Minister make the statements as alleged? If so, were they continuing statements to the date of sale of the land on 17 March 1998?

(b) If the statements were made, were they made in circumstances giving rise to causes of action in deceit or negligence, or for relief from unconscionable conduct by the Minister?

(c) Did the LAC Act apply to the purchase of the land by the Minister, and if so, is Candibon entitled to restitutionary remedies or damages by reason of breaches of s 13 or s 109(2) of the LAC Act by the Minister?

7 For the reasons that follow, I have concluded that Candibon's claims in deceit, negligence and for unconscionable conduct are not made out and its statutory claims are not tenable. The question of what relief Candibon might be entitled to does not arise and the proceeding must be dismissed.

8 On 23 October 1987, Kameel Pty Ltd, controlled by Mr Souhail ('Sam') Mondous, Isildur Pty Ltd, controlled by Mr Mondous' brother-in-law Bassam Nassrawi, and Emerald Music Pty Ltd, controlled by Sebastiano Canzoneri, entered into a contract to acquire Greenhills for a purchase price of $1.95 million. The vendors were Clarice Ada Williamson and Barry George Williamson, who were graziers.

9 Candibon was apparently acquired (off the shelf) by Messrs Mondous, Nassrawi and Canzoneri to hold and develop Greenhills, and duly became the purchaser by nomination under the relevant contract for sale of land.

10 At the time of its purchase by Candibon, Greenhills was a grazing property consisting of a nearly square parcel of some 255 hectares bounded by Greenhills Road to the south, Healesville-Kooweerup Road to the east, McGregor Road to the west and rural and industrial land to the north. It was made up of seven lots: lots 1 to 6 and the 'house lot'.[1] Lot 6 was reserved for the construction of a future main road (which later became the Princes Freeway - Pakenham Bypass) and was a long thin lot with a half-diamond at either end (for on/off ramps) that traversed the land north of halfway separating lots 3 and 4 to the north from lots 1, 2, 5 and the house lot to the south. At the time of its sale to the Minister in 1998, lot 6 contained a small airstrip which was used by the local skydiving club.

11 The configuration of the land and the impact of the road reservation is best understood by reference to the following map:

12 The land acquired by the Minister comprised lot 6 (the 'Freeway Corridor') and the lots to the south of the Freeway Corridor: lots 1, 2, 5 and the house lot (the 'Southern Parcel').[2]

13 Mr Mondous was the only one of the five former directors of Candibon to give evidence. He was the principal witness for Candibon and appears to have been its directing mind, at least for the purpose of the acquisition and development of Greenhills. He explained that in 1998, he was already an experienced property developer and was specifically responsible for Candibon's core business activity, which was to identify land for development, and to acquire and ultimately develop such land. This would usually involve securing the rezoning of the land for development.

14 Mr Mondous gave evidence that when Candibon acquired Greenhills, it intended to hold it for subdivision and perhaps other development. This would require Greenhills to be rezoned, because it was not then zoned so as to allow for profitable development.

15 In 1988, when Greenhills was acquired by Candibon, it was zoned Agricultural 1 under the Pakenham Planning Scheme, and the Freeway Corridor was reserved for a 'proposed main road'. Mr Mondous gave evidence that the Pakenham area had just begun to be identified as a potential high growth area by professionals and investors in the real estate industry, and by government planners. What this would ultimately mean for the zoning of land in specific locations was something that might take years to become clear. However he had confidence that government planners could be made to see, in due course, that Greenhills was a good site for commercial or residential development because of its openness, its flatness and its proximity to the Pakenham township, which meant ease of access and supply of services. As a result, he arranged for Candibon to buy Greenhills to hold it for the day when it would be ripe for rezoning and development.

16 Mr Mondous was correct to identify Pakenham as an area that would shortly undergo significant change. Land use on the south-eastern fringe of Melbourne would soon become the subject of much attention by policy makers, local government and developers. In September 1989, the then Minister for Planning and Environment[3] placed on exhibition four broad 'concepts'[4] for the development of the south-eastern growth area, including Pakenham. Of the four concepts, only two - described as the 'containment' and 'cellular' concepts - provided for urban growth in an area which appeared to include the Greenhills land south of the freeway reservation. The other two concepts did not provide for any future urban development south of the freeway reservation.[5]

17 As a result, Candibon engaged consultants to lobby both the Minister and the Shire of Pakenham[6] to ensure that concepts favourable to the development of Greenhills would be adopted.

18 In November 1990, the Minister for Planning and Urban Growth[7] released the SouthEastern Growth Area Plan (the 'SEGA plan') and Minister's Direction.[8] The Minister's Direction provided, among other things, that when preparing a planning scheme amendment for land within the south-eastern growth area, a planning authority was required to have regard to the SEGA plan.

19 The SEGA plan was expressed to contain a framework for future growth in the area and contained a set of requirements and plans that related to matters such as urban growth limits, the staging of development and population, activity centres, employment, environment and open space, and transport. It anticipated the preparation of 'local structure plans' which would show the layout and location of important uses and facilities, would be approved by the municipal council with the concurrence of the Minister for Planning and Urban Growth and would form the basis for subsequent planning scheme amendments. Figure 2 of the SEGA plan, which describes urban growth limits, shows the Greenhills land south of the freeway reservation as 'proposed residential'. Figure 3, which shows the staging of development and population, appears to show the Greenhills land south of the freeway reservation as 'Stage 3' to be developed in 20052009. Figure 6, which deals with employment, also appears to show the Greenhills land south of the freeway reservation as proposed residential.

20 In November 1990, the Pakenham Planning Scheme was amended to zone land north and south of the Pakenham township, including Greenhills, as 'Highway 1'.[9] The objectives of the 'Highway 1' zone in the Pakenham Planning Scheme included, relevantly, to "retain the long term option of possible future urban development in the area of land extending easterly from Pakenham Township to the Bunyip River and in the area south of the Officer township and south of the Pakenham township".[10] The explanatory memorandum stated that the inclusion of land in the 'Highway 1' zone identified "the direction and limits of development in the Pakenham area, retains the land in parcels large enough for development efficiency, and provides for appropriate interim uses". The amendment was said to facilitate government policy by ensuring the programmed release of land and the coordinated supply of infrastructure. Areas would be zoned 'Urban' in local section amendments in the context of agreed local structure plans and infrastructure availability.

21 As Candibon submitted, the 'Highway 1' zone was a form of holding zone. It anticipated rezoning of the relevant land once structure plans had been put in place and infrastructure was available to support the development of the land. For the time being, however, land zoned 'Highway 1' under the Pakenham Planning Scheme could be used for limited purposes only and, importantly, could not be subdivided into lots of less than 25 hectares.

22 The SEGA plan and planning scheme amendment must have given Candibon confidence that Greenhills could be subdivided and profitably developed for residential land purposes in due course. However, Mr Mondous gave evidence that notwithstanding the SEGA plan and the planning scheme amendment, the development of Greenhills for urban uses proved to be problematic.

23 In late 1992, there was a change of government and the Hon Robert Maclellan became the Minister for Planning. Mr Maclellan was the Member for Berwick and subsequently the Member for Pakenham. He had a long history of active involvement in the Berwick/Pakenham area.

24 Once he became Minister for Planning, despite the demands of the role, Mr Maclellan's keen interest in the development of the township of Pakenham did not diminish. One of his early actions was to reverse a decision that had been taken by the previous Labor government to require the Springvale Cemetery Trust to acquire land on the existing Princes Highway at Pakenham for the purposes of a cemetery. Mr Maclellan believed that the land in question, which became known as the 'Necropolis site',[11] should be available for housing and related development,[12] and in early 1993 he directed the Urban Land Authority to re-acquire the Necropolis site and find an alternative site for the cemetery.

25 One of the sites investigated as an alternative site for the cemetery by the Urban Land Authority was the Southern Parcel. Candibon was apparently amenable to such a development, providing it could obtain a reasonable price for the land. However, the Minister stressed that any purchase would need to be based on the Valuer-General's valuation and would have to take into account the nonurban potential of the land. The fact that the Minister considered the Southern Parcel to have only 'non-urban potential' must have come as a surprise and a disappointment to the Candibon directors, although it was apparently only after the Southern Parcel had been valued on behalf of the Urban Land Authority that they learned of the Minister's attitude.

26 On 11 February 1993, in accordance with the Minister's instructions, the Valuer-General valued the Southern Parcel at $2 million. The valuation noted that the Southern Parcel was zoned Highway 1, which allowed for a minimum area of 25 hectares to be subdivided, with the result that only Lot 5 could be further subdivided. The valuation then stated:

The Shire of Pakenham Planning Office indicates that over recent years the owner has approached the Shire with the view to rezoning the subject land for further subdivision into Country Residential blocks. This would mean the extension of development and services beyond the present boundaries of [the] Authority's Outline Development Plan and south of the Proposed Freeway. The owner has been advised that such a development would not be contemplated at the present time.

...

A report published by the Ministry for Planning and Environment in September 1989 indicates that some of the area south of the proposed Freeway should be zoned for Future Urban Development. This would seem to be at variance with the local Responsible Authority.

After considering advice from the Shire of Pakenham and the Ministry for Planning and Environment it is my view that the subject land has a limited value for urban development at the present time and the value has been assessed on this basis. Each marketable parcel has been assessed and an allowance made for the fact that the Urban Land Authority is offering settlement by 30 June, 1993 on the total property.

28 In early 1993, Candibon had the Southern Parcel valued at $6 million. Candibon's valuation referred to the fact that the land was located within a 'Highway 1' zone under the Pakenham Planning Scheme, which was a holding zone that had been created between the agricultural land to the south and the proposed residential development to the north, and that it was expected that land in the 'Highway 1' zone would eventually be rezoned to residential for normal density housing. The valuation made reference to the SEGA plan and the Shire of Pakenham Outline Development Plan and concluded that the appropriate basis for valuation was by direct comparison with other in globo land suitable for future subdivision into residential allotments.

29 On 8 April 1993, the Urban Land Authority also asked valuers Molyneux & Byrne Pty Ltd to value the Southern Parcel. The letter requesting the valuation stated:

The property is zoned Highway 1 and there is an understanding with the owner that its value is to be based on the current zone and not a future urban use.

30 Mr Mondous says that there was no such "understanding with the owner", and this is borne out by the valuations obtained by Candibon.

31 On 17 April 1993, Alex Scott & Co Pty Ltd valued the Southern Parcel on behalf of Candibon for $6.22 million on the basis that it was suitable for rezoning as residential. The valuation was prepared by Mr Tom Gibson, who was an important witness in this proceeding. Mr Gibson noted advice from the Council that the land was within a 'Highway 1' zone and came under the provisions of the Pakenham Planning Scheme, and that the land was also within an area identified by the Ministry of Planning as being within an area for future residential development. Where services were available, the Minister for Planning would allow land to be rezoned to enable development.

32 On 26 April 1993, the Urban Land Authority obtained the valuation that it had requested from Molyneux & Byrne, which valued the Southern Parcel at $4,120,000. However, on 6 May 1993, the Director of Project Management at the Urban Land Authority wrote to Mr Byrne (of Molyneux & Byrne) and asked him to review the valuation on the basis that potential for further subdivision beyond the 25 hectare minimum size did not exist, despite the land being zoned 'Highway 1'.

33 It was at this point that Mr Maclellan, as Minister for Planning, took an important step in relation to the planning controls that affected, or would affect, the future development of the land. On 21 May 1993, under the heading 'DEVELOPMENT STRATEGY SOUTH EASTERN GROWTH AREA', he wrote to the Council explaining that he had caused a review to be undertaken to take into account updated population estimates and the reexamination of major infrastructure requirements for the region. The Minister confirmed that the central thrust of the SEGA plan was to encourage development to follow the major transport corridors along the Pakenham and Cranbourne rail lines and the Princes and South Gippsland Highways, that that would continue, and that the location of growth would be largely dependent on the provision of engineering services. He stated that development would be encouraged and would occur where physical services could be provided and employment opportunities were most accessible. This favoured the concentration of development in the initial stages at Cranbourne and Berwick. Areas within the Shire that were further out could be accelerated at a later date as land supply in Berwick and Cranbourne diminished. Land which was not connected to the metropolitan sewerage system would naturally develop more slowly. Because of the sensitivity of Western Port Bay there would be a need to ensure that expansion of the sewerage system was not at the expense of this sensitive ecosystem. The Minister continued:

Development between Beaconsfield, Officer and Pakenham will be concentrated between the SECV powerline easement and the foothills to the north of the growth corridor and the proposed freeway reserve to the south. These will provide logical and well understood boundaries within which to develop future communities_. It is not this Government's intent to have urban development go south of the existing reserve for the Princes Freeway_.[13]

34 Although the legal status of this letter is uncertain, it was treated by the Council as a form of Ministerial direction, and I will refer to it as the 'Minister's May 1993 directive'. The Minister's May 1993 directive meant, at least so far as the Minister was concerned, that the Southern Parcel was no longer earmarked for residential development as per the SEGA plan.

35 On 29 May 1993, Molyneux & Byrne re-valued the Southern Parcel at $2,855,000. This valuation was based on there being no potential for subdivision into lots of less than 25 hectares. However, the revised valuation expressed reservations about the assumption as to the future use of the land given uncertainties in the policy articulated by the Minister.

36 On 29 June 1993, the Valuer-General wrote to the Urban Land Authority noting that his valuation of $2 million was reached on the basis that immediate subdivision for residential purposes was not a viable proposition. He observed that in contrast, the two valuers for Mr Mondous had undertaken an assessment on the basis that subdivision was imminent and had assessed the Southern Parcel to be worth $6 million and $6.22 million. The Valuer-General concluded, "This view of works proceeding in six months is not one that can be contemplated by this Office."

37 Given the disagreement as to how the Southern Parcel should be valued, the sale of the Southern Parcel to the Urban Land Authority did not proceed.

38 Although Mr Mondous did not understand the Minister's May 1993 directive to eliminate the possibility of the Southern Parcel being developed for urban uses, he decided to look into running a cemetery himself and engaged a consultant to investigate that possibility. He was duly advised that private cemeteries were not permitted in Victoria and that it was highly unlikely that approval would be given for a private facility. It was also reported to him that one of the local councillors, Councillor Bill Ronald, believed that the freeway reservation represented an appropriate southern edge to the township's urban area, consistently with the views of the Council's planner, Mr John McCaffrey. According to the consultant, Councillor Ronald had expressed the view that Mr Mondous' time would be better spent "mending fences" with the Minister. On the basis of his inquiries, the consultant set out Candibon's options for the Southern Parcel as follows:

1. Sit on the land and over time seek to persuade the authorities to allow it to be developed (in part or in full) for urban purposes.
2. Offer the land for sale to the appropriate authorities for use as a regional cemetery/crematorium at rural values rather than at potential urban values.
3. Prepare a submission proposing to develop the land for the purposes of a private cemetery/crematorium.
4. Place the land on the market for disposal as soon as possible.

39 The consultant favoured the second option, but Mr Mondous was not persuaded.

40 It was, however, Mr Mondous' evidence that in the following years, very little of any significance occurred in connection with the development of the Southern Parcel or the Freeway Corridor. Candibon did obtain advice from Molyneux & Byrne in about June 1995 in relation to possible uses of the planning scheme amendment procedure and the permit procedure to force the rezoning of the Southern Parcel, but apparently took the matter no further.

41 Meanwhile, on 21 March 1996, the Necropolis site was officially valued at $3,800,000 and approval was given for the Minister to acquire it pursuant to his powers under s 171 of the Planning & Environment Act 1987 (Vic).

42 This was the state of play when Mr Mondous approached the Minister in his electorate office in Pakenham in mid 1996 to discuss what uses the Southern Parcel could be put to. There were, apparently, a number of such meetings. Much of this proceeding centres on Mr Mondous' claim that the Minister told him in the course of these meetings that no residential or commercial uses would be permitted on the land, that he would not permit the land to be rezoned for residential or commercial uses, that the government required the land for the freeway and as a buffer for the freeway, and that the government would compulsorily acquire the land if Candibon did not agree to sell it.

43 Although Mr Mondous' witness statements referred to a larger number of meetings, Mr Mondous gave oral evidence of only three such meetings, the details of which are set out below. It was at the last of these meetings, which Mr Mondous says took place on 13 September 1996, that the threat of compulsory acquisition was allegedly made. According to Mr Mondous, the 13 September meeting with the Minister went very badly for Candibon. He said that that was the point at which he went from feeling that he had some control over what happened to the land to feeling that he had none.

44 In November 1996, Mr Mondous wrote to the Minister referring to the discussions between him and the Minister on 13 September. The letter stated that consideration had been given to the Minister's suggestion that uses for the land other than rural residential uses be explored, and that an acquisition by the government would be acceptable to Candibon on a compulsory basis with the value established by two independent valuers and incorporating the acquisition of the Freeway Corridor.

45 The evidence before the Court was that there then followed a protracted process of negotiation between Candibon and the Minister, involving the preparation of no less than four valuations, two conferences of valuers and a lengthy exchange of correspondence. The possibility of compulsory acquisition was investigated by the Department Infrastructure on behalf of the Minister but not pursued. A price was eventually agreed in or about February 1998, and the Southern Parcel and the Freeway Corridor were sold to the Minister by contract of sale dated 17 March 1998 for a purchase price of $2.1 million. The sale was completed on 17 April 1998. The process involved the Office of the Valuer-General and was overseen by the Victorian Government Land Monitor from about June 1997 onwards.

46 It was the Minister's evidence that it was never his intention to manage the land himself. In his capacity as Minister for Planning, he owned other land in the Shire that was managed by the Council. In December 1997, in anticipation of the Minister acquiring the land, the Minister's Department made an initial approach to the Council regarding the management of the land. The management issue was raised again with the Council around the time of settlement in April 1998. In July 1998, the Council authorised its Chief Executive Officer to negotiate the final terms of a management agreement and to execute a management agreement on behalf of the Council. On 26 October 1998, the management agreement was finally executed by both the Minister and the Council.

47 By that time, the Council's new Chief Executive Officer, Mr Don Welsh, had written to the Minister to propose a land exchange to the Minister. This was a fairly complex proposal, involving the exchange of the Council's municipal offices for the Necropolis site and the Southern Parcel. The Council's municipal offices apparently had potential for use in secondary education and/or as a TAFE facility, which was of interest to the Minister. Mr Welsh had plans to develop the Necropolis site for housing and the Southern Parcel to create employment opportunities. In September 1998, the Minister met with Mr Welsh and other officers of the Council in relation to the land exchange proposal, and effectively agreed to moving forward with the proposal, directing that all transactions were to proceed at the ValuerGeneral's assessment.

48 Negotiations on the land exchange proceeded and on 23 July 1999, the land exchange agreement was executed by the Minister and the Council.

49 The transfer of the Southern Parcel from the Minister to the Council ultimately took place on 14 October 1999.[14] A little over four years later, in early 2004, the new Minister for Planning, Ms Mary Delahunty, transferred the Freeway Corridor to VicRoads to enable the Pakenham Bypass to be constructed.

50 Meanwhile, the Council, albeit slowly, proceeded to take steps to rezone the Southern Parcel. The land had been zoned 'Rural' in the new-format Cardinia Planning Scheme in 1999. In November 2003, Amendment C55 to the Cardinia Planning Scheme came into operation, extending the Urban Growth Boundary to embrace the Freeway Corridor and the Southern Parcel. Shortly after that, on 8 January 2004, notice of the preparation of Amendment C44 to the Cardinia Planning Scheme was gazetted relating to the proposed rezoning of the Southern Parcel from 'Rural' to 'Industrial 1' to allow the development of the land for a business park. Council adopted Amendment C44 on 3 November 2004 and it was gazetted a day later.

51 The Southern Parcel has now been partially developed as a business park by means of a joint venture between the Council and a private operator, Parklea Pty Ltd.

52 I have truncated the chronology for the purposes of providing an overview. The critical events will be described more fully in the relevant parts of this judgment. In essence, Mr Mondous claims to have been unpleasantly surprised by the rezoning of the Southern Parcel and its development as a business park after Candibon sold it to the Minister, allegedly in reliance on a representation that the government would not permit it to be commercially developed or rezoned for commercial purposes. So far as Mr Mondous is concerned, Candibon has been wrongfully deprived of the valuable opportunity to commercially develop the Southern Parcel itself.

53 The causes of action in negligence, deceit and in respect of unconscionable conduct are based upon statements described in Candibon's statement of claim[15] as having been made by the Minister, Mr Maclellan, during 1996 and 1997. It is alleged that the Minister said to Mr Mondous "categorically" that the government had determined that:

(a) the State required Greenhills for the proposed freeway, and otherwise to be a buffer zone for the proposed freeway;

(b) contrary to Candibon's wishes, Greenhills was not to be developed for residential or commercial uses;

(c) contrary to Candibon's wishes, the State, through the Minister, would not permit Greenhills to be rezoned to permit development for residential or commercial uses;

(d) for these reasons the State wanted ownership of Greenhills; and

(e) the Minister was to compulsorily acquire Greenhills on behalf of the State if Candibon was not prepared to sell it by private agreement.

(These representations are referred to by Candibon and in these reasons as the 'Statements').

54 The Statements are alleged to have been made orally by the Minister to Mr Mondous as Candibon's representative during the course of approximately six meetings between the Minister and Mr Mondous at the Minister's electorate office in Pakenham. It is alleged that the Minister made the statements pleaded in paragraphs (a) to (d) at most, if not all, of the meetings. However, he made the statement pleaded in paragraph (e) during one of the later meetings only.

55 Candibon alleges that as the Minister had powers under the Planning & Environment Act to compulsorily acquire the land and to effectively veto any rezoning of the land for development, the Minister was uniquely placed to accurately disclose how those powers would be exercised. The Minister was aware that Candibon had purchased and was holding Greenhills as an investment with a view to development and that it was important to Candibon how the Minister proposed to exercise his powers in relation to compulsory acquisition and rezoning.

56 Further, Candibon alleges that it was at a special disadvantage vis a vis the Minister, because it required information about matters the subject of the Statements in order to decide whether to sell Greenhills, and if so on what terms, and was reliant on the Minister for that information. Because of the Statements, Candibon was under a mistaken belief that the government had made the determinations categorically described in the Statements.

57 In fact, so Candibon alleges, contrary to the Statements, the government had not made determinations to the effect alleged,[16] and at the time of the acquisition and unbeknown to Candibon, there existed significant potential for commercial development on the Southern Parcel: by mid1998, the Council had in contemplation acquiring the Southern Parcel from the Minister expressly for the purposes of industrial development; and by September 1998, the Minister had decided in principle to transfer the Southern Parcel to the Council to facilitate industrial development.

58 In relation to the claim in deceit, Candibon alleges that between the Minister's last making the Statements in 1997 and the contract of sale entered into on 17 March 1998 and completed on 17 April 1998,[17] the Minister implicitly represented to Candibon that, as far as he knew, the government's position continued to be as described in the Statements (the 'implicit representation'). This was based on the fact that at no time prior to the contract for sale or settlement did the Minister disclose to Candibon that the government's position was other than as described in the Statements. However, for the reasons that will be described fully in the detailed consideration of the deceit claim, Candibon alleges that by the time the contract of sale was entered into on or about 17 March 1998, the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development. When the contract for sale was entered into on 17 March 1998, the government's position was not as described in the Statements and the Minister knew this to be so, or did not care whether or not it was so. Accordingly, Candibon alleges that the implicit representation that the government's position continued to be as described in the Statements was false and the Minister knew it was false or did not care whether or not it was false.

59 It is common ground that there were a number of meetings between Mr Mondous and the Minister at the Minister's electorate office in Pakenham at which the development of Greenhills, and the Southern Parcel in particular, was discussed. All of these meetings were initiated by Mr Mondous. They took place at times when the Minister attended his electorate office to deal with electorate matters, usually on a Friday. The Minister did not have a staff member with him during the meetings, whereas Mr Mondous was usually - perhaps always - accompanied by an adviser.

60 Mr Mondous made two witness statements[18] about the meetings with the Minister at which he alleges the Statements were made. The Minister made two witness statements about the meetings that he had with Mr Mondous.[19] Mr Tom Gibson of Alex Scott & Co Pty Ltd also refers to a meeting that he attended between the Minister and Mr Mondous in his witness statement.[20] The other persons who Mr Mondous says also attended one or more of these meetings, Mr Bruce Gibson and Ms Barbara Mahon, did not provide statements or give evidence. There is a disagreement between Mr Mondous and Mr Maclellan as to whether Mr Mondous ever saw the Minister on his own: Mr Mondous gave evidence that he was always accompanied by an advisor or consultant; Mr Maclellan recalls seeing Mr Mondous alone on at least one occasion.

61 In his first witness statement, Mr Mondous stated that in late 1996, on the basis of discussions he had had with the Council, he decided he should start exploring with the Minister what possible uses for the Southern Parcel the Minister might consider allowing. He stated that he had approximately six meetings with the Minister at the Minister's electorate office in Pakenham between late 1996 and the end of 1997. At the first meeting, he alleges that the Minister told him some things that the Minister would repeat, in one form of words or another, at the subsequent meetings. According to Mr Mondous, the Minister told him, very clearly, that the State government had decided the following things:

(a) It needed Greenhills[21] for the proposed freeway extension and otherwise to be a buffer zone for the proposed freeway;

(b) Greenhills was not to be developed for residential or commercial uses;

(c) The government would not permit Greenhills to be rezoned for residential or commercial uses;

(d) For these reasons, the government wanted to acquire Greenhills.

62 Mr Mondous stated that after the first meeting, he asked Tom Gibson to look into what future uses might be possible and therefore what Greenhills might be worth. He wanted this information for the purposes of negotiating a price with the Minister, and to help him decide, depending on where the negotiations went, whether he wanted to sell to the Minister at all.

63 Mr Mondous stated that during 1997 he had further meetings with the Minister at which the Minister reiterated what he had already told Mr Mondous. Mr Mondous stated that he could no longer recall at what point he decided it was not worthwhile holding Greenhills for future development. However, he did at some point come to that decision, based on what the Minister had told him. He believed what the Minister had told him, in particular, that the government would not permit Greenhills to be developed for residential or commercial uses. This signified the failure of the strategy that had moved him to buy Greenhills in the first place. He concluded that he would not be able to develop the land profitably.

64 Mr Mondous stated that the meetings he had with the Minister in 1997 and the process of deciding that it was not worthwhile holding Greenhills for future development coincided with the Minister obtaining valuations of Greenhills and the receipt of the first written offer from the Minister's office on 23 June 1997. That was an offer to acquire the Southern Parcel and the Freeway Corridor for $1.85 million.

65 In his oral evidence, Mr Mondous gave a much expanded and in some respects different account of his meetings with the Minister. Mr Mondous said that he received advice from the Council that the best way to explore options for the development for the Southern Parcel was with the Minister himself. Mr Mondous phoned Mr Bruce Gibson, the senior member of the Gibson family and one of the principals of Alex Scott & Co, to arrange a meeting with the Minister. A meeting was held in around July 1996 between Mr Bruce Gibson, Mr Mondous and the Minister. Most of the discussion took place between Bruce Gibson and the Minister. According to Mr Mondous, Bruce Gibson asked the Minister what the intentions of the government were and the Minister made it very clear that the government would not allow urban uses south of the freeway reservation and this included commercial, industrial and residential uses. The Minister said that he, as Minister, would not permit urban use south of the freeway reservation. He said the government needed Candibon's land for a "buffer", that is, the government wanted the Freeway Corridor for the freeway extension and the balance of the land as a buffer for the freeway extension. The government wanted to acquire the land for that purpose. According to Mr Mondous, this meeting was short and formal, not more than 20 minutes long.

66 Mr Mondous gave evidence that after that first meeting with the Minister he was still not entirely convinced that there was no way for Candibon to develop the land profitably. In August 1996, he got in touch with Bruce Gibson's son, Tom Gibson. He also contacted Barbara Mahon of Mahon & Mahon, planning consultants, to ask if it was possible to lobby the Minister. Mr Mondous convinced Barbara Mahon to accompany him to another meeting with the Minister. They met with the Minister in around August 1996. Mr Mondous said that this second meeting was not very beneficial from his point of view. It was even shorter than the meeting with Bruce Gibson, because the Minister repeated what he had told Mr Mondous already. He said the government had not changed its mind and that it would not allow any development to the south of the freeway reservation. Again, the Minister said that as Minister, he would not permit any development south of the freeway reservation. This time, the Minister also said that he intended to use the land to create a buffer "for industry use".

67 Mr Mondous gave evidence that prior to this meeting he had asked Tom Gibson to review his 1993 valuation and, before doing so, to find out what the Minister meant by a "buffer" and what he wanted the buffer for. After the meeting with the Minister involving Barbara Mahon, Mr Mondous phoned Tom Gibson to find out where he had gotten to with his valuation and his inquiries of the Minister. Tom Gibson told him that he had not had a chance to do anything, but suggested that the best thing was to arrange a meeting with the Minister so that when he valued the land he was 'on the same page' as the Minister.

68 The critical meeting described by Mr Mondous in his oral evidence was a third meeting which took place on 13 September 1996 and was attended by Mr Mondous, Tom Gibson and the Minister.[22] Mr Mondous gave evidence that at this meeting the Minister lost patience and said very clearly the government wanted to acquire the land and that if Candibon did not "accept the acquisition at the right price", it was the Minister's intention to compulsorily acquire the land. Mr Mondous gave evidence that up until that point he had felt that he was in 'the front seat' in negotiations with the Minister, in that he was in a position to reject the Minister's proposals. This meeting changed everything because of the threat of compulsory acquisition. So far as he was concerned, it had been established between 1992 and 1996 that the Minister and the government would not allow urban development to the south of the freeway reservation. The government had wanted the land for a cemetery, but had offered to buy it for a price which did not take into consideration the zoning of the land at the time. Mr Mondous said that he knew all of this by the time of the meeting in September 1996. However, now the Minister was saying that Candibon did not have any choice. If it did not sell the land for the price the government wanted, then the government was going to compulsorily acquire it.

69 Mr Mondous gave evidence that the Minister told him and Tom Gibson that the government intended to use the land for "industry", such as an airfield or a cemetery. Mr Mondous said that the Minister did not ever mention industrial purposes. In Mr Mondous' view, the Minister's reference to "industry" was very limited and 'industry' was to be distinguished from 'industrial':

... there's big thing between industrial and industry. Industrial you can put factory, manufacturing, bulk store, you can - it's free to do what you want. Industry is very limited and most of those, 99 of the industries in the country is used or operate by government or local government, council and government. I haven't seen, you know, industry, air field operate by private people or cemetery or, you know, or racecourse, all that. That's very limited to use by government, you know.

70 What Mr Mondous did not say in his evidence-in-chief was that just prior to the September 1996 meeting, Candibon had retained Mahon & Mahon to prepare a proposal for the rezoning of the Southern Parcel from 'Highway 1' to 'Country Living', and approval of a subdivision yielding 111 to 117 lots of 1 to 2 hectares each. The theme of the proposal was "distinctly town and country living with the essence of the township streetscape design and presentation replicated" and, with lots of 1 to 2 hectares in size, it involved much more intensive subdivision than was permitted by the then current zoning. The proposal referred to the relevant strategic policies as the SEGA plan and the Pakenham Planning Scheme and argued that the larger lots provided a graduated buffer between the Pakenham township and the rural land uses to the south, with the freeway being the logical extent of urban consolidation.

71 Although Mr Mondous gave evidence that the Mahon & Mahon proposal was not shown to the Minister, Mr Gibson's evidence and that of Mr Maclellan was that it was. Mr Maclellan gave evidence somewhat dismissively that the provision in the proposal for "on-site effluent disposal" was 'code' for septic tanks. Despite the attempt to describe the proposed subdivision as a "buffer", it was the type of development that was never going to find favour with the Minister.

72 For his part, Mr Maclellan gave evidence that he recalled discussions with Mr Mondous about the prospects of development south of the freeway reservation, but could not be sure that these discussions occurred in 1996 and 1997. He recalled a meeting to which Mr Mondous brought his valuers which took place in his electorate office as a discussion about what could be done with the Southern Parcel. He agreed that he did say in substance to Mr Mondous that, while he was Minister for Planning, Greenhills would not be developed for residential purposes south of the proposed freeway.

73 In his first witness statement, Mr Maclellan stated that he advised Mr Mondous that there were some potential commercial uses for the land south of the freeway, specifically the relocation of the Pakenham Racecourse, on/off ramps for the freeway and the relocation of some small industries along Kooweerup Road. Mr Maclellan stated that as Minister, he was not opposed to appropriate limited commercial development of parts of Greenhills. He told Mr Mondous this in one or more of the meetings he had with him. So far as he was concerned, Greenhills[23] could have been an appropriate alternative site for the Pakenham Racecourse. It could have been used as a parachuting field, moving that operation approximately 300 metres south of the freeway reservation. Greenhills could also have been used for irrigation, utilising grey water from local sewerage systems, or it could have been a possible site for a municipal depot. However, he agreed that he advised Mr Mondous that whilst he was Minister, the land south of the proposed freeway was not to be used for residential development. In Mr Maclellan's view, this had been a position of successive governments, over many years.

74 It was Mr Maclellan's evidence that the question of compulsory acquisition was raised at the meetings with Mr Mondous in the following context. He said that if he was acquiring land as Minister and the vendor wished to have it done by a noncontentious compulsory acquisition process, then at the vendor's choice the land could be acquired that way. He said that he never had any intention of compulsorily acquiring Mr Mondous' land, or the freeway reservation itself. He said that if Mr Mondous wished to sell, he was happy to buy. If Mr Mondous did not wish to sell, Mr Maclellan did not intend to compulsorily acquire. The offer or suggestion of compulsory acquisition was something for Mr Mondous to explore to see whether the same amount of money might be more tax effective in his hands if the land was compulsorily acquired. Mr Maclellan was emphatic that he did not ever threaten Mr Mondous with compulsory acquisition: it was up to Mr Mondous as to which way the land would be acquired, and Mr Mondous had every opportunity to make the choice.

75 Mr Maclellan stressed that he had never sought out Mr Mondous, and that all of their contact had been at Mr Mondous' instigation. He recalled that he had previously helped Mr Mondous to resolve another planning matter involving different land owned by Mr Mondous in Berwick and that Mr Mondous came back to see him after that matter was successfully resolved and told him that he was short of working capital. Mr Maclellan assumed Mr Mondous was short of working capital because Greenhills was not in a ready state to be developed. That is when the idea came up that Mr Maclellan could possibly help Mr Mondous by buying the Freeway Corridor. Mr Maclellan said that it suited his local member obligations and his local member image to be seen to be doing something to acquire part of the freeway reservation. He suggested that "a proper and decent solution" might lie in him buying the Freeway Corridor at the Valuer-General's valuation. Mr Mondous went away to think about the proposal, but came back and said that the amount that would be paid for the Freeway Corridor would not be sufficient. That is when the balance of the land south of the freeway reservation (the Southern Parcel) came into play.

76 Tom Gibson is the only other person to have given evidence about the discussions between the Minister and Mr Mondous that ultimately resulted in the Minister acquiring the land. In his witness statement, Mr Gibson stated that he was present during at least one meeting between Mr Mondous and Mr Maclellan. He recalled Mr Mondous asking the Minister what he could do with the land. The Minister said there would be no development south of the proposed freeway. Tom Gibson recalled the Minister emphasising that development would be north of the freeway and saying that the government wanted to purchase Greenhills. He recalled the Minister saying that he would prefer to effect the acquisition privately through negotiation, but he also recalled there being discussions about compulsory acquisition. He recollected the Minister saying that he, the Minister, would look at compulsorily acquiring the land. According to Tom Gibson, the Minister told Mr Mondous that he intended the land to be used for community purposes. He said he wanted to move the local skydiving club there and that he intended the local horse racing track to be relocated to Greenhills from its existing site in Pakenham. The Minister also mentioned that he had not yet found a replacement site for the cemetery.

77 Both parties rely on events after the meetings to support their versions of what was said at the meetings. Such evidence is also relevant to whether, if the Statements were made, they were continuing representations to the time of the contract for the sale of the land. Fortunately, most of the communications between representatives of Candibon and representatives of the Minister after the meeting between Mr Mondous and Mr Maclellan on 13 September 1996 are in writing or are otherwise documented.

78 After the meeting with the Minister on 13 September 1996, Candibon wrote to the Minister on 11 November 1996 (the 'November 1996 letter') in terms that reveal something about what must have occurred at that meeting.[24] The November 1996 letter is headed "RE: GREENHILLS ESTATE, 199.53ha (493 acres) PAKENHAM" and states as follows:

Further to our recent discussion on the 13th September, 1996 we have given great consideration to your suggestion to explore alternative uses for the land; such as industry/air field rather than rural residential uses.

We have also considered an acquisition by your Government which would be acceptable to us if it was on a compulsory basis with the value established by two independent Valuers and incorporating the acquisition for the proposed freeway (32.43ha - 80 acres).

We believe that the value of our land is very comparable on a per acre basis to the price paid for the land your department purchased between the railway and the Princes Highway in Pakenham as that land is unserviced residential land, where as [sic], our land is serviced land, suitable for many different uses.

I have appointed Alex Scott & Staff Pty Ltd as my Agent/Valuer in this matter and should you require any further particulars please do not hesitate to contact either Tom or Bruce Gibson.

79 There was no response from the Minister to the November 1996 letter. However, the letter shows that at the meeting on 13 September 1996, the Minister suggested alternatives to 'rural residential' uses, and that the land be used for such things as "industry/air field". There also appears to have been discussion about the land being compulsorily acquired and the acquisition including the Freeway Corridor. Candibon considered an acquisition to be "acceptable" and was looking for a price per acre that was comparable with what the Minister had paid for other land in Pakenham.

80 However, there was evidence that after writing to the Minister in November 1996, Mr Mondous continued to use Bruce and Tom Gibson to pursue other development options for the Southern Parcel. On 4 February 1997, Tom Gibson spoke with Mr Mondous. His file note of that conversation records that he advised Mr Mondous that Mr John McCaffrey, the Council's planner, would not support 20 acre lots as it would inhibit any future subdivision. I infer that Mr McCaffrey had been asked by Mr Gibson about the possibility of subdividing the Southern Parcel into 20 acre lots. Mr Mondous' response to Mr McCaffrey's concern was recorded as being that this could be overcome by an agreement under s 173 of the Planning & Environment Act. Mr Gibson also told Mr Mondous that Mr McCaffrey had suggested making an application to subdivide the larger lots into 25 hectare lots, as the Council might not have any objection to creating three lots out of the 74 hectare lot or two lots out of the 49 hectare lot.

81 Mr Gibson's file note also records a further discussion with Mr McCaffrey on 7 February 1997, in which Mr McCaffrey told Mr Gibson that he opposed subdivision below the minimum as it would fragment the land too greatly and inhibit agricultural uses, and that he, Mr McCaffrey, was not happy to put to the Minister any development that the Minister had not agreed to in concept, "due to [the Minister's] strong antiresidential development view south of the proposed freeway". The file note further records that one or other of Mr Mondous or Mr Gibson expressed disappointment in Mr McCaffrey's position, as everything would be referred back to the Minister before any further subdivision would be supported, and that Mr Mondous was reluctant to apply for a planning permit if surveying fees would be incurred. Nonetheless, Tom Gibson said he would prepare a permit application and get back to Mr Mondous the following week.

82 In fact, Tom Gibson did start to prepare an application for a planning permit for the subdivision of the Southern Parcel. A partially completed application form was found on his file, which he brought to Court when he gave his evidence.

83 In his oral evidence, Tom Gibson agreed that in February 1997, he was investigating the possibility of further subdividing the Southern Parcel. When Mr Mondous was questioned in crossexamination about this discussion with Mr Gibson and asked why he was spending money for Tom Gibson to make inquiries about subdividing the land if it was to be compulsorily acquired in any event, Mr Mondous deflected the question by querying whether Tom Gibson's file note was in fact made in 1997. Mr Mondous did not satisfactorily answer this question.

84 I am satisfied, however, that Mr Mondous instructed Tom Gibson to explore with the Council the possibility of further subdivision of the Southern Parcel in early 1997 as an alternative to sale to the Minister.

85 A file note from the Minister's office dated 14 March 1997 also records that Mr Bruce Gibson called the Minister on that day regarding "the Mondous property". The file note records Mr Gibson saying to the person who made the note that the Minister was going to look into acquiring the land and getting a valuation from the Valuer-General. Mr Gibson was wondering what stage that was at and, if it was not possible for the Minister to acquire the land, Mr Gibson wanted to know the Minister's thoughts on subdivision into 20 acre lots.

86 I infer that Bruce Gibson was asked to approach the Minister directly about subdivision of the Southern Parcel as an alternative to sale to the Minister.

87 The file note recording Bruce Gibson's telephone inquiry is annotated by the Minister, "Dept to discuss. V.G do we have an old one re Pakenham Cemetery search". It appears that Mr Gibson's phone call prompted the Minister to ask what valuations were already on the Valuer-General's files, following the search for an alternative cemetery site in 1993. Significantly, this is the first evidence of the Minister taking any steps to purchase the land. It occurred almost six months after the September 1996 meeting at which the threat of compulsory acquisition was allegedly made, which on Mr Mondous' evidence was the last of his meetings with the Minister about future uses of the land.

88 At about this time, Candibon received, and for a time kept alive, an offer from a local family to acquire the house lot. Tom Gibson dealt with this matter on behalf of Candibon. On 22 April 1997, the Tony Volders Family Trust provided to Tom Gibson a letter of offer to purchase the house lot for $350,000. The offer was countersigned by Tom Gibson. It mistakenly named the vendor as Casdar Pty Ltd, which was another of Mr Mondous' companies.

89 In the event, the offer was withdrawn, apparently as a result of inquiries made on behalf of the Valuer-General. As part of its valuation process, the Valuer-General's office contacted the Volders family to inquire about the offer on the house lot. This was unfortunately framed as an inquiry as to why the Volders were prepared to pay so much for the house lot. So much emerges from a letter dated 3 June 1997 from Tom Gibson to the valuer in question, Mr Nick Lovass, enclosing information requested plus a copy of the offer from the Volders for the house lot. Tom Gibson's letter records that after Mr Lovass telephoned Mrs Volders, Mrs Volders telephoned Tom Gibson concerned about Mr Lovass' query as to why so much had been offered for the house lot. Mr Gibson told Mr Lovass that it was very wrong for him to create this impression "with other purchasers" and that, as a result, the sale to the Volders was jeopardised as they had advised of their intention to withdraw their offer unless accepted by 4 June 1997. Mr Gibson concluded:

I am disappointed with this turn of events as it will mean the owner may have to promote this property for sale to find another buyer, an expense he will not want to bear.

90 In his evidence, Mr Gibson confirmed that he wrote the letter to Mr Lovass within his general authority from Candibon as its agent to offer Greenhills for sale. I find that after the critical meetings with the Minister in 1996, Candibon nonetheless felt free to sell the land, or parts of it, to other buyers. Although Candibon did not promote the land for sale to other buyers, it felt free to do so.

91 The course of dealings between Candibon - principally through Mr Mondous - and the Minister - through the Department of Infrastructure - through 1997 and into early 1998 also raises doubt about the sale taking place under the shadow of a threatened compulsory acquisition and Candibon having no choice but to sell the land to the Minister.

92 In the Minister's Department, Mr Russell Maunder, Acting Property Manager, was charged to handle the purchase of the land. On 1 May 1997, Mr Maunder recorded in a file note that the Minister had directed that, subject to the agreement of VicRoads, Tom Gibson should be contacted and verbally advised that the Minister was prepared to purchase the land for the amount of $2 million "and no more!" The file note indicates that enquiries were being made in relation to the Southern Parcel only (not including lots 3, 4 and 6).

93 A further file note made by Mr Maunder at this time records VicRoads' advice that it would have no objection to the Minister purchasing the reserved land (the Freeway Corridor) and the land to the south, as it would mean that VicRoads would not be required to proceed to compulsory acquisition when the Freeway Corridor was required for the Pakenham Bypass.

94 On 2 May 1997, Tom Gibson made a file note of a discussion with Mr Maunder. It records Mr Maunder telling him that he, Mr Maunder, was instructing valuers to assess "Sam's land" and that an offer to purchase would be made. The file note then says:

I told him about the offer on the house lot & Sam's reluctance to accept, and that we are selling Lots 1, 2, 5, 6 and the house lot.

95 In crossexamination, Mr Gibson confirmed that that was something that he would have said to Mr Maunder and that he would have done so on the instructions of Mr Mondous. He said that he did not have written instructions, but that he believed that he had oral instructions to say what he said. The file note, especially the words "we are selling" and the identification of the relevant lots, indicates that Candibon was a willing seller and that Mr Gibson was treating the sale as a routine commercial transaction. Again, this casts doubt on the sale taking place under the shadow of a compulsory acquisition and Candibon having no choice but to sell the land to the Minister.

96 On 5 May 1997, Mr Maunder made a file note of his advice to the Minister that it would be necessary to obtain "VG +1 assessments", that is, two valuations. The same note suggests that Mr Maunder was then in touch with Tom Gibson to discuss the sale, because it records that Mr Maunder did not mention an exact amount to Tom Gibson, but Tom Gibson suggested that Mr Mondous "may accept around $2.8 m!"

97 The same day, Mr Maunder also wrote to the Valuer-General about the purchase of the land, stating that it was understood that the owner might favourably respond to an offer made in accordance with the assessment of the Valuer-General's office. The Valuer-General was asked to arrange for two assessments on the basis of the then current zoning of the land. The letter records that the Minister wished to make an offer to the owner without delay.

98 Valuations were carried out by and on behalf of the Valuer-General by Mr Nick Lovass of the Valuer-General's office and by Mr Brian Dudakov of A T Cocks and Partners in May 1997. Mr Lovass valued the land at $2,020,000; Mr Dudakov valued it at $1,740,000.

99 Mr Lovass' valuation stated that the allotments south of the proposed freeway were zoned 'Highway 1', which permitted the property to be utilised for agricultural and animal husbandry purposes and that the land could be subdivided in the normal course into not less than 25 hectare parcels. The valuation referred to the Minister's May 1993 directive and to the Pakenham Outline Development Plan, which showed development to take place to the north of the proposed freeway, "thus lending support to the Minister's letter confining development in the area". Under general comments, Mr Lovass observed that the property was in an area which "for the present at least" was reserved for rural purposes. However, it was expected that the township of Pakenham would slowly expand in a southerly direction towards the subject property.

100 Mr Dudakov's valuation also noted that the land was zoned 'Highway 1' and could not be subdivided into lots of less than 25 hectares.[25] In accordance with the Minister's May 1993 directive, the land was just south of the designated area for residential development within the Pakenham area. Mr Dudakov concluded that the subdivision restrictions within the 'Highway 1' zone prohibited any residential potential for the site and that, given the tone of the Minister's May 1993 directive, the subject site was just outside the designated growth area and could not be considered to have residential subdivision potential over the short to medium term. "We acknowledge that the above is based on a ministerial directive which may alter at a later stage, however it is our understanding that over the short to medium term the government is unlikely to change its view on the growth corridor parameters." Mr Dudakov's valuation concluded:

Having regard to the planning considerations and, in particular, the current Government's view that the Growth Corridor shall not go south of the Freeway Reserve, we have resolved to assess the value of the land based upon its current zoning and potential. We do not consider a prospective purchaser would attribute any [sic] growth potential to the subject property than is evident in the prices paid for similarly zoned land which we have analysed for the purpose of determining value.

101 Mr Dudakov subsequently revised his valuation to $1.85 million.

102 On 18 June 1997, the Victorian Government Land Monitor approved the Minister purchasing the land for up to $2.02 million, subject to the Minister becoming the responsible authority for the land. On 23 June 1997, Mr Maunder wrote to Candibon advising that the Minister was prepared to accept the transfer of the Freeway Corridor and the Southern Parcel for $1.85 million subject to a number of conditions, including acceptance of the offer within 28 days and agreed arrangements with the skydiving club being formalised.

103 On 10 July 1997, Mr Maunder made a file note of a conversation with Mr Mondous in which Mr Mondous advised that he would be sending a letter saying that the offer was not acceptable. Mr Maunder recorded himself as saying to Mr Mondous that it might be appropriate to have a conference of valuers or at least have the Department's valuers consider the report of Mr Mondous' valuer.

104 Mr Mondous duly wrote to Mr Maunder on 28 July 1997 stating that the offer to purchase the land was unacceptable. However, the letter continued:

If you are prepared to reconsider your offer we are willing to engage a valuer.

I am prepared to accept an offer on the house lot containing 42 acres, would the sale of this lot affect your interest in the balance.

I await your response.

105 On 30 July 1997, Mr Maunder wrote to Mr Mondous referring to Mr Mondous' letter refusing the Minister's offer. Mr Maunder said that to enable negotiations to continue, it was necessary for Mr Mondous to obtain the advice of a registered valuer and a conference of valuers could then be organised if required. Mr Maunder's letter confirmed that, subject to the approval of the Minister, the Minister might consider the purchase of the property excluding the house lot. However, prior to taking any action in relation to the sale of the house lot, Mr Mondous should ascertain the exact intention of the Minister. Mr Maunder asked to be informed when Mr Mondous had received his valuer's advice.

106 However, on 1 August 1997, Mr Mondous replied as follows:

1. We have no intention of incurring further valuation costs over and above the costs we incurred in 1995 as a result of your Governments [sic] previous interest in our property, unless you are prepared to met [sic] their reasonable costs should our negotiations not prove successful.
2. We believe that after many meetings and discussions with local agents and valuers and after considering recent sales and the proposed livestock exchange and industrial site opposite our property, the availability of all services that an amount of 78000 per acre would be readily achieveable [sic] if the property was offered for sale, in its current titles, on todays [sic] market.

107 On 25 August 1997, Mr Maunder responded that in order to assist negotiations, the Minister had agreed to meet Candibon's costs of a valuer[26] up to a limit of $5,000. The offer was conditional upon a copy of the valuation being provided to the Department. It was anticipated that the advice obtained by Candibon would enable the matter to be further considered.

108 A meeting between the Minister and Mr Mondous was apparently proposed for 16 September 1997. On 12 September, Mr Maunder prepared a briefing for the Minister describing developments to that point in time, including the Minister's agreement to pay for a further valuation. He noted that an offer had been made for the house lot but that Mr Mondous had not accepted the offer, as he thought this might affect the value of the balance offered to be purchased by the Minister. Tom Gibson had been instructed to provide an assessment (valuation) to Mr Mondous and it was understood that Mr Gibson's report would be available the following week. Mr Mondous had advised that an amount of around the $3 million mark was more likely to be acceptable, and that his valuation advice would confirm this opinion. Mr Maunder asked the Minister to consider whether it was appropriate that he attend the relevant part of the Minister's meeting with Mr Mondous. The briefing was annotated by Mr Maunder on 16 September 1997, "Minister directed that I deal directly with Mr Mondous".

109 I infer that the meeting between the Minister and Mr Mondous did not take place. A file note made by Mr Maunder on 16 September 1997 records that Mr Mondous told Mr Maunder that he would advise Mr Maunder further when Tom Gibson's valuation was received, otherwise Mr Maunder could contact Mr Gibson directly.

110 On 9 October 1997, Mr Maunder made a file note that Mr Mondous was "sending [a] letter". On that day, he received a facsimile from Candibon dated almost a month earlier - 18 September - which stated:

We refer to your letter of 30th July 1997 regarding the above and advise that we wish to proceed to sell the land mentioned above. We ask you as to whether or not your intentions have changed and if not are you prepared to resubmit a higher offer for our perusal and possible acceptance.

Should we not hear from you within 14 days from the date of this letter we will assume that you are no longer interested and will therefore proceed to sell it on the open market.

111 The 18 September facsimile was signed by Mr Sebastian Canzoneri. In his first witness statement, Mr Mondous stated that Mr Canzoneri sent this letter to the Minister at his direction in advance of Tom Gibson's report. Based on what the Minister had told him, he had decided that it was not worthwhile holding Greenhills for further development and he knew that the Minister wanted to acquire the land. This letter was intended to get the Minister to make his best offer quickly.

112 On 3 November 1997, Tom Gibson valued the land at $2.465 million. Under the heading "Town Planning", Mr Gibson's valuation report said:

A Planning Certificate has not been sighted, however, advice from the Town Planning Department at the Shire of Pakenham indicates that the land is partly within a "Highway 1" zone and partly within a proposed main Road zone and comes under the provisions of the Pakenham Planning Scheme. The property's current use conforms with this zone.

The property is also within an area identified by the Ministry of Planning as being outside an area for future Residential Development. A new planning scheme is currently on exhibition showing that the land is to be zoned "Rural" and for which the Minister for planning is the responsible authority. I have been advised that this is so because it enables the minister to negotiate the purchase of the subject property, and is no more onerous than if the Cardinia Shire was the responsible authority.

The proposal to rezone to "Rural" appears to be a blanket change to all highway 1 zoned land, Council have indicated that the proposed zone will be no more onerous than the previous zone. The minister supports Industrial not Residential type use for the property.

113 Tom Gibson expressed the view that the highest and best use of the property was as rural residential lots "with long term development potential". He stated that the sale of two properties opposite lots 1 and 2 had been negotiated: "50 acres zoned industrial sold from the council to a developer proposing an industrial park and stockyards. This sale is believed to be around $6000 per acre plus developer's incentives".[27] An adjoining 180 acre parcel zoned 'Highway 1' was believed to have been sold to the developers of the stockyards for around $8,000 per acre. Mr Gibson observed that this indicated that there was growing speculation towards industrial land around Pakenham.

114 It is apparent that Mr Gibson did not value the land on the basis that it had no development potential. Like Messrs Lovass and Dudakov, he took into account the then current 'Highway 1' zoning and the longer term potential for development of the land. All three valuers proceeded on the basis, however, that the planning controls and the Minister's May 1993 directive prevented the development of the land for residential purposes.

115 A conference between valuers was arranged in November 1997. The evidence includes a file note dated 12 November 1997, which appears to be a file note of the valuers' meeting. It records "Tom Gibbons, Russell Maunder, BD, PD, Murray Carman" being in attendance,[28] and the existence of two opposing valuations: $1.83 million and $2.465 million.

116 On 21 November 1997, Tom Gibson wrote to Mr Mondous about the valuers' meeting in the following terms:

We discussed each others comparables [sic] sales and agreed on the approach to value. The main differences being the dates of valuation which meant that Brian was unaware of sales I relied heavily on and the degree of compatibility of value to Lot 6 due to the proposed freeway.

I agreed to increase the discount allowance on Lot 6 and Brian agreed to increase his assessment on the house lot and marginally increase his assessments on the other lots. He increased his opinion to $2,020,000 and left to consider the degree of compatibility of the sale of the Mullane Road property.

Since the conference we have sold 100 acres in Coop Road at $400,000 ($4,000 per acre) and the Development of the Victorian Livestock Exchange Industrial Park has commenced. Both of these I believe add weight to my argument that Brian should Increase [sic] his assessment.

As a result of the conference I have revised my opinion of the current market value of the property described in my report to you dated 3rd November, 1997 to Two Million Two Hundred Thousand Dollars. $2,200,000.

117 This letter was forwarded to Mr Maunder on 25 November 1997.

118 Mr Carman of the Victorian Government Land Monitor's office also prepared a file note of what had occurred at the conference of valuers. The file note makes reference to the sales evidence provided by Mr Gibson and records that Mr Dudakov said he could support an increase in his valuation to $2 million, subject to acceptance by Mr Gibson and his client. Mr Gibson had rejected this proposal and agreed to seek instructions from his client as to what would be acceptable. After Mr Gibson departed, Mr Dudakov had indicated that he would be likely to review his valuation to approximately $2.18 million.

119 On 9 December 1997, Mr Maunder was told by Tony Comito of Comito & Co., Candibon's solicitors, that Mr Mondous would advise of his acceptance of an offer in the next few days. The following day, 10 December 1997, Candibon wrote to Mr Maunder in the following terms:

After discussing the matter with Mr Tom Gibson (the valuer) we advise that Candibon Pty Ltd would accept the offer of $2,200,000 for the Sale of Land.

We also advise that we are prepared to negotiate on the amount should an incentive be offered.

120 The 10 December letter was signed by Mr Canzoneri.

121 On 16 December 1997, A T Cocks and Partners provided a revised valuation of Mr Dudakov's assessment based on more recent sales which indicated values to have risen over the previous six months. This resulted in an increase in his valuation of the land to $2,050,000. However, it was suggested that it might be necessary to offer slightly in excess of that figure, say $2.1 million to $2.15 million, to secure the site.

122 On 24 December 1997, the Valuer-General wrote to Mr Maunder in response to Mr Maunder's request that his office consider recent sales provided by Tom Gibson. The letter records that Mr Lovass met Tom Gibson on 19 December 1997. Mr Gibson provided Mr Lovass with particulars of the sales and also supplied the details of his amended valuation resulting from the conference of valuers. Mr Gibson reduced his valuation from $2.465 million to $2.2 million. Mr Lovass considered sales which had occurred in the general area since the preparation of his valuation in May 1997. As a result of the discussions and sales investigations, however, it had been determined that a review was not warranted and the Valuer-General's valuation remained at $2,020,000.

123 On 16 January 1998, Mr Maunder advised Mr Mondous that the Valuer-General adhered to his assessment of $2.02 million. Mr Maunder's file note records that Mr Mondous said that an offer of $2.05 million on a 30 day settlement would not be acceptable.

124 On 21 January 1998, Candibon wrote to Mr Maunder in the following terms:

We advise that we have had various discussions with our valuer and that we will accept the amount of $2,100,000.00 on a 30 day settlement.

125 The 21 January letter is signed by both Mr Mondous and Mr Canzoneri.

126 On 3 February 1998, Mr Maunder wrote to Tom Gibson to arrange a meeting between Tom Gibson and a representative of the Valuer-General. What occurred at that meeting is set out in a letter from the Valuer-General to Mr Maunder dated 4 February 1998. The letter records that valuations of $2,020,000 (Mr Lovass) and $2,200,000 (Mr Tom Gibson) were tendered. Mr Lovass considered that the total value of the land was $2,140,000 from which a bulk discount of approximately $120,000 ought to be allowed. As the difference between the two gross values amounted to only $60,000 and it was reasonable to make some allowance for the bulk nature of the property transaction, agreement was reached on an allowance for the bulk discount and on a final valuation of $2,100,000.

127 On 5 February 1998, Mr Maunder sought approval from the Government Land Monitor to accept a counter-offer of $2.1 million. The purchase was described as being by private treaty under s 171 of the Planning & Environment Act. The same day, the Victorian Government Land Monitor wrote to Mr Maunder granting approval to make an offer to purchase the land up to the Valuer-General's valuation of $2.1 million.

128 The following day, 6 February 1998, Mr Maunder wrote to Mr Mondous advising that the Minister was prepared to purchase the Southern Parcel and Freeway Corridor for the sum of $2.1 million on the basis of a 30 day settlement.

129 The documents in evidence reveal that at this point the question of compulsory acquisition re-emerged. On 9 February 1998, Mr Maunder made a file note of a discussion that he had had with the Minister:

The Minister has directed that instead of dealing with the purchase of the property on a negotiated basis, he wishes to compulsorily acquire the 197 ha on the basis that he rezones the land to a public purpose. I advised that I will investigate and advise further.

130 On that day, Mr Maunder made a further note recording that the Minister wished to discuss the relocation of the skydiving club and that consideration should be given to the possibility of South East Water installing a pipeline for irrigation and to uses such as horse training and/or a Council depot.

131 On 12 February 1998, Mr Maunder prepared a briefing for the Minister in relation to "acquisition issues". The relevant parts of that briefing are as follows:

During our discussions last Monday in relation to this matter, you advised that following your discussions with Mr Mondous on the weekend, Mr Mondous raised his concerns regarding the payment of capital gains tax upon the transfer of the subject property to you in your capacity as Minister.

It is understood that you advised Mr Mondous that it could be advantageous for Mr Mondous and the Department to change tack and enter into the acquisition of the property on a compulsory basis pursuant to the Land Acquisition and Compensation Act 1986. Prior to proceeding on this basis, I undertook to investigate the implications for both Mr Mondous (on the basis of capital gains tax savings) and the savings, if any, to you as acquiring authority.

My preliminary discussions with Mr Rob Bradford (Victorian Government Solicitor) and Mr Michael Donnellan (Land Monitor) have confirmed my initial attitude of proceeding on a compulsory basis. It is considered that a compulsory acquisition will not achieve savings to Mr Mondous by way of saving his payment of capital gains tax and that the market value of the property will not be reduced should you as acquiring authority proceed on an acquisition basis.

132 Mr Maunder's briefing went on to discuss an Australian Tax Office ruling on capital gains tax and expressed the preliminary conclusion that Mr Mondous' company would not, in any event, be eligible to claim a capital gains tax exemption. Mr Maunder also discussed the possibility of savings to the Minister as acquiring authority and passed on verbal advice to the effect that the basis of valuation would be the same but that going down the compulsory acquisition path opened the Minister up to a number of claims and allowances that would increase the total paid to Mr Mondous' company which were not required to be paid on a negotiated basis. Mr Maunder presented three options to the Minister: obtaining formal advice from the Victorian Government Solicitor and formal advice from the Valuer-General in relation to a compulsory acquisition; finalising the transfer on the agreed basis; or formally withdrawing from negotiations for the purchase and commencing the compulsory acquisition process whilst being aware of the added costs of the acquisition.

133 On 17 February 1998, Candibon wrote to Mr Maunder in the following terms:

We re-confirm our offer to sell and the Department's acceptance of the above Land for the sum of $2,100,000.00 on a negotiated basis (non compulsory acquisition) for a 30 day settlement.

We await your for your [sic] reply.

134 On the same day, contrary to Mr Maunder's advice but presumably before he became aware of Candibon's request that the sale take place on a negotiated rather than a compulsory acquisition basis, the Minister directed that the compulsory acquisition proceed. Mr Maunder made a file note recording that the Minister believed that Mr Mondous would find this approach more acceptable but that should negotiations become protracted or if added costs were anticipated, the Minister would withdraw from the compulsory acquisition. As the maximum amount of $2.1 million had been set, the acquisition amount agreed for the "all up" amount could be set at $2 million.

135 On or about 24 February 1998, Mr Maunder wrote to the Valuer-General asking for advice relating to the valuation methodology that the Valuer-General would adopt should a compulsory acquisition be undertaken. The Valuer-General responded on 2 March 1998 advising that the assessment of compensation would be based on the difference between the unaffected value of the land, had it not been reserved, and the affected value as a result of reservation. Hypothetical plans of subdivision would be required to assess the 'before' value. Plans would also have to be prepared for the remaining land to assess the 'after' value. The unaffected value would represent the full market value of the property. The Valuer-General advised that the valuation made by his office that was being used in the negotiations did not take into account any diminution in the value of the owner's land to the north and included an amount less than the unaffected value of the reserved portion of the property. The impact of making a valuation under the provisions of the LAC Act would result in a significant increase in compensation being awarded to the owner, which would include items such as valuation, legal costs and other expenses in addition to solatium, compared with the then current negotiated price of $2.1 million.

136 In the meantime, on 24 February and again on 4 March 1998, Candibon's solicitors, Comito & Co, wrote to the Department's solicitors requesting copies of the contract of sale and transfer of land in anticipation of settlement on 6 March 1998. In the second of these letters, Comito & Co advised that if contracts were not exchanged and settlement effected by 6 March 1998, Candibon would require written confirmation that the purchaser would pay penalty interest pending settlement, which was to be effected no later than 31 March 1998, or it would not proceed with the sale. The Department's solicitors, Coltmans Price Brent, responded by advising that documents had been prepared but that they had been instructed that Candibon had been speaking directly to its client (the Minister) suggesting a different basis for proceeding with the matter. Coltmans needed to await the Minister's instructions.

137 On 11 March 1998, Mr Maunder sent through a briefing to the Minister seeking to obtain his signatures on vendor's statements, contract of sale and claim form. Mr Maunder informed the Minister that the Valuer-General had confirmed Mr Maunder's original understanding that the impact of making a valuation under the provisions of the LAC Act would result in a significant increase in compensation being awarded to the owner. The vendor's representative had re-confirmed the acceptance of the Department's offer of $2.1 million on a negotiated (non-compulsory acquisition) basis for a 30 day settlement. Mr Maunder advised that it was prudent for the Minister to continue with the purchase of the property on a non-compulsory basis. Solicitors acting for the Department had been provided with the necessary documentation prepared by the vendor's solicitor and had advised that the documentation was in order for the Minister's signature.

138 On 13 March 1998, Comito & Co wrote to Coltmans Price Brent enclosing contract of sale and answers to requisitions on title duly executed by Candibon. The day of sale was given as 13 March 1998 and a settlement date of 27 April 1998 "or earlier" was nominated.

139 The contract for sale was entered into on 17 March 1998.

140 On 18 March 1998, the Minister himself made a file note about the acquisition of the land:

Property Owned by Mr Mondous

Greenhills Road, Pakenham.

It is proposed to purchase this site, which includes land reserved for a future road related to proposed Pakenham/Princes Highway bypass. The Pakenham Sky Diving Club currently occupies part of the reserved land.

The Sky Diving Club is ready to be relocated and has undertaken to manage a good deal of the property. In addition, there is a proposal for South East Water to place their surplus water on a significant portion of the land. Associated Municipal uses, such as BMX tracks, walking trails, and horse riding are also proposed with Council and community involvement.

An agreement to pay $2.1M for the site has been reached.

141 On 26 March 1998, Mr Maunder made a file note recording the Minister's direction that consideration be given to transferring the reserved land (the Freeway Corridor) to VicRoads at no cost on the basis that VicRoads would construct a drainage easement in association with South East Water. Mr Maunder suggested that it might be appropriate for discussions to occur between VicRoads and the Department in this regard.

142 Meanwhile, between 20 March and 2 April 1998, the solicitors for the respective parties exchanged letters in relation to the payment of the deposit and the settlement date for the sale. Candibon sought settlement by 27 March 1998, insisting that exchange of contracts was conditional upon confirmation that settlement would be effected on that date. Later, Candibon asserted that exchange was to be conditional on the Minister agreeing to pay interest from 27 March 1998 with settlement no later than April 1998. Mr Barlow of Coltmans Price Brent responded, stating that the matter was held up by Candibon's discussions with the Minister about compulsory acquisition, and Coltmans had been asked to hold the contracts while that option was considered. Coltmans was informed that the matter would proceed by contract. Mr Comito then advised that Candibon was prepared to extend the settlement date to 17 April 1998 and no further. Mr Barlow confirmed that 17 April would be the settlement date.

143 The sale of the land to the Minister was completed on 17 April 1998.

Post settlement events - the involvement of Council

144 Prior to settlement, in around mid December 1997, Mr Maunder was in touch with the Council to discuss the possibility of the Council managing the land once it was acquired by the Minister. There was a precedent for this, in that the Minister already owned two parcels of land in the Shire that were managed on his behalf by the Council.

145 After settlement, on 15 May 1998, the Minister signed a memorandum prepared by his Department approving a proposal to formally request the Council to act as his management agent for the land. The memorandum describes the uses contemplated for the land. According to the memorandum, the Council would take on a coordinating role "in regard to discussions with":

• South East Water and the placing of surplus water onto the land;

• management of the property to be occupied by the skydiving club;

• commercial development of parcels fronting either Healesville-Kooweerup or McGregor Roads; and

• other uses for the land such as motorcycle and bicycle, trail riding etc.

146 The Minister 'ticked' each one of these proposed uses, including the commercial development of parcels fronting either Healesville-Kooweerup or McGregor Roads. The memorandum in question is of importance in this proceeding because it is said to show that the Minister regarded portions of the Southern Parcel as available for commercial development. I will refer to this memorandum henceforth as the '15 May memorandum'.

147 On 21 May 1998, Mr Maunder wrote to the Council's Manager of Business Development, Mr Brian Robinson, requesting him to prepare a draft management agreement and referring to Mr Robinson's awareness of "various issues". The issues in question mirrored those identified in the 15 May memorandum. The letter concluded, "As part of Council's management role please ensure that these issues are addressed."

148 The Council considered the issue of a management agreement at its meeting on 20 July 1998. The minutes of that meeting record the condition of the property and the fact that portions of the property fronting Healesville-Kooweerup Road had "future commercial development potential", whilst the southeast corner was under consideration for a motor sports complex. The minutes noted that, "Several issues surrounding current and future uses of the land will need to be resolved in discussions with a number of interested parties. It is essential therefore that a management agreement is executed to empower Council to properly deal with these issues."

149 On 24 July 1998, the Council's new Chief Executive Officer, Mr Don Welsh, met with the Minister to discuss the management of the land and other matters. In relation to the land, the agenda refers to an application for an airstrip, the development of a layout plan, a transfer station, and a fourth point, "maximise infrastructure". Other matters were also discussed by Mr Welsh and the Minister, including the Council's proposal to acquire the Necropolis site, the future of the Council's municipal offices and the establishment of an art and design studio in Pakenham. These, along with the Southern Parcel, were the elements of the 'land swap' which was eventually entered into between the Minister and the Council, and which is described in more detail below.

150 On 19 August 1998, the Council wrote to Mr Maunder confirming it had resolved to accept the Minister's invitation to assume responsibility for the management of the land, attaching a draft management agreement for perusal and comment. The draft management agreement made no mention of the "various issues" referred to by Mr Maunder in his letter to Mr Robinson. It simply provided that, in substance, the Council have power to enter into agreements for the leasing and licensing of the land and that the Council generally maintain the land and pay taxes, charges, expenses and other outgoings in respect of the land. The draft management agreement also referred to the current occupation of the land on a month to month basis by B & H Williamson, and provided that all proposals for leasing and licensing the property should be submitted to the Minister (or his representative) for approval prior to entry into any lease or licence.

151 The management agreement was entered into by the Minister and the Council on 26 October 1998. Although the management of the land quickly became caught up in the land swap proposal, the land was managed pursuant to the agreement until the land swap was effectuated in 1999. During that period, the Minister gave permission under the management agreement for part of the land to be leased to the Council for a waste transfer station and for a three year grazing lease to a local farmer.

152 It was Mr Welsh's evidence that following his negotiations with the Minister about the management of Greenhills, he conceived the idea of a land exchange whereby Council would use its only asset of value to the State, its municipal offices, as consideration for the transfer to the Council of the Greenhills and Necropolis sites. That the Council should become the owner of the Greenhills and Necropolis sites flowed from Mr Welsh's assessment of the need to create employment and quality housing opportunities in the Pakenham area. Mr Welsh gave evidence that he believed that the development of an industrial estate would be an effective means of creating employment opportunities in Pakenham. He also considered it essential that quality housing be developed so that high income earners remained in the community. He gave evidence that the need to create employment and provide better quality housing formed the two "core planks" of his economic strategy for the future of the Shire.

153 Mr Welsh's core planks are reflected in the proposal for the land swap, which was first set out by Mr Welch in a draft (undated) minute for the Council entitled 'Pakenham Land Exchange' and marked confidential. The minute records that the Council was negotiating with the Minister in relation to a number of properties:

• the Necropolis site, through which the Council wished to elevate the profile of Pakenham as a growth corridor by entering into a joint venture with a major land developer;

• the Greenhills "industrial property" that the Minister had purchased to facilitate the Pakenham Bypass;

• the Council offices, which would provide the Minister with the opportunity to provide an innovative secondary/TAFE education centre; and

• an art and design studio supported by the Minister but subject to a business study by the Council.

154 In relation to the Greenhills land, the minute stated:

An application was lodged to construct an airport on the Greenhills land to facilitate the operation of the Pakenham Skydiving Club. That application brought to Council's attention the importance of Council ensuring that developments compatible to adjacent activities such as the Livestock Selling Centre must be provided in this area. Planning controls are inadequate in this instance because of the broad opportunities within industrial zones and appeal processes. It is important that Council escalate its level of control through ownership of the Greenhills site.

155 The minute went on to state that negotiations had been protracted and, in the case of the Council offices, were at a stand-off due to disagreements on value. It was considered that a land swap might break the deadlock and potentially deliver, amongst other things, a major developer to Pakenham, allow the Council to participate, through land ownership, in the planning of critical tracts of land, enable the Council to set aside land for recreation, education and community purposes, preserve land for a possible Pakenham Racing Club relocation, allow the expansion of the Pakenham Cemetery, protect major new industries, and provide the Council with land to offer as an incentive for major new industries.

156 Attached to the minute was a document entitled 'Outline of Land Exchange Agreement' which referred to conditions precedent to the transfer of the Council land, including the Council having satisfied itself that it could develop part of Greenhills as an industrial estate and establish a waste transfer station on another part of the Greenhills land. The conditions precedent to the transfer of the Minister's land included the Council agreeing to offer the Pakenham Racing Club an option to acquire part of the land as the prospective site of the club's new racecourse.

157 A copy of the 'Outline of Land Exchange Agreement' was sent to the Minister on 31 July 1998 under cover of a letter from Mr Welsh setting out the benefits of a land swap in the terms described above.

158 The contents of the minute disclose that while the first official approach to the Minister was made on 31 July 1998, there had most likely been some earlier discussion between the Council and the Minister or his Department about Greenhills being included in a land swap proposal. This is evident from the fact that one of the conditions precedent to the land swap is that land is made available for the relocation of the Pakenham Racing Club.

159 On 11 August 1998, Mr Welsh wrote to the Minister advising him that the Council had accepted a recommendation to propose to the Minister a land swap involving the Council chambers, the Greenhills land, the Necropolis site (now referred to as 'Pakenham Park') and a proposed art and design studio. A meeting between Mr Welsh and the Minister eventually took place on 3 September 1998 attended by Mr Maunder. Mr Maunder's file note records only that the Minister directed that all transactions proceed at the ValuerGeneral's assessment and that the Minister raised the possibility of the Council purchasing the Beaconsfield Primary School as part of the land swap.

160 It appears that by 3 September 1998, the Minister had accepted, in principle, the idea of a land swap involving Greenhills.

161 A followup letter from the Council to the Department stressed the need for the transaction to proceed immediately "due to the involvement of other parties and the community since our meeting" and suggested that under the Local Government Act 1989 (Vic), transactions with the Crown were exempt from the requirement for valuation prior to exchange. However, the implementation of the land swap proposal took over a year. Like the acquisition of Greenhills, it was carried out in methodical fashion by Mr Maunder in the Department and subject to monitoring by the Government Land Monitor. Again, the Valuer-General's office was involved in carrying out the relevant valuations.

162 In the meantime, the land continued to be used for grazing and, presumably, by the sky-diving club. On 24 March 1999, with the land swap still pending, Mr Welsh sent a letter to Mr Maunder requesting the government to grant the Council a lease over part of the land for the purpose of constructing a refuse transfer station. The request for a lease in advance of the land swap was said to arise as a consequence of the Council's urgent need for a suitable transfer station site. In this context, Mr Welsh observed that the Council understood that the Minister did not object to Greenhills being used for limited appropriate commercial development.[29]

163 A draft land exchange agreement was forwarded to the Minister via Mr Maunder in March 1999.[30] In relation to Greenhills, the Council covenanted to offer the Pakenham Racing Club an option to acquire part of the land for 15 years as the prospective site of the club's new racecourse. It also provided for the Council to transfer that part of the land that was the freeway reservation to VicRoads at no cost.

164 Mr Maunder described the land swap to the Minister in a briefing on 19 March 1999, summarising the Council proposal as follows:

• Council to provide Municipal offices (VG$1.99M) and the sum of $2M to fund the construction of an Arts and Design studio (site as yet unidentified). Offices then to be transferred to Education for a nominal consideration. (In principle approval of Minister for Education obtained).
• Minister to exchange the properties known as 'Pakenham Park' (VG $2.8M) and 'Greenhills' (VG $2.21M including freeway reservation, $390,000) to be transferred to Council.
• Council to undertake construction of railway station and set aside parcel of land from 'Pakenham Park' for Police and SES.

165 Mr Maunder's briefing set out the Department's proposed alternative position which required Council to provide a cash amount of $2 million to ensure equality of exchange. The briefing noted that following a conference of valuers, it was expected that the ValuerGeneral would consider an exchange on that basis to be reasonable. The briefing is annotated by Mr Maunder recording that lot 6 (the Freeway Corridor) was to be transferred by the Minister to VicRoads and not to the Council and then VicRoads.

166 Mr Maunder was also charged to deal with the request from the Council to use the land as a refuse transfer station. On 15 April 1999, he advised Mr Welsh that it was under consideration and that Mr Welsh should prepare a draft lease for consideration by the Minister. The letter stated that the Minister had advised that he was agreeable to the relocation of the Pakenham Racecourse to a site on the land as determined by Council. In order to facilitate the proposed land exchange it was understood that areas, yet to be defined, might be excised from the land in order to achieve an equality of exchange.

167 On 20 May 1999, the Minister was asked to approve a rural lease for the Greenhills land, which was to be used for the purpose of grazing livestock. The term of the lease was three years expressed to commence on 1 March 1999. The lease was signed by the Minister on 20 May 1999.

168 The negotiations for the land exchange continued meanwhile, with the ValuerGeneral recommending a cash contribution from the Council based on a disparity in the proposed exchange of $2,175,000. The Council proposed cash consideration of $900,000.[31] Ultimately, the Council offered $1 million in cash consideration. The letter to Mr Maunder in which this offer was made is annotated "Minister, I think this will get us over the line". The Minister has responded, "Well done". On 1 July 1999, the ValuerGeneral advised that in view of the intangible benefits to the State of Victoria, it would not be unreasonable to proceed with the land exchange in addition to the Council contributing $1 million.

169 On 15 July 1999, Mr Maunder briefed the Minister that agreement had been reached on the basis that the Council would contribute $1 million towards the exchange.[32] Mr Maunder advised the Minister that the Government Land Monitor had given approval for the land exchange to proceed and that following transfer of ownership of the Council offices to the Minister, a lease agreement would be entered into with the Council to occupy the premises for a period of three years with an option of one year.

170 The land exchange agreement was finally entered into by the Minister and the Council on 23 July 1999. The agreement refers to the sale and lease-back arrangement of the Council's municipal offices and to the obligations of the Council including to offer Pakenham Racing Club the option to acquire part of the Southern Parcel (being an area of not less than 50 hectares) for 15 years as the prospective site for the club's new racecourse. It was Mr Welsh's evidence that this condition was insisted on by the Minister. Mr Welsh considered it to be an encumbrance to the Council's strategy to develop the land as an effective industrial estate. However, in order to finalise the agreement with the Minister, the Council had no option but to agree to the inclusion of this condition.

171 On 29 September 1999, Mr Maunder made a file note summarising the land exchange agreement. Mr Maunder's file note refers to a deed dated 17 September 1999 which was given to Mr Maunder on 23 September 1999. According to the file note, the deed varied the conditions of the original agreement by providing that, subject to the approval of the Minister, the sum of $1 million (presumably the Council's cash contribution) was to be directed to the construction of an emergency services centre and education facilities approved by the Minister, with the payment to be made on 17 September 2003. The deed was not the subject of Departmental advice to the Minister and was not sighted by the Government Land Monitor prior to the Minister's signature.

172 In his briefing to the Council about the land exchange agreement on 15 November 1999, Mr Welsh confirmed that the Council had acquired the Greenhills land, part of which would be developed as an industrial estate. A Council works depot and waste transfer site would be located within the estate.

173 The Southern Parcel has subsequently been developed as an industrial estate by the Council, although at the time of the trial of the proceeding, actual development was limited to a strip along Healesville-Kooweerup Road and to the north east of the Southern Parcel. I think it fair to say that most of the Southern Parcel remains undeveloped. Mr Welsh gave extensive evidence about the difficulties involved in the development and about the financial costs to the Council, which it is unnecessary to describe in any detail.

174 As a preliminary matter, it is to be observed that the matters described in the Statements are said to be matters that 'the government' had 'determined'. Consistently with 'the government' making 'determinations', it is also alleged that, contrary to the Statements, the government had not made the determinations to the effect pleaded except (if at all) provisionally and that the absence of determinations was to be inferred from, among other things, the absence of any compliance with the procedures laid down in the LAC Act. The Minister is alleged to have had a duty to Candibon to ascertain that the government had not arrived at the 'settled determinations' to the effect pleaded.

175 The defendants submit that the reference to government 'determinations' is significant and that, particularly in relation to the claim in deceit, Candibon must be held strictly to its pleading. They say that the word 'determined' must be given its proper meaning having regard to the way in which the case is pleaded, and that the pleading shows that a determination must be something like an amendment to the planning scheme or, at the very least, a ministerial direction.[33] Plainly, there was nothing of the sort. For its part, Candibon submits that the word 'determination' means no more than 'decision'. It concedes that if the word 'determination' means more than a decision, it cannot succeed. Its case was not that there had to be some formal resolution of a statutory or regulatory nature that the land would never be permitted to be redeveloped for residential or commercial uses; its case had only ever been that there was a representation that the government would not allow the land to be redeveloped.

176 I accept that there is a tension in the pleading arising from the reference to government 'determinations' that are distinct from what the Minister himself intended or proposed. The pleading in negligence is predicated on there being a difference between what the Minister said the government had determined and what the government had in fact determined. In this context, a government determination most likely means something other than the intentions or views of the Minister himself. There is a real question as to how a government, as opposed to the Minister who has express powers under the Planning & Environment Act in relation to land use, can 'determine' that something will be allowed or will not be allowed, and how, as an abstract entity, it could do so other than through a formal - and therefore public - process of some kind. The pleading in deceit is not founded on any distinction between the Minister and the government: the Minister's deceit is alleged to lie in the difference between what the Minister said he was going to allow and what he actually intended to allow.

177 However, I propose to decide this case on the basis that the words 'determined' and 'determination' bear the meanings 'decided' and 'decision' respectively. The defendants are correct to say that as fraud is alleged against the Minister and the State, the pleading should be strictly construed. However, the claim for deceit is, for the reason I have given, not dependent on any kind of distinction between what the Minister said or did and what the government itself had determined to do. To the contrary, what is alleged is that the Minister said one thing, but intended to do, or was amenable to doing, something quite different. It is this conflict between the Minister's alleged intentions and his representations to Mr Mondous that forms the basis for the allegation of fraud.

178 According to Candibon, the Minister told Mr Mondous at the last of the meetings in September 1996 that the State wanted ownership of Greenhills and that the Minister was to compulsorily acquire Greenhills on behalf of the State if Candibon was not prepared to sell it by private agreement. Candibon therefore says that the threat of compulsory acquisition involved the interaction of two propositions: first, the Minister wanted the land and wanted to reach an agreement with Mr Mondous about purchasing it; secondly, if no understanding could be reached about a private sale, the Minister would compulsorily acquire the land.

179 Mr Mondous and Mr Maclellan agree that the question of the government compulsorily acquiring the land was raised in the course of discussions between them. They differ as to whether compulsory acquisition was threatened by the Minister if Candibon did not agree to sell the land to him or whether it was raised by the Minister as an option that might confer taxation or other benefits on Candibon.

180 Mr Maclellan gave evidence that during the course of later meetings he had with Mr Mondous, Mr Mondous told him he was short of working capital. Having regard to Mr Mondous' liquidity problem, he told Mr Mondous that the only way that he could assist was by purchasing the Freeway Corridor. Because Mr Mondous said that that would not give him the money that he required, the Minister offered to buy the Southern Parcel, but only at the Valuer-General's valuation. Mr Maclellan said that although he discussed with Mr Mondous the possibility of compulsorily acquiring the land, it was on the basis that it could be of benefit to Mr Mondous to proceed in that way. He therefore asked Mr Maunder to investigate the option of proceeding as a compulsory acquisition and to provide him with advice.

181 In this context, Mr Maclellan referred in his oral evidence to his earlier modus operandi as a Minister of the Crown when he was, as he put it, in the business of acquiring land. He said that as Minister for Transport in 1978 he would give vendors the option of 'noncontentious' compulsory acquisition. Describing this process, Mr Maclellan said:

... I in 1978 might have told as Minister for Transport, VicRoads although it was then called the Country Roads (indistinct) to tell the farmer that rather than receiving a royalty for the gravel, which we compulsorily took out of a paddock to make roads, they might be better to sell us a small corner of their farm, we would take the gravel out, put - make it into a dam and sell it back to them so that they didn't get a royalty payment, which was clearly taxable as the nose on my face and that's quite prominent, whereas the purchase and repurchase of a corner of the paddock where the gravel happened to be located would not be, having been - you know, having been aware of that, I was aware that people in the position of Mr Mondous might well be able to find a more effective way of benefiting themselves out of exactly the same sort of money.

182 Mr Maclellan's version of events is hotly disputed by Mr Mondous. Mr Mondous says that Candibon was threatened with compulsory acquisition at his meeting with the Minister on 13 September 1996 and that there could be no other explanation for why Candibon agreed to sell the land when it did.

183 Candibon contends that Mr Maclellan's version of events should not be accepted for a number of reasons. First, Mr Maclellan's account is fatally infected by his recollection of being approached by Mr Mondous following the "successful completion of the Berwick 'tavern' issue". In fact, this was a zoning dispute which was resolved adversely to Mr Mondous and not prior to the critical meeting which dealt with the land. Secondly, Mr Mondous was not short of working capital and, in any event, the sale of Greenhills yielded no working capital as the whole of the net proceeds of the sale went to pay off the loan from the Commonwealth Bank. Thirdly, the pace at which Mr Mondous reacted to the Minister's interest in acquiring the land did not suggest keenness; to the contrary, it was indicative of reluctance. Finally, Candibon contends that Mr Maclellan's account of how and to what extent Mr Mondous raised with him the issue of working capital became unstable under crossexamination: Mr Maclellan proffered a number of versions of what Mr Mondous actually said starting with reference to a 'liquidity problem', then that Mr Mondous told him he was short of working capital, then that he inferred from Mr Mondous' body language that Mr Mondous was short of working capital, and finally that Mr Mondous told him he was short of working capital because he was not able to develop any immediate property in the short term.

184 Candibon submits that Mr Mondous gave extensive evidence about the way he operated his businesses, buying land with different development horizons, and that he understood the Southern Parcel to be a long term proposition, given the SEGA plan, which earmarked it for future urban development in 2005 to 2009. It was consistent with his long term outlook for the Southern Parcel that he refused to sell it to the Urban Land Authority for a rural value in 1993 when the Authority sought to acquire it for the purposes of a cemetery.

185 Candibon also relies on the fact that in February and through part of March 1998, the Minister again raised the prospect of compulsory acquisition: he twice directed that compulsory acquisition be initiated and on the second occasion, despite Departmental advice that it would be of no benefit either to the Minister or to Mr Mondous, directed[34] that the acquisition of the land proceed as a compulsory acquisition. Candibon points out that Mr Maunder gave evidence that the use of the word 'directed' signified, in effect, 'ordered'.[35]

186 In his 12 February 1998 memorandum to the Minister concerning the possible compulsory acquisition of Greenhills, Mr Maunder recited the account the Minister gave him on Monday, 9 February 1998, of the Minister's earlier discussions with Mr Mondous about capital gains tax. Candibon points out that the Minister raised two issues with Mr Maunder: capital gains tax savings for Mr Mondous, and cost savings for the Minister. As for Mr Maunder's 11 March 1998 memorandum, although it recited the fact that Candibon had reconfirmed its acceptance that the sale proceed on a negotiated (noncompulsory) basis, its primary focus was to warn the Minister compulsory acquisition would cost him more than a negotiated sale. In any event, so Candibon says, Mr Mondous gave unchallenged evidence that Candibon was making no capital gain on the transaction and that he, Mr Mondous, knew this to be the case. There would therefore have been no reason for him to ask the Minister to take any steps, be it by way of compulsory acquisition or otherwise, to reduce Candibon's tax liability.

187 Candibon also submits that by the 'liquidity story', Mr Maclellan sought to minimise his own interest in acquiring the land by portraying it as arising from a chance discussion. It also helps him to explain what might have prompted Mr Mondous to want to sell the land. However, according to Candibon, the liquidity story does not stand up to scrutiny because if Mr Mondous only needed $1 million, why did the Minister agree to buy the Freeway Corridor as well as the Southern Parcel? Moreover, in his witness statement, Mr Maclellan gave as reasons for his interest in purchasing the Freeway Corridor with the Southern Parcel the fact that it would allow him to set the Freeway Corridor as the southern limit of residential development, the fact that VicRoads had not been timely in acquiring the land for the freeway extension, and the fact that VicRoads might have needed some of the Southern Parcel for that purpose. However, in his evidence, according to Candibon, his explanation shifted. He said, in effect, that buying the Freeway Corridor would enhance his image in the electorate and would require VicRoads to accord greater priority to the construction of the Bypass.[36] Candibon submits that this explanation makes no sense, because purchasing the 30odd hectares of the Freeway Corridor could not transform VicRoads' priorities and there was nothing in the discovery to suggest that as Minister he impressed upon VicRoads, post purchase, the significance of his acquisition for their forward planning. Candibon says that in truth, Mr Maclellan's evidence masks the fact that he only had use for the Southern Parcel. To get it, he told Mr Mondous that the State needed Greenhills for the proposed freeway, and otherwise as a buffer zone; and that he would compulsorily acquire Greenhills for these purposes if need be. Those were the terms in which he expressed himself. That being so, the only course open to the Minister was to acquire both the Freeway Corridor and the buffer. Had he sought to acquire the buffer without the Freeway Corridor, questions would have been asked.

188 In final submissions, Mr Richter QC for Candibon asked a series of rhetorical questions to demonstrate the unlikelihood that Mr Mondous would have agreed to sell the land to the Minister otherwise than under the threat of compulsion. He asked:

(a) How likely is it that someone who is allegedly anxious to sell the land because he is said to have his capital tied up and to have liquidity problems, would go to a Minister of State for help to alleviate such problems by seeking to dispose of the land to the Minister? Wouldn't such a man go to a bank or put his property up for sale through an agent, or advertise the property, circulate the fact that it's on the market, seek purchasers for it?

(b) How likely is it that the land which the Minister unilaterally devalued in 1993 (at the time of the cemetery negotiations) would willingly be offered for sale to the same Minister? Why would Mr Mondous sell to the very person who 'squeezed' him in 1993 and was not prepared to make any concessions about anything that would be of value to a developer rather than sell the property on the open market?

(c) How likely is it that a willing vendor, when dealing with a purchaser who is trying to help him, would refuse to spend any more money on valuation fees?

(d) How likely is it that a long term investor/developer who is not in financial difficulties would agree to sell what is effectively a prize parcel of land which is shown as proposed residential in the SEGA plan of November 1990?

(e) How likely is it that an anxious and willing vendor would allow a straightforward sale to drag on from mid-1996 to March 1998 unless he was, as it were, stuck between a rock and a hard place?

(f) How likely is it that a willing and financially anxious vendor does not respond to an offer made on 13 November 1996 until two months later?

(g) How likely is it that a developer who is told that there is some opportunity for commercial or industrial development would not ask the Minister responsible what he had in mind?

189 I make the following preliminary observations about the suggestion implicit in many of these questions that Mr Mondous dragged his feet because he was an unwilling vendor and that the Minister would have been the least desirable purchaser from his point of view:

(a) There was no suggestion by Mr Mondous that the Minister ever sought him out in order to discuss the land;

(b) However, Mr Mondous sought out the Minister on a number of occasions to discuss the future of the land;

(c) The suggestion that Mr Mondous allowed the sale to 'drag on' because he was an unwilling vendor is not consistent with Candibon's submission that letters sent by it to the Minister and the Department during negotiations in 1997 threatening to sell the land (or part of it) to other parties were 'ploys' to spur the Minister or the Department along;

(d) The SEGA plan had, at best, uncertain application to the land in the light of the Minister's May 1993 directive, which stated that it was not the government's intent that urban development go south of the freeway reservation. As a result, when Mr Mondous approached the Minister in 1996, it was highly questionable whether the land could be described as "a prize parcel" of land on the basis that it had been designated as 'future residential' in the SEGA plan;

(e) The land had effectively been "devalued" by the Minister's May 1993 directive and the statement that it was not the government's intent that urban development go south of the freeway reservation. This was something that would affect the price of the land on the open market, not just in the Minister's eyes. It was therefore not a question of Mr Mondous offering the land to the one person who believed it to be worth less than it really was.

190 It is true that it would be unusual for a property developer in financial straits to approach a minister of the Crown or the State government to resolve his or her financial difficulties by acquiring property from the developer, particularly if the minister in question had previously sought to buy the land at what the developer considered to be an undervalue and had insisted that it be valued on the basis that it had less development potential than the developer thought that it had. However, the relationship between Mr Mondous and the Minister was no ordinary relationship between a minister and a property developer. There was evidence that Mr Mondous repeatedly sought out the Minister by taking advantage of his availability to his constituents at his regular Friday clinics at his electorate office. Mr Mondous chose to discuss his planning problems with the Minister in the relatively informal setting of the Minister's electorate office, where the Minister was not accompanied by advisers or departmental officers. What Mr Mondous thought the Minister could do for him exactly is unclear, but it remains the case that Mr Mondous did seek the Minister's assistance on a number of occasions in this setting in connection with his property developments. The Minister recalled that he had assisted Mr Mondous in relation to the renewal of a permit for a tavern on land that Mr Mondous owned in Berwick; Candibon says that there was no successful intervention and that the planning dispute in question was not a dispute about a permit but a dispute about the zoning of land. Nonetheless, Mr Mondous does not deny that he approached the Minister in relation to the development of the Berwick land as well as the Greenhills land. In this context, I find it entirely plausible that Mr Mondous complained of the cost to him (or Candibon) of having to hold the land in an 'unripe' condition for so long and that the Minister saw a solution that might assist Mr Mondous and would also be of general benefit to the community in Pakenham.

191 In my view, Candibon's version of events is not consistent with the long gestation of the agreement for sale and the fact that for some considerable period after the alleged threat, Candibon explored other options for the land, including a private sale and further subdivision of the land. Whatever the parties may now say about their reasons for doing things - and there is conduct that apparently defies rational explanation on both sides - the documentary trail of events in the eighteen month period leading up to the sale is inconsistent with the Minister having made a threat of compulsory acquisition.

192 I have set out the chronology of events after 13 September 1996 leading to the sale of the land to the Minister by agreement made on 17 March 1998. That chronology does not suggest that Candibon negotiated the sale of the land to the Minister under threat of compulsion. It shows that Candibon felt free to and did explore other options for the land. The sale was a heavily negotiated process which culminated on 17 February 1998, when Candibon wrote to the Department confirming its offer to sell the land on a non-compulsory basis for the price that had been negotiated by its valuers and those of the Minister:

We re-confirm our offer to sell and the Department's acceptance of the above Land for the sum of $2,100,000.00 on a negotiated basis (non compulsory acquisition) for a 30 day settlement.

193 Indeed, even Candibon's November 1996 letter, which refers expressly to an acquisition on a compulsory basis, is worded in a way that supports the Minister's contention that compulsory acquisition was at Candibon's option:

We have also considered an acquisition by your Government which would be acceptable to us if it was on a compulsory basis with the value established by two independent Valuers and incorporating the acquisition for the proposed freeway (32.43ha - 80 acres).

194 By this letter, Candibon indicated that it would agree to sell the Southern Parcel to the Minister on three conditions:

(b) the value of the land be established for that purpose by two independent valuers; and

(c) the acquisition include the Freeway Corridor as well as the Southern Parcel.

195 Mr Mondous gave evidence that he was familiar with the process of compulsory acquisition: land owned by him[37] had previously been compulsorily acquired by the Department of Education. Mr Mondous must have been familiar with some of the advantages of a compulsory acquisition over a private sale. It is difficult to see why, if Candibon did not wish to sell the land to the Minister and did so only because it was threatened with compulsory acquisition, it did not put the Minister to his word. In my view, a threat of compulsory acquisition does not explain why Candibon agreed to sell the land privately at what it considered to be a significant undervalue.

196 When Mr Mondous met with the Minister on 13 September 1996, he took with him the proposal for residential development prepared by Mahon & Mahon. The defendants submitted, and I accept, that the evidence of Candibon's endeavours to develop the land shows that Mr Mondous was principally focussed on developing the land for residential purposes. While I also accept Mr Mondous' evidence that Candibon was prepared to develop the land for a range of purposes (which is borne out by his investigation into whether Candibon could develop it as a private cemetery), Mr Mondous' attitude to selling the land is likely to have been strongly influenced by its prospects for intensive subdivision, that is, its prospects for development for residential or rural residential purposes.[38] As Tom Gibson said in his evidence, he advised Mr Mondous that the highest and best use of the land was for residential or rural residential purposes.

197 Viewed in this context, Candibon's November 1996 letter invites the Minister to purchase the land. It states that the value of the land is "very comparable on a per acre basis to the price paid for the land your department purchased between the railway and the Princes Highway in Pakenham". The land between the railway line and the Princes Highway was the Necropolis site, which the Minister had acquired earlier in the year for $3.8 million. If Mr Mondous was not going to be able to develop the land for residential or rural residential purposes as he wished to, his next best option may well have been to sell it to the Minister at the same or a similar price per acre as the Minister had paid for the Necropolis site. It may simply be that by November 1996, Mr Mondous had formed the view that developing Greenhills was problematic and his money and energies would be more profitably deployed developing land elsewhere.

198 Most importantly, however, in satisfying the Court that the Minister threatened to compulsorily acquire the land if Candibon did not sell it to him by private treaty, Candibon must grapple with the evidence that emerges from the documents that after the discussions with the Minister, Candibon nonetheless explored options for further subdivision of the Southern Parcel and the sale of the house lot to another potential purchaser, and threatened to put the land on the open market for sale if the Minister did not respond to it within 14 days. None of these actions was consistent with being threatened with compulsory acquisition and having no choice but to sell to the Minister.

199 Candibon contends that the various proposals that it explored for subdivision or sale in 1997 formed part of the valuation process, which was not inconsistent with a threat of compulsory acquisition. It says that there was nothing in the file notes of Tom Gibson or arising from Bruce Gibson's call to the Minister's office in March 1997 that was anything other than a normal incident of the valuation process. No serious work was ever done to advance any of these ideas; they were not commercial initiatives but merely valuation ploys. Mr Mondous contends that Mr Maclellan himself recognised this in his evidence about his attitude to the Mahon & Mahon proposal, which he dismissed as a ploy to influence the valuation of the land.

200 I do not accept that these proposals were merely valuation ploys or that they represented simple incidents of the valuation process. That would not explain why Mr Gibson spoke to the Council (as opposed to the Minister or the Department) about the possibility of further subdividing the land, why he set about preparing a subdivision application to the Council or why he expressed his disquiet to the Valuer-General's office when it upset the possible sale of the house lot to the Volders.

201 Mr Mondous' letter to the Department of 28 July 1997, in which he stated he was prepared to accept an offer on the house lot and inquired whether the sale of the house lot would affect the Minister's interest in the balance, also requires some explanation. Preparedness to accept an offer on the house lot from a third party (such as the Volders) and concern about the sale of the remaining lots falling over would suggest that Candibon was considering the Volders' offer and did not feel constrained or overborne by a threat of compulsory acquisition.

202 Mr Mondous had particular difficulty explaining this letter: he gave evidence that it referred to an offer on the house lot from the Minister. He said it did not refer to the Volders' offer, as that offer had been allowed to lapse almost two months earlier. I find unconvincing his explanation that the letter referred to an offer on the house lot from the Minister himself. There is no evidence that the Minister was interested in separately acquiring the house lot. Moreover, the clear purpose of the letter was to inquire whether the Minister would still be interested in acquiring the balance of the land if the house lot were excised. This is certainly how Mr Maunder treated the inquiry and it is, in my view, the only reasonable way in which Mr Mondous' inquiry could be interpreted.

203 Candibon says that if the letter did not mean what Mr Mondous thought it meant, then it is entirely plausible that it was written as a ploy to 'spur' the Department along. I consider this to be unlikely - why limit a ploy of that kind to the house lot if the intention was to put pressure on the Minister in respect of the whole of the land? In fact, by letter dated 30 July 1997, Mr Maunder responded to the inquiry by informing Candibon that the Minister might consider the purchase the property excluding the house lot. In this same letter, Mr Maunder informed Mr Mondous that to enable further negotiations to take place, Mr Mondous had to obtain the advice of a registered valuer. He concluded by asking Mr Mondous to let him know when he received his valuer's advice. Far from the Minister or the Department needing to be 'spurred on', the ball was squarely in Mr Mondous' court following Candibon's rejection of the offer that had been made by the Minister.

204 Moreover, even if Candibon was not really considering accepting an offer on the house lot - or if there was in fact no such offer - the fact that Candibon could use a threat of that kind against the Minister shows that Candibon considered the sale of all or part of the land to a third party to have been open to it under the arrangements or understanding that it had with the Minister.

205 This is consistent with Tom Gibson's file note of his discussion with Mr Maunder in May 1997, in which he told Mr Maunder "about the offer on the house lot and Sam's reluctance to accept, and that we are selling lots 1, 2, 5, 6 and the house lot." Mr Gibson gave evidence that he believed that he had oral instructions from Mr Mondous to say this to Mr Maunder. For the reasons I have previously given, I consider that Mr Gibson's file note shows Mr Gibson to have been treating the sale of the Southern Parcel as an ordinary sale of land unaffected by a threat of compulsory acquisition.

206 Candibon also contends that its letter of 18 September 1997, in which it threatened to sell the land - all of it this time - on the open market ("Should we not hear from you within 14 days from the date of this letter we will assume that you are no longer interested and will therefore proceed to sell it on the open market"), was a ploy to get the Minister to hurry up. It points to the letter having been drafted on 18 September 1997, only two days after Mr Mondous had told Mr Maunder that he would be in touch again once Tom Gibson's valuation was to hand. However, the letter was not sent for three weeks, that is, until 9 October 1997, by which time the 14 day deadline stipulated in the letter had expired. Candibon says that Mr Mondous told Mr Maunder that day that he was sending the letter and within a few days it was 'business as usual', and Mr Maunder was informed that he would be told when Tom Gibson's valuation advice was to hand. There was no further mention of selling on the open market, and Tom Gibson sent his valuation to Mr Maunder on 7 November 1997. Candibon says that Tom Gibson's file is in evidence and contains nothing to suggest that he was involved in the drafting of the 18 September letter, that it was ever communicated to him, or that he was ever asked to look at putting the property on the open market, either in late September 1997 or at all.

207 I am unsure what should be inferred from the delay in sending the letter, that it soon became 'business as usual' between Mr Maunder and Mr Mondous, or from the fact that Tom Gibson was not involved in its drafting. In the light of the earlier correspondence, it should be taken to mean what it says, namely that Candibon intended to sell the land on the open market if no response was received from the Minister. If it was just a ploy, which I do not accept to be the case, the fact that Candibon could use such a threat or ploy against the Minister shows that Candibon considered the sale of all or part of the land on the open market to have been a possibility under the arrangements or understanding with the Minister.

208 As to the proposition that Mr Mondous engaged Tom Gibson to sell the Southern Parcel, Candibon submits that there is no evidence at all that Mr Gibson ever had instructions from Mr Mondous to market the property or any part of it to anyone other than the Minister. His file, which was in evidence, is devoid of anything to indicate any form of marketing campaign, any soliciting of potential purchasers or of anything to suggest that Candibon was seriously contemplating the offer that had been received from the Volders on the house lot. Indeed, in respect of the Volder offer, there is nothing to suggest that Tom Gibson solicited it or that there was any kind of response to the offer. By letter dated 29 May 1997, the Volders placed a deadline for acceptance on their offer of 4 June 1997 and there is nothing to suggest that this elicited a response either.

209 While it is true that there is nothing to indicate that there was any form of marketing campaign for the land or any soliciting of potential purchasers, Mr Gibson's file note regarding the sale of Lots 1, 2, 5, 6 and the house lot, and his reaction to Mr Lovass contacting Mrs Volder suggests that he was doing what he could to sell the land when opportunities arose. Mr Gibson's evidence was that he was retained to sell the land, and he was duly paid a commission for securing the sale of the land to the Minister. The evidence was that he received a substantial commission, despite the fact that the property was not advertised or otherwise actively promoted by him on the open market.

210 Candibon further submits that the Minister's agreement to pay Candibon's valuation costs supports its contention that the Minister threatened to compulsorily acquire the land if it did not agree to sell it. It says that this offer cannot have been because the Minister thought Candibon's price was reasonable, as Candibon was then claiming around twice what the Minister had offered, and well above the $2 million limit that the Minister had fixed in his own mind. According to Candibon, the reason the Minister agreed to pay the valuer's costs was because he was going to compulsorily acquire the land if he could not come to terms with Candibon, and he would have to pay the valuation costs in any event.[39]

211 The evidence relating to the Minister's agreement to pay Candibon's valuation costs in the course of the negotiations for the sale of the land is as follows:

(a) On 10 July 1997, Mr Maunder made a file note of Mr Mondous telling him that he would send advice stating that the Minister's offer (of $1.85m) was not acceptable. Mr Maunder noted that he advised that it might then be appropriate to convene a conference of valuers or at least for the Department's valuers to consider the report of Mr Mondous' valuer;

(b) On 23 July 1997, Mr Maunder made a further file note recording that Mr Gibson was the valuer acting for Mr Mondous and that he would provide his report with sales evidence shortly;

(c) On 28 July 1997, Mr Mondous wrote to Mr Maunder (letter drafted by Tom Gibson) stating that the Minister's offer to purchase the property was unacceptable, but that if [the Minister/the government/the Department] was prepared to reconsider the offer, Candibon/Mr Mondous was willing to engage a valuer [there then followed the statement about the sale of the house lot and the inquiry as to whether this would affect the interest in the balance];

(d) However, on 1 August 1997, Mr Mondous again wrote to Mr Maunder stating that he had no intention of incurring further valuation costs unless [the Minister/the government/the Department] was prepared to meet those reasonable costs should negotiations not prove successful. This letter referred to costs incurred in 1995 as a result of the government's interest in the property at that time;

(e) On 21 August 1997, Mr Maunder recorded in a file note that he explained to Mr Gibson that the Department was unable to consider increasing the offer until supporting valuation evidence had been supplied by Mr Mondous. The file note records, "Tom advised that he has not been formally instructed by Mr Mondous to provide valu[ation] advice, however Tom would provide this advice for an amount not exceeding $5,000 for [sic] the AIV scale - whichever is less, should he receive instructions from Mondous. I advised that it may be possible to consider the Dept. paying this fee in order to progress negotiations, subject to the approval of the Minister";

(f) On 25 August 1997, Mr Maunder made a file note recording that the Minister had advised that he was agreeable to paying an amount up to $5,000 for valuation advice to be obtained by Mr Mondous;

(g) On that same day, Mr Maunder wrote to Candibon informing it that in order to progress negotiations, the Minister had agreed to meet its valuation costs up to $5,000 on the condition that a copy of the valuation would be provided to the Department on request. It was anticipated that the advice obtained by Candibon would enable the matter to be further considered.

212 Having regard to this sequence of events, it does not follow from the Minister's payment of Candibon's valuation costs that the Minister agreed to do so because he knew that he would have to pay them anyway on a compulsory acquisition. Mr Maunder's file notes and letters show that the negotiations had reached an impasse with Candibon's rejection of the Minister's first offer. Candibon was seeking a higher offer but the Minister was unable to increase his offer without a valuation from Candibon to justify making a higher offer. The Minister (apparently on the advice of Mr Maunder) concluded that offering to pay Candibon's valuation costs (albeit only up to the amount of $5,000) was the best way to move negotiations along. Accordingly, I am not persuaded that the Minister's agreement to pay Candibon's valuation costs supports its allegation that the Minister threatened to compulsorily acquire the land.

213 Candibon also submitted that the sale of the land at an under value supported the existence of a threat of compulsory acquisition. I do not accept that the land was sold at an under value. I have set out in some detail the contents of the valuations that were obtained and the process by which the sale price was negotiated between the valuers. The land was not valued as though it had no potential for development. It was valued in the light of its development potential having regard to the then current planning controls and the Minister's May 1993 directive. Hence, Mr Lovass' valuation took into account that the property was in an area which, "for the present at least", was reserved for rural purposes, but noted that it was expected that the township of Pakenham would slowly expand in a southerly direction towards the subject property. Mr Dudakov concluded that the land was just outside the designated growth area and could not be considered to have residential subdivision potential over the short to medium term, but noted that this was based on a ministerial directive which might alter at a later stage. He said that he did not consider a prospective purchaser would attribute any [more] growth potential to the land than was "evident in the prices paid for similarly zoned land", that is, land zoned as 'Highway 1'. For his part, Tom Gibson expressed the view that the highest and best use of the property was as rural residential lots "with long term development potential" and used sales of two properties opposite as an indication that there was "growing speculation towards industrial land around Pakenham". The land was therefore valued by the parties' valuers having regard to its potential in the short, medium and long term, and by reference to the value of land in the same zone. The sale price was negotiated based on these valuations.

214 As to the alleged instability of Mr Maclellan's evidence, Mr Maclellan said that he offered to buy the land to assist Candibon with its liquidity problems (which could be described as a shortage of working capital, or some other kind of financial difficulty arising from an inability to develop land) and because he saw advantages to the Shire in so doing. He said that he offered to carry out the transaction as a compulsory acquisition if it had some benefit for Mr Mondous. In my view, nothing turns on whether Mr Maclellan understood Candibon's problem to be one of liquidity or lack of working capital or some other financial stress arising from its inability to develop the land. I think it likely that Mr Mondous complained to the Minister about the financial consequences of his inability to develop the land. That would have been part and parcel of his approaching the Minister on several occasions to discuss the future use of the land and, at least on the last occasion, to try to persuade the Minister to permit a rural residential development. The circumstances in which Mr Mondous came calling might well - and quite reasonably - have been interpreted by the Minister to indicate some general financial difficulty.

215 Candibon has provided no financial records of any substance, despite being requested to do so by the defendants.[40] The only financial records of Candibon before the Court are a four page document entitled 'Mondous balance sheet summary ', attached to Mr Mondous' second witness statement, a single page profit and loss statement for the years ending 1996-2000 which was not formally tendered, and a rent receipt. The information provided by each of these documents is meagre and of questionable reliability. The first is not a balance sheet (although it is described as such), but a somewhat confusing profit and loss statement. It relates solely to Mr Mondous' holding in various entities, and appears to assume that Mr Mondous owned all of the units in Candibon, which was not the case. The 'profit and loss statement' is also unreliable. For example, it records rental received as $26,250 per year (which is the amount Candibon received in respect of Greenhills) for the entire period, despite the fact that the land was sold in March 1998.

216 As a result, apart from the assertions by Mr Mondous that both he and Candibon were financially successful, there is nothing upon which the Court could make any findings as to its financial position.

217 In any event, Mr Maclellan's evidence that he understood Candibon or Mr Mondous to have had financial difficulties does not detract from his evidence on the question of compulsory acquisition. The evidence that he raised the possibility of compulsory acquisition as an option and not as a threat is consistent with the protracted process of negotiation that followed, which was carefully documented by the Department, as well as by the Valuer-General, the Government Land Monitor and Mr Gibson, and in the correspondence between Candibon and the Department.

218 Likewise, although I find the proposition that the Minister suggested a compulsory acquisition in order to confer tax benefits on Candibon surprising, I accept Mr Maclellan's evidence on this point. Whether as a matter of fact Candibon was in a position to obtain tax benefits from selling the land via a compulsory acquisition rather than by way of a private sale is not to the point. Mr Maclellan's evidence was no more than that he wanted to give Candibon the option, in the event that it could be advantageous to it, to proceed by way of compulsory acquisition. That Candibon in fact made no capital gain on the land and Mr Mondous knew this to be so does not affect the Minister's appreciation of the potential benefits to Candibon of a compulsory acquisition. In any event, I note that Mr Maunder's briefing to the Minister of 12 February 1998 refers to Mr Mondous raising concerns with the Minister regarding the payment of capital gains tax upon the transfer of the land to the Minister. I see no reason why the Minister would tell Mr Maunder that Mr Mondous had raised a capital gains tax issue with him if he had not. If the Minister wished to compulsorily acquire the land, he could do so for reasons quite unrelated to Candibon's tax problems: the Minister did not need to dissemble to his departmental officers about why they should investigate the option of compulsory acquisition.

219 I prefer Mr Maclellan's evidence on this matter, and indeed generally, to that of Mr Mondous, to the extent that their versions of events did not marry. I found Mr Maclellan to be an honest and generally reliable witness who, not surprisingly, struggled at times to recall with precision events that took place 14 years earlier in the course of his busy working life as the Minister for Planning. The fact that Mr Maclellan did not accurately recall the nature of the dispute that he referred to as the 'tavern issue', that he mistakenly believed himself to have assisted Mr Mondous in relation to that issue, that he could not initially recall the question of compulsory acquisition being raised until after the sale, that he expressed his understanding of Candibon's circumstances variously as involving a liquidity problem, a cash flow problem and a shortage of working capital, does not detract from the reliability of his evidence on the question of whether he stated to Mr Mondous that the Government required Greenhills and would compulsorily acquire it if Mr Mondous did not agree to sell it. He was emphatic that he did not, and I accept his evidence. In my view, it accords with the documentary evidence, whereas Mr Mondous' evidence on this subject matter does not.

220 As to Mr Maclellan's recollection of the 'tavern issue' in particular, Candibon made much of the fact that the difficulty experienced by Mr Mondous was not a permit issue, but an issue of competing planning scheme amendments. The Planning Panel report on the proposed amendments makes it clear, however, that planning permits had been issued in the past for Mr Mondous' Berwick land, including for a tavern. These permits had lapsed. The Panel noted that the fact that approvals had been issued 'was relied on heavily by the proponent', but concluded that they should be given little weight in determining the final location for the neighbourhood centre that was the subject of its inquiry. From this, I conclude that Mr Maclellan's recollection of the 'tavern issue' as a permit issue is likely to have been reasonably accurate. It is likely that Mr Mondous based his case for Ministerial intervention on the existence of the earlier permits, much as he apparently did before the Panel.

221 Based on Mr Maclellan's evidence about his interest in purchasing the Southern Parcel and the various uses that he contemplated for it once purchased, it is apparent that he was a 'hands on' local member and an interventionist and somewhat unorthodox Planning Minister. I accept that he saw in Mr Mondous' inability to develop the land in the way he wanted to as an opportunity to purchase, for the benefit of the community of Pakenham, what was regarded as a good site for sporting and other community facilities. As Mr Richter QC put to him in cross-examination, he saw an opportunity to make a 'good fellow' of himself in his constituency. He understood that he could only purchase land in accordance with valuations from the Valuer-General but, based on his previous experience, saw what he thought might be a way to package the purchase to make it more attractive to Candibon, namely by way of a 'non-contentious' compulsory acquisition. In the event, that idea went nowhere.

222 There is one final piece of Mr Maclellan's evidence that I find persuasive as to whether he effectively forced Mr Mondous to sell the land to him. Describing his last meeting with Mr Mondous, Mr Maclellan said as follows:

... let me tell you, the last meeting was an occasion when Mr Mondous came to my electorate office totally un-notified, you know, he hadn't made an appointment, he hadn't said he was coming, he just came. And he came into the office and he clasped me firmly by both shoulders, thanked me for my help and in a continental fashion, gave me a kiss on both cheeks thanking me for all my help. Now, that was the last time I ever saw Mr Mondous until I glimpsed him in the courtroom on Monday.[41]

223 It goes without saying that such conduct is inconsistent with Mr Mondous having been forced to sell the land to the Minister under threat of a compulsory acquisition. Mr Mondous denied that the incident occurred, because he said he had never attended the Minister's electorate office without an adviser. I accept Mr Maclellan's evidence on this matter because I found him a credible witness and because I consider it unlikely that he would have made up or imagined an event of this kind. It is consistent with the pattern of behaviour whereby Mr Mondous felt at liberty to visit the Minister's electorate office during the time the Minister set aside to see his constituents in order to discuss his planning problems directly with the Minister and to seek the Minister's advice or intervention.

224 I found Mr Mondous to be a less reliable witness than Mr Maclellan. I accept that Mr Mondous came to the Court feeling genuinely cheated by the Minister and the State government: the sale of the land to the Minister has cost him the benefit of the very steep increase in the value of the land since 1998. However, the way in which he gave his evidence - repeatedly telling his counsel not to interrupt his evidence-in-chief and to allow him to recite his narrative unimpeded - gave rise to the impression that he had carefully constructed the narrative that he wished to present to the Court to a point that raised doubts about its reliability. His witness statements differed in important respects from the oral evidence in which he described in detail his meetings with the Minister, and it was apparent that he had had to adjust his evidence to take into account some of the documents that emerged in discovery and in the trial - in particular, the November 1996 letter and the Mahon & Mahon 'rural residential' proposal, each of which threw light on what occurred at the critical meeting on 13 September 1996.

225 While it is true that Mr Maclellan also found himself having to explain matters in documents that were not consistent with parts of his evidence and that some of his explanations were unconvincing, Mr Maclellan did not purport to be able to present a tidy story and made appropriate concessions about his lack of accurate recollection. By contrast, Mr Mondous gave the impression of being a man used to backing his own judgment and to getting what he wants, and I formed the impression that he had no hesitation in constructing his narrative for that purpose.

226 Ultimately, when the recollection of the chief protagonists in this proceeding - Mr Maclellan and Mr Mondous - is tested against the documentary evidence, that evidence supports Mr Maclellan's version of events rather than that of Mr Mondous.

227 I am therefore not satisfied on the balance of probabilities that the Minister told Mr Mondous that the government had determined that it would compulsorily acquire the land if Candibon would not agree to sell it to the Minister by private agreement.

The government's need for Greenhills as a buffer

228 It is alleged that the Minister told Mr Mondous that the government had determined that it required Greenhills[42] for the proposed freeway and otherwise to be a buffer zone for the proposed freeway.

229 The proposition that the government required Greenhills for the proposed freeway and otherwise to be a buffer zone for the proposed freeway does not withstand scrutiny: the freeway itself required a fairly narrow buffer zone, and it is unlikely that the Minister or anyone within the government believed that the entire 164 hectares of the Southern Parcel would be required as a buffer zone for the freeway.

230 However, Candibon submits that in his evidence Mr Maclellan "enthusiastically agreed" that the land was going to be a buffer for the freeway. It is true that when asked in cross-examination whether the land was going to be a buffer for the freeway, the Minister replied, "Absolutely, no reason why not". However, he then said:

Why squeeze a few houses or whatever, other than the racecourse which would have been a buffer. The use for sewerage if needed, that is to irrigate it with sewerage just to get rid of the water - to evaporate the water and put it through grass on its way to Western Port Bay, as it inevitably did, down the creek. Those uses are a buffer. Now, we had earlier agreed Your Honour that those uses were a buffer and it was my intention that those be the uses for the whole of the land and therefore I argued with counsel and put to you Your Honour that he's using the word buffer to cover those things and I am using the word buffer to cover those things and I am saying that all of Mondous' land, south of the freeway, was going to be used for those purposes.

Nobody who was in any of those meetings could have missed the - my enthusiasm for relocating the racecourse as being my number one objective because of its buffering effect and its occupation of the land and its abatement of any pressure for inappropriate development.[43]

232 These answers show Mr Maclellan to have been referring to a 'buffer' as a transitional zone between urban and nonurban (rural) areas rather than as a buffer zone for the freeway. They are consistent with the uses described in his file note made the day after the contract for sale had been entered into and in Mr Maunder's 15 May 1998 memorandum.

233 Not surprisingly, given the difficulties with the way the allegation is pleaded, in final submissions Candibon sought to redefine the 'buffer' referred to in its pleading as a transitional zone of precisely the kind described by Mr Maclellan in his evidence. Candibon referred to the fact that one of the key concepts under the SEGA plan was the establishment of buffer zones adjacent to urban growth boundaries. These were transitional zones and, as the concept was a familiar one to Mr Mondous, so Candibon now says, he took steps to find out what kind of buffer uses the Minister had in mind.[44] Candibon contends that the potential uses for the land that the Minister identified (small airfield, a racecourse, a municipal depot and recreational uses) were all ideally suited to a buffer zone, namely, a transitional zone separating the urban areas north of the freeway reservation and the largely rural area south of Greenhills Road. It further contends that neither the documents nor Mr Maclellan's evidence disclosed any comprehensive or pressing purpose for his acquisition of the Southern Parcel and that the absence of a comprehensive or pressing purpose was consistent with a broad or nonspecific purpose, such as a buffer zone.

234 Candibon and Mr Maclellan are therefore in heated agreement that as Minister, Mr Maclellan regarded the Southern Parcel as a buffer zone between the urban north and the rural south. I am satisfied that the Minister spoke to Mr Mondous about the Southern Parcel operating a buffer zone in this sense. This is consistent with the Minister's May 1993 directive and with the uses that the Minister repeatedly and consistently told the Court he contemplated for the Southern Parcel: the relocation of the Pakenham Racecourse, the possible relocation of the skydiving club from the road reserve, the possible use of the land as sacrificial grassland for the water from the South East treatment plant lake and so on.[45]

235 However, it does not follow that the government itself required the land for a buffer of this kind or, indeed, that the Minister told Mr Mondous that the government required the land for that purpose. The requirement for a buffer zone between the Pakenham township and the rural land south of Greenhills Road could have been met by the imposition of appropriate planning controls. There was no compelling reason for the government to acquire the land in order to create the buffer at that time or at all.

236 Moreover, as I have found, the proposition that the Minister was determined to wrest Greenhills from Candibon is not consistent with the pattern of contacts between Mr Mondous and the Minister, and Candibon and the Department prior to the Minister's purchase of the land.

237 As for the Freeway Corridor, had the Minister told Mr Mondous that the government required the Freeway Corridor for the purposes of constructing the freeway extension, this would have been to do no more than to state the obvious: it had long been reserved for precisely that purpose. However, the evidence was that there was no pressure for the government to acquire the Freeway Corridor at that time.

238 I am therefore not satisfied on the balance of probabilities that the Minister told Mr Mondous that the government required the land for the proposed freeway or otherwise to be a buffer zone for the proposed freeway.

239 It is alleged that the Minister told Mr Mondous in all of the meetings that, contrary to Candibon's wishes, the government had determined that Greenhills was not to be developed for residential or commercial uses and that the government would not permit Greenhills to be rezoned to permit development of that kind. These statements form the basis for Candibon's claims in deceit and negligence, because Candibon alleges that when the Minister purchased the land, he in fact had commercial development in mind or was open to such development occurring.

240 It is common ground that the Minister told Mr Mondous that he would not permit the Southern Parcel to be developed for residential uses. However, the parties differ as to whether the Minister told Mr Mondous that there could be no commercial development of the land.

241 In his first witness statement, Mr Maclellan stated that he told Mr Mondous he was not opposed to appropriate limited commercial development of parts of Greenhills - specifically, the relocation of the Pakenham Racecourse, on/off ramps for the freeway, and the relocation of some small industries along Healesville-Kooweerup Road.[46]

242 In the Further and Better Particulars of the defendants' Second Amended Defence,[47] the defendants say that the Minister was open to proposals for the use of the Southern Parcel for commercial purposes such as the future relocation of the Pakenham Racecourse, the relocation of some small industries to parcels of land fronting Healesville-Kooweerup Road, entry and exit ramps for the proposed Bypass, an airfield for the use of parachutists, a municipal depot or for irrigation (using grey water from local sewerage systems). They say that the Minister did not discuss precisely which part or parts of the Southern Parcel the Minister was open to proposals for such use or uses. Nor had the Minister resolved precisely which part or parts of the Southern Parcel was or were open for such proposed use or uses.

243 However, Candibon submits that Mr Maclellan there uses the word 'commercial' in a distorted sense, treating as commercial developments that are not truly commercial. Moreover, according to Candibon, Mr Maclellan's first witness statement creates the false impression that he had significant discussions about the commercial development of the land with Mr Mondous, covering a series of potential prospects. In fact, so Candibon says, Mr Maclellan's crossexamination revealed that he could not say whether he mentioned to Mr Mondous the potential relocation of small industries to Healesville-Kooweerup Road. He said that he did tell Mr Mondous that he would not allow residential use on the land.[48] He later said he could not say with perfect recall what the discussion was at the meetings, but the theme was Mr Mondous was asking what the land would be used for, to try to put a value on it.[49]

244 Candibon relies on the evidence of Mr Mondous as to what he was told by the Minister about the possibility of development on the land. It also relies on the evidence that the Minister told Tom Gibson that there would be no development south of the proposed freeway and that he intended the Southern Parcel to be used for community purposes, and that he also told Councillor Bill Ronald that his intention for Greenhills was that it serve exclusively the purposes of community, sport and recreation. The Council's planner, Mr McCaffrey, recalled the Minister telling him much the same thing. Moreover, when the Government Land Monitor belatedly requested an explanation for the purchase of the Southern Parcel, the Minister sent him a file note disclosing only uses of a recreational or municipal nature.

245 Candibon also says that everything the Minister had said and done up until his meetings with Mr Mondous in 1996 was consistent with him telling Mr Mondous that the Southern Parcel was not to be developed for commercial uses. The Minister's stated position in the 1993 cemetery negotiations was that the Southern Parcel was not suitable for urban development and that it should be valued on that basis. The ValuerGeneral's valuation of $2 million was made on that basis and the Urban Land Authority also instructed Molyneux & Byrne to value the Southern Parcel on that basis. Candibon says that the Minister's insistence to Mr Maunder that no more than $2 million be paid for the Southern Parcel and the Freeway Corridor also shows that he had in mind that there would be no urban development on the Southern Parcel.

246 According to Candibon, the Court should not accept Mr Maclellan's evidence that he used the expression 'urban development' in the Minister's May 1993 directive to connote only residential development, because this does not accord with accepted planning terminology, with the use of the word 'urban' in the SEGA plan, which the Minister's directive was calculated to override, or with the Minister's own stated reasons for not wanting urban development south of the freeway reservation, namely, to prevent bifurcation of the township by the freeway, and because the land to the south was wet and hard to drain and sewer. According to Candibon, 'urban development' is a well understood planning term which embraces, but is wider than, residential and commercial development. It is not synonymous with residential development alone. During the Urban Land Authority's negotiations with Mr Mondous in 1993, the Minister formalised his stated position in the Minister's May 1993 directive to exclude urban development south of the freeway reserve (and therefore on the Southern Parcel). The Minister's official stance in this regard persisted until 29 April 1998 and beyond.

247 When asked in cross-examination what he had in mind when he referred to the relocation of some small industries along Healesville-Kooweerup Road, Mr Maclellan said that he meant to refer to the location of some small industries rather than to their relocation. He said he did not have any particular relocations in mind and he did not have any particular industries in mind. He had in mind the possibility that there might be a matching of industries with the ones on the other side of Healesville-Kooweerup Road so that there would be no great planning tension. It was not as if a new industrial node was being created - it was the same VicRoads road frontage on which there was already a livestock exchange and some small industries.[50] When asked whether he told Mr Mondous this, he replied that he talked to Mr Mondous about possible future uses of the land and Mr Mondous was curious as to what he might do with the land. He told Mr Mondous that he would relocate the Pakenham Racecourse and then went on with other possibilities. If somebody interpreted what he said as being 'no residential', then they would be absolutely right. If somebody thought it meant 'no commercial', then they would be right to the extent that that 'commercial' excluded the racecourse and parachutists and dealing with the sewerage water at a charge to the sewerage authority. If that was regarded as noncommercial then there would be no commercial development.

248 In this context, Mr Maclellan described the issue as one of 'scale'. He explained what he meant in the context of the racecourse. He said that he would want the racecourse to present itself both as an experience and as a successful opportunity. He would not want it 'decorated' along its front road with 'grubbiness', which is often what comes with industry and commercial development. However, he said, "But if, in the fullness of time ... you have to accommodate something like that along the frontage because of the frontage and the rates and the possible land taxes ...".

249 Mr Maclellan's evidence was consistent as to the kinds of uses that he principally envisaged for the land. When asked his reason for purchasing the land, Mr Maclellan referred firstly to the relocation of the racecourse.[51] He then referred to the possible use for sewerage waste water and the "remote and faint possibility" that there might be some small area between the drain and the road for commercial or industrial uses like little factories or engineering works "or something". He said that it was in his mind that there could be factories at some stage in the future but not while he was Minister.[52] Mr Maclellan said, "What I contemplated ... was the relocation of the Pakenham Racecourse, the possible relocation of the parachuting from the road reserve just perhaps a couple of hundred metres south. That didn't happen either. The possible use of the land as a sacrificial grassland for the water from the south-eastern treatment plant lake, which is still there and is about to be connected up to Melbourne and there can no longer be a problem. But this is 12 years later. ... I sought to protect the racecourse in my electorate and I did so as local member. I did so even when I was the Minister for Transport. And I did so when I was Minister for Planning."[53]

250 It is uncontroversial that the Minister told Mr Mondous that the land was not suitable for residential development. I consider it very likely that the Minister said something along these lines to Mr Mondous, having regard to the fact that at the 13 September 1996 meeting, the Minister was presented with the Mahon & Mahon proposal for a rural-residential subdivision on the Southern Parcel, complete with its 'on-site effluent disposal'.

251 I am also persuaded that, consistently with the Minister's May 1993 directive, it was his view that land south of the freeway reservation was not suitable for 'urban' development. There is some uncertainty as to what 'urban' means in the context of the Minister's May 1993 directive, but seems is relatively clear that the Minister did not intend the land to be developed by the unconstrained spread of the Pakenham township: the township was to be concentrated between the SECV power line easement and the foothills to the north of the growth corridor and the freeway reservation to the south. That dispensed with the possibility of residential development south of the freeway reservation. That was not to say, however, that there could be no development of any kind south of the freeway reservation. The Minister's May 1993 directive stated that the location of growth would be largely dependent on the provision of engineering services and that development would be encouraged and would occur where physical services could be provided and employment opportunities were most accessible. Hence, once there was a prospect that he or the government might acquire the land, the Minister became interested in such things as relocating the Pakenham Racecourse and the parachute club, and making the land available for waste water storage and community facilities such as BMX bike tracks. While I accept the evidence that the Minister communicated to councillors and Council officers that the land once purchased would be used for municipal and community purposes such as sports and recreation, this would not preclude limited other uses.

252 Mr Maclellan became entangled in the proposition that he should have but did not say something to Mr Mondous about the possibility of commercial development of parcels along Healesville-Kooweerup Road. In cross-examination, Mr Maclellan agreed that if he had said to Mr Mondous that there would not be any development such as small scale industry down the Healesville-Kooweerup Road frontage, then that would have been an exaggeration. He continued:

But then if I said, "There won't be any industrial development" and then said, "Well, there may be some small ones down Kooweerup Road." But I said that to Mr Mondous, I said that to his valuers, I said that to everybody that would listen.

253 I consider it unlikely that the Minister told Mr Mondous that there could be some small industries along Healesville-Kooweerup Road. Candibon's November 1996 letter, which I have found reflected the discussion between the Minister and Mr Mondous at their meeting on 13 September 1996, referred to the uses proposed by the Minister as "industry/airstrip". What the Minister may have meant by "industry" is difficult to discern, but given the kinds of uses subsequently contemplated by the Minister, it is unlikely that he meant commercial enterprises of a kind or on a scale that would have been of interest to a property developer like Mr Mondous.

254 Mr Maclellan conceded in cross-examination that had he mentioned the possibility of small industries along Healesville-Kooweerup Road, it would have been "amazingly helpful" to Mr Mondous to give him a better idea of what could be done with the land. Although it might have clarified certain things for Mr Mondous, the location (or relocation) of some small industries along Healesville-Kooweerup Road is likely to have been of very limited interest to him. It would not have enabled Mr Mondous to realise his vision for the land because it would have left most of the land unavailable to be developed as Mr Mondous hoped. It remained the case that the Minister intended the land to be primarily used for low intensity uses of the kind he repeatedly described.

255 Of course, it is Candibon's case that the Minister effectively placed a blanket prohibition on any commercial development on the land in his discussions with Mr Mondous. However, I am not satisfied that the Minister described the limitations on the development of the land in those terms. A critical part of Mr Maclellan's evidence was that he did not say there could be no commercial development of the Southern Parcel because some of the uses he had in mind might well have a commercial element to them. He gave as an example the racecourse, or the water storage if the water authority was required to pay for the service. It was also the case that some commercial development, albeit not on a large scale, was permitted under the then existing zoning of the land. In the 'Highway 1' zone, various commercial uses were permitted, such as a tourist facility, a motel, a restaurant, a petrol filling station, a wholesale plant nursery, an educational establishment, a golf course, a drive-in theatre and 'rural industry'. Likewise, 'Rural' zoning under the new-format planning scheme permitted various industrial or commercial uses related to agriculture. What neither of these zones permitted, however, and what Mr Mondous really wanted, was the capacity to subdivide the land into much smaller lots and to develop it for intensive uses. That would have given Candibon the ability to pursue commercial opportunities for the land of a kind and on a scale that were commercially interesting to it. While the 'Highway 1' or 'Rural' zoning remained, the minimum lot size was a fundamental obstacle to the realisation of Mr Mondous' vision for the land.

256 What exactly the Minister said to Mr Mondous in the course of the meetings in his electorate office in 1996 about permissible uses for the land and future zoning remains uncertain. However, I find that Mr Mondous approached the Minister with at least one detailed proposal for residential subdivision. I consider it likely that Mr Mondous' vision for the land took the form of residential development and the subdivision of the whole of the Southern Parcel for that purpose, and that that is what he sought to discuss with the Minister and to persuade the Minister to allow. Given the Minister's May 1993 directive, this was unlikely to find favour with the Minister and would have coloured the Minister's response to Mr Mondous if asked what Candibon could do with the land.

257 However, in the context of the then current and proposed planning controls, and given what the Minister himself thought the land should be used for, it would have made little sense for the Minister tell Mr Mondous that he would not allow any commercial development on the land. Even the Minister's May 1993 directive did not impose such a blanket prohibition on commercial development of the land. Although I accept that the Minister conveyed to Mr Mondous - most likely indirectly - that he would not permit the land to be rezoned for the kinds of commercial uses that Mr Mondous might find attractive, I am not satisfied that the Minister told Mr Mondous that the land could not be developed for commercial uses. This might have prevented the relocation of the racecourse or constrained the use of the land for some of the other things that the Minister thought would be appropriate uses for the land.

258 I accept that the Minister told Mr Mondous that the Southern Parcel was not to be developed for residential uses and that he would not permit the Southern Parcel to be rezoned to permit development for residential uses. However, I am not satisfied on the balance of probabilities that the Minister told Mr Mondous that the Southern Parcel was not to be developed for commercial uses and that he (or the government) would not permit the Southern Parcel to be rezoned for such uses.

259 I have considered the Statements individually and have concluded that I cannot be satisfied that the Statements were made as alleged. It is pleaded that the Minister made the Statements to the plaintiff "categorically", that is, that there could be no doubt or confusion about the meaning of the Statements, and I have tested them against the evidence on that basis.

260 Moreover, if the Statements are considered collectively, the evidence does not support the narrative that the government needed the land for its own purposes and the Minister applied pressure to Mr Mondous to sell it to him by telling him that he would not be permitted to develop the land for residential or commercial uses and threatened him with compulsory acquisition. In particular, the evidence does not show a pre-existing need or desire for the land by the government or, apart from the alleged threat of compulsory acquisition itself, the application of pressure by the Minister. That is a critical part of the narrative supporting the claims, for without it, Candibon could simply have waited for the Minister to move on or the government to change in the expectation that population pressures would eventually cause the land to be rezoned for the kind of urban development from which it could make the significant entrepreneurial profit that it hoped to make when it acquired the land in 1988.

261 Mr Mondous was correct to understand that the Minister contemplated limited uses for the land, in that the Minister considered the land to be unsuitable for intensive or 'urban' development due to its separation from the township by the proposed freeway, its drainage problems and the need to provide a buffer between the township and the rural land to the south. This is consistent with the policy described in the Minister's May 1993 directive. Insofar as Mr Mondous hoped to persuade the Minister to depart from this policy, he failed. However, that is not sufficient to satisfy me that the Statements were made as alleged.

262 The claims in deceit, negligence and in equity are based on the Statements having been made as alleged. Although I have found the Statements not to have been made out the evidence, I propose to consider those claims in the event that I am subsequently found to have been wrong in my analysis of the evidence.

263 Candibon will make out its claim in deceit only if the following five elements are shown: [54]

(a) The Minister made a false representation;

(b) The Minister made the representation with the knowledge that it was false or the Minister was reckless or careless as to whether the representation was false or not;

(c) The Minister made the representation with the intention that it be relied on by Candibon;

(d) Candibon acted in reliance on the false representation; and

(e) Candibon suffered damage which was caused by reliance on the false representation.

264 The representation on which Candibon relies is the so-called 'implicit representation' that the government's position when it entered into the agreement to acquire the land in March 1998 and acquired the land in April 1998 continued to be as described in the Statements, that is, that it needed the land for the freeway or as a freeway buffer, that the land would not be developed for residential or commercial uses and it would not permit rezoning for those uses, and that the government wanted ownership of the land and would compulsorily acquire the land if Candibon did not agree to sell it.

265 I have found that the Minister did not make the Statements as alleged. It follows that there was no implicit representation to the effect pleaded. In deceit, the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation.[55] Candibon's failure to satisfy the Court as to the existence of the implicit representation spells the end of the claim in deceit, as the first of the five elements has not been established.

266 Furthermore, even if the Statements, or some of them, were made so as to give rise to an implicit representation that the government's position as at 17 March 1998 was that the government required the land for a buffer and would not permit the rezoning and development of the land for commercial purposes, and even if that representation was false, the claim in deceit would fail. The only statements forming part of the implicit representation that Candibon alleges were made by the Minister when he knew them to be false (or did not care whether they were true or false) were the statements relating to the future commercial development and zoning of the land. It is pleaded that by the time the agreement was made on about 17 March 1998, the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development. However, on Mr Mondous' oral evidence, the Minister's statements about the future commercial development of the land did not cause Candibon to sell the land to the Minister.

267 Mr Mondous was bound to acknowledge that a statement by a government minister that land cannot be developed for particular uses does not mean that the land will never be able to be developed for such uses. As an experienced developer, he well knew that governments come and go, and that land-use policies change. Policies may change within the term of a government and/or within the tenure of an individual minister. Mr Mondous had experienced this first hand when the government of which Mr Maclellan was a member came to power in 1992 and the previous government's plans for the south-eastern growth corridor were modified by the Minister's May 1993 directive to the Council. Mr Mondous consistently maintained that Candibon was prepared to hold the land for as long as necessary and that it had acquired Greenhills to develop or, if necessary, to hold and then develop. According to Mr Mondous, it was a question of waiting until the land was ripe for development. However, counsel for Candibon submitted that for Candibon, the Minister's statement that the land could not be developed for residential or commercial uses did mean that it could 'never' be so developed, because it was told that the Minister was to compulsorily acquire the land if Candibon did not agree to sell it to the Minister.

268 The statement containing the threat of compulsory acquisition was therefore critical. Without the threat of compulsory acquisition, so Mr Mondous said, Candibon was in the driver's seat: it could decide whether or not to accede to the Minister's wish to acquire the land. However, once the threat of compulsory acquisition was made, Candibon had no option but abandon its plans for the land and sell it to the Minister. It follows that on Mr Mondous' version of events, Candibon did not sell the land to the Minister in reliance on the statements in respect of which it claims to have been deceived.

269 Furthermore, Candibon's allegation that by the time the Minister entered into the agreement to acquire the land on 17 March 1998, he regarded portions of the Southern Parcel as potentially available for commercial development underwent modification in final submissions. It was submitted that the statements the Minister made to Mr Mondous precluding future commercial uses for the land "exaggerated the extent, finality and firmness of his stance against such uses", rather than that they were false. Put this way, Candibon's complaint became one of exaggeration rather than deception. That does not amount to the deceit that is alleged.

270 Nonetheless, in case I am subsequently held to be wrong in rejecting the claim in deceit on the bases described, I propose to examine briefly the factual basis for the allegation that, at the time that he entered into the agreement to acquire the land on 17 March 1998, the Minister himself regarded the Southern Parcel as potentially available for commercial development. Of course, Mr Maclellan gave evidence that he did regard the land as potentially available for limited commercial uses - such as horse-racing, waste water storage and as an airfield. Mr Mondous says that he did not understand these uses to be commercial uses and that the Court should not understand them to be commercial uses as none of them would present for Candibon (or any property developer) the opportunity to make any sort of entrepreneurial profit.[56] The question of the Minister's intentions for the land and whether those intentions were materially different from the intentions conveyed to Mr Mondous in the meetings in 1996 is therefore perhaps best addressed by considering whether the Minister had in mind commercial development in the sense understood by Mr Mondous, that is, industrial development of a type and on a scale which would have been of interest to Candibon, that is, from which Candibon could have made a substantial entrepreneurial profit.

271 The nub of Candibon's claim in deceit is that the Minister told Mr Mondous "categorically" that the government would not permit Greenhills to be developed for residential or commercial uses or to be rezoned to permit development for those uses when in fact the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development.

272 In support of the allegation that the Minister regarded portions of the Southern Parcel as potentially available for commercial development, Candibon pleaded the following matters:

(a) The Minister's engagement of the Valuer-General's office in late 1997 to prepare a valuation of the Council's chambers to enable the Minister to acquire them;

(b) The Council's resolution in about December 1997 to engage consultants to undertake a feasibility study for the establishment of a motorsport facility on the Southern Parcel and its direction to the steering committee for the study to develop a management plan to take advantage of opportunities for commercial development;

(c) In January 1998, the Minister and the Council respectively delaying the valuation of the Council chambers, which is alleged to have occurred pending the Minister's acquisition of Greenhills;

(d) On 22 April 1998, the Minister writing to the Treasurer proposing two sites in the Pakenham area for a proposed 'Intel' manufacturing facility, one of which must have been Greenhills;

(e) Following settlement under the agreement for the sale of the land, the Minister's Department and the Council reactivating the valuation process in respect of the Council's chambers;

(f) In mid-May 1998, the Minister countersigning a memorandum prepared by his Department to signify his approval for the Council to take on a coordinating role in relation to discussions regarding "commercial development of parcels [of the Southern Parcel] fronting either Healesville-Kooweerup or McGregor Roads" (the 15 May 1998 memorandum);

(g) On 11 August 1998, the Minister receiving a letter from the Council formally proposing a land swap involving the Southern Parcel in return for the Council's municipal offices. This is alleged to have given the Council the Necropolis site for an upmarket housing estate and the Southern Parcel as a site on which new industries could establish themselves in order to attract a market for the home sites in the proposed housing estate on the Necropolis site. [57]

273 Candibon alleges that it is to be inferred from these matters that:

(a) the Minister's acquisition of Greenhills was regarded by him as a logical precursor to any agreement by him to acquire the Council's municipal offices;

(b) At the time the Minister made the 'implicit representation' -

• he had already become aware of discussions regarding the commercial development of the Southern Parcel; and

• he had become minded to encourage commercial development of the Southern Parcel.

274 In fact, in final submissions nothing was made of the timing for the valuation of the Council's municipal offices. The matters alleged to show the Minister's state of mind on or before 17 March 1998 regarding the commercial development of the Southern Parcel are the so-called 'Intel letter' of 22 April 1998 (in which the Minister is alleged to have proposed the Southern Parcel for a major manufacturing development), the land swap arrangement with the Council (resulting in the transfer of the Southern Parcel to the Council in July 1999), the Council's investigation into the viability of a motor sports facility on the Southern Parcel in 1998 (which allegedly involved the Council investigating commercial opportunities for the Southern Parcel as early as December 1997) and the 15 May 1998 memorandum (which refers to the commercial development of parcels fronting Healesville-Kooweerup and McGregor Roads).

276 On 22 April 1998, some five days after the sale of the land to the Minister had been completed and just over a month after the agreement for the sale of the land, the Minister signed a letter to the Treasurer proposing two unnamed sites in the Pakenham area for an 'Intel' manufacturing facility (the 'Intel letter'). Both sites were said to be green field sites in excess of 200 hectares within the urban growth corridor, owned by the government and managed by the Council and therefore able to be developed within a short timeframe. Candibon says that Greenhills - or more specifically the Southern Parcel - was one of the sites that the Minister was offering to the Treasurer for development. The fact that the Minister was able to propose the Southern Parcel to the Treasurer as the site of a major manufacturing facility shows, so Candibon says, that at the time that he entered into the agreement with Candibon to acquire the land on 17 April 1998, the Minister regarded the Southern Parcel as potentially available for commercial development.

277 The evidence before the Court as to the genesis of the Intel letter was as follows. At the beginning of April 1998, there were reports in the Australian press that Intel, described as the world's largest maker of computer chips, was considering a massive investment in manufacturing in Australia that would be worth up to AU$6 billion. It was understood that Australia was on Intel's short list for a silicon fabrication plant to make the next generation of computer chips. One newspaper reported that Victoria was understood to be the preferred location for the facility. The facility would generate millions of dollars in research and development spending if it proceeded.

278 According to the Council officers who gave evidence, the Council saw this as an opportunity to attract a major employer to the Shire. On 3 April 1998, Mr David Roff, the Council's interim Chief Executive Officer, prepared a briefing note for the Minister regarding the possible Intel investment. He advised the Minister that the Council had made contact with Business Victoria to be told that Multimedia Victoria was handling the Intel bid. It was thought that the requirements were a green field site of 200-300 hectares with plenty of clean water. Mr Roff subsequently made contact with Multimedia Victoria, which confirmed the substance of what the Council had previously been told and that Intel needed a site that was "ready to go", that is, a site that had infrastructure/servicing approvals. The 3 April briefing note to the Minister stated that the Council proposed writing to Multimedia Victoria and to Mr Bob Mansfield, the Prime Minister's Investment Broker, offering Pakenham as a location for the Intel facility.

279 The same day, Mr Roff signed a letter to Mr Peter Wolcott of Multimedia Victoria explaining why the Pakenham area was the ideal location for the proposed Intel facility. Under the heading "Suitable sites", the letter stated that whilst there were a number of sites within the Pakenham area which were well placed to accommodate the proposed facility, two specific sites were worthy of close consideration. The particular features of those sites were described as follows:

Land size - both are green field sites in excess of 200 ha in area.

Land use capability - the sites are fully serviced and are situated within the urban growth corridor. They are not adversely affected by environment, heritage or other issues and could therefore be developed without delay.

Ownership/control - the sites are owned by the Minister for Planning and Local Government and managed by Cardinia Shire. Both sites can, as a result, be made available for the proposed facility within a short time frame.

280 A copy of this letter was forwarded to the Minister on 7 April 1998.

281 On 22 April 1998, the Minister wrote to the Hon Alan Stockdale, Treasurer and Minister for Multimedia, reproducing almost verbatim Mr Roff's letter to Mr Wolcott of 3 April 1998. This letter put forward two sites as worthy of consideration for the Intel facility for the reasons that were given to Mr Wolcott.

282 Mr Roff gave evidence that he prepared the 3 April briefing note and that the Minister referred to in the briefing note could only have been Mr Maclellan. Mr Roff recalled discussing the Intel proposal with Mr Maclellan, as he was the local member and Mr Roff was seeking his support. Mr Roff did not recall dealing with any other minister in respect of Intel. However, he could not recall whether he sent the briefing note to the Minister or whether he simply used it to aid his discussions with the Minister.

283 In his witness statement, Mr Roff said that he had limited recollection of his discussions with the Minister. He recalled that he and the Minister discussed the Intel proposal and that the Minister indicated to him that the Minister would support him proposing for the Intel facility two sites which he owned in Pakenham: one was the Necropolis site and the other was Greenhills. Mr Roff stated that he could not recall whether he had sought the Minister's approval to propose either or both of these sites, or whether the Minister gave Mr Roff the idea of proposing one or both of them.

284 As to the Council's letter to Multimedia Victoria dated 3 April 1998, Mr Roff confirmed that the sites referred to were the Necropolis site and Greenhills and that he, Mr Roff, had obtained the Minister's support to propose these sites for the Intel facility.

285 Mr Robinson, the Council's Business Development Manager, also gave evidence about the genesis of the letters proposing the two Pakenham sites for the Intel facility. He said that he believed someone at the Council saw a newspaper report to the effect that the government was trying to attract Intel to set up a manufacturing facility in Victoria. This would have been referred to him as the manager of business development. It was part of his job to do something to put Pakenham into contention as a potential location for the facility. At the time, the Council was chasing anything that seemed to be a prospect for generating local employment. Mr Robinson said the 3 April letter to Multimedia Victoria was probably drafted by him. He said that the references to the two sites suggested to him that the sites in question were the Necropolis site and Greenhills. He could not recall whether the Minister's approval to offer these sites was obtained in advance. He did not recall being a party to any discussions with the Minister about the Intel proposal.

286 For his part, in his second witness statement Mr Maclellan stated that the Intel letter would have been drafted for his signature, as was usual when he was the Minister. While he could not say for certain which two sites were referred to in the letter, the site which most immediately came to mind was the Necropolis site. This would have been in excess of 200 hectares, within the urban growth corridor, serviced and fronting the Princes Highway. He remained uncertain as to the identity of the other site referred to in the letter - it could well have been that the sites were two different configurations of the Necropolis site. He remained of the belief that Greenhills was not one of the sites referred to in the Intel letter. He did not believe Greenhills was in excess of 200 hectares or that it was situated within the urban growth corridor. It did not have highway frontage. It was true however, that Greenhills was owned by the government and managed by the Council.

When the Letter was provided to me for my signature I had no belief that the land referred to in the Letter was Greenhills.

Had I known that the Letter when presented to me for signature was referring to the Greenhills land, I would not have signed it.

At that time I had in mind that the part of Greenhills that was not reserved for the proposed freeway could have been used as a site for the relocation of the Pakenham Racecourse. When Greenhills was transferred to the Cardinia Shire Council, I ensured that provision was made for the possibility of the Pakenham Racecourse being relocated to Greenhills.

At no time did I ever consider any part of Greenhills being a location for a business park.

288 In his third witness statement, Mr Maclellan responded to Mr Roff's statement in the following terms:

I do not recall having any conversation with Mr Roff about Intel, but this does not mean the conversation did not take place.

If I did have a conversation with Mr Roff on 3 April 1998 (which is a Friday) about Intel, I would not have agreed to have offered Greenhills as a site, if indeed Greenhills was referred to at all. At this stage, the transaction for Greenhills had not yet finalised, and I would not have offered up a site which I did not own. I note from the attachments to Mr Roff's statement that he sent a letter to Peter Wolcott of Multimedia Victoria on 3 April 1998, and that this letter was provided to me, with a request that I provide assistance.

I am quite certain that if any site was offered it would have been the Pakenham Park site (now Lakeside). I believe that if I had offered two sites, it would have been two configurations of the Pakenham Park site, as set out in my statement dated 28 July 2010.

289 The Minister then gave further reasons why he remained of the belief that Greenhills was not one of the sites referred to in the Intel letter: Greenhills had no reticulated sewerage and had drainage problems, and that on the date the letter was written (22 April 1998) the Council had not agreed to manage the site.

290 There is therefore a conflict between the recollection of Mr Roff and that of Mr Maclellan as to whether Mr Maclellan was informed that one of the sites proposed for the Intel facility was Greenhills.

291 Mr Maclellan was extensively crossexamined about the Intel letter. He was asked whether he would sign pieces of paper without knowing roughly what they were about. He answered, "That's an awkward question to answer under oath. I'm sure there were occasions when I perhaps foolishly, or illadvisedly, signed things I shouldn't have signed. ... I tried not to. I can't answer more truthfully than that." He said that the Intel letter did not ring a bell with him but that he may well have read it at the time.[58] He said that he was supporting his local constituency but that looking at the letter now, if he met Mr Stockdale (the Treasurer, to whom it was addressed), he would not be proud of the letter. He was not sure that the Treasurer would have been forgiving of him for writing a letter which suggested that services were readily available, only to find that it was going to cost a considerable amount to get them there.[59]

292 Significantly, Mr Maclellan staunchly maintained the position that when he read the Intel letter, he would have seen it as referring to two configurations of the Necropolis site. He said the Intel letter would not, in his mind, have had anything to do with the Southern Parcel or the area south of the freeway reservation.[60]

293 In fact, in his evidence Mr Maclellan went so far as to say that if Intel had decided that the Southern Parcel was an ideal site for its facility and had the support of the Premier and the Treasurer and a majority of Cabinet, then he, as Minister, would have had to fall into line or resign. He said that he thought he would have resigned, so strongly did he feel about a breach of longstanding government policy in relation to the development of land south of the freeway reservation.[61]

294 Mr Maclellan was asked by counsel for Candibon to sketch the different configurations of the Necropolis site. That sketch is in evidence and shows as follows:

295 The small rectangles marked 'P.E.' are alternative sites for Police and Emergency facilities, which were to be constructed on the Necropolis site. The different 'configurations' referred to by Mr Maclellan simply place these facilities at different points on the site.

296 Candibon made a number of submissions about the reliability of the Minister's evidence in relation to the Intel letter:

(a) The reasons Mr Maclellan gave for excluding Greenhills as one of the two properties are transparently unsatisfactory: his insistence that Greenhills was not in excess of 200 hectares, was not serviced (as opposed to the Necropolis site) and not within the urban growth corridor do not withstand scrutiny, as Greenhills and the Necropolis sites were the only pieces of land that he and the State had in the Shire that even approached 200 hectares, the Necropolis site was no more or less serviced than Greenhills in respect of sewerage, water, electricity and telecommunications, and it was marginal whether or not Greenhills was within the urban growth corridor. The other matters he raised involving the unavailability of reticulated sewerage, drainage problems and the fact that the management agreement had not been signed do not stand up to scrutiny as the Necropolis site did not have reticulated sewerage either and the Necropolis site had drainage problems as well;

(b) While in Mr Maclellan's second witness statement he was uncertain as to what the two sites might have been, following receipt of Mr Roff's statement, Mr Maclellan swore a further witness statement in which his reaction was to profess himself "quite certain" that the only two sites he would had offered Mr Roff were two different configurations of the Necropolis site;

(c) In Mr Maclellan's second witness statement he said that as at 3 April 1998, his purchase of Greenhills had not been finalised and he would not have offered up a site he did not own. However, he had by then signed a contract to buy it and had offered the Council a management contract in respect of the land some three months earlier before he had even agreed terms to buy the land.[62] Although no management agreement had been signed by the Council, a proposal had been put to the Council as early as 12 December 1997.

297 Further, Candibon submits that Mr Maclellan's claim not to have had any knowledge of 'Intel' was disingenuous, as was his claim that he had no idea what project he was supporting when he signed the Intel letter. This was not consistent with his statement that he would not have signed the letter had he known or believed it was nominating Greenhills for the purpose of the Intel facility. Candibon even goes so far as to suggest that Mr Maclellan's mispronunciation of Intel as "Intertel" when giving his evidence was feigned for the purpose of bolstering his story that he did not know what he was doing. It is inconsistent, so Candibon says, with the fact that he had been regularly attending the Ministerial Industry Council, a Cabinet committee that had targeted Intel in 1994 and that there had been an ongoing campaign to attract it to Victoria lasting a number of years after 1994.

298 I do not accept that Mr Maclellan feigned lack of knowledge about the Intel proposal. However, I find unsatisfactory his explanation that when he signed the Intel letter he had (or must have had) in mind two configurations of the Necropolis site. The drawing that he made during crossexamination, which carves two small parcels out of the 200 hectare site at different points, is unconvincing. In my view, the two 'configurations' could not reasonably be described as two different sites. It is the one site with two possible excisions. I also find the explanations in his second and third witness statements, which refer to the size of the Southern Parcel (164 hectares rather than anything approaching 200 hectares), its lack of services, and the fact that it was not at the time owned by the government or managed by the Council, unconvincing. They have an air of ex post facto rationalisation.

299 In my view, the person who drafted the Intel letter (most likely, Mr Robinson) had in mind Greenhills as one of the sites. I also think it likely that Mr Roff mentioned to the Minister, en passant, that Greenhills could be one of the sites. However, as to the significance of such a comment by Mr Roff and the attention the Minister would have paid to it, I found Mr Robinson's evidence very useful. In cross-examination, Mr Robinson was asked a series of questions about whether it was misleading to attribute to Greenhills the characteristics of the sites described in the Intel letter. He had to agree that most of what was said in the letter about the characteristics of the proposed sites was misleading if one of them was Greenhills. He was then asked whether that caused him to change his view that Greenhills was one of the sites referred to in the Intel letter. He answered that it did not, and then sought to explain this by reference to the Council's approach to business development at the time. He said:

We would engage in various kite-flying exercises in an attempt to attract business into the region, and ostensibly to create employment, and I don't know whether it's the right expression or not, but there would be a fairly large square [element] of poetic licence used by myself and the CEO in letters of this nature in effectively pitching to whether it be State, Federal Government or people such as Intel to attract them into the region, and I may well have written this letter without, you know, there's a certain degree of flexibility with the truth in terms of what we could deliver, and our intent was in writing these sorts of letters to get companies like Intel's attention, and then, once we had their attention, we would then work furiously to try and fill in the gaps, as it were. So if Greenhills wasn't a suitable site, if it turned out that Greenhills wasn't a suitable site for Intel, we would talk to private landowners within the locality and try and find a suitable site. So we would often go with proposals such as this which were far from fully developed and there would often be elements within the correspondence which weren't necessarily completely true, with the intent of trying to attract those sorts of companies. And then, once we had their interest, when we felt we had a chance of attracting them, then we would then resolve the difficulties, whether it be servicing or land provision or whatever other issues arose.[63]

300 To similar effect, Mr Roff described the Intel letter as "a high level pitch to attempt to get on to some sort of long list, if you like, for further consideration. ... It was merely an attempt to get some attention, maybe then be able to progress the proposition."[64]

301 That, in my view, reveals the true status of the Intel letter and explains why the Minister signed it without proper regard to what it was proposing and explains why any reference to Greenhills in discussions did not ring alarm bells for him. The Intel letter was 'a kite flying exercise', to use the words of Mr Robinson. There was no real reason to believe that of all of the little towns in all of the lands on earth, Pakenham would be favoured by Intel for its new manufacturing site. Its distance from the airport alone was likely to remove it from contention. As a result, the Intel letter (and the 3 April letter on which it was based) was replete with assertions that were at best vague and in a number of respects quite inaccurate.

302 Notwithstanding Candibon's submissions, I find that the Minister signed the Intel letter without giving proper attention to its contents. It may be that it did not occur to him that Greenhills was one of the sites proposed, although this is contrary to the evidence given by Mr Roff that Greenhills was discussed as a possible site; alternatively, it may have registered with the Minister that Greenhills was one of the sites mentioned, but he gave it scant attention or was prepared to overlook his objections to the use of Greenhills for large-scale industrial purposes on the basis that, as Mr Robinson said, difficulties finding a suitable site could be resolved in the unlikely event that the proposal went any further. It is also possible, of course, that the Minister thought that the Intel facility was of such a scale and potentially of such importance to the region as to justify a change in policy in respect to land use south of the freeway reservation should Pakenham have become a serious prospect for its location.

303 Candibon has seized on the Intel letter as the 'smoking gun' in this case. It does not persuade me that at the time the Minister entered into the agreement with Candibon to acquire the land, the Minister regarded the Southern Parcel as potentially available for commercial development of a kind or on a scale that would have been of interest to Candibon, or of the type that subsequently took place. The relevant event took place after the Minister had entered into the agreement to purchase the land, and involved a highly speculative (indeed, unlikely) prospect to which I find that the Minister gave scant attention.

304 In any event, had the Minister decided that the Intel proposal was sufficiently important to the State and the local community to justify a radical change in land use policy, it would not follow that he deceived Candibon when he let it be known that Candibon would not be able to develop the land as it wished. It would be consistent with his role and function as the Minister for Planning to make changes to land use policy if the public interest warranted the change.

305 Candibon points to the Minister's preparedness in August 1998 to contemplate the land swap proposed by the Council and his 'in principle' approval of it in September 1998 as evidence that, at the time that he entered into the agreement with Candibon to purchase the land, he regarded the Southern Parcel as potentially available for commercial development.

306 The facts of the land swap arrangement do not support any such conclusion. The evidence was that the land swap was an initiative of the Council that arose in the middle of 1998, some time after the Minister had acquired Greenhills. There was no evidence that a possible land swap involving Greenhills was in the Minister's mind in March or April 1998 or, indeed, that the Minister had any inkling at that time that, if Greenhills was transferred to the Council, the Council would proceed to seek to rezone the whole of the Southern Parcel as 'Industrial' and work towards developing it as a large industrial estate.

307 In his witness statement, Mr Robinson stated that by late 1997, he was working with the Minister on a proposal for a land exchange involving the Necropolis site and Council's municipal offices. Mr Lovass was to value Council's municipal offices for the purpose of the proposed land exchange. At some point - he could not recall when or how - Greenhills was brought into the proposal. Although this is consistent with there having been discussions for some time about the sale of the Council's municipal offices to the State government, it is not consistent with Mr Welsh's evidence that he conceived the land swap involving Greenhills in part to resolve the impasse that had developed in relation to the value of Council's municipal offices. I am satisfied that the land swap proposal involving Greenhills only came into being in July 1998, when Mr Welsh began to concern himself with the sale of Council's municipal offices and with the management of Greenhills. I accept Mr Welsh's evidence on this point.

308 None of the foregoing suggests that the Minister set out to deceive Candibon into selling the land to him by making statements about the development potential of the land that were not true, knowing that it was to be transferred to the Council for the purposes of industrial development. The land swap proposal post-dated the sale of the land to the Minister and, if the Council did have plans for the land to be commercially developed as early as March or April 1998, there is no evidence that the Minister knew about them.

309 Nonetheless, Candibon points to what it says is a "lack of candour" in the Minister's evidence regarding the land swap. It submits that in professing not to have known that the Council was looking to develop an industrial estate on Greenhills, there remains a "singular void" in Mr Maclellan's account of events. It says that Mr Maclellan's account does not explain why the Council wanted to buy Greenhills from him at all, for it cannot have been to achieve any of the community outcomes which he says he had in mind, as these would have been perfectly achievable under his ownership and the Council's management. Candibon says that Mr Maclellan's evidence does not explain why, so far as he knew, the Council wanted to spend money buying the land from him or why, so far as he knew, the Council wanted to do so without some assurance that they would be permitted to use it for whatever purpose was driving their interests. Candibon also asks why the Council did not simply exclude Greenhills from the land swap in 1999 when it could not find the $1 million that the ValuerGeneral and the Government Land Monitor required it to contribute to equalise the land swap and why the Minister did not suggest this, instead of subsidising the Council's purchase. Candibon submits that the "obvious truth" is that the Minister knew very well why the Council both wanted and needed the Southern Parcel. The Council had a strategy to transform the demographic of the town. It wanted an upmarket housing estate on the Necropolis site which would double the size of the township, and it wanted largescale employment on the Southern Parcel to match - a strategic industrial node.

310 It may well be the case that the Minister knew of Mr Welsh's strategy by the time he agreed to the land swap in principle in September 1998, but the timing of the Minister's knowledge is crucial. Mr Welsh's evidence was that he developed the strategy described, but that he did not do so until he came to work for the Council in June 1998. In my view, the hypothesis that the Minister knew that the Council wanted the Southern Parcel for a "strategic industrial node" prior to March or April 1998 is far-fetched. It is also contrary to the evidence of Mr Maclellan, which was to the effect that he would not have approved the development of the land for that purpose. It is clear that throughout these land swap negotiations, the Minister insisted that a significant part of the Southern Parcel had to be made available for the Pakenham Racing Club.

311 Candibon says further that the Minister's knowledge of the proposal to develop an 'industrial node' on Greenhills is evidenced by the fact that there is reference to the development of a strategic industrial node in the new format Cardinia Planning Scheme. In August 1997, the future development of such a node was contemplated for investigation "in proximity to the interchange of the [proposed freeway] and Cardinia Road" in the display draft to the proposed new scheme.[65] In the August 1999 version of the Cardinia Planning Scheme approved by the Minister, the very same idea is recited, with the additional words that the establishment of a strategic industrial node at Pakenham "will be implemented ... by including land in close proximity to the proposed freeway interchange of the [freeway bypass] and Kooweerup Road ... in an Industrial 1 Zone".

312 In fact, in clause 21.06-4, the Cardinia Planning Scheme states that "a strategic industrial node exists around the intersection of Bald Hill Road and Kooweerup Road, Pakenham, and this will be further strengthened by the future construction of the Pakenham section of the Princes Freeway which will improve access. The development of a future strategic industrial node should be investigated in proximity to the interchange of the Pakenham section of the Princes Freeway and Cardinia Road as development of the growth corridor proceeds." Under 'Strategies', the Planning Scheme includes the strategy of establishing "a strategic industrial node at Pakenham" and states that strategies in relation to industry will be implemented through the Planning Scheme by "[i]ncluding land in close proximity to the proposed interchange of the Princes Freeway and Kooweerup Road in Pakenham in an Industrial 1 Zone".

313 I agree with Candibon that the interchange there referred to must be the proposed interchange on the north east corner of the Southern Parcel. Nonetheless, the statements in question do not mean that the Southern Parcel was to be included in an 'Industrial 1' zone. In fact, the then existing industrial area was to the north-east of the Southern Parcel adjacent to Bald Hill Road, that is, just to the north-east of the proposed on/off ramps from the Pakenham Bypass at Kooweerup Road. The Panel and Advisory Committee reporting on the proposed Planning Scheme in August 1998 reported that it was intended to strengthen the industrial node existing around Bald Hill and Kooweerup Roads, with access being improved by the future construction of the Pakenham section of the Princes Highway, and that as development in the growth corridor proceeded, the Council intended to investigate the potential for a future strategic industrial node near the interchange of the Pakenham extension of the Princes Highway and Cardinia Road.

314 This does not support Candibon's thesis that the Council, and by implication the Minister, were planning as early as 1997 to rezone the Southern Parcel for industrial purposes. In fact, it appears that the proposal was to strengthen the industrial zone to the north and to investigate developing a further 'node' in another area altogether. In my view, it is of no assistance to Candibon.

315 As a result, I am not satisfied that the Minister's 'attitude' to the land swap proposal and the references to industrial nodes in the new format planning scheme support the proposition that by 17 March 1998, the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development of a kind or on a scale that Candibon would have been interested in pursuing itself, or of the kind or on the scale that subsequently took place.

316 Candibon alleges that in about December 1997, and in anticipation of the Minister acquiring the land, the Council resolved to engage external consultants to undertake a feasibility study for the establishment of a motorsports facility on a portion of the Southern Parcel and simultaneously directed its steering committee for the study to develop a management plan to take advantage of opportunities for commercial development. It contends that it must be inferred from this that by March 1998, the Minister had become minded to encourage commercial development of the Southern Parcel.

317 There is a fundamental difficulty with this proposition. In December 1997, the steering committee was not directed to develop a management plan to take advantage of opportunities for commercial development on Greenhills. The location of the future motorsports facility remained open at that stage. Only in May 1998, was the Southern Parcel identified as the site for the proposed motorsports facility. Furthermore, the Minister was not involved in the proposal or the study.

318 There was produced on subpoena to the Court a large amount of material that was created by or was in the custody of the Council's consultant for the motorsports feasibility study, Spiller Gibbins Swan Pty Ltd ('SGS'). The material in question shows that the Southern Parcel was identified as the potential site for the motorsports facility in May 1998, and that there was from the outset discussion about how to accommodate an 'industrial zone' on the land at the same time, as well as the other uses that were proposed for the Southern Parcel, such as the relocation of the skydiving club. Thus, for example, the SGS documents refer to the following:

(a) The Council's 'requirements' for an industrial zone, understood to be a 20 hectare strip, 200 metres wide by 1 kilometre long along Kooweerup Road;

(b) The need to embrace the construction of an airstrip, parachute landing area, and infrastructure for the skydiving club, along with the "development of an industrial area along the Kooweerup section of the land";

(c) The Council requiring the whole 200 metre depth for the industrial strip along the eastern boundary "... because the type of large scale industries they would want to attract would want at leas [sic] this depth." The type of industry would be the normal large scale industry as permitted under the Council's scheme;

(d) The fact that the Council had proposed to reserve the eastern edge of the site (200 metres deep) for industrial purposes.

319 The documents in question were created during a period from in mid-May 1998 to the end of July 1998.

320 The motorsports feasibility study was finalised by SGS in December 1998. It identified one potential site for the complex, being the Southern Parcel, and noted that about 122 hectares of the total parcel of 160 hectares was potentially available for motorsports facilities. Under the site suitability assessment, SGS noted that the site was zoned 'Highway 1' in part and 'Rural' in part and that the Council had proposed to reserve the eastern edge of the site (200 metres deep) for industrial purposes.[66]

321 Apart from the initial resolution to conduct the feasibility study in December 2007, which did not identify Greenhills as a potential site, none of the materials relating to the proposed motorsports facility were in existence at the time the Minister purchased the Southern Parcel. Nor, in my view, do they implicate the Minister in the proposal to develop an industrial strip along the eastern boundary of the Southern Parcel.

322 It does appear, however, that by mid-May 1998, the Council had plans to develop the eastern edge (Kooweerup Road frontage) of the Southern Parcel for industrial purposes. One can only speculate as to where the idea came from and when it was conceived. In my view, however, the motorsports materials do not support the contention that the Minister made a false representation to Candibon in that, as at the date he acquired the land, he regarded portions of the Southern Parcel as potentially available for commercial development of the kind described in the motorsports materials or of a kind or on a scale that could have been attractive to Candibon.

323 I find, in particular, that the Council did not resolve in December 1997 to engage consultants to undertake a feasibility study for the motorsports facility on the Southern Parcel or direct its steering committee to develop a management plan to take advantage of opportunities for commercial development on the Southern Parcel in anticipation of the Minister acquiring the land. Further, even if that were the case, there is no evidence that the Minister knew of such matters or that he himself regarded portions of the Southern Parcel as available for the kind of development that is referred to in the motorsports materials. In fact, Mr Maclellan repeatedly said in his evidence that he did not regard the Southern Parcel as available for that kind of development and there is nothing in the motorsports materials to show the contrary.

324 It will be recalled Mr Maunder's briefing note to the Minister on 15 May 1998 following the purchase of the land and concerning its future management proposed that the Council be authorised to enter into discussions concerning, amongst other things, "commercial development of parcels fronting either Healesville Koo Wee Rup or McGregor Roads". The Minister ticked this item, as well as all the other items on the list. The other items related to the placement of surplus water on the land, the management of the farmhouse, the management of surrounding grazing land, the management of the property to be occupied by the skydiving club and uses of the property "such as motor cycle and bicycle, trail riding etc".

325 Mr Maclellan said in evidence that when he ticked the 15 May memorandum he was authorising discussions to take place in respect of Kooweerup Road or McGregor Road but not both. The location he had in mind was just to the south of the livestock exchange where there was a firm frontage to Kooweerup Road. However, he said he knew nothing about the Council's proposal for an industrial strip 200 metres deep along the eastern boundary[67] and that he would never have contemplated a 20 hectare industrial site on the Southern Parcel.[68] When asked whether anyone from the Council or his Department ever mentioned to him that there might be in the offing some planning for large scale industry on the site, Mr Maclellan said: "No and if they had they would have received some rather direct counselling from me ... [a]bout drainage, about site difficulties, about the principal reason being the relocation of the racing club, not the creation of an industrial estate. Of the fact that on the other side of the road there was land zoned and being used for industry and an opportunity to increase its size quite conveniently."[69] He said he would certainly not have approved of a proposal to build an industrial estate.

326 I have dealt at length with the Minister's evidence about possible commercial development along Healesville-Kooweerup Road when considering whether the Minister made the statement that the government would not permit Greenhills to be developed for commercial uses or rezoned for that purpose. The Minister's evidence was to the effect that he had principally municipal and community purposes in mind for the Southern Parcel when he purchased it in March 1998. The other items on the 15 May memorandum reflect these purposes. Although no reference is made to it in the 15 May memorandum, the relocation of the Pakenham Racecourse was one of the principal uses that the Minister said that he contemplated, and this was carried forward into the land swap arrangements in 1999.

327 Given the variety of uses mentioned in the 15 May memorandum, and the Minister's evidence about his intentions generally, I am satisfied that the Minister did not regard the acquisition of the Southern Parcel as a commercial opportunity for the State government or, indeed, for the Council. The land was to be principally used for municipal and community purposes. As he himself said, the existing industrial area across the road could be expanded if further industrial land was required. The kind and variety of uses contemplated by the Minister effectively precluded commercial development of the kind that subsequently took place.

328 In order for the 15 May memorandum to stand as evidence of deceit by the Minister, it must constitute evidence that the Minister in fact had in mind the kind of commercial development that he knew might have been of interest to a developer such as Candibon. This would include, on the evidence of Mr Mondous, the type of industrial development that ultimately occurred. The 15 May memorandum refers to a much more limited form of commercial development, described by the Minister in his evidence and in the Further and Better Particulars of the Second Amended Defence as the "relocation of some small industries to parcels of land fronting Koo Wee Rup Road". Development on that scale is consistent with the other uses contemplated in the 15 May memorandum, and with the relocation of the Pakenham Racecourse, to the Southern Parcel.

329 Furthermore, at the risk of stating the obvious, the Minister 'ticked off' on the 15 May memorandum some two months after the contract for the sale of the land had been entered into.

330 I am not satisfied that the Minister's approval of the matters listed in the 15 May memorandum meant that as at 17 March 1998, the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development of the kind or on a scale that might have been of interest to Candibon or, indeed, of the kind that subsequently took place.

331 Candibon has not established on the balance of probabilities the elements required to make out its claim in deceit. Principally, it has not established that the Statements were made at all, let alone made knowing them to be false (or not caring whether they were true or false) and for the purpose of inducing Candibon to sell the land to the Minister. Had the statements concerning the future commercial use of the land been made, I am not satisfied that they would have induced Candibon to sell the land to the Minister, for it was Mr Mondous' evidence that Candibon was prepared to hold the land for as long as was necessary for it to become ripe for development.

332 Finally, the matters relied upon by Candibon to show that when he entered into the agreement to purchase the land on 17 March 1998 the Minister had in mind the commercial development of the land, or was open to such development occurring, do not satisfy me that the Minister had in mind commercial development of the land of a kind or on a scale that Candibon would have been interested in pursuing itself, or of the kind or on the scale that subsequently took place.

334 Candibon contends that as the Minister had powers under the Planning & Environment Act to compulsorily acquire land such as Greenhills and to effectively veto any rezoning of Greenhills for development, the Minister was uniquely placed to accurately disclose how these powers would be exercised. He was aware that Candibon had purchased and was holding Greenhills as an investment with a view to development and knew that how he proposed to exercise his powers in relation to compulsory acquisition and rezoning were matters of importance to Candibon. As a result, Candibon alleges that the Minister owed Candibon a duty to take reasonable care to ensure the accuracy of the Statements.

335 In fact, so Candibon says, contrary to the Statements, the government had not made the determinations described in the Statements. This is to be inferred from the absence of any compliance with the procedures laid down in the LAC Act, from the fact that the Minister disposed of almost all of Greenhills within a short time of acquiring it and from the fact that the disposal was to the Council, which planned to develop Greenhills and was now doing so as an industrial complex.

336 Candibon therefore contends that the Minister should have ascertained that the government had not arrived at settled determinations to the effect described in the Statements and should not have made the Statements.

337 The claim in negligence is based on the Minister having made the Statements to Mr Mondous as alleged. That allegation has not been made out on the balance of probabilities and the claim in negligence must fail for that reason.

338 There are further difficulties with the claim in negligence. The claim raises the question as to what is meant by a 'determination', in that it is predicated upon the government's determination being something other than what was known or intended by the Minister. It is alleged, in essence, that the Minister should have been more careful to ascertain the intentions of another person or entity - the government - before he made the Statements to Mr Mondous. However, there was no evidence of the government - as opposed to the Minister - having made any decisions or formed any intentions in respect of the land, let alone decisions or intentions that were different from the Minister's decisions or intentions.

339 Furthermore, with the possible exception of a decision made as part of the Cabinet process, a 'determination' or decision made by 'the government' would ordinarily be made by formal means such as passing legislation or making regulations, or by the giving of a formal direction. Any such 'determination' or decision would be a matter of public record. Candibon, as a professional property developer, would not need to rely on the Minister to tell it about the determination.

340 The case which Candibon prosecuted and in respect of which it adduced evidence was that the Minister said one thing to Mr Mondous about what could be done with the land, but really intended to allow something different to occur once he obtained ownership of the land. In the absence of evidence that the government had a different position from that of the Minister, and as to what the Minister knew or ought to have known about the government's position, the claim in negligence cannot be made out.

341 The defendants submit that, in any event, the claim in negligence is statute barred by reason of s 5(1)(c) of the Limitation of Actions Act 1958 (Vic). As the cause of action in negligence accrued upon the sale of the land to the Minister in March 1998 and the proceeding was not commenced until 2006, the claim in negligence was brought outside of the six year period allowed by s 5(1)(c).

342 Candibon's response is that the cause of action did not accrue until 22 March 2000 when it was first alerted to the Council's intentions for the land or, alternatively, the cause of action is an action for relief from the consequences of a mistake, and by virtue of s 27(c) of the Limitation of Actions Act, time did not begin to run until 22 March 2000, which is when Candibon either discovered the mistake or could, with reasonable diligence, have discovered the mistake.

343 As a matter of general principle, a negligence claim accrues when damage is first suffered, even though damage may continue to accrue.[70] It is not the case that time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, that damage has been sustained. As Nettle JA observed in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd,[71] the High Court rejected that very argument in Hawkins v Clayton.[72] The general principle was confirmed by the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd,[73] a case involving the purchase of an asset at an over value as a result of a representation which the purchaser did not know to be false. The High Court held that the plaintiff could have recovered the difference between the price paid for and the market value of the asset as at the acquisition date, and that the limitation period would have begun to run from the date of acquisition.[74] I therefore reject Candibon's submission that its cause of action in negligence did not accrue until it was alerted in March 2000 to the purpose to which the Council intended to put part of the land.

344 Candibon also relies on s 27(c) Limitation of Actions Act, which provides that in the case of an action for which a limitation period is prescribed by that Act and the action is for relief from the consequences of a mistake, the limitation period does not begin to run until the plaintiff has, or could with reasonable diligence have discovered the mistake.

345 Candibon's argument concerning the application of s 27(c) of the Limitation of Actions Act unfolds as follows:

(a) the Minister induced it to sell the land by making the Statements;

(b) the making of the Statements gave rise to a cause of action in negligence;

(c) Candibon laboured under the mistake that the government had made the determinations described in the Statements, when in fact the government had not; and

(d) therefore, Candibon's negligence claim is an action for relief from the consequences of a mistake within the meaning of section 27(c) of the Limitation of Actions Act.

346 A plaintiff's cause of action will be one for relief from the consequences of mistake where the mistake is 'an essential ingredient' of the cause of action[75] or 'the gist of the cause of action'.[76]

347 In Phillips-Higgins v Harper,[77] Pearson J considered s 26(c) of the now repealed Limitation Act 1939 (UK) in relation to a claim to recover monies due under a contract where the plaintiff had failed to realise that the balance was due to her and, as his Honour put it, by that mistake the action was concealed from her. His Honour said:

... But that is not sufficient. Probably provision (c) applies only where the mistake is an essential ingredient of the cause of action, so that the statement of claim sets out, or should set out, the mistake and its consequences and pray for relief from those consequences. In this case the statement of claim sets out that sums became due and that only a smaller amount of X pounds has been paid, and the prayer is for an account to ascertain the sums still due and for payment of them when so ascertained. This action is not for relief from the consequences of mistake within the meaning of section 26. [78]

348 His Honour observed that the section was intended to be a narrow one, because any wider provision would have opened too wide a door of escape from the general principle of limitation.[79]

349 Although this decision has been criticised in England for its narrow interpretation of the exception provision,[80] it has been followed in Australia.[81]

350 In Barton v Chibber,[82] Hampel J held that mistake is the gist of the action where it is the mistake itself that gives a right to apply to a court for relief, for example, in an action for recovery of money paid under a mistake of fact. [83]

351 In my view, the 'essential ingredients' of Candibon's negligence claim are the making of the Statements and the alleged purpose for which they were made, Candibon's reliance on the Statements to sell the land to the Minister and the loss suffered by it as a result of selling the land to the Minister. The cause of action was complete at the time of sale and, had Candibon discovered the true state of affairs and brought the negligence claim within the limitation period, it would not have been necessary to plead that it made a mistake in order to recover. Candibon's 'mistake' as to whether or not it had a cause of action in negligence is not an essential ingredient of the negligence claim itself. Moreover, the 'gist of the action' is the Minister's conduct and Candibon's reliance on it, and not Candibon's mistake as to whether it had a cause of action against the Minister arising from that conduct.

352 In my view, therefore, Candibon's cause of action in negligence arose when it sold the land to the Minister in reliance on the Statements and it cannot rely on s 27(c) of the Limitation of Actions Act to extend the limitation period because it does not seek relief from the consequences of mistake. Its claim in negligence is statute barred.

353 Candibon's claim for relief from unconscionable conduct by the Minister relies on the following propositions:

(a) Candibon required information about the matters the subject of the Statements in order to decide whether to sell Greenhills, and if so on what terms;

(b) Candibon was reliant on the Minister for that information;

(c) Because of the Statements, Candibon was under a mistaken belief that the government had made the determinations categorically described in the Statements;

(d) When Candibon agreed to sell the land to the Minister, the Minister knew or ought to have known these matters, and the Minister unconscionably exploited Candibon's special disadvantage by making the agreement to purchase the land, thereby acquiring Greenhills for a portion of what it was really worth.

354 Candibon therefore relies on the established jurisdiction in equity to relieve against transactions borne of inequality, that is, where the parties did not meet on reasonably equal terms, and the stronger party has unconscionably exploited the disadvantage of the weaker party. Again, this cause of action must fail because Candibon has failed to establish that the Statements were made as alleged.

355 Furthermore, I could not be satisfied from the circumstances in which the Statements were allegedly made that the sale of the land to the Minister was a transaction 'borne of inequality' that involved unconscionable conduct by the Minister. The principal authority on unconscionable conduct of the kind alleged is Commercial Bank of Australia v Amadio,[84] in which Mason J described conduct that will attract relief as unconscionable in the following way:

... if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A's) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable.[85]

356 His Honour observed that the result would be the same if A, instead of having actual knowledge of that situation, was aware of the possibility that the situation might exist or was aware of facts that would raise that possibility in the mind of any reasonable person. In Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd,[86] Gummow and Hayne JJ discussed the qualification of the word 'disadvantage' by the adjective 'special' in Mason J's judgment. Their Honours disavowed any suggestion that the principle applied whenever there was merely some difference in the bargaining power of the parties and emphasised that the disabling condition or circumstance was one which seriously affected the ability of the innocent party to make a judgment as to his or her best interests, when the other parties knew or ought to have known of the existence of that condition or circumstance and its effect on the innocent party.[87]

357 Candibon put its case on the basis that it had to accept whatever the Minister told Mr Mondous about his intentions, because it had no other way of knowing what was in the Minister's mind. When the Minister spoke to Mr Mondous about his intentions, he did so from the position that the legislation clothed him with the power to make good those intentions if he wished, or not if he so wished, and there was nothing that Candibon could do about either eventuality. That, according to Candibon, put it at a special disadvantage vis a vis the Minister.

358 In support of these contentions, counsel for Candibon emphasised what he described as the Minister's extraordinarily wide power to rezone the land and the fact that the Minister was the only practical source of information about how this power might be exercised.

359 In my view, it is misconceived to claim a special disadvantage in dealings with a minister of the Crown based on the fact that the minister has statutory powers that he or she may decide when and how to exercise. Ministerial powers are not unconstrained - they must be exercised lawfully, that is, in accordance with legislated or generally accepted processes and procedures designed to foster transparency and accountability. Furthermore, a minister is constrained in what he or she can properly say or do in response to the inquiries or entreaties made by a professional property developer who has come to see the minister for the purpose of seeking the minister's intervention, particularly in relation to speculative land dealings. Mr Mondous and/or Candibon was no more in a position of 'special disadvantage' in relation to the Minister than any member of the public who has regard to government policy when making commercial decisions.

360 Mr Mondous elected to approach the Minister on several occasions to discuss how he might be able to develop the land. Each time, on his own evidence, he was accompanied by a professional adviser. On the final occasion at least, he gave the Minister a proposal to develop the land for rural residential purposes. In so doing, he was endeavouring to improve Candibon's commercial position by persuading the Minister to depart from existing - publicly known - policy. Although the Minister subsequently purchased the land, the circumstances of the meetings do not support a finding that the Minister engendered and then exploited a misunderstanding or mistake as to the uses to which the land could be put in the future.

361 Candibon concedes that while disadvantage arising from the ordinary vicissitudes of commercial life would not normally be 'special', but argues that the degree of disadvantage may make it so. In this context, it submits that special disadvantage involving the impairment of the ability to make a judgment as to one's own best interests might well be found in the situation of a "non-negotiable contract dictated by a party with greatly superior bargaining power". I take the reference to a "non-negotiable contract" to refer to the Minister's alleged threat that the government would acquire the land compulsorily if Candibon did not agree to sell it on terms acceptable to the government. I have found that no such threat was made as a matter of fact and that Candibon did not agree to sell the land to the Minister under threat of compulsory acquisition.

362 It was Candibon's case that it did not have financial difficulties and that it was in a position to hold the land for as long as was necessary to achieve Mr Mondous' vision for it. It received independent legal and valuation advice before entering into the agreement for the sale of the land. Moreover, its directing mind, Mr Mondous, described himself as a very experienced property developer, who must be taken to have well understood the intricacies of the planning process and the extent of the Minister's powers.

363 In my view, Candibon was not in a position of special disadvantage when it sold the land to the Minister and the Minister did not take unconscionable advantage of its position.

364 The claim based on unconscionable conduct is not made out on the facts.

365 The defendants also submit that the claim in equity is statute barred, by analogy with the claim in negligence.

366 Section 5(8) of the Limitation of Actions Act provides:

This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by the Court by analogy in like manner as the enactment corresponding to that provision was applied before the repeal of that enactment by the Limitation of Actions Act 1955.

367 Meagher, Gummow and Lehane, in Equity: Doctrines & Remedies,[88] discuss the application of the Statute of Limitations to equitable claims, commencing by reference to what Lord Westbury LC said in Knox v Gye:

Where the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation. ... Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as a rule of procedure regulating the remedy it affords. [89]

368 The principle is succinctly described in Dr Spry's Equitable Remedies.[90] The Court may decide that the material equitable right is so similar to legal rights to which a limitation period is applicable that a limitation period should be applied to the equitable right also. If there is a sufficiently close similarity between the exclusive equitable right in question and legal rights to which the statutory provision applies, a court of equity will ordinarily act upon it by analogy, but it will so act only if there is nothing in the particular circumstances of the case that renders it unjust to do so. What is regarded by courts of equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules.

369 Helpfully, Meagher, Gummow and Lehane give a number of examples of equity acting by analogy.[91] In Metropolitan Bank v Heiron,[92] it was held that the liability of a fiduciary to account for bribes received by him to the person to whom he owed his fiduciary duty was the equitable equivalent of the legal liability of a defendant sued at law for money had and received; in Re Lady Hastings,[93] the Court of Appeal held that where a claim in the nature of a contract debt was made against a married woman's separate estate, the claim was barred after the expiration of six years on the analogy of the barring by statute of simple contract debts. However, in Paragon Finance plc v DB Thakerar & Co,[94] the Court of Appeal distinguished between the liability of an agent to account and the liability of an agent for funds held as a constructive trustee. The former, whether it was based in contract or arose from the fiduciary relationship, became statute barred either directly or by analogy; however, there was no legal analogy for the latter and so it could not be statute barred. In Cia de Seguros Imperio v Heath (REBX) Ltd,[95] the Court of Appeal considered that a claim for equitable compensation resembled sufficiently a common law action for damages for breach of contract to enable the Statute of Limitations to be applied by analogy.

370 In The Duke Group Ltd (in liq) v Alamain Investments Ltd,[96] Doyle CJ considered the closeness of the analogy between a claim for breach of fiduciary duties against directors and a claim in tort against them which would attract a statutory time limit. In the light of the approaches taken in Cia de Seguros Imperio v Heath[97] and Coulthard v Disco Mix Club Ltd,[98] Doyle CJ concluded that the courts had taken a fairly broad approach to the question of the similarity between the equitable claim and a similar common law claim. The cases gave considerable weight to the point that the facts relied on would support both the common law and equitable claims and seemed not greatly concerned with distinctions between the causes of action. His Honour held that the application of a time limit by analogy could not depend on a minute comparison between the claim in equity and the claim said to be similar and statute barred - it was to be expected that there would always be differences in the elements of the claim in equity and the claim said to be statute barred. However, differences in the elements of the respective causes of action must be relevant, and possibly significant. In relation to the claims before him, his Honour concluded that there were causes of action in tort against the directors that were sufficiently similar to the claim against the directors for breach of fiduciary duty for the analogy to apply. However, he was not satisfied that in all the circumstances it was just to strike out the proceeding on the basis that it was barred by the application by analogy of the statutory time limit.

371 The defendants rely on the similarity between the factual basis for the claim in negligence and the factual basis for the unconscionable conduct claim, along with the fact that exactly the same relief is sought in respect of each claim.

372 The facts relied on in Candibon's claim in negligence relate to the circumstances in which the Minister made the Statements to Mr Mondous, the content of the Statements and the Minister's knowledge that Candibon was likely to rely on the Statements because it needed the information in the Statements and had no other way of obtaining it. As a result of the Minister's conduct (breach of duty), Candibon sold the land for below its real value and was diverted from its commercial strategy.

373 Likewise, the facts relied upon by Candibon in its claim based on the Minister's unconscionable conduct relate to the circumstances in which the Minister made the Statements to Mr Mondous, the content of the Statements and the Minister's knowledge that Candibon was likely to rely on the Statements because it needed the information in the Statements and had no other way of obtaining it. As a result of the Minister's conduct (unconscionable exploitation of his position), Candibon sold the land for below its real value and was diverted from its commercial strategy.

374 The defendants submit that the present case is similar to Cia de Seguros Imperio, where the analogy was held to apply because what was alleged to give rise to the dishonest breach of fiduciary duty were "precisely those facts" that were also relied on for alleging breach of contract or breach of duty in tort. While it was true that there was an extra allegation of intention, that did not detract from the fact that the essential factual allegations were the same. Furthermore, the claim was one for damages. That case was followed by the New South Wales Court of Appeal in Aussie Ideas Pty Ltd v Tunwind Pty Ltd.[99]

375 I accept the defendants' submissions. The essential factual allegations in both the negligence and unconscionable conduct claims are the same. The claims turn on the making of the Statements in the manner and in the circumstances alleged. The claims are alternative ways of obtaining compensation for being unfairly deprived of the benefit of the land as a result of the Minister's (allegedly false) representations. I am therefore satisfied that the claims made and remedies sought by Candibon are sufficiently similar for the application by analogy of the statutory time limit to the claim in equity.

376 The question is then whether it would be just in all the circumstances to apply the statutory time limit to the equitable claim. In this context, the Court must take account of Candibon's knowledge of its rights during the limitation period and, in particular, the impact of any fraud. The question is whether, by reason of the defendants' actions, Candibon was prevented from becoming aware of the matters giving rise to the cause of action for unconscionable conduct. Although Candibon says that it did not become aware of the sale of the land to the Council or of the intentions of the Council for the development of the land until a real estate agent alerted it to the possible sale and development of part of the land for a school campus in March 2000, there was no evidence before the Court of any attempt on the part of either the Minister or the Council to conceal the fact of the land swap or proposals for the use of the land by the Council. Indeed, the ownership of the land following the land exchange agreement was a matter of public record, and the manner in which the land could be developed was dictated by the applicable planning controls - again, a matter of public record. Moreover, there is nothing to suggest that Mr Welsh made any secret of his intention to develop an industrial park on the land, a plan that was hatched as early as mid-1998. As a professional property developer, and one that continued to be heavily involved in the Pakenham area by reason of his 'Blue Hills' development, Mr Mondous would have been exposed to these developments and could easily have informed himself about them.

377 In all of the circumstances, I consider that it would not be unjust to apply the statutory time limit to the claim for damages for unconscionable conduct.

378 Counsel for Candibon argued, on the basis of the somewhat difficult language in s 5(8) of the Limitation of Actions Act, that no limitation period could be applied by analogy to the unconscionable conduct claim because no provision of s 5 of the Limitations of Actions Act corresponded to any statutory provision that was in force before being repealed by the Limitation of Actions Act 1955 (Vic) and was applied by analogy or otherwise to limit claims for unconscionable conduct in the manner pleaded by the defendants.[100] He argued that there was nothing to indicate that any of the repealed provisions were applied before 1955 to equitable claims for relief against unconscionable conduct.

379 Section 5(8) is, in my view, less complex than it appears to be. In the present case, it means no more than that s 5(1)(a) of the Limitation of Actions Act does not apply to limit the plaintiff's claim for equitable relief for unconscionable conduct unless can it be applied by analogy, in the way that the earlier enactment corresponding to s 5(1)(a) (s 82(1)(c) of the Supreme Court Act 1928 (Vic) which limited the period for bringing claims in tort) was applied by analogy before it was repealed and rolled into the 1955 Act. Section 5(8) thereby preserves rather than constrains the ability of the Court to limit actions for equitable relief by analogy.

380 In my view, it is unnecessary to show that the repealed provision was previously applied by analogy specifically to a claim for relief against unconscionable conduct. The words "in like manner as the enactment corresponding to that provision was applied" refer to the manner of application, that is, 'by analogy'. Section 5(8) does not freeze in time the types of claims that may be limited by the application of the statute by analogy, but rather describes the process that is to be used for the application of the statute.

381 Counsel for Candibon also argued that Candibon's claim for equitable relief was a claim in equity's exclusive jurisdiction and that the limitation by analogy was only available in respect of claims in equity's concurrent jurisdiction. He argued in the alternative that, insofar as any limitation by analogy was available, it must mirror the doctrine of laches. No authority was cited for these propositions. The former is not consistent with Dr Spry's statement of the law that where there is a sufficiently close similarity between "the exclusive equitable right" in question and legal rights to which the statutory provision applies, a court of equity will ordinarily act upon it by analogy.[101] In The Duke Group,[102] Doyle CJ considered a similar argument that in a claim invoking the exclusive jurisdiction of equity, equity would not apply the time limit by analogy but would apply the doctrine of laches. This argument was based on remarks to that general effect by Kirby P in Williams v Minister, Aboriginal Land Rights Act 1983.[103] Doyle CJ characterised Kirby J's observations as doing no more than approving statements of principle that a claim for compensation for breach of fiduciary duty will rarely be the subject of a statutory time limit by analogy, and the doctrine of laches accommodates any and all of the factors that would fall to be considered in deciding whether a statutory time limit should be adopted by analogy.[104] However, that was not to say that equity would never in such a case apply a time limit by analogy. I respectfully agree with this analysis and with his Honour's conclusion.

382 For the reasons I have given, I consider that it would be just in all the circumstances to apply the statutory time limit to the claim for relief from the consequences of unconscionable conduct.

383 The statutory claims made by Candibon are based on ss 13 and 109(2) of the LAC Act.

384 Section 13 provides that if an Authority (in this case, the Minister) enters into an agreement to acquire an interest in land in contravention of s 6, which requires a notice of intention to acquire an interest in land to be given in most circumstances, the acquisition is voidable at the option of the person whose interest in land is or has been acquired. The exercise of that option is effected by the service on the Authority of a notice in writing signed by that person.

385 On 19 December 2005, more than seven and a half years after the Minister's acquisition of the land, Candibon served on the Minister a notice under s 13 purporting to render void the acquisition of the land by the Minister. On the basis of the notice, Candibon seeks orders for the restitution of the land, an accounting and/or the payment of an amount representing the present-day value of the land or such other amount as the Court thinks fit.

386 Alternatively, Candibon seeks to enforce such rights as it may have under s 109 of the LAC Act, which provides that if an Authority proposes to dispose of an interest in land acquired or purchased by it pursuant to the LAC Act within 18 months after the date of the acquisition of that interest, the Authority must, if practicable, first offer the interest for sale to the former owner at the market value of the interest at the date of acquisition.

387 Candibon makes these claims under the LAC Act against the background that the acquisition of the land did not take place in the manner prescribed in the LAC Act for a compulsory acquisition. Rather, the Minister acquired the land by private treaty, purportedly pursuant to the power conferred on him as the responsible authority for the land by s 171 of the Planning & Environment Act.

388 The acquisition of the land was presented to the Government Land Monitor as being effected by private treaty under this provision, and the Minister was made the responsible authority by amendment to the Planning Scheme expressed to be for the purpose of that provision. Likewise, the purchase was recorded in the Government Gazette as having been made under s 171(1) of the Planning & Environment Act.

389 Section 171(1) gives a responsible authority all the powers necessary for the purposes of carrying out its functions and duties under the Planning & Environment Act and for carrying into effect the objectives of a planning scheme for which he, she or it is the responsible authority. Sub-section (2) provides that the powers include the power, relevantly, to purchase land by private treaty on terms and conditions satisfactory to the authority.

Has the sale been avoided by reason of Candibon's notice given under s 13 of the LAC Act?

Did the LAC Act apply to t****he purchase by the Minister?

390 The LAC Act establishes procedures for the acquisition of land for public purposes and provides for the determination of the compensation payable in respect of land so acquired.[105] It does not confer power on any person or body to compulsorily acquire land. Such power must be conferred by another Act, referred to as the 'special Act'. The special Act authorises a person or body to compulsorily acquire land and nominates the person or body to be the 'Authority' for the purposes of the LAC Act.

391 In this case, the special Act which could potentially have authorised the Minister, as the Minister for Planning, to acquire the land by compulsory process was the Planning & Environment Act. Section 172(1)(a) provided and continues to provide that the Minister or a responsible authority may compulsorily acquire land which is 'required for the purposes of any planning scheme' even if the scheme (or an amendment to the scheme) has not been adopted or approved by the relevant planning authority or approved by the Minister. Section 172(3) duly provides that the LAC Act applies to the Planning & Environment Act and for that purpose, the latter is the special Act and the Minister or the responsible authority is the Authority.

392 Section 6 of the LAC Act provides (subject to a number of exceptions in s 7 that are not presently relevant) that if the Authority intends to acquire an interest in land for the purposes of the special Act, the Authority must serve upon specified persons (including the registered proprietor of the land) a notice of intention to acquire the interest. The notice must also be served on particular authorities[106] and lodged with the Registrar of Titles.[107]

393 The application of s 6 of the LAC Act in the present case depends on whether the Minister intended to acquire the Greenhills land 'for the purposes of the special Act', that is, for one or more of the purposes for which the power of compulsory acquisition is given by the Planning & Environment Act. Hence, having regard to the terms of s 172(1)(a) of the Planning & Environment Act, the application of s 6 will depend on whether the Minister intended to acquire the land because it was required for the purposes of the Pakenham Planning Scheme.

394 The application of s 6 to the purchase of the land is also affected by s 4 of the LAC Act, which provides:

An Authority which is empowered under a special Act to acquire an interest in land by compulsory process must not acquire that interest by compulsory process or by agreement except in accordance with this Part [Part 2 of the LAC Act].

395 Section 4 therefore requires a person or agency who is 'empowered' to acquire property by compulsory process to comply with the procedural requirements in Part 2 of the LAC Act, even when acquiring the property by agreement or private treaty. As Candibon points out, this is consistent with the recommendation of the report to the Minister for Planning which informed the development of the LAC Act[108] that any Authority which possesses the power to compulsorily take land should be obliged to comply with the provisions of the new Act [the proposed LAC Act], whether or not it proposed to use compulsion to take that particular land.[109] The reason for this recommendation was as follows:

The question arises whether a landowner should be given any kind of statutory protection in relation to the purchase of land by agreement. Why is this necessary? Because the bargaining positions of the parties are not the same as in the market place: one party possesses the power to compulsorily acquire. This fact means that some 'voluntary' sales may be that in name only. To overcome this inequality in bargaining positions, the A.L.R.C. recommended that, generally speaking, Authorities be required to supply specified information to landowners even in the case of a voluntary sale.[110]

396 That some of the requirements the LAC Act may apply to acquisitions by private treaty is supported by the definition of 'acquire' which, for the purposes of the LAC Act, means to acquire an interest in land by compulsory process or by agreement if the person acquiring the interest is empowered to acquire it by compulsory process, and by s 7 of the LAC Act, which provides that an Authority is not required to serve a notice of intention under s 6 in three circumstances:

(a) where the land has been publicly advertised for sale and the Authority believes that the interest is still available for sale when it proposes to acquire the interest;

(b) where the Authority serves on the person interested in the land a statement that it does not intend to acquire the land by compulsory process and a statement setting out the principal rights and obligations of the person under the LAC Act; and

(c) where the Minister certifies that to require the service of a notice of intention to acquire would be unnecessary, undesirable or contrary to the public interest.

397 Candibon therefore submits, in substance, that even though the land was not acquired by compulsory process, the Minister, as the Authority for the purposes of the LAC Act, was required to comply with the requirements of Part 2 of the LAC Act, including the requirements as to notice in s 6. As the Minister did not comply with the notice requirement in s 6, s 13 was enlivened and the Minister's acquisition of the land was voidable at Candibon's option. When it served on the Minister a notice in writing on 19 December 2005 exercising its option under s 13 of the LAC Act to render void the Minister's acquisition of the land, that service rendered the acquisition void ab initio at law.

398 Candibon's purported avoidance of the sale of the land to the Minister raises the following questions:

(a) Did the Minister acquire the land 'for the purposes of' the Planning & Environment Act and was he 'empowered' to acquire the land by compulsory process?

(b) Was the agreement for the purchase of the land an 'agreement' for the purposes of s 4 of the LAC Act?

(c) If the LAC Act applied, what are the consequences of the Minister's non-compliance with Part 2 and what remedies are available to Candibon?

Was the Minister 'empowered' to acquire the land by compulsory process?

399 Section 6 applies to an acquisition of land 'for the purposes of the special Act'. In this case, the purposes of the special Act must be those described in s 172 of the Planning & Environment Act. This is consistent with s 4, which makes s 6 applicable where the Minister is 'empowered' to acquire the interest in land by the special Act, in this case pursuant to s 172 of the Planning & Environment Act. As discussed, s 172(1)(a) gives the Minister the power to compulsorily acquire land which 'is required for the purposes of any planning scheme', even if the scheme or an amendment to the scheme has not been adopted or approved by the relevant planning authority or approved by the Minister.

400 Candibon submits that between 9 February and mid-March 1998, the land was required for the purposes of the Pakenham Planning Scheme within the meaning of s 172(1)(a) in that the Freeway Corridor was required for the public purpose of main road construction under the Planning Scheme as it stood, and the Southern Parcel was required for public purposes under an amendment to the Planning Scheme which had not then been formally adopted by the relevant planning authority (the Minister).

401 In its Second Amended Statement of Claim,[111] Candibon pleads that the yet to be adopted amendment to the Pakenham Planning Scheme was an amendment by which the Southern Parcel would be reserved for public purposes and that by 9 February 1998, the Minister had determined that such an amendment should be adopted. It will be recalled that on or about that date, Mr Maunder recorded that the Minister had directed him to put in train the process for a compulsory acquisition of the land, including reserving it for public purposes. Candibon submits that because the Minister was both the 'relevant planning authority' and the responsible authority for the purposes of s 172(1) of the Planning & Environment Act, the amendment that he had determined upon was therefore one which had by definition been approved by both the Minister and the relevant planning authority but which had yet to be formally adopted by the relevant planning authority within the meaning of s 172(1)(a). While a variety of processes and procedures are usually undertaken in order to effect an amendment, the Minister had a broad power to exempt himself from these requirements.[112]

402 Candibon says further that the Minister signed a contract to acquire the land for public purposes including a relocated skydiving club, proposed surplus water storage facility for South East Water and proposed municipal uses such as BMX tracks, walking trails and horse riding. It says that the Minister's May 1993 directive, which remained unchanged until April 1998 and beyond, taken with his corresponding decision regarding the public use of the Southern Parcel, constituted a de facto amendment to the Pakenham Planning Scheme and therefore an amendment as pleaded.

403 Candibon submits in substance that the identification by the Minister of public uses for the land amounted to the Minister requiring the land for the purposes of a planning scheme within the meaning of s 172(1)(a).

404 For their part, the defendants submit that the words 'is required' in s 172(1)(a) mean that the need must be reflected in the planning scheme at the time the decision is made to acquire the land. They rely on Fitzwood v Whittlesea City Council,[113] in which Ashley J considered the words 'is or may be required' in s 99 of the Planning & Environment Act concerning the right to compensation and the liability of a planning authority or responsible authority to pay compensation under ss 98 and 99 of that Act. His Honour distinguished between land that 'is' required and land that 'may be' required for a relevant purpose: the first would suit the circumstance that land has already been reserved under the planning scheme, whilst the latter would reflect the uncertainty of the planning process where land was shown as reserved for a public purpose in a proposed amendment to a planning scheme of which notice had been published in the Government Gazette or where the Minister had declared land to be proposed to be reserved for public purposes.[114]

405 In my view, it is not necessary for land to be subject to reservation or proposed reservation for it to be land that 'is required' for the purposes of s 172(1)(a). However, it is necessary for the land to be clearly identified by the Minister as being required for a specific purpose in the planning scheme, for example, in order to protect property that is subject to a heritage overlay, or to facilitate the implementation of a development or traffic management plan, or to ensure land is available for a specified use in accordance with the planning scheme. That is, the planning scheme purpose and the need to acquire the land for that purpose must have crystallised with sufficient particularity for the Minister to form the view that the land 'is required' for the purposes of the planning scheme.

406 Further, in stipulating that the Minister can only compulsorily acquire land that is required 'for the purposes of any planning scheme', s 172(1)(a) of the Planning & Environment Act requires the need for the land to be reflected in some way in a planning scheme or proposed amendment to a planning scheme.

407 Having regard to the language used in s 172(1)(a), any planning scheme amendment that the Minister might have had in mind at the time he purchase the Southern Parcel was still a way off being commenced let alone completed. The words 'even if the scheme or an amendment ... has not been adopted or approved' indicate that there must be something to adopt or approve, that is, that some steps have been taken to put in place the proposed scheme or amendment. That the Minister could have exempted himself from such requirements is not to the point. There is nothing to suggest that the need to comply with those requirements had arisen.

408 Even though the Minister had expressed views as to how the Southern Parcel might be used once acquired by him - for the future relocation of the Pakenham racecourse and/or the skydiving club, as a storage facility for waste water, for BMX tracks and other community facilities - when the Minister purchased the Southern Parcel in March 1998, he had not formed any view that it was required for a particular planning purpose. He had not been advised that there was any particular need for the land, and the requirements of the planning scheme did not figure strongly in his decision to acquire the land other than in the general sense of the land being inappropriate for residential development and forming a natural buffer between urban uses to the north and rural uses to the south. That did not require public ownership of the land.

409 In my view, Candibon's submissions as to the nature of the proposed or 'de facto' amendment ignore the fact that the Minister quickly decided not to proceed by way of compulsory acquisition and did not make, or even begin to make, the planning scheme amendment that would have been required. Indeed, he did not form the intention to acquire the land because it was required for the purposes of the existing or any proposed planning scheme (or amendment thereto). The requirements of the planning scheme were at no time identified as a reason for acquiring the land.

410 Moreover, the evidence about the status and evolution of the relevant planning scheme in the period leading up to the acquisition does not support Candibon's case. At the time the Minister entered into the agreement to acquire the Southern Parcel, the Council had prepared a proposed 'new format' planning scheme for the Shire of Cardinia. The proposed Cardinia Planning Scheme went on exhibition as a draft in August 1997, and was ultimately adopted in August 1999. It did not show the Southern Parcel as being reserved for public purposes or as being subject to a public purpose overlay. It was simply to be zoned 'Rural'.

411 I am therefore not satisfied on the evidence before the Court that when the Minister moved to purchase the land in 1997 and in early 1998, it was required for the purposes of the Pakenham Planning Scheme.[115]

412 Accordingly, when the Minister entered into the private treaty with Candibon to purchase the land, he was not 'empowered' to acquire an interest in the Southern Parcel by compulsory process. The fact that the Minister had in mind what could generally be described as public purposes for the land if he was able to purchase it was not sufficient to bring s 4 of the LAC Act into play. In my view, the Minister was able to purchase the Southern Parcel by private treaty without serving a notice of intention to acquire under the LAC Act.

413 The position is even clearer in relation to the Freeway Corridor. The Freeway Corridor had long been reserved in the Planning Scheme for a specific purpose, namely the construction of a main road. As a future main road, it was not required by the Planning Minister for the purposes of a planning scheme, but by the relevant roads authority for the purpose of main road construction.

414 Furthermore, as the defendants pointed out, it was not until February 2004 that the Freeway Corridor was in fact required for the purpose for which it was reserved. The evidence before the Court was that as at March and April 1998, VicRoads did not have the Pakenham Bypass in its funding program and therefore did not require the Freeway Corridor for the purpose of constructing the Bypass. Mr Maclellan gave evidence that he agreed to purchase the Freeway Corridor from Candibon in order to put pressure on the Commonwealth government and VicRoads to secure funding for the Bypass construction. The Court also heard that the Council lobbied the Commonwealth government to ensure that the Pakenham Bypass would be funded for construction once the Council had decided to develop the Southern Parcel as an industrial estate. I find, therefore, that at the time the Minister purchased the Freeway Corridor in March 1998, it was not in fact required for the construction of the Pakenham Bypass or the purposes of the planning scheme and the Minister did not require it or acquire it for that purpose.

415 I conclude that the Minister, as Minister for Planning, was not 'empowered' under s 172(1)(a) of the Planning & Environment Act to compulsorily acquire the Freeway Corridor because it was not required for the purposes of the Pakenham Planning Scheme.[116]

416 It was more generally submitted by Candibon that the Minister's power to acquire by private treaty under s 171(1) of the Planning & Environment Act is constrained in the same way as his power of compulsory acquisition under s 172, and that therefore what he could do by private treaty he could also do by compulsory process. Under s 171(1), the Minister's powers, including the power to acquire land by private treaty, are only those powers necessary for carrying out functions and duties under the Planning & Environment Act and for carrying into effect the objectives of a planning scheme.[117] This is to be compared with the power to acquire in s 172(1), which is limited to land required for the purposes of a planning scheme.

417 Although acquiring land for the purpose of carrying into effect the objectives of a planning scheme and acquiring land required for the purposes of a planning scheme may sometimes amount to the same thing, the power conferred by s 172(1) is narrower. In my view, the power to acquire land that is required for the purposes of a planning scheme may be an instance of the power to acquire land for the purpose of carrying into effect the objectives of a planning scheme, but the obverse is not the case. In this case, it might be argued that the Minister did not in fact acquire the land for the purpose of carrying into effect the objectives of a planning scheme and was therefore not authorised to acquire the land by private treaty or at all. That is as may be. However, that is not how Candibon put its case.

418 As a result, the Minister was not required to give a notice of intention to acquire the land, and Candibon's service of a notice under s 13 of the LAC Act has no legal effect.

Was the private treaty an acquisition 'by agreement' for the purposes of s 4 of the LAC Act?

419 This question only arises for determination if the Minister was empowered under s 172(1)(a) of the Planning & Environment Act to acquire the land or any part of it by compulsory process. Although I have found the Minister not to have been empowered to acquire the land under s 172(1)(a), I propose to consider briefly the defendants' argument that the acquisition of the land was not, in any event, an acquisition 'by agreement' for the purposes of s 4 of the LAC Act because the acquisition of an interest in land 'by agreement' refers only to the agreements that an Authority may enter into in the limited circumstances provided for in s 18 of the LAC Act.

420 Section 18 contemplates that following the commencement of the compulsory acquisition process by service of a notice of intention to acquire an interest in land, the acquisition may be compromised by agreement. An Authority may acquire the interest in land by agreement at any time after the service of the notice of intention, but before its lapse or withdrawal and before publication of a notice of acquisition. The defendants submit that the statutory scheme for compulsory acquisition, which includes Form 4 of the Land Acquisition and Compensation Regulations 1987, makes it clear that an agreement for the purposes of s 4 is one that is entered into voluntarily after the process of compulsory acquisition under the LAC Act and the Regulations has commenced and proceeded to that point.

421 For its part, Candibon says s 18 is not an exhaustive code as to when the power to acquire privately arises. The definition of 'acquire' does not contemplate only acquisitions in the circumstances set out in s 18. If that were so, s 13 could never be enlivened.

422 As a matter of logic, Candibon must be correct. Section 18 is expressed to confer a power that arises 'after the service of a notice of intention to acquire an interest in land'. If only agreements made under s 18 were captured by s 4 (and thereby made subject to s 6), then s 13 would have no work to do in respect of agreements. Yet s 13 specifically applies when 'an Authority enters into an agreement to acquire an interest in land'.

423 It follows that an agreement in s 4 must include an agreement other than an agreement under s 18. It may include an agreement to acquire land by private treaty so long as the acquirer is an 'Authority' and is empowered to acquire the land by compulsory process. However, in the particular circumstances in which the Minister entered into the agreement to acquire the land, the Minister was not empowered to acquire it by compulsory process.

What flows from the service of a notice under s 13 of the LAC Act?

424 Again, although I have found that there was no requirement for the Minister to serve a notice of intention to acquire the land on Candibon and s 13 is therefore not enlivened, I propose to consider briefly Candibon's submissions about its entitlements as a result of its purported exercise of the option under s 13 of the LAC Act to avoid the sale of the land.

425 Candibon submits that as a result of its service of the notice under s 13, the Minister's acquisition of what it describes as "the Titles to Greenhills" (which I take to mean an interest in the land) is to be taken to have been ineffective from the outset to pass the Titles to the Minister or to have re-vested the Titles in Candibon ab initio. Candibon says that it is ready, willing and able to make counter restitution to the Minister and the State in respect of the consideration paid for the Minister's voided acquisition of the Titles. Accordingly, it submits that the Minister and/or the State are liable to make restitution to it in respect of the Titles. What restitution involves in the current circumstances, according to Candibon, is the payment to it of an amount equal to the present value of the Titles, less such allowances as the Court may deem just. This is pleaded to be an amount in the vicinity of $85 million, less a relatively small sum for allowances.

426 Alternatively, Candibon says that when the Minister entered into the agreement to acquire the land, he did so knowing that he was the Planning Minister and the responsible authority in respect of the land, and that he was empowered to compulsorily acquire the land. He also knew that he had not served upon Candibon a notice of intention to acquire as required by s 6 of the LAC Act. As a result, when he acquired the land, he did so subject to Candibon's statutory right to call for the Titles to be transferred back and therefore subject to Candibon's equitable interest which would, upon the exercise of Candibon's statutory right, entitle Candibon absolutely to the whole of the beneficial estate in the Titles. As a result, Candibon contends that the Minister is to be taken as having acquired the Titles subject to Candibon's absolute entitlement to the whole of the beneficial estate in the Titles and therefore on trust for Candibon, and that the Minister as trustee is liable to account to Candibon for the Titles. Again, Candibon claims the amount of the present value of the land, less any amounts that the Minister could claim as an equitable charge.

427 I do not accept the propositions advanced by Candibon as to the nature of its rights under s 13 and the consequences of its purported exercise of those rights. The right conferred by s 13 was a right to take advantage of an enactment. It depended on the exercise of an option. Only on the giving of notice under s 13 could the Minister have been obliged to restore Candibon to its original position. Accordingly, unless and until Candibon made an effective choice to be restored to its pre-acquisition position by serving the notice under s 13, the acquisition by the Minister remained valid and the Minister was entitled to the benefit of the bargain that had been struck.[118] The Minister duly became the registered proprietor of the land and was entitled to deal with the land as its owner. Under the Torrens system, he was able to and did dispose of the legal estate in the land before any exercise of the option under s 13.

428 Any right that Candibon may have had to take advantage of s 13 of the LAC Act and avoid the acquisition was not exercised while the Minister was in a position to restore Candibon to its original position. By December 2005, the Minister had nothing to re-vest in Candibon. I agree with the defendants that Candibon's asserted right under s 13 to be restored to its original position was simply not capable of being exercised six years after the Minister had transferred his interest in the Southern Parcel to the Council (and it had become the registered proprietor thereof) and almost two years after he had transferred his interest in the Freeway Corridor to the VicRoads (and it had become the registered proprietor thereof).

429 Moreover, insofar as Candibon's argument was based on the proposition that the Minister, the Council and VicRoads as 'state entities' are interchangeable the one with the other, I reject that submission. The relevant parts of the land were legally transferred to the Council and VicRoads in 1999 and 2003 respectively, and there is no basis upon which those entities could be required to transfer the land back to the Minister. The land is in a legal and practical sense effectively out of the reach of both the Minister and Candibon.

430 As to restitution by means of monetary compensation rather than the return of the land, Candibon submits that the courts of equity have long recognised as valid rescissions made when the parties could not be restored to the status quo ante. The courts have ordered monetary adjustments to compensate for departures from the status quo ante that could not be reversed.

431 In cases of rescission, pecuniary relief may be granted in place of a benefit which cannot be restored if the result is practically just as between the parties, ensuring that the defendant is not 'robbed' nor the plaintiff unjustly enriched.[119] In the circumstances of this case, however, I am not satisfied that it would be practically just as between Candibon and the defendants to make an order requiring the defendants to pay Candibon the present value of the land (minus allowances) on the basis that Candibon making counter restitution in respect of the consideration paid in 1998 (plus interest). That would give Candibon the benefit of being a long term land-holder without any of the attendant risk. It would also give it the benefit of the work undertaken by the Council to service and rezone the land.

432 Moreover, absent a finding that the sale was effected under the threat of compulsory acquisition, to grant Candibon the restitutionary orders it seeks would be to enrich it on the basis of an option to rescind which I am satisfied Candibon would not have exercised at the time of the acquisition, even had it known of its entitlement to do so. What prompted Candibon to seek to avoid (or reverse) the sale of the land to the Minister in 2005 is likely to have been the significant increase in the value of the land since 2000. This was not just a function of the rezoning of the Southern Parcel and its development as an industrial estate. The defendants' valuer, Mr Dudakov, gave evidence of the exponential growth in the value of urban fringe land since 2000, and of the speculation that has fuelled this growth having regard to planning policies such as 'Melbourne 2030' and the introduction and repeated extension of the Urban Growth Boundary. By selling the land to the Minister in 1998, Candibon missed out on the windfall profits that were there to be made by the owners of land on Melbourne's urban fringes, and it now seeks the benefits of the increase in land value without the attendant risk.

433 Equity will not allow a plaintiff to claim, years later, the benefits of a speculative enterprise which has in the intervening time become certain.[120] While laches do not apply to a statutory right of the kind conferred by s 13 of the LAC Act, the passage of time may transform the nature of the benefit which a plaintiff seeks to have restored to it in such a way as to make restitution impossible. As Mr Mondous explained in his evidence, Candibon bought the land, then rural land, with the intention of holding it until such time as the expansion of the city would allow it to be rezoned and developed commercially. The risk that the events upon which the success of Candibon's project depended might not come to pass as it hoped was an element of Candibon's position in 1998 to which it cannot now be restored. Indeed, it likely to have been Candibon's appraisal of that risk - in hindsight, mistaken - which motivated it to sell in 1998 and, presumably, to pursue different ventures. Candibon now comes to the Court seeking an order giving it the benefit of the very substantial increase in urban fringe land values that has occurred over the past 10 years. This, in circumstances where it has not had to bear the costs or the risk of holding the land as undeveloped land, or indeed the costs or the risk of developing it, over any part of that period.

434 Furthermore, at the time of the acquisition, Candibon made clear that it did not wish to proceed by way of compulsory acquisition. The parties had been a short distance down that path, and had decided not to proceed in that way. It would have been of no benefit to Candibon to receive a notice of intention to acquire under s 6 of the LAC Act in circumstances where its solicitors were pressing the Minister's solicitors to conclude and settle the purchase as quickly as possible. The absence of a notice under s 6 could have no bearing on Candibon's ability to understand and assert its rights in the acquisition process.

435 Accordingly, I have concluded that even if Candibon was entitled to give notice avoiding the sale of the land pursuant to s 13 of the LAC Act, the land cannot be restored to it and no orders for the payment of monies in lieu should be made.

436 Candibon's argument in relation to the existence of a constructive trust in its favour - which was pursued only in passing in final submissions - must fail for the same reasons. As the right conferred by s 13 is a right to take advantage of an enactment, it could not create rights or interests in land unless and until notice was given. By the time Candibon gave notice under s 13, the Minister had no remaining legal or equitable interest in the land.

437 As a result, the statutory claim based on Candibon's asserted rights under s 13 of the LAC Act fails.

Was the Minister required to offer the land to Candibon under s 109(2)?

438 Section 109 of the LAC Act relevantly provides:

(1) The Authority may sell, lease or otherwise deal with or dispose of an interest in land acquired or purchased by it pursuant to this Act or the Acts repealed by this Act.

(2) It the Authority proposes to dispose of any interest in land pursuant to subsection (1) within eighteen months after the date of the acquisition of that interest, the Authority must, if practicable, first offer the interest for sale to the former owner at market value of the interest at the date of the acquisition.

439 In this case, the Minister agreed to transfer the Southern Parcel to the Council by the land exchange agreement dated 23 July 1999 and settlement of the transfer occurred on about 14 October 1999. Candibon alleges that the Minister owed Candibon a statutory duty to first offer 'the Titles' [the Southern Parcel] to Candibon at market value on the date that the Minister acquired them, and that his failure to do so has caused Candibon loss and damage. The alleged loss and damage is put in two ways:

(a) the lost opportunity to hold the Titles as a long term investment until growth in the region made the land ripe for urban development; and

(b) the lost opportunity to re-acquire the Titles at less than prevailing market value.

440 The first of the lost opportunities is alleged to result in damages being the present day value of the Southern Parcel (less the re-purchase price and other small costs); the second, to result in damages representing the 'true value' of the Southern Parcel in 1999 (less the repurchase price and other small costs).

441 In respect of this claim, Candibon relies on an implication of a civil remedy for damages for breach of statutory duty. Although it is not necessary to finally determine the question, s 109(2) of the LAC Act does not, in my view, give rise to a right to damages for non-compliance with the requirement that it imposes. The LAC Act does not yield a necessary implication giving a civil remedy for failure to comply with s 109(2); [121] nor does reference to matters governing the policy of the provision show an intention by the legislature to confer a private right.[122] Section 109(2) does not seem to me to be protective in character so as to provide a ground of civil liability when the breach of the obligation causes injury or damage against which the statute was designed to afford protection. The requirement in question is only imposed 'if practicable' and there is no underlying duty owed by the Authority to the former owner. These matters weigh against the implication of the private right that is asserted.

442 In any event, this claim would fail for the same reasons as the restitutionary claim founded on s 13 of the LAC Act. The sale of the Southern Parcel to the Council was not made pursuant to s 109(1) as required by subsection (2), because it was not a disposal of an interest in land acquired pursuant to the LAC Act. For the reasons previously given, the Minister acquired the Southern Parcel by private treaty pursuant to his powers under s 171 of the Planning & Environment Act and not pursuant to the LAC Act.

443 Moreover, even if s 109(2) gave rise to a claim for damages for breach of statutory duty, such a claim would be statute barred for the same reasons that Candibon's claim in negligence is statute barred.

444 Although it is unnecessary to consider the relief sought by Candibon pursuant to its claims, I propose to briefly address what became at the trial the vexed issue of the basis upon which compensation could have been awarded if the claims had been made out, and to say something briefly about the work undertaken by the expert valuers in this case.

445 Candibon has pleaded its loss and damage from deceit, negligence and unconscionable conduct in two ways:

(b) it was diverted from its commercial strategy of holding the land as a long term investment.

446 Candibon contends that, had it not been for the wrongful conduct of the Minister, it would have retained the Freeway Corridor until February 2004, when it would have transferred it to VicRoads and would have received compensation for the compulsory acquisition of the Freeway Corridor. It also says that it would have retained the Southern Parcel to the present day, securing a rezoning that allowed commercial uses of the kind to which the Southern Parcel is now being put.

447 In addition, of course, Candibon seeks damages for the loss of opportunity to re-acquire the Southern Parcel in 1999 pursuant to s 109(2) of the LAC Act.

448 Hence, in respect of the compensatory claims (deceit, negligence, unconscionable conduct regarding the Southern Parcel and the Freeway Corridor), Candibon seeks what it describes as a 'diversion from strategy' measure of damages looking at what would have happened to the present day, namely the current market value of the Southern Parcel and the February 2004 compulsory acquisition value of the Freeway Corridor. In the alternative, it seeks what it describes as the 'date of purchase measure' comparing the 'true value' of the land with the price paid.

449 As discussed, in relation to the claimed statutory right of pre-emption under s 109(2) of the LAC Act, it seeks damages based on the lost opportunity to reacquire the Southern Parcel in 1999 and to hold it to the present (being the current market value of the Southern Parcel) or, alternatively, the lost opportunity to reacquire the Southern Parcel in 1999 to advantage, comparing its 'true value' in mid 1999 with the re-acquisition price payable.

450 A number of complex issues arise from the way in which Candibon makes these claims -

(a) is Candibon's loss to be assessed as the difference between value and price at the date of the contract of sale (the transaction date) or by some other measure having regard to Mr Mondous' evidence that Candibon would have held on to the Freeway Corridor until it was compulsorily acquired in 2004 and would continue to hold the Southern Parcel until today?

(b) if the former, is the relevant value the market value on the relevant date or something else, described as 'true value'?

(c) if the relevant value is 'true value', how is that to be assessed? What subsequent events should be taken into account?

451 The defendants submit that, so far as the compensatory claims are concerned, this case is what Nettle JA in Environmental Systems v Peerless Holdings[123] called a 'transaction case' to which the 'transaction date rule' applies. This means that a claimant is entitled to the difference between what was paid and the value of the asset acquired (or sold) as at the transaction date. For its part, Candibon submits that there is no such rule, but rather 'a second order principle' of that kind designed to assist in identifying and isolating the loss caused by the wrong complained of. It says that the transaction date rule predates the emergence of a coherent approach to causation and that the courts have less need than they once did for devices like it, being better equipped to assess whether and to what extent events subsequent to the transaction represent losses that should be regarded as caused by the wrong. It urges the Court to disregard the transaction date rule and assess loss at whatever date seems apt.

452 Significantly, both parties rely on the High Court decision in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd.[124] In Astonland, advice about the local retail tenancy market given to the plaintiff by the defendant was held to be negligent, resulting in the plaintiff purchasing an asset - a shopping plaza - at an over value. The High Court held that the measure of damages in that case was the difference between the 'true value' of the property at the date of purchase and the purchase price paid. It found that the plaintiff had suffered actual loss at the time it entered into the contract to purchase the property because the market value of the property was less than the purchase price. However, that was not the only loss. Their Honours rejected the argument advanced by the defendant that where a plaintiff acquires an asset on the strength of advice about a contingency, the measure of damages is only the value that the market would place on the risk associated with that contingency, not the loss actually suffered when the contingency happens. They said that the approach of subtracting value from price was not inflexible and recognised a difference between the price and the real value of the asset, rather than its market value.

453 In some circumstances, therefore, the law will not limit recovery by reference to market value. As Dixon J said in Potts v Miller,[125] the real value of what the plaintiff got may be ascertained in the light of events which afterwards happened because those events may show that what the assets might have sold for was not their true value.

454 By analogy, the real value of what the plaintiff (Candibon) sold may be ascertained in the light of events which afterwards happened because those events may show that what the land sold for was not its true value. Accordingly, if appropriate, the Court is entitled to have regard to events after March 1998 in order to establish the 'true value' of the Southern Parcel and the Freeway Corridor.

455 However, in Astonland the High Court also warned that although events after the date of acquisition might be taken into account, it was necessary to distinguish among possible causes for the decline in value of what had been bought. If the cause was inherent to the thing itself, then its existence should be taken into account in arriving at the real value at the time of the purchase. If the cause was independent, extrinsic, supervening or accidental, then the decline in value was not the consequence of the inducement. In the case of the shopping plaza, the cause of the decline was what the defendant was found liable for not warning about, namely the potential weakness in the local retail tenancy market. Subsequent events arose from the nature of the property itself and its commercial and geographical environment. It was the Court's view that rental levels were doomed from the start and that the losses were inevitable. In such a case, market value might not correspond with true value, because the market can operate under mistake: a material factor may not be apparent to the market. In Astonland, the material factor was that tenants were largely unavailable except at minimal rentals.

456 Assuming that this logic can be applied to an increase in the value of the asset that has been sold and not just to a decline in value of something that has been bought, deciding which subsequent events can permissibly be taken into account to determine 'true value' and which cannot, is not an easy task. Candibon submits that it held the land in anticipation of rezoning and that the Statements were about two subjects - the prospects of rezoning, and the Government's intentions regarding compulsory acquisition. It says that it would not be extraneous to the alleged wrong to have regard to the subsequent rezoning of the land (which Candibon would have aimed for, but for the Statements) and the 2004 compulsory acquisition compensation (which would have accrued to the plaintiff, but for the Statements). It contends that those subsequent events should be taken into account in assessing the 'true value' of the land.

457 For their part, the defendants submit that there was no mistake or distortion in the market, that is, no material factor that was not apparent to the parties and their valuers when the sale of the land was being negotiated in 1997 and 1998, and that no recourse to 'true value' is necessary or justified. They say, in substance, that the 'true value' of the Southern Parcel, that is, what it was truly worth, was established through the valuation process that was undertaken in late 1997 and early 1998.

458 However, had the claim in deceit been made out, it would have been on the basis that the Minister had in mind the imminent use of the Southern Parcel for industrial purposes and its consequent rezoning (but told Mr Mondous that there was no possibility of such use or rezoning). There would have been a mistake in the market by reason of the Minister's deceit. Had the valuers known the true position, they would have factored the rezoning into their assessment of the market value of the Southern Parcel and arrived at different valuations.

459 Accordingly, had there been deceit by the Minister, it would have been legitimate to determine the 'true value' of the Southern Parcel as at the transaction date by reference to the fact that the Southern Parcel was rezoned as 'Industrial 1' in late 2004.

460 The same logic does not apply to the Freeway Corridor. When the parties and their valuers negotiated the sale of the land to the Minister in 1997 and early 1998, it was well known that the Freeway Corridor was reserved for the purposes of main road construction and marked for (eventual) compulsory acquisition, and the Minister's alleged Statements could have had no bearing on the timing of the compulsory acquisition. In my view, there was no material factor that was not taken into account by the parties' valuers. Accordingly, I could not be satisfied that the 'true value' of the Freeway Corridor in March 1998 was other than the value agreed by the parties' valuers in late 1997 and early 1998.

461 Furthermore, insofar as the diversion from commercial strategy measure of damages represents a departure from the principle that the measure of damages for deceit and negligence is the difference between the value of the property acquired and the price paid as at the date of acquisition, I reject it as an appropriate measure of damages in this case. The High Court made clear in Astonland that the difference between the price and the appropriate value at the date of acquisition remains the ordinary measure of damages where an asset has been acquired at over value (and, by parity of reasoning, where an asset has been sold at under value). I do not accept the proposition that the appropriate measure of damages in the present case is the current market value of the Southern Parcel or the compulsory acquisition value of the Freeway Corridor in 2004.

462 Candibon's valuer, Mr Mark Holland, was asked to perform a number of valuation tasks for the Southern Parcel and the Freeway Corridor. The tasks reflected the different bases upon which Candibon claimed to be entitled to compensation and/or restitution in respect of the land. Mr Holland undertook six tasks as follows:

(a) task 1: 'true value' of the Freeway Corridor as at transaction date (March 1998);

(b) task 2: value of the Freeway Corridor on a compulsory acquisition basis as at 2004 (when it was actually required for freeway construction);

(c) task 3: market value of the Freeway Corridor as at today;

(d) task 4: 'true value' of the Southern Parcel as at transaction date (March 1998);

(e) task 5: 'true value' of the Southern Parcel as at mid 1999 (when it was transferred to the Council rather than re-conveyed to Candibon); and

(f) task 6: present market value of the Southern Parcel.

463 Mr Holland provided no less than three expert reports in respect of the tasks that he had been given. The first, dated 24 December 2009 (the '2009 Report') was based on the Amended Statement of Claim dated 4 May 2007 (which did not include the claim in deceit); the second, dated 25 October 2010 entitled 'Interim Supplementary Expert Witness Statement' (the 'Interim Report'), was incomplete, but referred to a series of assumptions upon which Mr Holland had been asked to base revised valuations; the third, dated 12 November 2010 (the '2010 Report') carried out the six tasks on the basis of a set of assumptions. The 2010 Report is the report upon which Candibon relied in the proceeding to establish the amounts to which it claims to be entitled. In particular, tasks 2 and 3 were undertaken on a 'before and after' basis in accordance with the LAC Act and, generally, the values that are ascribed to parts of the land at different times are based on figures derived from the compulsory acquisition value of the Freeway Corridor in 2004.

464 Candibon alleges that relying on the Statements, it resolved to sell the land at the value which it would have as a rural holding with no development prospects and that its 'true value' was significantly greater, resulting in a substantial loss to it. Hence, the market value of the Freeway Corridor as per Tom Gibson's report of 3 November 1997 was $320,000, yet its 'true value' according to Mr Holland's 2010 Report was $6.9 million. Similarly, the market value of the Southern Parcel in Tom Gibson's November 1997 report was $2.145 million, whereas the 'true value' of the Southern Parcel given in Mr Holland's 2010 Report was $36.5 million. In each case, true value was based on a set of assumptions concerning the zoning and ownership of the parcel in question and adjoining land.

465 In determining the 'true value' and the 'compulsory acquisition' value of the Freeway Corridor in his 2010 Report, Mr Holland was asked to assume that:

(a) the Freeway Corridor was destined to be required, and compulsorily acquired, for freeway construction in February 2004;

(b) no compensation was destined to be paid under Part 5 of the Planning & Environment Act to any owner or former owner of the land at any time prior to its compulsory acquisition in February 2004;

(c) as at February 2004, had the Freeway Corridor never been the subject of a proposed main road reservation, it would have been zoned 'Residential 1' under the prevailing Cardinia Planning Scheme;

(d) Candibon was to retain ownership of the Southern Parcel, the Freeway Corridor and lots 3 and 4 adjoining the Freeway Corridor to the north until the compulsory acquisition of the Freeway Corridor in February 2004; and

(e) as at February 2004, had the Freeway Corridor never been the subject of a proposed main road reservation, the Southern Parcel would have been zoned 'Residential 1' under the then prevailing Cardinia Planning Scheme.

466 In assessing the 'true value' of the Southern Parcel, Mr Holland was asked to assume the following:

(a) the Southern Parcel was destined to undergo the rezoning process that has led to its present day zoning; and

(b) the concept of rezoning the land to its present day zoning was first approved in principle by the Council and the Minister for Planning in mid 1998.

467 In fact, in his 2010 Report, Mr Holland approached the assessment of true value in 1998 by establishing the values from the point of view of compulsory acquisition in February 2004 and extrapolating from that assessment back to 1998, discounting the amount by the cost of money between 1998 and 2004. The discount rate for the opportunity cost of money that was used was 7.5%. The same methodology was used for task 5, which was to establish the true value of the Southern Parcel in 1999 (when, so Candibon says, the Southern Parcel ought to have been offered back to Candibon pursuant to s 109(2) of the LAC Act).

468 On the basis of the evidence given by the defendants' expert, Mr Dudakov, I do not accept this as a valid methodology. Mr Dudakov's expert evidence was that there was 'exponential' growth in the marketplace for industrial land between early 1998 and 2004. When asked to give his assessment of the change in sentiment in the marketplace for industrial land between these dates, his answer was as follows:

Oh, frankly chalk and cheese. The market took off significantly, there was exponential growth in the market, it's demonstrated in 2000, then in the course of 2003 and 2004 sales in - each new sale that took place in Laverton, which is the major industrial area, showed the new benchmark price and rising exponential values. And to give a further example, immediately opposite the Murdesk property was the - is what's known as the Scanlan property and in late 2001, that property sold for $220,000 a hectare. So you - again, you're seeing an exponential growth. So you're comparing a property immediately opposite, assumed to be zoned (indistinct) terms at [$]67,000 a hectare in January 2000 and here, almost two years later, about the end of 2001 a property immediately opposite selling for $220,000 a hectare. So exponential growth in values.

469 Mr Dudakov was asked to comment about the methodology adopted by Mr Holland. He said he totally disagreed with it. He said the market evidence would demonstrate a significant growth in values over that period of time, and that would put paid to reducing values back using a factor of 7.5%.

470 For the reasons given by Mr Dudakov, I find that the methodology deployed by Mr Holland was not an appropriate way to determine the 'true value' of the Freeway Corridor or the Southern Parcel as at March 1998 or of the Southern Parcel as at mid 1999. Further, as the defendants point out, some of the assumptions upon which Mr Holland based his assessment of true value (working back from the valuation exercise he conducted in respect of the compulsory acquisition value of the Freeway Corridor in 2004) were not events that actually happened so as to involve the application of hindsight. In particular, the assumptions that the Northern Parcel (lots 3 and 4) would be retained by Candibon as at February 2004 and as at the present are not valid assumptions. In February 2004, the Freeway Corridor did not form part of a parcel of land which incorporated both the Northern Parcel and the Southern Parcel.

471 Accordingly, I do not accept Mr Holland's assessments of 'true value' for the Freeway Corridor and the Southern Parcel in March 1998 or for the Southern Parcel in mid 1999. Nor do I accept the compulsory acquisition values given for the Freeway Corridor in 2004 and the present. Those values must be assessed having regard to the fact that Candibon sold the Northern Parcel in 2003.

472 It is unnecessary to say anything further about the valuation evidence. Mr Holland and Mr Dudakov differ about the per hectare prices to be given to the Freeway Corridor as at 2004 and the Southern Parcel as at 2011 on the basis of comparable sales. Given my findings on liability and the unavailability of the restitutionary remedies, I do not propose to make any findings about the values proposed by the expert valuers.

473 Candibon's claims in deceit, negligence and for relief from unconscionable conduct are based on the Minister having made the Statements to Mr Mondous and the Statements being false. Having regard to the evidence, I am not satisfied on the balance of probabilities that the Minister made the Statements to Mr Mondous as alleged.

474 In particular, I am not satisfied that the Minister told Mr Mondous that the government had determined that it would compulsorily acquire the land if Candibon would not agree to sell it to the Minister by private agreement. The evidence does not support a finding that Candibon negotiated the sale of the land to the Minister under threat of compulsion. It shows that Candibon felt free to and did explore other options for the land and that the sale was a heavily negotiated process which culminated on 17 February 1998, when Candibon wrote to the Department confirming its offer to sell the land on a non-compulsory basis for the price that had been negotiated by its valuers and those of the Minister.

475 I accept that the Minister told Mr Mondous that the Southern Parcel was not to be developed for residential uses and that he would not permit the Southern Parcel to be rezoned to permit development for residential uses. I accept also that the Minister had limited commercial uses in mind for the land given the then existing planning controls, its separation from the Pakenham township by the proposed freeway extension and what he perceived to be its drainage problems. However, I am not satisfied that the Minister told Mr Mondous that the Southern Parcel was not to be developed for commercial uses, that he (or the government) would not permit the Southern Parcel to be rezoned for such uses, or that the government required the land for the proposed freeway or otherwise to be a buffer zone for the proposed freeway.

476 Each of the plaintiff's claims in deceit, negligence and for relief from unconscionable conduct must fail as a result.

477 As to the claim in deceit specifically, Candibon has not established on the balance of probabilities any of the elements required to make out its claim. Principally, it has not established that the Statements were made at all, let alone made knowing them to be false (or not caring whether they were true or false) and for the purpose of inducing Candibon to sell the land to the Minister. However, even if statements prohibiting the future commercial use of the land had been made, I could not be satisfied that they would have induced Candibon to sell the land to the Minister, for it was Mr Mondous' evidence that Candibon was prepared to hold the land for as long as necessary for it to become ripe for development, that it had long time horizons, and that until the Minister made the alleged threat of compulsory acquisition, Candibon remained in the 'front seat' and could accept or reject any offer made by the Minister.

478 Moreover, the evidence of the matters relied upon by Candibon to show that when the Minister entered into the agreement to purchase the land on 17 March 1998, he regarded portions of the Southern Parcel as potentially available for commercial development, does not satisfy me that when the Minister purchased the land in March 1998, he had in mind or was open to commercial development of the land of a kind or on a scale that Candibon would have been interested in pursuing itself, or of the kind or on the scale that subsequently took place.

479 In addition to the finding that the Statements were not made as alleged, the claims in negligence and for relief from unconscionable conduct suffer from a number of difficulties. The claim in negligence is statute barred. Candibon's cause of action in negligence arose when it sold the land to the Minister allegedly in reliance on the Statements, and it cannot rely on s 27(c) of the Limitation of Actions Act to extend the limitation period because it does not seek relief from the consequences of mistake. The claim for relief from unconscionable conduct is also statute barred by analogy with the claim in negligence.

480 As to the statutory claims made under the LAC Act, they too must fail.

481 The LAC Act did not apply to the purchase of the land by the Minister. This means that the notice given by Candibon in 2005 under s 13 of the LAC Act seeking to avoid the sale to the Minister had no effect. It also means that the Minister was not required to honour any right of pre-emption under s 109(2) of the LAC Act.

482 The LAC Act did not apply to the purchase of the land because the Minister, as Minister for Planning, was not 'empowered' under s 172(1)(a) of the Planning & Environment Act to compulsorily acquire the land in circumstances where the land was not required for the purposes of the Pakenham Planning Scheme. I have found that the land was not required for the purposes of the relevant planning scheme or any proposed planning scheme.

483 In any event, I do not accept the propositions advanced by Candibon as to the nature of its rights under s 13 and the consequences of its purported exercise of those rights. The right conferred by s 13 was a right to take advantage of an enactment. It depended on the exercise of an option. Accordingly, unless and until Candibon made an effective choice to be restored to its pre-acquisition position by serving the notice under s 13, the purchase by the Minister remained valid. The Minister became the registered proprietor of the land in 1998 and was entitled to deal with the land as its owner. He was able to and did dispose of the legal estate in the land before any exercise of the option under s 13.

484 Candibon's argument in relation to the existence of a constructive trust in its favour must fail for the same reasons.

485 Finally, s 109(2) of the LAC Act has no application as the sale of the Southern Parcel to the Council was not made pursuant to s 109(1) as required by sub-s(2), because it was not a disposal of an interest in land acquired pursuant to the LAC Act. Furthermore, even if s109(2) applied, it does not, in my view, give rise to a right to damages for non-compliance with the requirement that it imposes.

[1] Also referred to as the 'homestead lot'.

[2] Lots 3 and 4 to the north of the Freeway Corridor were not acquired by the Minister and their fate is not directly in issue. So far as they are relevant, they will be referred to as the 'Northern Parcel'.

[4] The 'cellular' concept, the 'containment' concept, the 'linear' concept and the 'new settlement' concept.

[5] Of which the Freeway Corridor on Greenhills formed a part.

[6] The Shire of Pakenham was later replaced by the Cardinia Shire Council. I shall refer to both as 'the Council'.

[9] Shire of Pakenham Planning Scheme (16 February 1988), Amendment L40.

[10] Shire of Pakenham Planning Scheme (16 February 1988), Local Section cl 6.7.2(a).

[11] Also subsequently known as 'Pakenham Park' or 'Lakeside'.

[12] The Minister also saw the opportunity to address some of Pakenham's strategic planning issues, including relocation of the Central Primary School and proposed TAFE college onto the property.

[14] On 3 August 2000, amendment C8 to the Cardinia Planning Scheme was gazetted, removing the Minister as responsible authority in respect of the Southern Parcel.

[15] Second Amended Statement of Claim filed 9 March 2010.

[17] The pleading refers to 23 April 1998, but Candibon conceded that settlement occurred on 17 April 1998.

[18] Dated 7 December 2009 and 4 October 2010.

[19] Dated 2 March 2010 and 12 October 2010.

[21] Mr Mondous explained that when he referred to 'Greenhills', he was referring to the Freeway Corridor and the Southern Parcel. The land north of the Freeway Corridor, Lots 3 and 4, was not in issue.

[22] The meeting of 13 September 1996 is not specifically referred to in the Second Further Amended Statement of Claim or in the first or second witness statements of Mr Mondous.

[23] By which I understand him to have meant the Southern Parcel.

[24] A draft of Candibon's November 1996 letter was found during the course of the hearing on Tom Gibson's file, and Mr Gibson explained that he had drafted the letter after the meeting on 13 September 1996. Both Tom Gibson and Mr Mondous gave evidence that the November 1996 letter accurately reflected what was said at the meeting of 13 September 1996. Tom Gibson agreed in evidence that he put everything of importance that was discussed at the 13 September meeting in that letter.

[25] Unless some specific criteria were met.

[26] Registered with the Australian Institute of Valuers.

[28] I take "Tom Gibbons" to be Tom Gibson, "BD" to be Brian Dudakov, and "PD" to be Mr Dudakov's assistant Paul Donovan. Murray Carman was a senior monitor with the Victorian Government Land Monitor.

[29] Witness Statement of Donald Stewart Welsh dated 9 September 2010 [16].

[30] Conditions precedent to the exchange included the Minister rezoning the Necropolis site to allow it to be developed for residential subdivision and the Council entering into a contract with the developer for the development of the Necropolis site that included the developer or joint venture partner agreeing to the division of land for the establishment of education facilities, the construction of a railway station and to allow the Council to expand its leisure facility.

[31] On the basis that it would be doing a number of other things such as committing to an investment of $3 million towards the development of a regional art/design/performance facility and the fact that the transaction would trigger other developments including the development of a combined VCE/TAFE campus on the Council offices site and the creation of a modern integrated emergency services precinct on the Necropolis site.

[32] As part of the conditions of the agreement, the Council had also committed to provide three identifiable parcels of land within Pakenham Park (the Necropolis site) to be used for an SES/police complex, an arts and design studio and a site for a future railway station. The Council would transfer the ownership of those sites to the relevant bodies on a fully serviced basis for 'nil' consideration. The Council had also committed to undertaking various infrastructure projects.

[33] The steps for amending a planning scheme are clearly set out in the Planning & Environment Act: there is the procedure of exhibition and of notice, for the making and consideration of submissions; there is provision for a hearing and reporting by a Panel, consideration of the Panel's report, the adoption of the amendment by the Planning Authority and the approval of the amendment by the Minister.

[34] This is the word used in the Maunder file notes dated 9 February 1998 and 17 February 1998. The latter file note recites the Minister's expectation that a compulsory acquisition would cost him no more than $2 million all up (compared to the $2.1 million contract price that had been agreed in principle).

[35] Candibon also contends that on three occasions in his oral evidence, Mr Maclellan made unguarded statements that revealed the true character of what he had put to Mondous, that is, that he intended to take the land if need be. These are references to the possibility of 'taking' land from Mr Mondous and to 'requiring' another developer to reconvey to the State part of a property that had been transferred to the developer.

[36] Transcript of Proceedings, Candibon Pty Ltd v Minister for Planning (Supreme Court of Victoria, Emerton J, 4-7, 11-14, 18, 20-21, 25-26 October, 4, 22-24, 29-30 November, 2-3, 6, 8-10, 14-16 December 2010) ('Transcript') 1919-20, 2100.

[37] Or a company of which he was a director.

[38] In this context, I note that despite the fact that it succeeded in having lots 3 and 4 (north of the freeway reservation) rezoned as residential land, Candibon disposed of these lots before developing them. Mr Mondous explained to the Court that there was a problem with access to these lots which affected their development potential. Overall, it seems, Greenhills presented problems for Candibon. By contrast, in 1998, Mr Mondous acquired land closer to the Pakenham township known as 'Blue Hills', which he successfully developed as a residential estate.

[40] On 16 March 2010, the defendants' solicitors wrote to the plaintiff's solicitors [CB 10, p 1439]:

As was discussed between Counsel on 1 March 2010, the defendants believe that there are deficiencies in the plaintiff's discovery.

Please provide discovery of the following documents:

1. All documents setting out the plaintiff's financial position between 1 July 1996 and 30 June 2001 ...

The plaintiff's solicitors replied by letter dated 25 March 2010 [CB 10, p 1536]:

Having discussed the matter with senior and junior counsel, we are having difficulty seeing why documents of this category are relevant to be discovered. Could you please advise us what you see as the issue or issues, or the line of inquiry, to which they would be relevant.

[42] Again, this refers to the Freeway Corridor and the Southern Parcel.

[45] However, he observed that there could have been a problem involving Ramsar Treaty areas and the discharge into drains leading into Western Port Bay into the Ramsar areas.

[46] See Witness Statement dated 2 March 2010 [16], [28].

[54] Magill v Magill [2006] HCA 51; (2006) 226 CLR 551, 587-8; [2006] HCA 51 [114].

[55] Magill v Magill [2006] HCA 51; (2006) 226 CLR 551, 587-8; [2006] HCA 51 [114]; O'Doherty v Birrell [2001] VSCA 44; (2001) 3 VR 147, 169; [2001] VSCA 44 [54]-[55].

[56] Plaintiff's Outline of Argument re Further and Better Particulars of Paragraph 17B of the Second Amended Defence filed 12 May 2010.

[57] Candibon's pleading also referred to no documents being discovered:

• evidencing any communication or other happening to prompt the Minister to alter his intention from that disclosed in the Statements to an intention to permit development of the land for commercial purposes; or

• showing that the Minister became aware of the discussions regarding the development of the Southern Parcel only after he signed the agreement; or

• showing that the Minister became minded to encourage such development only after he signed the agreement.

[61] Including the policy of the previous Liberal government under Mr Alan Hunt and of successive Labor ministers right up to the point where the Minister signed off on the Ministerial direction. Mr Maclellan observed that the Labor Party did not rezone the land when it was next in power and that they put it outside the urban growth boundary under Melbourne 2030 until it was first amended.

[62] Letter from Russell Maunder to Brian Robinson dated 12 December 1997.

[65] Cardinia Planning Scheme (August 1997 draft), cl 21 [4.1.4].

[66] It also noted that in the long term, the proposed Princes Freeway would be the southern boundary to Pakenham residential development. The freeway and the proposed skydivers runway (to the south of the freeway) would provide a minimum buffer distance of 250-300 metres between the future residential areas and the proposed motorsports complex.

[70] Hawkins v Clayton (1988) 164 CLR 539, 534, 560-61, 587-88, 598-602; Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 531, 540; Di Sante v Camando Nominees Pty Ltd [2000] VSC 211 [35].

[71] [2008] VSCA 26; (2008) 19 VR 358, 393 [108]-[109].

[72] (1988) 164 CLR 539, 548 (Mason CJ and Wilson J), 587 (Deane J), 599-600 (Gaudron J).

[73] [2004] HCA 54; (2004) 217 CLR 640, 655.

[74] Hawkins v Clayton (1988) 164 CLR 539, 602.

[75] See Phillips-Higgins v Harper [1954] 1 QB 411.

[76] See Howell v Young [1825] EngR 76; (1826) 4 B & C 259; Barton v Chibber (Unreported, Supreme Court of Victoria, Hampel J, 29 June 1989); Hillebrand v Council of the City of Penrith [2000] NSWSC 1058.

[77] [1954] 1 QB 411.

[80] See generally Edelman J, 'Limitation Periods and the Theory of Unjust Enrichment' (2005) 68 The Modern Law Review 848.

[81] Sinclair v Registrar-General [2010] NSWSC 173 [34].

[82] (Unreported, Supreme Court of Victoria, Hampel J, 29 June 1989).

[84] (1983) 151 CLR 447; [1983] HCA 14.

[86] (2003) 214 CLR 51; [2003] HCA 18.

[88] R P Meagher, J D Heydon and M J Leeming Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (Butterworths LexisNexis 4th ed, 2002), 1015-6.

[90] I C F Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (LBC Information Services, 8th ed, 2010) 419-20.

[91] R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (Butterworths LexisNexis 4th ed, 2002) 1016.

[92] (1880) 5 ExD 319.

[93] (1880) 35 ChD 94, 105.

[94] [1998] EWCA Civ 1249; [1999] 1 All ER 400, 415-6.

[95] [2000] EWCA Civ 219; [2001] 1 WLR 112.

[96] [2003] SASC 415 ('The Duke Group').

[97] [2000] EWCA Civ 219; [2001] 1 WLR 112 ('Cia de Seguros Imperio').

[98] [2000] 1 WLR 707.

[99] [2006] NSWCA 286 [22], [23].

[100] Paragraph 16 of the plaintiff's Reply to the Second Amended Defence filed 14 April 2010.

[101] I C F Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damage' (LBC Information Services, 8th ed, 2010) 419-20.

[102] [2003] SASC 412.

[103] (1994) 35 NSWLR 497, 509-10.

[104] The Duke Group [2000] EWCA Civ 219; [2001] 1 WLR 112 [116].

[105] Land Acquisition and Compensation Act 1986 (Vic), s 1.

[106] Ibid s 9.

[107] Ibid s 10.

[108] Stuart Morris, Barrister, 'Land Acquisition and Compensation: Proposals for New Land Acquisition and Compensation Legislation' (Report to the Minister for Planning, January 1983); see Victoria, Parliamentary Debates, Legislative Assembly, 8 May 1986, 2015 (F N Wilkes) (Second Reading Speech, Land Acquisition and Compensation Bill 1986).

[111] A Third Amended Statement of Claim was filed on 26 August 2011, just three days before delivery of this judgment. However, no amendment has been made to this part of Candibon's pleading.

[112] See s 20(4) of the Planning & Environment Act 1987 (Vic).

[113] (1998) 98 LGERA 28, 50.

[114] His Honour observed that it might, however, be objected that even when land has been reserved for a public purpose, it cannot be said that land 'is required' - there is always the risk, for example, of revocation. However, against that, the formula used in s 99(a) of the Planning & Environment Act seemed to address the situation then before the Court and in that context it was right to speak of land already reserved as land which 'is required'.

[115] Nor am I satisfied that the land was required for the proposed Cardinia Planning Scheme, although this was not expressly argued.

[116] Again, nor was it required for the proposed Cardinia Planning Scheme.

[117] For which he or she is the responsible authority.

[118] See Australand Corporation (Qld) Pty Ltd v Johnson [2007] QCA 302; [2008] 1 Qd R 203, 245; [2007] QCA 302 [120]-[121] (Keane JA) .

[119] Alati v Kruger (1955) 94 CLR 216; [1955] HCA 64; McKenzie v McDonald [1927] VicLawRp 19; [1927] VLR 134; O'Sullivan v Management Agency & Music Ltd [1985] 1 QB 428; Spence v Crawford [1939] 3 All ER 271, 288.

[120] See, eg, Clegg v Edmondson [1857] EngR 375; (1857) 8 De G M & G 787; 44 ER 375; Rowe v Oades (1905) 3 CLR 73; [1905] HCA 42.

[121] O'Connor v SP Bray Ltd [1937] HCA 18; (1937) 56 CLR 464, 472.

[123] [2008] VSCA 26; (2008) 19 VR 358, 393-4; [2008] VSCA 26 [109].

[124] (2004) 217 CLR 640; [2004] HCA 54 ('Astonland').

[125] (1940) 64 CLR 282; [1940] HCA 43.