Court of Appeal (WA)|2001-07-04|Before: Lure J

Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WASCA 199 (4 July 2001)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : TEMWOOD HOLDINGS PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2001] WASCA 199

Town Planning and Development - Land reserved under the Metropolitan Region Town Planning Scheme Act 1958 - Power to impose a condition ceding reserved land to the Crown free of cost on subdivision under Town Planning and Development Act 1928 - Whether ceding condition ultra vires, for an improper purpose or unreasonable - Nature of appeal from the Town Planning Appeal Tribunal - Applicability of O 63 r 9 of the Supreme Court Rules

Metropolitan Region Town Planning Scheme Act 1958

Metropolitan Region Town Planning Scheme Act Amendment Act 1962

Allen Commercial Construction Pty Ltd v North Sydney Municipal Council [1970] HCA 42; (1970) 123 CLR 490

Associated Provincial Picturehouse Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223

Australasian Memory Pty Ltd v Brien [2000] HC 30; (2000) 172 ALR 28

Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566

Bennett & Co v CLC Corporation [2001] WASCA 51 (2001) 37 ACSR 96

Canada Southern Railway Co v International Bridge Co (1883) 8 App Cas 723

Collector of Customs v Pressure Tankers Pty Ltd (1993) 115 ALR 1

Colonial Sugar Refining Co Ltd v Melbourne Harbour Trust Commissioners [1927] AC 343

Commissioner of Taxation v Miller (1946) 76 CLR 93

Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135

Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1

David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265

Durham Holdings Pty Ltd v New South Wales [2001] HCA 7; (2001) 177 ALR 436

Durham Holdings Pty Ltd v NSW 75 ALJR 501

FCT v J Walter Thompson (Aust) Pty Ltd [1944] HCA 23; (1944) 69 CLR 227

Georgoussis v The Medical Board [1957] VicRp 98; [1957] VR 671

Hall & Co Ltd v Shoreham-by-Sea Urban District Council (1964) 1 WLR 240

Hughes v Doncaster Metropolitan Borough Council [1991] 1 AC 382

Kirkness v John Hudson & Co Ltd [1955] AC 696

Marford Nominees Pty Ltd v State Planning Commission, unreported; SCt of WA; BC 9600102; 1 February 1996

Metwally v University of Wollongong (No 2) (1985) 60 ALR 68

Minister for Navy v Rae [1945] HCA 6; (1945) 70 CLR 339

Minister of Housing and Local Government v Hartnell [1965] AC 1134

Mobil Oil Australia Pty Ltd v FCT [1963] HCA 41; (1963) 113 CLR 475

Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 177 ALR 390

Municipal Council of Sydney v Campbell (1925) AC 338

Newbury District Council v Secretary of State for the Environment [1981] AC 578

Ocean Reef (WA) Pty Ltd v Town Planning Board (1982) 2 SR (WA) 131

O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210

Owners of "Shin Kobe Maru" v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404

Perrymead Investments Pty Ltd v Western Australian Planning Commission (1996) 16 SR (WA) 181

Pointe Gorde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Land [1947] AC 565

Proctor v Brisbane City Council (1993) 81 LGERA 398

Ruhamah Property Co Ltd v FCT [1928] HCA 22; (1928) 41 CLR 148

Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491

Westel Co-operative Ltd v Foodland Associated Ltd (1987) 5 ACLC 979

1 McLURE J: This is an appeal from the Town Planning Appeal Tribunal ("Tribunal") dismissing an appeal by the appellant from the imposition by the Western Australian Planning Commission ("Commission") of a condition of subdivision of land owned by the appellant in Singleton near Mandurah known as Bayshore Gardens Estate.

2 The condition the subject of the appeal ("Condition") states:

"The portion of PT lot 1001 to the west of the land zoned 'Urban' under the Metropolitan Region Scheme being shown on Diagram or Plan or Survey as a 'Reserve for Recreation' and vested in the Crown under s.20A of the Town Planning and Development Act, such land to be ceded free of cost and without any payment of compensation by the Crown."

3 The land the subject of the Condition ("Foreshore Reserve") was reserved for parks and recreation under the Metropolitan Region Scheme ("MRS") in November 1963.

4 The appeal to the Tribunal was a consolidation of three appeals relating to approvals imposing the Condition in relation to the subdivision of:

(i) a superlot in the north-east part of the land, resulting in a superlot of 16.0602 hectares and a remaining lot of 62.8756 hectares ("May 2000 subdivision");

(ii) a portion of the land to the south-east known as Rosebay Grove, Singleton, being 23 residential lots and a balance lot ("first September 2000 subdivision");

(iii) a portion of the land to the south-west known as Foreshore Drive, Singleton, being 46 residential lots and a balance lot ("second September 2000 subdivision").

5 The appellant's grounds of appeal are as follows:

"1. The Tribunal held that the Appellant, at the time of the respondent's decisions, had no right, present or contingent, under s.36 of the Metropolitan Region Town Planning Scheme Act 1959 ('MRTPSA') with respect to the reservation of the foreshore reserve. The Tribunal should have held that:-

1.1 the Appellant had, at the time of the respondent's decisions, a vested but contingent right to compensation under MRTPSA arising from the reservation under the Metropolitan Region Scheme ('MRS') of the foreshore reserve, which was property not to be expropriated without compensation by or under any other Act without a clear expression of legislative intent; and

1.2 the power of the respondent under s.20 of the Town Planning and Development Act 1928 to impose conditions on approval of subdivision of land nearby to the foreshore does not empower the respondent to expropriate without compensation that right.

2. The Tribunal, having held that the intended effect of the condition imposed by the respondent on the Appellant with respect to the foreshore reserve, namely that the "portion of part lot 1001 west of the land zoned 'Urban' under the Metropolitan Region Scheme being shown on the Diagram or Plan or Survey as a 'Reserve for Recreation' be ceded to Crown free of cost and without any payment of compensation by the Crown ('the Condition') was to defeat the operation of Part V (including s.36) of the MRTPSA and deprive the Appellant of the opportunity of claiming compensation under MRTPSA after the land is vested in the Crown, should have held the Condition was invalid as:-

2.1 the Condition was beyond power for the reasons in ground 1 above;

2.2 further or alternatively, because the reservation of the foreshore reserve under the MRS prevented use or development of that land inconsistently with that reservation, the Condition had no valid planning purpose and, rather, had the sole purpose of preventing the Appellant ever claiming compensation under s.36 of MRTPSA;

2.3 further or alternatively, the Condition did not fairly and reasonably relate to the development by the Appellant of the land the subject of the development applications;

2.4 further or alternatively, the Condition was so unreasonable that no reasonable planning authority could have imposed it."

6 The first ground of appeal raises a question of construction of the Town Planning and Development Act 1928 ("TPD Act") and the Metropolitan Region Town Planning Scheme Act 1958 ("Scheme Act"). The issue is whether the Commission has the power (or jurisdiction) under s 20(1)(a) of the TPD Act to impose a condition on subdivision which (to put it in entirely neutral terms) has the effect of preventing a person from claiming compensation under Pt V of the Scheme Act. If the question is answered in the negative, the result will be that the Condition can never be imposed on land reserved under the Scheme Act.

7 Grounds of appeal 2.2, 2.3 and 2.4 involve an abuse of power in the administrative law sense of improper purpose and unreasonableness. However, it is a necessary first step in an abuse of power case to identify, as a matter of construction, the subject matter, scope and authorised purpose, express or implied, of the statutory power under consideration.

8 Each of the grounds of appeal in the way explained involves questions of law.

9 Section 54B of the TPD Act provides for an appeal from the Tribunal to the Supreme Court. It materially provides:

"(1) Subject to subsection (2), any person aggrieved by a direction, determination or order of the Appeal Tribunal in proceedings before the Tribunal to which the person was a party may appeal to the Supreme Court against the direction, determination or order, in the manner, and in the time, prescribed by the Rules of Court.

(2) An appeal does not lie to the Supreme Court from a direction, determination, or order of the Appeal Tribunal unless the appeal involves a question of law."

10 Order 65 of the Supreme Court Rules ("SCR") applies. Order 65 r 10(1) provides:

"Subject to paragraph (2), the appeal shall be in the nature of a rehearing, and the Judge hearing the appeal may confirm, quash or vary the decision of the tribunal against which the appeal is made or remit the matter to the tribunal for rehearing, with or without directions."

11 Order 65 r 10(2) gives the Judge a discretion to admit additional or fresh evidence.

12 On a proper construction of s 54B(2) of the TPD Act, if a question of law is involved in the decision of the Tribunal, the whole of the decision, and not merely the question of law, is then open to review: Ruhamah Property Co Ltd v Federal Commissioner of Taxation [1928] HCA 22; (1928) 41 CLR 148 at 151.

13 The wording of s 54B of the TPD Act is to be contrasted with s 44 of the Administrative Appeals Tribunal Act 1975 which provides that a party may appeal to the Federal Court "on a question of law" from any decision of the Administrative Appeals Tribunal. The distinction between the statutory formulations was considered by the Federal Court in TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119; (1988) 82 ALR 175. The court said (at 178):

" ... If the condition as to jurisdiction were met, (that is there was a question of law involved) the whole of the "matter" or controversy between the taxpayer and the commissioner came before the court. This no longer will be the case with appeals brought to this court under s 44 of the AAT Act. The existence of a question of law is now not merely a qualifying condition to ground the appeal, but also the subject of the appeal itself."

14 Accordingly, decisions concerning s 44 of the AAT Act are not directly applicable to appeals from the Tribunal to this Court. It was accepted by both parties that this appeal is in the nature of a rehearing rather than an appeal in the strict sense or a hearing de novo. The distinction between the categories of appeal was discussed in the joint judgment of Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 at [12] [13]. An appeal to a court or tribunal whose function is simply to determine whether the decision in question was right or wrong on the evidence and the law as it stood when the decision was given is an appeal in the strict sense. If an appellate tribunal can receive further evidence and its powers are not restricted to making the decision that should have been made at first instance, the appeal is usually described as an appeal by way of rehearing. Although further evidence may be admitted on an appeal of that kind, the appeal is usually conducted by reference to the evidence given at first instance and is to be contrasted with an appeal by way of hearing de novo. In the case of a hearing de novo, the matter is heard afresh and a decision is given on the evidence presented at that hearing. The High Court said (at [14]):

"Ordinarily, if there has been no further evidence admitted and if there has been no relevant change in the law, a court or tribunal entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was error on the part of the primary decision maker."

15 In my view, that is the correct approach to take to the construction of s 54B of the TPD Act. No further evidence was admitted in this case and there has been no relevant change in the law. Accordingly, it is only if the Tribunal has made an error that the whole decision of the Tribunal is open to review. This is consistent with the approach taken by the High Court in Ruhamah v FCT and the Full Court of this Court in Bradshaw v Medical Board of Western Australia (1990) 3 WAR 322 at 328.

The History of the Subdivision and Condition

16 On 11 May 1992 the appellant became the registered proprietor of portion of Cockburn Location 16 being Lot 1001 on Plan 17791 in Certificate of Title Volume 1888 Folio 372 (the "land"). The land has been progressively subdivided since 1993. The Condition was first imposed by the Commission in an approval of a subdivision of the land in October 1993.

17 At the hearing of the appeal, the appellant objected to a number of the Commission's submissions on the basis they went beyond the matters considered and ruled on by the Tribunal and were not the subject of a Notice under O 63 r 9 of the SCR. At this stage I refer to relevant factual matters canvassed by the Tribunal in its reasons (which neither party challenged). They are as follows:

"In 1990, the Environmental Protection Authority set a level of assessment at Consultative Environmental Review ["CER"] arising from an application to change the zoning of the land from Urban Deferred to Urban under the MRS. Part of the land was within System 6 recommendation M107.

System 6 reserves are those recommended in 1983 by the Department of Conservation and Environment for the Darling Range region of Perth. The M107 recommendation 'Peelhurst, Singleton and Madora' noted that the area has extensive coastal dunes, valuable for coastal vegetation, recreational and aesthetic reasons. It also referred to a need for a buffer zone of uncleared land to preserve the scenery and vegetation. Most importantly, as it affects this land, the buffer zone was to be an east-west link of open space between the coast and Mandurah Road.

This assessment was suspended but reactivated in 1992 when the Appellant became the owner of the land. The recommendations of the EPA were that the proposal for urban development was acceptable and the EPA Bulletin stated that the main purpose of the M107 area:

was that the area's recreational and landscape values be protected by planning procedures which would not require public acquisition of the land involved.

The then Department of Planning and Urban Development had not made provision for the east-west strip in documents at that time and it did not become part of the planning framework for that area. The Bulletin containing the recommendations of the EPA stated:

As it has not been possible to achieve the implementation of Recommendation M107 through the planning process as recommended, and because the ecological management difficulties inherent in the conserving the east-west links particularly once surrounded by urban development, it was decided by the Authority to consider alternatives...

The alternative recommended was that there be an expanded coastal foreshore reserve, wider than that normally required by the planning authority, the boundary of which was to be based on landform features for the protection of a range of flora species.

Mr Darren Walsh, the Manager of the Environmental Planning Branch of the Department of Environmental Protection, gave evidence on the CER and its outcome. There were six appeals from the Report and Recommendations, none of which were from the Appellant. Finally, the Hon. Minister for the Environment issued a 'Statement that the Proposal May be Implemented' pursuant to s.45 of the Environmental Protection Act 1986. This Statement set out the conditions under which the proposal could be implemented including that there be a foreshore reserve and, at subdivision, the Appellant 'shall transfer to public ownership the proposed foreshore reserve.' As well, it was stated that the Appellant should provide, in exchange for a part of M107 that is to be developed in the Structure Plan that formed the basis for the CER, additional open space adjacent to the reserve shown in that Plan. By letter dated 13 January 1993, the Appellant advised the Hon. Minister that 'the conditions meet with our approval.'

The land, the subject of the condition under Appeal, was reserved for Parks and Recreation under the MRS in approximately 1963. The boundary of the reserve was altered by the 1994 'South West Corridor Omnibus Amendment No. 960/33. The reserve is approximately 20 ha and has been the subject of natural accretion of the shore line resulting in a slight reduction of the area.

The entire subdivision is part of the 'Bayshore Garden Estate' in the City of Rockingham District Town Planning Scheme No.1 and the subject of a Comprehensive Development Plan for the Development Zone in which it was situated, approved by the Commission in October 1993.

The first approval of this land appears to be in October 1993 and includes ceding of a foreshore reserve of 21.775 ha. For various reasons, the foreshore condition was not required by the Commission but the Appellant was advised that the Diagrams would not be endorsed until the foreshore reserve was ceded. Apparently, the plans were endorsed without the ceding and subdivision proceeded, indicating that the condition was waived. The Commission agreed in 1994 to the foreshore being ceded in three stages and that the Appellant accordingly enter into a deed with the Commission. Further lots were created and the deed remained in draft in the meantime.

Ms Watts, an officer for the Ministry for Planning indicated that seven subsequent subdivisions were approved by the Commission with no condition requiring ceding. She states in her Statement of Evidence:

This appears to be an oversight, as the question of ceding the foreshore was never raised, or it was assumed that ceding had taken place.

In 1998, the Ministry advised the Applicant that the ceding condition be carried out. In fact, the Ministry refused an application for development for two grouped dwellings on the reserve on the basis that the land is to be ceded.

The purpose of the application for subdivision in November 1999 was to create a residential superlot. It is at this time that the Commission reasserted its foreshore condition."

The Provisions of the TPD Act and Scheme Act

18 Section 20(1)(a) of the TPD Act prohibits a person without the approval of the Commission from, inter alia, subdividing any lot and the Commission:

"may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective."

19 Section 20C of the TPD Act applies where the Commission has approved a plan of subdivision upon condition that portion of the land be set aside and vested in the Crown for parks, recreation grounds or open spaces generally. If the relevant local government and the Commission approve, the owner of the land may, in lieu of setting the land aside, pay to the local government a sum that represents the value of the land the subject of the condition.

20 The TPD Act also authorises the making of town planning schemes with the general object of improving and developing land to the best possible advantage (s 6). Sections 11 and 12 of the TPD Act deal with compensation payable to persons injuriously affected by a town planning scheme. I will deal with those sections in the context of the Scheme Act.

21 Section 3 of the Scheme Act provides that it is to be construed in conjunction with the TPD Act as if the provisions of the Scheme Act were incorporated with and formed part of the TPD Act. However, in the event of any conflict or inconsistency between the Acts, the provisions of the Scheme Act prevail to the extent to which they are in conflict or inconsistent.

22 The MRS is a town planning scheme for the metropolitan region made pursuant to s 30 of the Scheme Act. Part V of the Scheme Act deals with compensation. Section 36(1) provides that for the purposes of applying the provisions of s 11 and s 12 of the TPD Act to the provisions of the MRS, s 11 and s 12 shall be read and construed as if, inter alia:

(a) the Commission were the responsible authority; and

(b) those provisions (s 11 and s 12) included subsections (3), (3a), (4), (5) and (6) of the Scheme Act.

23 Further, pursuant to s 36(2)(a) of the Scheme Act the MRS may provide that the Commission can elect to acquire land where compensation for injurious affection is claimed as a result of the operation of s 12(2a), (b)(i) or (ii) of the TPD Act.

24 Section 11 of the TPD Act materially provides:

"(1) Any person whose land or property is injuriously affected by the making of a town planning scheme shall ... be entitled to obtain compensation in respect thereof from the responsible authority: ...;

(2) ...

(3) ...

(4) Any question as to whether any land or property is injuriously affected ... and as to the amount and manner of payment ... of the sum which is to be paid as compensation under this section ... shall be determined by arbitration under and in accordance with the Commercial Arbitration Act 1985, unless the parties agree on some other method of determination."

25 Section 12(2a)(b) narrows the scope of s 11 of the TPD Act.

" ... land shall not be deemed to be injuriously affected by reason of any provision of a town planning scheme which comes into force on or after the appointed day, and which deals with any of the matters specified in clause 10 of the First Schedule, unless the scheme

(i) permits development on that land for no purpose other than a public purpose; or

(ii) prohibits wholly or partially the continuance of any non-conforming use of that land or the erection, alteration or extension on the land of any building in connection with or in furtherance of, any non-conforming use of the land, which, but for that prohibition, would not have been an unlawful erection, alteration or extension under the laws of the state or the local laws of the local government within whose district the land is situated."

"Classification or zoning of the scheme area for various types, kinds or classes of residence, flats, trade, business, industry, commercial, recreation, cultural heritage conservation, educational or other public or institutional purposes ..."

27 As previously stated, subsections (3), (3a), (4), (5) and (6) of s 36 are to be read and construed as part of s 11 and s 12 of the TPD Act. Those subsections materially provide:

"(3) Subject to subsection (4), where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until 

(a) the land is first sold following the date of the reservation; or

(b) the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant.

(3a) Compensation for injurious affection to any land is payable only once under subsection (3) and is so payable -

(a) under paragraph (a) of that subsection to the person who was the owner of the land at the date of reservation; or

(b) under paragraph (b) of that subsection to the person who was the owner of the land at the date of application,

referred to in that paragraph, unless after the payment of that compensation further injurious affection to the land results from -

(4) Before compensation is payable under subsection (3) -

(a) where the land is sold, the person lawfully appointed to determine the amount of the compensation shall be satisfied -

(i) that the owner of the land has sold the land at a lesser price than he might reasonably have expected to receive had there been no reservation of the land under the Scheme;

(ii) that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell the land; and

(iii) that the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land;

(b) where the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant, the person lawfully appointed to determine the amount of compensation shall be satisfied that the application was made in good faith.

(5) A claim for compensation under subsection (3) shall be made at any time within 6 months after the land is sold or the application for permission to carry out development on the land is refused or the permission is granted subject to conditions that are unacceptable to the applicant.

(6) (a) Subject to this section, the compensation payable for injurious affection due to or arising out of the land being reserved under the Scheme for a public purpose, where no part of the land is purchased or acquired by the Commission, shall not exceed the difference between -

(i) the value of the land as so affected by the existence of such reservation; and

(b) The value referred to in paragraph (a)(i) and (ii) shall be assessed as at the date the land is sold as referred to in subsection (3)(a) or the date on which the application for permission to carry out development on the land is refused or the permission is granted subject to conditions that are unacceptable to the applicant."

28 The Commission is entitled to recover compensation paid if, as a result of the MRS being amended, the reservation of land for public purposes is revoked or the area of land reduced (s 36(9) of the Scheme Act).

29 Where an owner intends to sell the land and claim compensation, the valuation is to be undertaken by a Board of Valuers pursuant to s 36C of the Act. The Scheme Act makes no provision for the conduct of a valuation when a development application is refused or made subject to unacceptable conditions. In those circumstances it appears that s 11(4) of the TPD Act applies.

30 After the hearing, the respondent provided a legislative history and supporting material on the compensation provisions of the TPD Act and the Scheme Act. It was copied to the appellant and no objection was taken to its use. Sections 11 and 12 of the TPD Act have been in the Act from its commencement. In 1957, subsection (2a) of s 12 was inserted in the TPD Act by the Town Planning and Development Act Amendment Act 1956. The Second Reading Speech states:

" ... at present there is considerable doubt and quite a lot of fear among local authorities as to the affect that a comprehensive zoning scheme might have upon them. They are afraid that if they embark upon a comprehensive zoning scheme, they might find themselves liable for payment of very substantial compensation for injurious affection ... The Bill provides that no compensation for injurious affection shall be paid in respect of zoning provisions of a town planning scheme, that is, the defining or classifying of the scheme area into various zones in which specified types of land-use are permitted, industrial, residential and the like.

However, the provision regarding no compensation will not apply unless the zoning scheme meets these two requirements - the scheme has to provide for the retention of existing use rights in land and buildings which do not conform to the zoning proposal and permits the reasonable extension of any building. Secondly the zoning scheme must permit the land to be developed or improved privately; that is, that is not zoned or reserved for public purpose such as roads, parks, schools, etc, which would preclude private development."

31 The Scheme Act came into effect on 19 February 1960. When passed, s 36 of the Scheme Act contained no restrictions on the right to compensation other than those in s 12 of the TPD Act.

32 In the Metropolitan Region Scheme Report 1962 ("1962 MRS Report") which was submitted under s 31(a) of the Scheme Act for the approval of the MRS, the Metropolitan Region Planning Authority ("Authority") advised that it might be beyond its financial resources to meet the compensation liability that might arise under s 11 of the TPD Act. The Authority advised that the depreciation in value was in many instances hypothetical and would become real only when property was sold at a value depressed by the reservation or where development was frustrated by a refusal of consent under the MRS. The 1962 MRS Report states (at page 6):

"The Authority has accordingly submitted that liability for compensation for injurious affection be limited to two circumstances:-

(a) where a sale is effected at a depressed value attributable to reservation under the Scheme; or

(b) where consent to development of property is refused on the grounds of reservation under the Scheme."

33 Subsections (3) to (5) of s 36 of the Scheme Act were inserted by the Metropolitan Region Town Planning Scheme Act Amendment Act 1962. The relevant Second Reading Speech refers to the 1962 MRS Report and states:

"The Bill also amends the compensation provisions in respect of the metropolitan region scheme. This amendment arises from a consideration of the financial resources of the metropolitan improvement fund and problems of planning authorities in other States where claims for compensation have totalled many millions of pounds - far beyond the resources of the responsible authorities. It has been said that many of these claims were due to the uncertainty of the owners in respect of their right.

As indicated in the report submitted by the Authority, it is quite impossible to contemplate the acquisition immediately, or over a short period of time, of land which will not be required for many years ahead and the cost of which will, in the aggregate, run to many millions of pounds. However, as the Act stands, the authority could be confronted with a heavy claim for compensation in respect of the whole of the land reserved under the scheme and far beyond its financial ability to meet. Nevertheless, it is necessary that the land be reserved in the scheme for this future need; and the reservation imposes an obligation in respect of compensation.

It can properly be argued that reservation under the scheme depreciates the value of land. However, the depreciation is, in many cases, hypothetical and becomes real only when the land is sold at a price which reflects this depreciation, or when development is frustrated by a refusal of consent under the scheme. The amendment proposes that compensation for injurious affection be limited to two circumstances: where a sale is effected at a depressed value attributable to reservation under the scheme, or where consent to develop is refused on the ground of reservation under the scheme."

34 The text of the MRS was published in 1963. Division 3 of the MRS deals with reserved land not owned by or vested in a public authority.

35 Clause 18 of the MRS prohibits a person from carrying out any development on reserved land without the written approval of the Authority. The approval of the Authority may include conditions (cl 19). Clause 20 of the MRS provides for the payment of compensation under the Scheme Act. Clauses 28 to 30 of the MRS deal with the procedures and process that apply to an application to develop reserved land. Under cl 30, the Authority may refuse its approval or grant its approval subject to such conditions as it deems fit.

Existence of the Power to Impose the Condition

(a) as a result of the reservation under the MRS, the appellant had a "vested albeit contingent right" to compensation under the Scheme Act;

(b) statutes are not to be construed as interfering with vested interests unless the intention is manifest;

(c) on a proper construction of s 20(1)(a) of the TPD Act, the Commission did not have the power to "defeat" or "interfere" with the appellant's vested right to compensation under the Scheme Act.

37 The relevant principle of statutory construction is traditionally formulated in terms of a presumption against interference with vested proprietary interests: see Clissold v Perry [1904] HCA 12; (1984) 1 CLR 363 at 373. However, the presumption also applies to vested:

(a) common law rights: Pyneboard Pty Ltd v Trade Practices Commission (1983) 45 ALR 609 at 617;

(b) property rights created by statute: Springhall v Kirner [1988] VicRp 21; [1988] VR 159 at 165 - 166; see also Commonwealth of Australia v WMC Resources Ltd [1998] HCA 8; (1998) 194 CLR 1.

38 There is a debate as to whether the presumption applies to statutory rights that do not give rise to a right of property or a right "akin" to property (Greville v Williams [1906] HCA 97; (1906) 4 CLR 694; Cummings v Claremont Petroleum (1995) 185 CLR 124 at 133). In Springhall v Kirner the court adopted a broad approach and said (at p 165) an enactment should not be construed in a manner that would lead to the loss of a person's valuable rights without payment of compensation.

39 However, whatever be the outer limits of the operation of the presumption, in my opinion it applies to the removal of a vested statutory right of compensation which itself is provided to compensate a person for the limitation or curtailment of rights attached to ownership of property. This approach is consistent with that taken by the Full Court in Bond Corporation Pty Ltd v The Western Australian Planning Commission [2000] WASCA 257 at [29], [30] and [49].

40 Regardless of the scope of the property or rights the subject of the presumption, the property or rights affected must be vested. Accordingly, it is necessary to analyse the appellant's position in relation to a claim for compensation under the Scheme Act as at the date of the imposition of the Condition.

41 The appellant became the registered proprietor of the land of which the Foreshore Reserve formed part in May 1992. The Foreshore Reserve was reserved under the MRS in November 1963. It was an agreed fact that no compensation had been paid to the appellant or to any previous registered proprietor of the Foreshore Reserve under the Scheme Act.

42 The appellant could not obtain compensation in reliance on s 36(3)(a) of the Scheme Act because that is payable to the owner of the relevant land at the date of the reservation (s 36(3a) of the Scheme Act ).

43 The appellant's statutory route to compensation rests on s 36(3)(b) of the Scheme Act pursuant to which "no compensation is payable by the Commission for injurious affection to the land reserved for a public purpose alleged to be due to or arising out of such reservation" until the Commission refuses an application made under the MRS for permission to carry out development on the land or grants permission subject to conditions that are unacceptable to the applicant. In those circumstances, compensation is payable to the owner of the land as at the date of the application (s 36(3a)(b) of the Scheme Act).

44 Prior to the imposition of the Condition, the appellant had made an unsuccessful application to carry out development on the Foreshore Reserve ("the first application"). It was common cause that the first application was not made in good faith. There is nothing in the Scheme Act to suggest the first application itself barred or exhausted the appellant's entitlement to make a fresh development application and, if appropriate, claim compensation in relation to the fresh application under s 36(3)(b) of the Scheme Act. This outcome is consistent with that in Cape Developments v City of South Barwon [1982] VicRp 102; [1982] VR 1011. Thus, the factual position at the time of the imposition of the Condition was that the Foreshore Reserve had been reserved but a current development application under the MRS had not been made by the appellant.

45 The Tribunal rejected the appellant's submission that as a result of the Condition it was deprived of a vested right (or statutory entitlement). It followed its earlier decision in Love v Western Australian Planning Commission [1999] WATPAT 4 which was to the effect that statutory entitlement to compensation under the Scheme Act only arises after a claim is made by virtue of s 11(1) of the TPD Act. In this way, the Tribunal was able to distinguish a line of Victorian cases which considered legislation similar in structure (albeit different in terminology) to s 11 of the TPD Act and s 36(3) of the Scheme Act: Halwood Corporation Ltd v Rhodes Corporation (1998) 2 VR 439 at 447 - 448; City of Nunawading v Day [1992] VicRp 13; (1992) 1 VR 211 at 226; Cape Developments Pty Ltd v City of South Barwon [1982] VicRp 102; [1982] VR 1011 at 1018 -1019.

46 In Halwood Corporation the Full Court of the Victorian Supreme Court held that a substantive right to claim compensation arose under the Victorian equivalent of s 11 of the TPD Act and that its equivalent of s 36(3) was a procedural or temporal trigger which had to be satisfied before an obligation to make or an entitlement to receive compensation arose. The court in Cape Developments referred to the s 11 equivalent as creating an "inchoate right to compensation" which right crystallises on the occurrence of one of the triggering events.

47 The relationship between s 11 of the TPD Act and s 36 of the Scheme Act was considered by the Full Court of this Court in Bond Corporation Pty Ltd v The Western Australian Planning Commission [2000] WASCA 257. The Court had to consider, inter alia, whether an application made with no intention on the part of the applicant to develop the land subject to a reservation under the MRS but only to trigger compensation under s 36(3) of the Scheme Act precluded the person lawfully appointed to determine compensation from being satisfied that the application was made "in good faith" for the purposes of s 36(4)(b) of the Act.

48 The Full Court held that where an applicant does not genuinely wish to carry out a development and nevertheless applies for permission to so develop land, the application is not bona fide within the meaning of s 36(4)(b) of the Scheme Act. Although the Full Court did not have to consider the questions in issue in this appeal, Ipp J (with whom Wallwork and Owen JJ agreed) made a number of relevant observations. In particular he said:

(a) s 36 of the Scheme Act defers the obligation to pay compensation under s 11 of the TPD Act (paras 11 and 15);

(b) owners of land suffer loss merely by reservation of land for public purposes but s 36(3) of the Scheme Act provides that compensation is not payable upon that kind of loss being sustained and the philosophy underlying the deferment of payment of compensation is that it should only be payable when the owner of the land involved suffers a significantly more tangible loss than that which occurred when the land was reserved (pars 34 and 37).

49 The Court's reference to the deferral of the obligation to pay compensation is consistent with s 11 of the TPD Act being the source of the power to award compensation. I do not understand the Full Court to be saying that loss is claimable under s 11 of the TPD Act which is different in kind and additional to the loss which is claimable under s 36(3) of the Scheme Act. (cf Renstone Nominees Pty Ltd v Metropolitan Regional Planning Authority (1987) 21 APAD 12 at 38, 40.) Such an approach is inconsistent with the legislative intent reflected in the Second Reading Speech for the Scheme Act Amendment Act 1962 (inserting subsections (3) to (5) of s 36) and the 1962 MRS Report on which the amendments were based.

50 Difficulties of construction arise because of ambiguities in the language of s 11 of the TPD Act and s 36 of the Scheme Act. For example, s 11(1) does not restrict compensation for injurious affection to the land the subject of the reservation whereas s 36(3) refers to compensation for injurious affection to the land reserved for a public purpose. However, s 36(6) of the Scheme Act, which deals with the maximum amount of compensation payable and refers to "injurious affection due to or arising out of the land being reserved under the Scheme for a public purpose", is consistent with s 11 of the TPD Act. Further, s 36(3) is not formulated in terms of a power to grant compensation but rather as a restriction on when compensation is payable. However, the opening words of subsections (3a), (4), (5) and (7) of s 36 of the Scheme Act suggests that s 36(3) of the Scheme Act is the source of the power to award compensation.

51 It is apparent from the identification of the ambiguities that there is a live issue concerning the subject matter of compensation under Pt V of the Scheme Act. It is unnecessary to determine that issue in this appeal. I intend to confine my analysis of s 11 of the TPD Act and s 36 of the Scheme Act to identifying the conditions which must exist in order for the appellant to have a vested right to compensation.

52 Although the matter is not free from difficulty, I construe s 11 of the TPD Act and s 36 of the Scheme Act as operating in the following way:

(a) the nature and scope of the entitlement to compensation is governed by s 11 and s 12 of the TPD Act as varied by s 36 of the Scheme Act;

(b) the effect of s 36(3) is to condition and defer entitlement to payment of compensation to the occurrence of either of the events in subparagraph (a) or (b) of s 36(3);

(c) the right or entitlement to obtain compensation is conditioned upon the applicant making a claim within the time specified in s 36(5) of the Scheme Act.

53 On this construction, the occurrence of a s 36(3) event and the requirement to make an application within the specified time are conditions upon which the right or entitlement to compensation is given and compliance with which is the basis of the right. This is to be contrasted with a procedural requirement which bars a remedy rather than preventing the existence of a right: see R v McNeil [1922] HCA 33; (1922) 31 CLR 76 at 96, 99 and 100; Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, at 267, 274 and 292.

54 As s 36(3) of the Scheme Act is not an independent and additional source of power to grant compensation, it is necessary to determine whether s 12(2a)(b) of the Scheme Act has the effect of excluding the appellant from entitlement to compensation. I agree with the reasoning and conclusion of the Tribunal in Renstone Nominees (at 39 - 40) that reservation of land under the MRS is not a "classification" or "zoning" for the purposes of s 12(2a)(b) of the Scheme Act and accordingly the section does not apply to limit compensation where land is reserved under the MRS. This conclusion is consistent with the Second Reading Speech for the TPD Act Amendment Act 1956 and the 1962 MRS Report (p 6).

55 The only remaining construction issue is whether the requirement of a "good faith" application under s 36(4)(b) of the Scheme Act also conditions an applicant's right to compensation. Notwithstanding that good faith depends upon the "satisfaction" of the duly appointed arbitrator, in my assessment it conditions the right. The respondent submitted that the history of the reservation renders the appellant incapable (as a matter of fact) of making any development application in good faith. In my view, it cannot be concluded at this juncture that all possible future development applications by the appellant must lack the requisite good faith.

56 The next question is whether the appellants have a vested, contingent or inchoate right (or entitlement) to compensation under the Scheme Act. To avoid any ambiguity it is necessary to define the terms.

57 A vested right is an existing or accrued right that cannot be defeated by, and is not subject to a condition precedent and where all events giving rise to the creation (as distinct from enjoyment) of the right have occurred at the relevant date, in this case, the date of imposition of the Condition. A contingent right is conditioned upon the occurrence of a future event which is itself uncertain or questionable and which does not give rise to an existing (or vested) right. An inchoate right is partial or unfinished in the sense that it is in the course of accruing but is not yet accrued.

58 At the time of the imposition of the Condition, the appellant did not have a vested right to compensation. It had a contingent or inchoate right to compensation. On the happening of a s 36(3) triggering event, a vested right to claim compensation arises. If and when a claim is made within the statutorily prescribed six-month period, a vested right to compensation arises.

59 However, in my opinion, regardless of how the appellant's rights are characterised, the statutory presumption does not limit the scope of the Commission's power in s 20(1)(a) of the TPD Act to impose the Condition in this case for the reasons given by the High Court in Lloyd v Robinson [1962] HCA 36; (1962) 107 CLR 142.

60 In that case the respondents were the legal owners of 605 acres of land south of Mandurah known as Miami Beach Estate which had been progressively subdivided. As a condition of approval of a proposed subdivision of part of the remaining unsubdivided land, the then Town Planning Board ("Board") in March 1960 required the owners to transfer 20 acres of land to the Crown free of cost for park and recreation purposes. The area to be transferred was outside the area for which approval to subdivide was sought but formed part of the original land which remained unsubdivided. The condition was attacked as being beyond power on the grounds that:

(a) the land the subject of the condition was outside the land the subject of the application for subdivision and was thus for an improper purpose;

(b) in the absence of any provision for compensation, the Town Planning and Development Act 1928 - 1959 (WA) should not be construed as intending to authorise what would amount to confiscation of property.

61 The Board's power to impose conditions was materially the same as the Commission's in this case. The High Court rejected both grounds. In relation to the second ground of attack it noted that the consequence of the submission would be that the Board could never give an approval of a subdivision conditionally upon the applicant giving up land for any purpose however relevant the condition might be to the observance of proper standards in local development. It dealt with the confiscation submission in the following way:

"Given the necessary relevance of the conditions to the particular step which the Board is asked to approve, there is no foothold for any argument based on the general principle against construing statutes as enabling private property to be expropriated without compensation. The Act at its commencement took away the proprietary right to subdivide without approval, and it gave no compensation for the loss. But it enabled land owners to obtain approval by complying with any conditions which might be imposed, that is to say which might be imposed bona fide within limits which, though not specified in the act, were indicated by the nature of the purposes for which the board was entrusted with the relevant discretion ... If approval is obtained for the subdivision of one area of land by complying with a condition which requires the giving up of another area of land for purposes relevant to the subdivision of the first, it is a misuse of terms to say that there has been a confiscation of the second. For the giving up of the second, a quid pro quo is received, namely the restored right to subdivide the first. It may be that the quid pro quo is inadequate, and that the land owner, though under no legal compulsion to give up the second area of land if he chooses to forego the idea of subdividing the first, is nevertheless under some real compulsion, in a practical sense, to submit to the loss of it because of the importance to him of obtaining the approval. But there is no room for reading the act down in some fashion by appealing to a principle of a construction that has to do with confiscation."

62 The land the subject of the vesting condition in Lloyd v Robinson was not reserved under the Scheme Act at the relevant time. However, the Scheme Act was passed in 1959 and came into effect on 19 February 1960. Further, the TPD Act was amended in 1955 to insert s 7A which allowed for interim development control of the metropolitan region by way of an interim development order pending the introduction of the Scheme Act. Under s 7A(12), compensation was allowable where a development application was refused, or approved subject to conditions, on the ground that the proposed metropolitan region scheme was to include that land within a reservation for public purposes.

63 The High Court's reasoning in Lloyd v Robinson concerning the relevance of the statutory presumption is equally applicable to land the subject of a reservation under the Scheme Act as it is to land where the rights of ownership are unfettered. The effect on all land, reserved or not, of a condition that the land be ceded to the Crown free of cost ("ceding condition") is that the land (that is, a vested proprietary interest) is to vest in the Crown free of cost. The Condition does not operate directly on the appellant's rights under Pt V of the Scheme Act. In the appellant's case, ceding of the land (as the quid pro quo for subdivisional approval) would prevent the appellant from ever incurring the tangible loss on which the right to compensation for reservation is conditioned.

64 There is no inconsistency between a construction of s 20(1)(a) of the TPD Act which (in appropriate circumstances) empowers the Commission to impose a ceding condition on land reserved under the MRS and Pt V of the Scheme Act. Indeed, s 20C of the TPD Act is express statutory recognition of the validity of ceding conditions as are the planning policies made under s 5AA of the TPD Act which the Tribunal must take into account pursuant to s 53(1) of the TPD Act.

65 It follows from Lloyd v Robinson that on the facts of this case nothing of significance affecting the scope of the Commission's power under s 20(1)(a) of the TPD Act flows from the statutory presumption. Accordingly, grounds of appeal 1 and 2.1 fail.

66 However, nothing in these reasons concerning the statutory presumption and validity of a ceding condition which in its terms relates only to the land is intended to address the issue whether the statutory right to compensation survives if land is ceded or otherwise disposed of after the owner of the land has suffered compensable (tangible) loss under s 36(3)(b) of the Scheme Act.

67 That the power is wide enough in appropriate circumstances to permit a ceding condition does not mean the imposition of such a condition can never be an abuse of power resulting in invalidity. This clearly emerges from Lloyd v Robinson. The High Court answers the question on the scope of the Board's power in s 20(1)(a) of the TPD Act on the assumption that:

(a) there exists the necessary relevance of the condition to the particular step which the Board is asked to approve; and

(b) the Board acted in good faith and not with a view to achieving ends or objects extraneous to the purpose for which the discretion exists.

68 As is to be expected in relation to the statutory grant of a discretionary power for a public purpose, an exercise of that discretion can be invalidated on any common law ground of review. Those grounds include:

(i) taking into account an irrelevant consideration;

(ii) failing to take into account a relevant consideration;

(iii) exercising a power for a purpose other than that for which it is conferred;

(iv) exercising a discretionary power in bad faith;

69 The appellant's grounds of appeal to the Tribunal (AB 29 - 30) and grounds 2.2 to 2.4 of the appeal to this Court are based on the test of invalidity of town planning conditions contained in the House of Lords decision in Newbury District Council v Secretary of State for the Environment [1981] AC 578. In that case the Court laid down a test of validity which required the satisfaction of three criteria, being that a condition must:

(a) be imposed for a planning purpose and not for any ulterior purpose;

(b) fairly and reasonably relate to the development permitted; and

70 The Newbury test of validity is not an exhaustive statement of the grounds on which the exercise of the Commission's discretion under s 20(1)(a) of the TPD Act can be challenged: Falc Pty Ltd v State Planning Commission, unreported; FCt SCt of WA; Library No 9076; 27 September 1991. Further, the Newbury test is directed to the validity of the exercise of the power, not to a review of the decision on its merits.

71 The Newbury test albeit formulated in a slightly abbreviated form was applied by the Tribunal in this case. The abbreviated formulation relates to the first limb of the test and focuses on the purpose of the condition, not the purpose of the person who imposed the condition (or who reconsiders the merits of and upholds the imposition of the condition).

72 The appellant also used the abbreviated formulation of the first limb of the Newbury test in its appeal to the Tribunal and to this Court. Ground 2.2 of the appeal is to the effect that the reservation of the Foreshore Reserve under the MRS prevented use or development of that land inconsistently with the reservation and therefore "the Condition had no valid planning purpose and rather had the sole purpose of preventing the appellant ever claiming compensation" under s 36 of the Scheme Act.

73 However, the focus of improper purpose (as with other common law grounds of review of discretionary decisions) is on the conduct of the decision-maker in imposing the condition: Lloyd v Robinson; Marshall v Director General, Department of Transport [2000] HCA 37. Where improper purpose is alleged, it is necessary firstly to identify the statutory or authorised purpose(s) for which the discretionary power is given. There is no difficulty in identifying the authorised purpose of Pt III of the TPD Act (which includes s 20(1)(a)) as "planning purposes". Secondly, it is necessary to identify the purpose in fact of the relevant decision-maker. To focus solely on the purpose of the condition rather than the purpose of the decision-maker in imposing the Condition may unduly narrow the scope of inquiry. However, purpose is to be distinguished from motive: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 534 - 535.

74 Subjective considerations allow reference to the decision-maker's reasons for decision and the material considered by that decision-maker in reaching his or her decision. However, as in the area of trade practices law where the relevant legislation expressly distinguishes "purpose" and "effect", it is accepted that purpose can be and usually is inferred from objective factors including the nature of the decision, the circumstances in which it was made and its effect: Dowling v Dalgety Australia Ltd [1992] ATPR 41-165 at 40, 269. So too with proof of improper purpose in administrative law where the character, operation, and effect of the decision is relevant: Brownells Ltd v Ironmongers' Wages Board [1950] HCA 3; (1950) 81 CLR 108.

75 It is not necessary to prove that the unauthorised purpose was the sole purpose. There is some judicial support for the view that it must be a dominant purpose: Samrein Pty Ltd v Metropolitan Water Sewerage Drainage Board (1982) 56 ALJR 678. However, it has to be at least a substantial purpose: Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87. In Thompson, the council in the exercise of a power to resume land for improvement resumed a large area of land some of which was to be subdivided and resold at a profit to fund the improvement work. The High Court held that the evidence disclosed that the ulterior purpose was a substantial purpose in that the power would not have been exercised had there not been a desire to achieve the unauthorised purpose of funding the development work.

76 A person impeaching the exercise of a power on the basis of improper purpose bears the onus of establishing that issue. Where the subject matter of a decision falls squarely within power, in the absence of evidence establishing improper purpose or evidence displacing all possible permitted purposes, it must be accepted that the decision was made for a proper purpose. Further, an improper purpose will not lightly be inferred and, by application of a presumption of regularity, will only be inferred if the evidence cannot be reconciled with the proper exercise of the power: Industrial Equity Ltd v Deputy Commission of Taxation [1990] HCA 46; (1990) 170 CLR 649 per Gaudron J at 671 - 672.

Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WASCA 199

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Judgment (249 paragraphs)

Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WASCA 199 (4 July 2001)

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Cases Cited (45)