VINCENT NOMINEES PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2012] WASC 28 (2 February 2012)

3 The content and scope of the dispute, and who was making what claims in that dispute, are in issue between the parties in this action.

4 In very broad overview, the plaintiff fails because:

(a) the first issue is the proper construction of the contract: who must show what in order to succeed in the dispute? I find that, in substance, the plaintiff must show that the payment of compensation to the previous owner was invalid; and

(b) the second issue is the validity of the payment of compensation to the previous owner. I am not satisfied that the plaintiff has established the invalidity of the payment.

5 The rest of these reasons are divided into the following sections:

(6) Reasons for rejecting the plaintiff's primary and first alternative constructions;

(7) Principles relevant to construction of contracts;

(9) The background facts about the underlying dispute;

(10) The proper construction of the contract of sale: the merits of the WAPC's primary construction compared to its alternative construction;

(12) Was the amount of compensation agreed? If so, when?

(14) The validity of the Greenham payment: the parties' contentions;

(15) The validity of the Greenham payment: the test for invalidity;

(16) The validity of the Greenham payment: did the statutory scheme permit the MRPA to agree the amount of compensation?

(17) The plaintiff's other attacks on any agreement;

(18) The plaintiff's attacks on the Board of Valuers' valuation;

(19) The plaintiff's attacks on the purported determination or resolution of the affected value by the MRPA; and

Sections 2 10 concern the proper construction of the contract of sale. Sections 11 19 concern the validity of the payment to the previous owner.

6 In order to understand the issues in the action it is necessary to outline some background facts. Later in these reasons I will set out the facts in more detail.

7 The plaintiff bought lot 8 in May 1983 from Mrs Margaret Greenham. It has an area of 2.0917 ha. Earlier, in April 1981, a portion of 0.5391 ha of lot 8 had been reserved for 'Important Regional Roads' under the Metropolitan Region Scheme (MRS). That reserve remained in place, although in 1999 the purpose of the reservation was changed to 'Primary Regional Road'.

8 Before selling lot 8 to the plaintiff, Mrs Greenham gave notice, under the relevant legislation, to the Metropolitan Region Planning Authority (MRPA) of her intention to sell the property. There was then a series of steps taken by the MRPA and the Board of Valuers which I will describe later. (The MRPA is the predecessor to the WAPC).

9 In June 1983, after lot 8 had been transferred to the plaintiff, Mrs Greenham claimed compensation from the MRPA for the injurious affection of lot 8 by the reservation.

10 In August 1983, the MRPA paid $12,500 compensation to Mrs Greenham. The legal effect, if any, of that payment is in issue. There are also a number of issues about the steps taken and events leading to that payment.

11 On 15 August 1993, the MRPA registered a caveat against lot 8, as contemplated in the legislation.

12 The plaintiff did not become aware of the caveat until September 2006. At that time, the plaintiff had contracted to sell lot 8. The purchaser discovered the caveat after a title search and the contract fell over. The plaintiff wrote to the Minster for Planning, complaining about the caveat. A dispute arose between the parties. As I have said, the content of the dispute in itself is an issue. After the dispute arose, the parties negotiated a sale by the plaintiff to the WAPC of lot 8 as well as a neighbouring property, lot 7.

13 In May 2008, the WAPC and the plaintiff entered a contract of sale of lots 7 and 8. There is no issue about the purchase of lot 7.

14 The proper construction of the contract of sale is the first major issue in this action and will determine what the other issues are.

15 The contract of sale is dated 29 May 2008 and is made between the plaintiff as seller and the WAPC as purchaser. In the contract the plaintiff is referred to as Nizich, which is the surname of the plaintiff's directors. The contract recitals include the following:

(a) In or around 1983 WAPC's predecessor The Metropolitan Region Planning Authority paid $12,500.00 compensation to Nizich's predecessor in title as compensation for injurious affection arising from a reservation in relation to part of Lot 8, which compensation entitlement arose upon the first sale of the property from Nizich's predecessor in title to Nizich following the reservation of the land under the Metropolitan Region Scheme ('MRS Reservation'), pursuant to section 36 of the former Metropolitan Region Town Planning Scheme Act 1959 (MRTPS Act).

(b) At that time, the amount of compensation paid represented a quarter of the full market value of Lot 8 unaffected by the MRS Reservation. WAPC asserts that subsections 36(3) and (7) and section 36AA and section 37(5) of the MRTPS Act, now also reenacted as sections 171, 180 and 192 of the Planning and Development Act 2005, operate to support the position that the WAPC is entitled to reduce the unaffected value of Lot 8 by the proportion that the compensation it previously paid bore to the value of the land at the time the compensation was paid.

1. Nizich disputes all the claims referred to in Recital B ('the Dispute').

1. WAPC has offered $1,895,000.00 plus GST (if applicable) to purchase Lot 7 from Nizich and $1,406,250.00 plus GST (if applicable) to purchase Lot 8 from Nizich.
2. The Parties agree that the offer for Lot 7 is full market value unaffected by the MRS Reservation and that there is no dispute or argument between the Parties in relation to the sale and purchase of Lot 7.
3. In relation to Lot 8 the parties agree that the full market value unaffected by any MRS Reservation ('full market value') of Lot 8 is $1,875,000.00 plus GST. WAPC has discounted the full market value of Lot 8 by one-quarter of the full market value to reflect the proportionate value of the alleged compensation payment made to Nizich's predecessor in title.
4. WAPC and Nizich have agreed to proceed with the settlement of the conveyance of Lot 7 and Lot 8 based on the purchase prices referred to in Recital D but without prejudice to and on the terms and conditions referred in this Contract including the assertion by Nizich of his entitlement with respect to the Dispute to be paid the additional one-quarter value of the full market value of Lot 8 after the transfer of Lot 8 to WAPC.

16 The operative part of the contract includes the following:

1. WAPC agrees to buy and Nizich agrees to sell Lot 7 and Lot 8 both free of all Encumbrances (including any easements and restrictions), and including all buildings and improvements erected on Lot 7 and Lot 8 and with vacant possession 30 days after the date of execution of this contact ('the Settlement Date') upon the following terms and conditions:

1.1 the purchase price for Lot 7 (100% of full market value) will be $1,895,000.00 plus GST (if applicable);

1.2 the purchase price of Lot 8 will be $1,406,250.00 plus GST (if applicable) which price may be varied subject to the resolution of the Dispute in the manner provided for in paragraphs 2 and 3;

(a) Provided he commences proceedings against WAPC in the Supreme Court within six (6) months of the Settlement Date, Nizich shall be entitled to pursue his claim for the difference between the purchase price paid by WAPC for Lot 8 on the Settlement Date and the full market value for Lot 8 in order to satisfy his claim in the Dispute.

(b) Notwithstanding that Nizich may be successful in any proceedings referred to in paragraph (a) brought against WAPC, WAPC is entitled to remain the registered proprietor of Lot 8 following settlement.

(c) Provided proceedings are issued as indicated in 2(a), Nizich's rights with respect to the Dispute survive and do not merge with Settlement.

1. For the avoidance of doubt, the Parties agree that if Nizich is successful in the Dispute with respect to the one quarter of the full market value not otherwise paid to him by the WAPC, then WAPC will be required to pay an additional $468,750.00 plus GST if applicable to Nizich as the remainder of the purchase price for Lot 8.

17 The first issue in the case is the proper construction of the contract of sale. In what circumstance is the plaintiff entitled to the additional $468,750 (the Additional Sum)?

18 I begin with some preliminary observations about the language and structure of the contract of sale to explain how the construction issue arises.

19 Clause 1.2 provides that the purchase price for lot 8 of $1,406,250 plus GST may be varied subject to the resolution of the Dispute (defined in Recitals B and C) as provided in cl 2 and cl 3.

20 Clause 2 entitles the plaintiff to commence proceedings within six months to pursue its claim for the difference between the purchase price paid at settlement and the agreed full unaffected market value of lot 8, in order to satisfy its claim in the Dispute.

21 Clause 2(c) preserves the plaintiff's rights with respect to the Dispute.

22 Clause 3 makes it clear that if the plaintiff succeeds in the legal proceedings respecting the Dispute, the WAPC will be obliged to pay the Additional Sum as the remainder of the purchase price for lot 8.

23 The upshot is that if the plaintiff succeeds in the proceedings respecting the Dispute, it is entitled to payment of the Additional Sum.

24 That invites attention to what the Dispute is, and what is entailed in the plaintiff's succeeding in relation to the Dispute.

25 The Dispute is defined in Recitals B and C. The definition provision of the contract is not to be read in isolation from the operative provisions of the contract. Rather, the definition should be inserted in the relevant operative provisions and the contract then construed as a whole: see the cognate principle of statutory construction: Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216 [84], [103].

26 Recital B sets out claims said to have been made by the WAPC. Recital C states that the plaintiff disputed all of those claims, and defined that as 'the Dispute'. The contract of sale says nothing about the grounds on which the plaintiff disputed the WAPC's claims.

27 Recital B(b) records the WAPC's assertion that various provisions of planning legislation operate to mean that the WAPC is 'entitled to reduce the unaffected value of Lot 8' by one quarter (that being the proportion that the compensation claimed by the WAPC to have been previously paid bore to the value of the land at the time). That is the only identified legal consequence of any element of the Dispute.

28 Recital C records that the plaintiff denies all of the WAPC's claims, including the claim in Recital B(b). With the possible exception of Recital G, to which I will refer later in these reasons, there is nothing in the contract of sale identifying any positive claims by the plaintiff, or any positive legal consequence said by the plaintiff to arise from its denials or from any claims.

29 However, as the WAPC's submissions emphasise, cl 2 and cl 3 are couched in terms of '[the plaintiff's] claim' (see cl 2(a), in two respects), '[the plaintiff's] rights' (cl 2(c)), and the plaintiff being successful in the Dispute (cl 3).

30 These features of the contract of sale give rise to questions of construction about defining the circumstances in which the plaintiff will have succeeded in relation to the Dispute (and so become entitled to the Additional Sum). Is it for the plaintiff to show that some or all of the WAPC's claims in Recital B should fail? If so, which claim or claims? Or is it for the plaintiff to establish a claim of its own? If so, what claim?

31 In these respects at least, the contract of sale is ambiguous and susceptible of more than one interpretation. That much is common ground between the parties.

32 The parties put five competing constructions, although, as I will explain, two of them in substance amount to the same thing.

33 The plaintiff's primary construction is as follows. The Dispute relates to the WAPC's claim that, without reference to any contemplated compulsory acquisition, by operation of the applicable legislative provisions it was entitled to reduce the unaffected value of the property so as to reduce the price to be paid for lot 8 by 25%. The plaintiff succeeds in relation to the Dispute if it defeats that claim.

34 The plaintiff advances two alternative constructions. The plaintiff's first alternative construction has these elements:

(a) the Dispute was about the valuations that had been used by the MRPA in the course of the events leading to the payment of $12,500 to Mrs Greenham;

(b) prior to the 2008 contract of sale, the plaintiff had contended that those valuations were unreasonably high and the payment of $12,500 did not represent one quarter of the true unaffected market value;

(c) if the plaintiff succeeded in those contentions, it would succeed in the Dispute and become entitled to the Additional Sum; and

(d) it was not necessary for the plaintiff to demonstrate that success in these contentions made the valuations invalid, or had any other legal consequence for the relative rights of the plaintiff and the WAPC.

35 The plaintiff advances the following second alternative construction:

(a) the Dispute was about the validity of the payment of compensation to Mrs Greenham and the WAPC's right to maintain its caveat; and

(b) the plaintiff would succeed in the Dispute if it showed that the payment of compensation to Mrs Greenham was invalid and that, consequently, the WAPC was not entitled to maintain its caveat.

36 The WAPC's primary construction is that the Dispute was about whether the plaintiff was entitled to compensation for the effect of the reservation. The WAPC contends that the plaintiff would become entitled to the Additional Sum only if it establishes that, as at the date of the contract of sale, it had a subsisting right to compensation for the effect of the reservation on lot 8.

37 The WAPC's alternative construction is that the Dispute was about whether by reason of the MRPA's payment to Mrs Greenham, the WAPC would have been entitled to reduce the unaffected value by 25%, and thus to the extent of the Additional Sum, if it had compulsorily acquired lot 8 from the plaintiff. On this construction, it contends that the plaintiff will be entitled to the Additional Sum if it establishes that the WAPC would not have been entitled to reduce the unaffected value of lot 8 by the relevant proportion if it had compulsorily acquired lot 8.

6. Reasons for rejecting the plaintiff's primary and first alternative constructions

38 In my view, it can be said at once that the plaintiff's primary construction, and its first alternative construction, find no support in the language of the contract of sale, and must be rejected.

39 I deal first with the plaintiff's primary construction. The WAPC's claims are set out in Recital B, by reference to various sections of the planning legislation. I will set out those provisions later in these reasons.

(a) compensation is not payable until (relevantly) the reserved land is first sold after the reservation: MRTPS Act s 36(3) (and Planning and Development Act 2005 (WA) (PD Act) s 177(2), although not referred to);

(b) if compensation for injurious affection has been paid, the authority can lodge a caveat against the land specifying the amount of compensation paid: MRTPS Act s 36(7), PD Act s 180;

(c) if compensation has been paid in relation to a matter, no further compensation is payable under any other provision of the Act as a result of the same thing: MRTPS Act s 36AA; PD Act s 171; and

(d) on a compulsory acquisition of reserved land for which compensation has been paid, there is to be deducted from the compensation assessed as payable an amount that bears the same ratio to that assessed amount as the compensation paid bears to the unaffected value, as determined under the Act: MRTPS Act s 37(5), PD Act s 192(2).

41 Nothing in those provisions is even remotely capable of sustaining a right, on the WAPC's part, to reduce the purchase price in a contract, freely entered into by both parties, for the WAPC to purchase lot 8 from the plaintiff. I do not think Recital B can be read as involving a claim by the WAPC to that effect. Nor is such a claim by the WAPC to be found elsewhere in the contract, read as a whole.

42 Further, to my mind, the obvious absence of any legal foundation for such a claim by the WAPC is itself a ground militating against construing the Dispute to mean the question of whether the WAPC could sustain such a claim. In the setting of a consensual sale it was obvious that the WAPC had no entitlement to reduce the price below that for which the plaintiff would agree to sell. On the plaintiff's construction, the WAPC agreed that it would pay the Additional Sum if it (the WAPC) failed in its claim to an entitlement that, plainly and beyond argument, it did not have. Objectively, that is an unlikely intention to ascribe to the WAPC.

43 The plaintiff sought to draw support for its preferred construction by reference to assertions said to have been made by the WAPC in correspondence preceding the contract of sale. I will outline that correspondence later in these reasons. The plaintiff submits that, in that correspondence, the WAPC asserted that it had a 25% ownership interest in lot 8, arising from its payment of compensation to Mrs Greenham. As I will explain, I do not read the correspondence in the way invited by the plaintiff. More fundamentally, the preceding correspondence cannot be used to give the contract of sale a meaning that, read as a whole and in context, its language cannot bear. The instrument must be read in its context, but it is the instrument that is to be construed. Reference to the context is not a licence to rewrite the contract to include provisions reflecting what the court infers from the background facts to have been intended by the parties. The search is for the intention of the parties as embodied in the words they have used in the instrument: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 110; Permanent Building Society (in liq) v Wheeler (1993) 10 WAR 109, 118 120.

44 In my opinion, the Dispute, as that term was used and defined in the contract of sale, did not encompass an assertion by the WAPC of a 25% interest in lot 8.

45 The plaintiff's first alternative construction also finds no support in the language of the contract of sale. Counsel for the plaintiff in effect accepted that (ts 331). The valuations that preceded the payment to Mrs Greenham are not mentioned anywhere in the contract of sale. The contract should not be construed to mean that the Dispute turned on the reasonableness or correctness of valuations not mentioned in the contract.

46 Moreover, it is objectively unlikely that the WAPC would have agreed to what is entailed by this construction. On this construction, once the plaintiff showed, in the subsequent proceedings, that the payment of $12,500 was unreasonably high or did not represent one quarter of the true unaffected market value, it would be entitled to the Additional Sum. It would not need to demonstrate invalidity or any other legal consequence to succeed. That would substantially have improved the plaintiff's position, and correspondingly disadvantaged the WAPC's position, compared to the positions in the absence of the agreement about the Additional Sum in the contract of sale. There is no apparent reason why the WAPC would have so agreed.

47 The plaintiff's second alternative construction and the WAPC's alternative construction substantially amount to the same thing. Counsel for both parties accepted that that was so (ts 432, 476). If the plaintiff shows that the payment of compensation to Mrs Greenham was invalid, it would follow that the WAPC was not entitled to maintain the caveat, so the plaintiff would succeed on its second alternative construction. It would also follow that the WAPC would not have been entitled to reduce the unaffected value by 25% on a compulsory acquisition, so the plaintiff succeeds on the WAPC's alternative construction. The substance of both constructions is that the plaintiff succeeds if and only if it shows that the payment to Mrs Greenham was invalid.

48 The choice between this construction and the WAPC's primary construction is less straightforward.

49 I begin by outlining the principles relevant to construction of contracts.

7. Principles relevant to construction of contracts

50 The principles relevant to the construction of contracts and other instruments were not in dispute.

51 The primary duty of the court in construing an instrument is to endeavour to discover the intention of the parties as embodied in the words they have used in the instrument: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (109 110); Permanent Building Society (in liq) v Wheeler (118 119).

52 The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood the terms to mean. It has been said in a number of cases in the High Court that that normally requires consideration not only of the text of the document, but also of the surrounding circumstances known to the parties, and of the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40]; International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 [8], [53].

53 In Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45, three justices of the High Court recently stated that trial judges (and intermediate appellate courts) are bound to apply what was said by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 352 about the admission of surrounding circumstances in construing contracts, unless and until the High Court says otherwise. In Codelfa, Mason J said that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one interpretation, but it is not admissible to contradict the language of the contract when it has a plain meaning.

54 Read as a whole, the reasons for Mason J in Codelfa may not limit the receipt of evidence of background facts as much as is sometimes suggested. See, in this regard, the observations of McLure JA in Chemeq Ltd v Shepherd Investments International Ltd [2007] WASCA 117 [154]. Further, a broad concept of ambiguity may apply in this context; see, for example, South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478 [35]; Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; (1999) 21 WAR 425 [43] [45].

55 In any event, in this case, as I have explained, the language of the contract of sale is ambiguous and susceptible of more than one meaning, and that was common cause. Consequently, evidence of background facts and the genesis of the contract of sale is admissible as an aid in its construction. However, as I have observed in relation to the plaintiff's preferred construction, there are significant limits on the role of the background facts. It remains the instrument that is to be construed. See [43].

56 An instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience: Zhu v The Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530 [82]; Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [43]. However, as Gleeson CJ, Gummow and Hayne JJ observed in Maggbury [43], what comprises 'business commonsense' in respect of a particular contract, as an objectively ascertained matter, may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible.

57 Among the background circumstances and context for an agreement may be matters of law: Maggbury Pty Ltd v Hafele Australia Pty Ltd [11]; Royal Botanic Gardens and Domain Trust v South Sydney Council [2002] HCA 5; (2002) 240 CLR 45; Amcor Ltd v Construction, Forestry, Mining & Energy Union [2005] HCA 10; (2005) 222 CLR 241 [13], [50], [64]; Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119 [113].

(1) it is only matters actually known by both parties, not all matters reasonably available to them, that are admissible background facts;

(3) there is no pleading or evidence that the parties were aware of any particular effect or had any particular understanding of the legislation concerning the WAPC's powers.

59 Some of the authorities on the first point were analysed by Edelman J in The City of Subiaco v Local Government Advisory Board [2011] WASC 322 [116] [121]. In my view, it is unnecessary to enter into a discourse on general principles on the first two of these points. My task is to construe the contract of sale. The contract of sale expressly mentioned various legislative provisions. It did so in the context of outlining the assertions that had been made by the WAPC and denied by the plaintiff, giving rise to the Dispute. That being so, in my opinion, it is appropriate to have regard to the legislative framework to construe the contract of sale. In those circumstances, I do not think that the third point is of any significance. I think the proper construction is to be derived from the contract itself and the legislative framework to which it refers. Those matters may indicate an objectively ascertained common intention or understanding.

60 At the time the contract of sale was entered into, part of lot 8 was reserved. The WAPC had lodged a caveat on the basis of the MRPA's payment of $12,500 to Mrs Greenham in 1983.

61 By s 173 of the PD Act, a person whose land is injuriously affected by the making or amendment of a planning scheme is entitled to obtain compensation for the injurious affection from the responsible authority. The WAPC is the responsible authority for the purposes of the MRS: PD Act s 4.

62 Compensation for injurious affection arising from the reservation of land for a public purpose is affected by s 177 of the PD Act. Section 177(1) and s 177(2) provide:

(1) Subject to subsection (3), when under a planning 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 -

(i) refuses an application made under the planning scheme for approval of development on the land; or

(ii) grants approval of development on the land subject to conditions that are unacceptable to the applicant.

(2) Compensation for injurious affection to any land is payable only once under subsection (1) and is so payable -

(a) under subsection (1)(a) to the person who was the owner of the land at the date of reservation referred to in subsection (1)(a); or

(b) under subsection (1)(b) to the person who was the owner of the land at the date of application referred to in subsection (1)(b),

unless after the payment of that compensation further injurious affection to the land results from -

(c) an alteration of the existing reservation of the land; or

(d) the imposition of another reservation of the land.

63 Further, s 171 of the PD Act provides as follows:

(1) If compensation has been paid under a provision of this Part in relation to a matter or thing no further compensation is payable under any other provision of this Act as a result of the same matter or thing.

(2) When a person is entitled to compensation under this Act in respect of any matter or thing, and is also entitled to compensation in respect of the same matter or thing under any other written law, that person is not entitled to compensation in respect of that matter or thing both under this Act and that other written law, and is not entitled to any greater compensation under this Act than that person would be under the other written law.

64 Section 171 was one of the legislative provisions referred to in Recital B of the contract of sale.

65 Section 180 was also referred to in Recital B. It provides that when compensation has been paid under s 177, the responsible authority may lodge a notification with the Registrar of Titles, specifying the amount of compensation paid and the proportion which that compensation bears to the unaffected value of the land. The significance of that proportion appears in s 192, to which I will refer shortly.

66 If a person claims compensation for injurious affection, the responsible authority (here the WAPC) may elect to acquire the land instead of paying compensation: PD Act s 187. If the responsible authority and the owner of the land are unable to agree the price, it is determined by reference to the value of the land without regard to any increase or decrease in value attributable wholly or partly to the planning scheme: PD Act s 187(3), s 188(1).

67 Section 190 gave the WAPC power to purchase land in the MRS from any person who was willing to sell it. That is the power that was in fact exercised by the WAPC in acquiring lots 7 and 8.

68 Section 191 provides that the WAPC, as responsible authority, may for the purpose of a planning scheme, compulsorily take land within the scheme. At the time of the contract of sale, that provision had been interpreted to empower the responsible authority to take the whole of land only part of which had been reserved: Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2007] WASC 43. After the date of the contract, the Court of Appeal held that the section does not empower the WAPC to take land which is zoned and not reserved: Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276 [41] [49]. That view was subsequently confirmed by the High Court: Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2010] HCA 2; (2010) 240 CLR 409 [33] [34].

69 The parties filed detailed written submissions about the extent to which and circumstances in which the state of the law at the time of the contract, as distinct from at a later time, is the relevant context for construction of a contract. The plaintiff submits that the appellate decisions in the Mandurah Enterprises cases mean that the WAPC had no power to take the whole of lot 8, only the reserved portion, and it does not matter that those decisions came after the date of the contract of sale. Because there was no power to take all of lot 8, the submission continues, the WAPC's alternative construction should not be adopted, because that construction is founded on a hypothesis that was not legally available.

70 It is not necessary to engage in an analysis of general principles. That is so, in my opinion, for two reasons.

71 First, the nature of the construction issue should be noticed. The issue relates to what is entailed by succeeding in relation to the Dispute. The parties were in dispute about their respective rights and obligations. That involves consideration of the legal framework governing their rights and obligations.

72 Secondly, in my view, what was contemplated by the parties about the legislative context is sufficiently clear from the terms of the contract.

73 If the WAPC had taken land under s 191 of the PD Act, compensation for that taking would have been payable under pt 10 of the Land Administration Act 1997 (WA). The value of the land would be assessed without regard to any increase or decrease in value attributable to the planning scheme, but having regard to any amounts of compensation already paid or payable in respect of the land for injurious affection resulting from the reservation: PD Act s 192(1). Section 192(2) provides that compensation already paid or payable is to be taken into account by deducting from the compensation assessed an amount that bears the same ratio to the compensation assessed as the compensation paid or payable under div 2 of pt 11 bears to the unaffected value of the land as determined under pt 11. It is that ratio which, according to Recital B, the WAPC claimed it could apply to reduce the unaffected value of lot 8.

74 Section 192 of the PD Act was referred to in Recital B. That section is engaged or potentially applicable only in the circumstance that a responsible authority has taken land under s 191 of the PD Act. Recital B says that:

(a) the compensation paid in 1983 was a quarter of the unaffected value of (the whole of) lot 8; and

(b) the WAPC asserts that the effect of the legislation referred to is that the WAPC was entitled to reduce the unaffected value by a quarter (that being the proportion that the compensation previously paid bore to the unaffected value of the land at the time).

To my mind, in that context, the fact that s 192 is referred to suggests contemplation of the possibility that, acting under s 191, the WAPC might take all of lot 8, not only the reserved portion, and then rely on s 192 to reduce the compensation payable for the taking. Application of the one quarter proportion would not make sense in the context of a taking of only the reserved part of lot 8. That is because the one quarter proportion was derived from the relationship between the unaffected value of the whole ($50,000) and the compensation paid ($12,500).

75 If I were wrong about this, it would not affect my construction of the contract of sale. In particular, it would not lead me to adopt the plaintiff's preferred construction or its first alternative construction. I have already explained my reasons for rejecting those constructions: see section 6. If I considered that the legislative context meant that the WAPC had no power to acquire the whole of lot 8 that would, if anything, tend in favour of the WAPC's preferred construction over its alternative construction (and the substantially equivalent second alternative advanced by the plaintiff). See section 10 on the merits of the WAPC's two constructions. But, in the end, it would not alter my view.

76 I turn to the evidence about the background facts regarding the underlying dispute in existence at the time of the contract.

9. The background facts about the underlying dispute

77 On 20 September 2006, Mr and Mrs Nizich wrote on behalf of the plaintiff to the Honourable Alannah MacTiernan, Minister for Planning. The letter stated that the plaintiff had just become aware of the MRPA's caveat, when it was discovered by a purchaser from the plaintiff under a recently signed contract of sale. The letter said that an officer of the WAPC, Mr Hillyard, had said that a deal was done with the previous owner, Mrs Greenham, after the plaintiff had become owner of lot 8.

78 The letter requested assistance in having the caveat removed immediately.

79 On 27 October 2006, the plaintiff entered into another contract of sale of lot 8. The contract was conditional on removal of the caveat by 27 April 2007. Subsequently, the caveat was not removed and the contract lapsed for failure of the condition.

80 By letter of 10 November 2006, the Minister wrote to Mrs Nizich. The letter stated that:

(a) Mrs Greenham had lodged a notice of intention to sell on 2 February 1983;

(b) this was necessary to trigger her rights for compensation, if her property was sold for less then the market value because of the reservation;

(c) on 28 February 1983, the Board of Valuers assessed the unaffected value of the property as $50,000 and the value of the reserved section as being $14,000;

(d) the MRPA wrote to Mrs Greenham in April 1983 advising that the affected value of land was $37,500 and should a sale occur she should submit a claim for compensation and she would be paid accordingly;

(e) the compensation claim was made after the transfer of land; and

(f) the Minister was seeking further legal advice, through the WAPC.

81 By letter of 13 August 2007, the WAPC wrote to the plaintiff's solicitors. A copy of that letter is document 6 in the agreed bundle of documents that is exhibit B. I will use the shorthand exhibit B6. The letter referred to a recent meeting between the parties and a subsequent opinion obtained from the State Solicitor's Office on the issues raised at that meeting. The letter stated that any retrospective 'checking' or attempting to disturb the findings of the Board of Valuers (a matter raised at the meeting) was not something that should be undertaken by the WAPC. The view of the State Solicitor's Office was that it would be necessary to find bad faith or fraud or to demonstrate that the finding of the Board was so unreasonable as to be selfevidently wrong. Further, the letter stated that any disturbance of the Board of Valuers' findings would only go to the quantum of compensation that had been paid to the original recipient of the compensation. The letter further stated that the WAPC 'still has a 25% interest in the value and ownership of Lot 8' (exhibit B6, page 11). On page 12, it stated that compensation had already been paid and 'cannot be paid a second time, and for that reason, the WAPC effectively retains a 25% interest in the ownership of Lot 8'.

82 Counsel for the plaintiff emphasises the unqualified assertion on page 11 of a 25% interest. In my view, read as a whole and in the statutory context, the letter asserts a 25% interest only in the sense explained on page 12.

83 By letter of 25 September 2007, the plaintiff's solicitors wrote to the WAPC enclosing a valuation of lot 8 by Mr Zucal, dated 31 July 2007. The letter stated that there were now two independent valuations saying the unaffected value of lot 8 at the relevant time was about $37,500, supported by sales evidence. Further, the letter stated that it appeared the Board of Valuers erroneously assessed the unaffected value at $50,000. The presence of that error was said to mean there was no basis to discount the present day value of lot 8. To do so would, the letter asserted, only 'compound the error and unfairly transfer the burden of the error to our client' (exhibit B9).

84 By letter of 15 October 2007, the WAPC wrote in response. The letter stated that:

(a) the WAPC was not able to disturb the Board of Valuers' assessment made in 1983;

(b) the WAPC did not agree that the independent valuations made in 2007 sustained the conclusion that the Board of Valuers had made a valuation error;

(c) the caveat indicating the WAPC's 25% interest must remain in place as compensation has been paid; and

(d) disturbance of the Board of Valuers' assessment could only be achieved by legal proceedings instituted by the plaintiff.

85 The letter set out a value for 75% of lot 8 at $1,406,250 and said that the WAPC would be willing to acquire lot 8 at that price. A note explained that this was 'after 25% caveat interest deducted' (exhibit B10, page 48).

86 In the context of the preceding correspondence and the statutory framework, the references to a 25% interest were to be understood in the sense explained on page 12 of exhibit B6.

87 The following features of the dispute between the plaintiff and the WAPC emerge from these background facts:

(a) the genesis of the dispute was that the plaintiff wanted to sell lot 8 (and had contracted to do so) and the MRPA's caveat prevented it from doing so;

(b) in response, the WAPC explained the history, including the approach taken by the Board of Valuers;

(c) the plaintiff asserted that the valuations in 1983 were wrong and too high, and supported that assertion with valuations conducted in 2007;

(d) in the correspondence that is in evidence, the plaintiff's solicitors did not spell out what, if any, legal consequences there might be if there was some flaw in the 1983 valuations. Rather, they appealed to general unfairness;

(e) the WAPC's letter of 15 October 2007 made some reference to the possibility of 'disturbance' of the 1983 valuations by legal proceedings to be instituted by the plaintiff. That letter did not spell out any specific legal consequences of disturbance of the valuations;

(f) the WAPC's earlier letter of 13 August 2007 had asserted that disturbance of the 1983 valuations would only affect the amount of compensation paid to Mrs Greenham;

(g) in correspondence, the WAPC took the position that the MRPA's payment of $12,500 compensation in 1983, and its caveat, and the statutory provision that compensation cannot be paid a second time meant that, in effect, the WAPC had a 25% interest in lot 8;

(h) at no stage did the plaintiff make any application for compensation for the reservation of lot 8, or give any indication of an intention to do so. To the contrary, the plaintiff wanted to sell lot 8; and

(i) at no stage did the WAPC indicate an intention to compulsorily acquire lot 8.

10. The proper construction of the contract of sale: the merits of the WAPC's primary construction compared to its alternative construction

88 For the reasons that follow, I prefer the WAPC's alternative construction (and the plaintiff's second alternative construction) to the WAPC's primary construction. In short, I consider that the alternative construction finds greater support in the text and structure of the contract of sale, and nothing in the background facts sustains a different approach.

89 The WAPC's submissions emphasise that cl 2 and cl 3 are couched in terms of '[the plaintiff's] claim' (cl 2(a)), '[the plaintiff's] rights' (cl 2(c)) and the plaintiff being successful in the Dispute (cl 3). Moreover, Recital G refers to the plaintiff's 'assertion of [its] entitlement with respect to the Dispute'. The WAPC submit that those expressions reveal a claim by the plaintiff of a positive entitlement, and that, in context, that can only mean a claim for compensation for the reservation.

90 In my view, these references can and should be read as meaning the plaintiff's claim that it should succeed in the Dispute and thereby be entitled to the Additional Sum, not as a reference to a positive claim by the plaintiff that gave rise to or constituted the Dispute. Further, cl 2(c) can be read as inserted in an abundance of caution to avoid a merger argument, rather than as involving the assertion by the plaintiff of a subsisting right.

91 In my view, the following features of the language and structure of the contract of sale favour my preferred construction.

92 First, the Dispute is defined as the disputing by the plaintiff of the WAPC's assertions recorded in Recital B. It is not defined by reference to any claim by the plaintiff for compensation. Moreover, there is no reference in the contract of sale to any such claim. Nor is any such claim made, or expressly contemplated, in the preceding correspondence.

93 Secondly, the substance of the WAPC's claim in Recital B(b), denied by the plaintiff, is that it was entitled to 'reduce the unaffected value of Lot 8 by the proportion that the compensation it previously paid bore to the value of the land at the time compensation was paid'. In my view, that language and substance resonates with, and is apposite to, the position applying on a compulsory acquisition. The notion of the stated proportion illustrates that. The same is true of the reference in Recital F to discounting by one quarter to reflect the proportionate value.

94 Thirdly, Recital B(b) listed a number of sections of the MRTPS Act and PD Act that the WAPC relied on for its asserted entitlement. I have already outlined those provisions. In my view, those references favour my preferred construction, although I acknowledge the references to s 36AA of the MRTPS Act and s 171 of the PD Act may be contraindications.

95 In my opinion, the legal context in which the parties contracted also militates against the WAPC's primary construction. This is a consideration I give less weight than the textual matters just stated. In my view, it was clear at the date of contracting that the plaintiff did not then have any subsisting right to compensation for the reservation. No right to compensation would arise until an event referred to in s 177(1) of the PD Act occurred. A sale by the plaintiff could not arguably trigger a right under s 177(1)(a). Regardless of any issues about the validity of compensation paid to Mrs Greenham, the sale by her was the first sale following the reservation, so by s 177(2)(a) she is the person entitled under s 177(1)(a). Assuming any rights to compensation were not extinguished by the sale (as to which see Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30 [37], [94] [109], [161]), no compensation could be payable until a development application was refused or granted on unacceptable conditions. No development application had been made or was contemplated. I think the absence of any subsisting right of the plaintiff to compensation was sufficiently clear to militate against the WAPC's primary construction.

96 It is true that the WAPC had not indicated an intention to compulsorily acquire lot 8. Nevertheless, there was an apparent understanding that the WAPC had power to compulsorily acquire lot 8 (see section 8). That understanding seems to me to be part of the backdrop for the contract of sale. There is some sense in the parties agreeing that lot 8 be sold on terms that reflect a proportionate discount that would have applied if the WAPC had instead invoked its compulsory acquisition powers. For the reasons I have explained in section 8, it is not to the point that, on a proper understanding of the legislation, the WAPC did not have the power to compulsorily acquire the whole of lot 8 under s 191.

97 In what I have said in the previous paragraph, and generally in adopting my preferred construction, I do not overlook that compensation for compulsory acquisition has elements and features that do not arise in a consensual setting. Examples include compensation for taking without agreement (often termed solatium) and for special value to owner. This was a point emphasised by counsel for the plaintiff. However, for reasons already given in section 6, I do not think this point sustains the plaintiff's primary construction or its first alternative construction. In short, that is because those constructions do not find adequate support in the language of the contract of sale.

98 For these reasons, I prefer the WAPC's alternative construction (and the plaintiff's second alternative construction).

99 On my preferred construction of the contract of sale, the plaintiff is entitled to the Additional Sum if and only if it establishes that the payment of compensation to Mrs Greenham was invalid. That brings me to the question of the validity of that payment. The remainder of these reasons are taken up with that question.

100 I begin by setting out the facts relating to the payment of $12,500 to Mrs Greenham.

101 The facts were largely but not entirely agreed. Much of what follows comes from the statement of agreed facts (exhibit F) and volume 1 of the agreed bundle of documents (exhibit A).

102 On or about 2 February 1983, Mrs Greenham gave written notice, with reference to s 36 of the MRTPS Act, to the then existing MRPA of her intention to sell lot 8. She applied in writing at the same time to the Board of Valuers for a valuation of lot 8 (as required by s 36C) (exhibit A4). The notice was in a standard form prescribed under the Metropolitan Region (Valuation Board) Regulations 1967 (WA). Mrs Greenham gave notice that she wished to be heard on the valuation, requesting the Board to contact an identified person who would appear on her behalf.

103 The Board of Valuers' practice in respect of valuations made in 1983, including the valuation made at the instance of Mrs Greenham in respect of lot 8, was to record and retain:

(a) any photographs taken of any improvements on the property to be valued; and

(b) the completed form titled 'Valuation Form' in relation to that property.

With the exception of brief sales summaries containing references to comparable sales appended to five Valuation Forms prepared by one particular Board member, the practice for the balance of the 37 valuations prepared by the Board in 1983 was not to record or retain any other sales or other evidence (if any) on which the valuation was based or any further valuation methodology.

104 On 14 February 1983, the Secretary of the Board of Valuers wrote to Mr Geoffrey Russell, requesting a valuation of lot 8 by 25 February 1983. The letter apologised for the short notice, saying the MRPA file had been received that day (exhibit A5A). Mr Russell was a very experienced valuer, who had been a member of the Board of Valuers since 1977. Over time, he held a number of positions in the Australian Institute of Valuers and was awarded life membership in 1985. He died in 1993.

105 A Valuation Form was completed by Mr Russell on 25 February 1983. Mr Russell recommended to the Board that the value of the whole of lot 8 not being affected by the reservation was $50,000, of which $14,000 was attributable to the reserved section (exhibit A6). The form is signed by the chairman of the Board as having been endorsed by the Board. Nothing on the form reveals anything about the methodology used. The preprinted form had space for the area of the land. That was not filled in. The form does not specify the area of the reserved section.

106 Mr Russell's firm rendered an invoice in the sum of $165 plus disbursements.

107 On or about 28 February 1983, the Board of Valuers communicated by letters from the chairman to Mrs Greenham and to the MRPA that it had valued the whole of lot 8 as not being affected by the reservation at $50,000, of which $14,000 was attributable to the reserved section (exhibit A8).

108 By letter of 8 March 1983, the Board of Valuers sent Mr Russell's completed Valuation Form to the MRPA (exhibit A10).

109 On or prior to 14 April 1983, the Finance Committee of the MRPA noted the advice from the Board of Valuers that lot 8 had an unaffected value of $50,000, of which $14,000 was attributable to the reserved portion. The Finance Committee then adopted a resolution to the effect that the unaffected value of lot 8 be $50,000 and the affected value be $37,500 (exhibit A12, page 29). In the latter respect, the Committee's resolution did not arise from the Board of Valuers' valuation. The minutes do not record the reasoning leading to the conclusion about affected value.

110 On or about 14 April 1983, the Finance Committee compiled the minutes of its meeting of 14 April 1983, which were also designated 'Report: MRPA/2062' (Report 2062). This contained under the heading '7. Compensation Section 36', the item '307/2/25/153 Greenham' and a reference to pages 73 74. Those pages dealt with the matters I summarised in the preceding paragraph.

111 At its meeting on 27 April 1983, the MRPA considered Report 2062 of its Finance Committee, and passed certain resolutions in relation to that, including a concluding resolution 'to adopt the balance of Report 2062 and endorse the actions taken' (exhibit A12, pages 22 23). The balance of Report 2062 encompassed the item relating to Mrs Greenham.

112 At all material times there was no delegation by the MRPA of any of its powers to its Finance Committee pursuant to s 19 of the MRTPS Act in respect of or concerning any of these matters.

113 On or about 21 April 1983, the MRPA wrote a letter to Mrs Greenham advising that the value of the property as affected by the reservation was $37,500 (exhibit A10). The letter stated that should a sale be finalised at the affected value, Mrs Greenham should submit a copy of the contract and the enclosed compensation claim form, and then 'arrangements will be made for payment of compensation monies'.

114 The plaintiff points out that this letter was written before the MRPA resolution of 27 April 1983 to adopt the Finance Committee resolution about lot 8. However, in my view, nothing turns on that, because the Finance Committee's actions were ratified by the MRPA by its resolution on 27 April 1983.

115 On 9 May 1983, the plaintiff and Mrs Greenham entered a written contract for the sale of the whole of lot 8 from Mrs Greenham to the plaintiff for the sum of $37,500 (exhibit A13).

116 At the time of the purchase of lot 8, the plaintiff was aware that part of lot 8 was reserved under the MRS.

117 The contract did not contain any term or condition in relation to claims of compensation for injurious affection of lot 8 arising from any reservation of lot 8 under the MRS.

118 On 25 May 1983, ownership of lot 8 was transferred to the plaintiff.

119 On or about 8 June 1983 and by letter, Mrs Greenham claimed compensation from the MRPA for injurious affection in respect of lot 8 on the ground of the reservation, pursuant to s 36 of the MRTPS Act (exhibit A18). Mrs Greenham attached a copy of the contract of 9 May 1983.

120 On 13 June 1983, the MRPA wrote to Mrs Greenham, referring to a telephone conversation between Mr Hendry and Mrs Greenham on 9 June 1983. The letter requested the compensation claim to be amended from $14,000 to $12,500 and thanked Mrs Greenham for her cooperation (exhibit A19A).

121 On 15 June 1983, the property manager of MRPA authorised payment of $12,500 compensation in respect of Mrs Greenham's claim (exhibit A20). The form requested payment to the Crown Law Department and referred to the MRPA's approval by the minutes I have already referred to.

122 By letter of 21 June 1983, Mrs Greenham sent an amended claim form, claiming $12,500 compensation (exhibit A20A).

123 By letter dated 28 June 1983, the secretary of the MRPA requested the conveyancer at the Under Secretary for Law to draw up the release agreements and arrange for the appropriate caveat to be lodged before the compensation of $12,500 was paid (exhibit A21).

124 There was also a payment voucher dated 28 June 1983 for payment to the Crown Law Department (exhibit A22). I infer that the Crown Law Department received the $12,500 and then paid that sum on behalf of the MRPA once the documents were prepared and executed.

125 On or about 9 August 1983, the MRPA paid Mrs Greenham a sum of $12,500 under a document expressed to be a deed of that date between the MRPA and Mrs Greenham, but executed only by Mrs Greenham (exhibit A24). The terms of the deed were as follows:

The land described in the Schedule hereto (hereinafter called the 'affected land') has been reserved under a Town Planning Scheme (hereinafter called 'the Scheme') made under the Town Planning and Development Act 1928 as amended in respect of which Acts the Authority is the responsible Authority.

The Owner was at the time of the said reservation the registered proprietor of the affected land and after the affected land was so reserved gave to the Authority notice of her intention to sell the affected land.

The Owner has sold the affected land at a price less than that which she might reasonably have expected to receive had the affected land not been reserved under the Scheme as aforesaid and the Owner therefore claims that the affected land was injuriously affected by the said reservation.

The Authority has agreed with the Owner that the value of the land had it not been affected by the reservation was the sum of FIFTY THOUSAND DOLLARS ($50,000.00) and considers that by reason of the said reservation a fair and reasonable valuation of the affected land is the sum of THIRTY SEVEN THOUSAND FIVE HUNDRED DOLLARS ($37,500.00).

The Authority has elected and agreed to pay the Owner as compensation for the said injurious affection the sum of TWELVE THOUSAND FIVE HUNDRED DOLLARS ($12,500.00) being the difference between the said sum of FIFTY THOUSAND DOLLARS ($50,000.00) and the said sum of THIRTY SEVEN THOUSAND FIVE HUNDRED DOLLARS ($37,500.00).

The Owner transferred the affected land to VINCENT NOMINEES PTY LTD of Lot 3 Clifton Street Kelmscott by transfer registered in the Office of Titles on the 25th day of May 1983.

NOW THIS DEED WITNESSETH:

1. THAT the Authority shall pay to the Owner the said sum of TWELVE THOUSAND FIVE HUNDRED DOLLARS ($12,500.00) upon the acceptance at the Office of Titles at Perth of caveat lodged by the Authority against the affected land and such Caveat shall be lodged as soon as practicable after the execution of this Deed by the Owner.
2. THAT in consideration of the said sum of TWELVE THOUSAND FIVE HUNDRED DOLLARS ($12,500.00) to be paid by the Authority the Owner as hereinfore provided the Owner hereby acknowledges and declares that such payment constitutes compensation in full satisfaction and discharge of her claim for compensation under the provision of the said Act and all other claims or rights of claim by her or any other person or persons claiming by through or under her by reason of the reservation of the affected land under the Scheme and the loss or damage caused thereby and of all other claims or rights of claim which she now has or but for the execution of these presents could or might have had in respect of the injurious affection of the affected land by the said reservation and for all loss of damage suffered thereby.

SCHEDULE

Portion of Canning Location 16 and being Lot 8 on Plan 8225 being the whole of the land comprised in Certificate of Title Volume 280 Folio 184A.

126 On or about 15 August 1983, the MRPA registered caveat C602204 against the original title of lot 8 as to an estate or interest in lot 8 by virtue of s 36 of the MRTPS Act (although incorrectly referred to as s 36 of the 'Town Planning and Development Act 1928'), in that on 9 August 1983 the MRPA made the payment of $12,500. The caveat describes the payment as having been made 'in full satisfaction of a claim for compensation for injurious affection arising out of [the reservation]' (exhibit A26).

127 As at the date of registration of caveat C602204, the registered proprietor of the property was the plaintiff and its address was Lot 3 Clifton Street, Kelmscott.

128 Section 138 of the Transfer of Land Act 1893 (WA) required that when a caveat was lodged, notice of the caveat was given by the Registrar of Titles to the registered proprietor. That was the practice of the Office of Titles in 1983 (exhibit A44; exhibit 2). Nevertheless, I accept the unchallenged evidence of Mr and Mrs Nizich, the directors of the plaintiff, that they did not receive notice of the caveat. They, and thus the plaintiff, first became aware of the caveat in 2006.

129 The parties were at issue about whether these facts gave rise to an agreement between the MRPA and Mrs Greenham about the amount of compensation.

12. Was the amount of compensation agreed? If so, when?

130 Mrs Greenham's application for compensation was initially in the sum of $14,000. The MRPA's letter of 13 June 1983 requested the claim be amended to $12,500 and returned the claim form for that purpose. Before Mrs Greenham returned the amended form, the property manager of the MRPA authorised payment of $12,500 to the Crown Law Department in respect of Mrs Greenham's claim. It may be open to infer from this that in a telephone conversation before the letter of 13 June 1983, an MRPA officer had said to Mrs Greenham that a claim for $12,500 would be paid. In any event, Mrs Greenham sent an amended claim for $12,500 by her letter of 21 June 1983. The limited evidence does not sustain an inference that the parties entered a binding agreement about compensation in June 1983.

131 In my view, by no later than when Mrs Greenham signed the deed in August 1983, she and the MRPA had agreed, in the contractual sense, that compensation was payable for injurious affection and that the amount of compensation was $12,500. The deed was evidently prepared by the Crown Law Department on behalf of the MRPA. The deed did not provide for execution by the MRPA. In my view, by providing the deed to her for execution, the MRPA made an offer to Mrs Greenham in the terms of the deed. By signing the deed Mrs Greenham accepted the MRPA's offer. Thereupon both parties were bound. In my opinion, once Mrs Greenham signed the deed, the MRPA was bound to pay her the $12,500 and she agreed to accept that payment in full satisfaction of her claim for compensation for injurious affection by the reserve on lot 8.

132 As I will explain in section 17 of these reasons, in my view, the validity of a payment of compensation in an agreed amount is not conditioned on the agreement about the amount of compensation constituting a legally binding contract.

133 Part of the plaintiff's case is that it was not open to the MRPA and Mrs Greenham to agree on the amount of compensation and that, in any event, that agreement was invalid. It is convenient to set out the statutory framework applying in 1983 in order to understand the parties' competing contentions about the validity of the Greenham payment.

134 A landowner's right to compensation for the injurious affection of land by the making of a town planning scheme was created by s 11(1) of the Town Planning and Development Act 1928 (WA) (TPD Act). Because the relevant provisions are those applying in 1983, I set them out in full.

135 At all times in 1983, s 11 provided as follows:

(1) Any person whose land or property is injuriously affected by the making of a town planning scheme shall, if such person makes a claim within the time, if any, limited by the scheme (such time not being less than six months after the date when notice of the approval of the scheme is published in the manner prescribed by the regulations), be entitled to obtain compensation in respect thereof from the responsible authority:

Provided that a person shall not be entitled to obtain compensation under this section on account of any building erected, or any contract made, or other thing done with respect to land included in a scheme after the date of the approval of a scheme, or after such date as the Minister may fix for the purpose, being not earlier than the date of the approval of the scheme.

Provided also that the local authority may make agreements with owners for the development of their land during the time that the town planning scheme is being prepared.

(2) Whenever, by the expenditure of money by the responsible authority in the making and carrying out of any town planning scheme, any land or property is within twelve months of the completion of the work, or of the section of the work affecting such land, as the case may be, increased in value, the responsible authority shall be entitled to recover from any person whose land or property is so increased in value, one half of the amount of such increase, if the responsible authority makes a claim for that purpose within the time, if any, limited by the scheme, not being less than three months after the date when notice of the approval of the scheme is first published.

(3) Where a town planning scheme is altered or revoked by an order of the Minister under this Act, any person who has incurred expenditure for the purpose of complying with the scheme shall be entitled to compensation from the responsible authority, in so far as any such expenditure is rendered abortive by reason of the alteration or revocation of the scheme.

(4) Any question as to whether any land or property is injuriously affected or increased in value within the meaning of this section, and as to the amount and manner of payment (whether by instalments or otherwise) of the sum which is to be paid as compensation under this section, or which the responsible authority is entitled to recover from a person whose land is increased in value shall be determined by arbitration under and in accordance with the Arbitration Act 1985, unless the parties agree on some other method of determination.

136 Section 12 stipulated certain circumstances in which compensation was not recoverable. It is not necessary to set it out in detail. I note that by s 12(2a)(e), if a question arose under par (d) of that subsection, it was to be determined in the same way as provided in s 11(4).

When a person is entitled to compensation under this Act in respect to any matter or thing, and is also entitled to compensation in respect to the same matter or thing under any other enactment, he shall not be entitled to compensation in respect of that matter or thing both under this Act and that other enactment, and shall not be entitled to any greater compensation under this Act than he would be under such other enactment.

138 The proper construction of s 11(4) is a central issue in this case. However, as was common ground for the purposes of this case, s 11(4) is to be construed in the context of s 36, s 36A, s 36B, s 36C and s 37 of the MRTPS Act. Those sections provided as follows in 1983:

1. (1) For the purposes of applying the provisions of sections eleven and twelve of the Town Planning Act to the provisions of the Scheme, the former provisions shall be read and construed as if -

(a) the Authority were the 'responsible authority or local authority' wherever referred to in the sections; and

(b) the passage, 'varied, amplified or revoked by the Authority' were substituted for the passage, 'altered or revoked by an order of the Minister under this Act' in subsection (3) of section eleven; and

(c) those provisions included subsections (3), (3a), (4), (5) and (6) of this section,

(2) (a) The Scheme may provide that where compensation for injurious affection is claimed as a result of the operation of the provisions of subparagraph (i) or (ii) of paragraph (b) of subsection (2a) of section twelve of the Town Planning Act the Authority may at its option elect to acquire the land so affected instead of paying compensation.

(b) The Authority shall, within three months of the claim for injurious affection being made, or where such a claim is made before the date of the coming into operation of the Metropolitan Region Town Planning Scheme Act Amendment Act 1968, within three months of that date, by notice in writing given to the claimant, either elect to acquire the land or advise that it does not intend to acquire the land.

(2a) Where the Authority elects to acquire the land as provided in subsection (2) of this section, if the Authority and the owner of the land are unable to agree as to the price to be paid for the land by the Authority, the price at which the land may be acquired by the Authority shall be the value of the land as determined in accordance with subsection (2b) of this section.

(2b) The value of the land referred to in subsection (2a) of this section shall be the value thereof on the date the Authority elects to acquire the land under that subsection, and that value shall be determined

(a) by arbitration in accordance with the Arbitration Act 1895; or

(b) on the application of the owner of the land, made in the prescribed manner

(i) by a Local Court, sitting at a place nearest to where the land lies - if the value of the land claimed by the owner thereof is not more than one thousand dollars; or

(ii) by the Supreme Court - if the value of the land claimed by the owner thereof is more than one thousand dollars; or

(c) by some other method agreed upon by the Authority and the owner of the land,

and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme.

(3) Subject to subsection (4) of this section, 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 paragraph (a) of subsection (3) of this section and is payable to the person who was the owner of the land at the date of reservation referred to in that paragraph, unless after the payment of that compensation further injurious affection to the land results thereafter from an alteration of the existing reservation on the land or the imposition of another reservation thereon.

(4) Before compensation is payable under subsection (3) of this section

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

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

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

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

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

(5) A claim for compensation under subsection (3) of this section shall be made at any time within six 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 Authority, shall not exceed the difference between

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

(ii) the value of the land as not so affected.

(b) The value referred to in subparagraphs (i) and (ii) of paragraph (a) of this subsection shall be assessed as at the date the land is sold as referred to in paragraph (a) of subsection (3) of this section 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.

(7) Where compensation for injurious affection to any land has been paid under subsection (3) of this section, the Authority may lodge with the Registrar of Titles a caveat against the land specifying the amount of compensation so paid and the date of the payment.

(8) On receipt of the caveat from the Authority, the Registrar of Titles shall enter it in the Register Book.

36A Compensation is payable in respect of land injuriously affected by the declaration, or by the amendment of the declaration, of a planning control area, and land so affected may be acquired by the Authority, in the same circumstances and to the same extent as if the land in the planning control area, instead of being in a planning control area, had been reserved under the Scheme for a public purpose.

36B (1) A Board of Valuers (in this section and in succeeding sections of this Act called "the Board") is established.

(2) The Board shall consist of four members, including the Chairman, appointed by the Governor, each to hold office for two years and to be eligible for re-appointment.

(3) Each of the persons appointed to the Board shall be an Associate or a Fellow of the Commonwealth Institute of Valuers Incorporated, an association incorporated under the laws of South Australia, and, of those persons, -

(a) one, who shall be Chairman, shall be nominated by the Authority; and

(b) three shall be nominated by the body known as The Real Estate Institute of Western Australia, incorporated pursuant to the Associations Incorporation Act 1895.

(4) The Board is constituted by the Chairman and any two members and may meet notwithstanding there being a vacancy on the Board.

(5) A vacancy on the Board occurs where a member dies, resigns or is removed by the Governor on the ground of his inefficiency, incapacity or misconduct.

(6) The members of the Board are entitled to such fees and expenses, in respect of attendances at meetings of, or while engaged in the business of, the Board, as the Governor may from time to time determine.

(7) Judicial notice shall be taken of the signature of the Chairman subscribed to any finding of the Board.

36C (1) The owner of land that is subjected to injurious affection due to, or arising out of, the land being reserved under the Scheme for a public purpose who gives notice of his intention to sell the land and claim compensation shall, unless the Authority waives the requirement apply to the Board, in the prescribed manner, for a valuation of the land as not so affected and the Board shall thereupon make such a valuation.

(2) Subject to subsection (3a) of this section, a valuation made by the Board pursuant to subsection (1) of this section shall be communicated to the applicant and to the Authority and, for the purposes of section thirty-six of this Act, a valuation so made is final.

(3) Upon receipt of a valuation made by the Board under this section, the Authority shall advise the owner of the subject land of the minimum price at which the land may be sold without affecting the amount of compensation (if any) payable to him under section thirty-six of this Act.

(3a) Where any land with respect to which a valuation has been made under this section is not sold within a period of one year from the making of the valuation, the Board may, at the request of the owner of the land, if in the circumstances of the case it thinks it just to do, review the valuation and either confirm the valuation or vary it.

(3b) Where the Board reviews a valuation pursuant to subsection (3a) of this section, it shall notify the owner of the land and the Authority accordingly and thereupon subsection (3) of this section, with such modification as circumstances require, applies to the valuation as reviewed by the Board.

(4) The Governor may make regulations prescribing procedures for, and the fees payable on, applications to the Board and those regulations may make provision for the applicant to be heard and for his submissions to be supported by statutory declarations made under, and by virtue of, section one hundred and six of the Evidence Act 1906.

1. (1) For the purposes of this Act and the Town Planning Act in relation to a Scheme, the Authority shall be deemed to be the responsible authority and has all the powers, rights, duties and authority conferred or imposed on a responsible authority.

(2) Any purchase moneys or rents or profits or other money received by the Authority from land acquired by it or arising out of the use or occupation of the land by the Authority shall be paid into the Fund.

(3) If before the Scheme, or an amendment to the Scheme, has the force of law the Authority is satisfied that any land is or is likely to be comprised in the Scheme, it may purchase the land.

(4) After the Authority is appointed to administer and carry out any order as provided in section twenty-five of this Act, it becomes the public authority responsible for the payment of compensation or the cost of purchasing any land under the provisions of paragraph (b) of subsection (12) of section seven A of the Town Planning Act.

(5) (a) Notwithstanding anything contained in the Public Works Act 1902, the value of any land or improvements thereon which is compulsorily acquired by the Authority under this section or section thirteen of the Town Planning Act shall for the purpose of assessing the amount of compensation to be paid for the land and improvements, be assessed without regard to any increase or decrease in value attributed wholly or in part to any of the provisions contained in, or to the operation or effect of, the Scheme and having regard to values current at the time of acquisition but in assessing the amount of compensation regard shall be had to any amounts of compensation already paid or payable in respect of the land under section thirty-six of this Act.

(b) Where compensation has been paid, or is payable, in respect of land pursuant to section thirty-six of this Act, then, subject to the succeeding provisions of this subsection, there shall be deducted from the compensation assessed pursuant to paragraph (a) of this subsection an amount that bears the same ratio to the compensation so assessed as the compensation paid or payable pursuant to that section bears to the unaffected value of the land, as determined under this Act.

(c) In assessing the amount to be deducted from compensation under the provisions of paragraph (b) of this subsection, the person lawfully appointed to determine the amount of compensation shall have regard to -

(i) any improvements or demolitions lawfully made to or on the land, subsequently to the determination of the unaffected value of the land; and

(ii) to the earlier termination of the tenure of the land, where the compensation might otherwise have been affected by an assurance given by the Authority, and which the Authority is authorized by this subparagraph to give, that the tenure was to be of a greater period.

(6) (a) The Authority shall hold for the purposes of the Scheme any land acquired by it under this Act or the Town Planning Act, including land purchased under section 36A of this Act or subsection (3) of this section, and may, subject to paragraphs (b) and (c) of this subsection, dispose of or alienate that land -

(i) for or in furtherance of the provisions or likely provisions of the Scheme; or

(ii) if that land is no longer required by the Authority.

(b) Subject to paragraph (c) of this subsection, the Authority shall not except with the consent of the Governor dispose of or alienate any land compulsorily acquired by it other than for or in furtherance of the provisions or likely provisions of the Scheme.

(c) In exercising a power to dispose of or alienate land conferred by this subsection, the Authority shall have regard to the general principle that in such cases land acquired by the Authority should, if in the opinion of the Minister it is practicable and appropriate to do so, be first offered for sale at a reasonable price determined by the Minister to the person from whom that land was so acquired.

(7) (a) Where any land held, taken, resumed or otherwise acquired under the Public Works Act 1902 or any other Act, for any public work, is in the opinion of the Governor not required for that work and is required for the purposes or likely purposes of the Scheme, the Governor notwithstanding the provisions of section twenty-nine of the first mentioned Act, may declare by notice published in the Gazette, that the land shall be held and may be used for the purposes of the Scheme.

(b) From the date of the publication of the notice the land described therein, by force of this subsection, vests in the Authority for the purposes of the Scheme.

14. The validity of the Greenham payment: the parties' contentions

139 The plaintiff claims that, for a number of reasons, the payment to Mrs Greenham was not a valid payment of compensation for injurious affection. More specifically, the plaintiff contends that the payment was not a valid payment of compensation for the purposes of the statutory provisions by which the MRPA/WAPC can:

(a) lodge a caveat: MRTPS Act s 36(7), PD Act s 180; and

(b) deduct a proportion of the unaffected value from the compensation otherwise payable upon a compulsory acquisition by the MRPA/WAPC: MRTPS Act s 37(5)(b), PD Act s 192.

140 In the rest of these reasons I will use the expression 'valid payment of compensation' (and similar expressions), in this sense.

141 In this section, references to legislative provisions are references to provisions of the MRTPS Act.

(1) the payment was not a valid payment of compensation because:

(a) the amount was not fixed by a person duly appointed to fix the compensation who was satisfied of the matters referred in s 36(4)(a);

(b) it was not fixed by a person duly appointed to fix the compensation who determined the difference between the affected value and the unaffected value as at the date of the transfer of the property, in accordance with s 36(6);

(c) it is not open to the MRPA and the person claiming injurious affection to agree on the amount of compensation. Rather, the statutory scheme requires a third party to be appointed to determine the amount of any compensation, and, in doing so, to comply with the requirements of s 36(4) and s 36(6);

(d) alternatively, the payment was invalid because the amount of compensation failed to meet the requirement in s 36(6) not to exceed the difference between the affected value and the unaffected value;

(2) if this contention is rejected, there was no contract fixing the compensation, alternatively any agreement fixing compensation is invalid on various grounds pleaded in par 4 of its reply;

(3) further or alternatively, the purported valuation of the unaffected value by the Board of Valuers was not a valid valuation within the meaning of s 36C, on various grounds set out in par 10 of the statement of claim, and this makes the payment of compensation invalid; and

(4) further or alternatively, the purported determination by the MRPA, or its Finance Committee, of the affected value of lot 8 as $37,500 was invalid on various grounds set out in par 12 of the statement of claim. That in turn was said to vitiate the payment of compensation to Mrs Greenham because in making that payment the MRPA acted upon that valuation or assessment.

143 The WAPC contends that on a proper construction of the statutory scheme:

(1) it is open to a claimant and the MRPA to agree on the amount of compensation for injurious affection;

(2) in this case, Mrs Greenham and the MRPA agreed compensation was payable in the amount of $12,500;

(3) the validity of a payment for compensation the amount of which had been agreed is not conditioned on:

(a) the appointment of a person to determine the amount of the compensation;

(b) that person or any person being satisfied of the matters set out in s 36(4);

(c) an assessment by that person of the difference between the affected and unaffected values of the property, as required by s 36(6)(a);

(d) a valid valuation of the unaffected value of the property by the Board of Valuers or a valid valuation of the affected value of the property by the MRPA; or

(e) a legally enforceable contract between the claimant and the MRPA;

(4) the plaintiff's attacks on the validity of any agreement about the amount of compensation (pleaded in par 4 of its reply) should be rejected;

(5) those conclusions make it unnecessary to determine the plaintiff's attacks on the Board of Valuers' unaffected value valuation and the MRPA/Finance Committee's resolution of affected value; and

(6) in any event, those attacks should be rejected.

I deal with the plaintiff's four major contentions in turn in sections 16 19. As will appear, I accept the WAPC's contentions.

15. The validity of the Greenham payment: the test for invalidity

144 The approach to be taken to determining the validity of the payment to Mrs Greenham must take into account the principles explained in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 [91] [93]. An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid. Whether the act is invalid depends on whether there can be discerned from the legislation a purpose to invalidate any act that fails to comply with the condition. That is to be ascertained by reference to the language of the statute, its subject matter and objects, and the consequences of holding void every act done in breach of the condition.

145 The same approach applies whether the legislation stipulates a requirement or condition in exercising a statutory power, or whether that condition or requirement is not stipulated, but is apparent from a proper construction of the legislation.

146 The effect of Project Blue Sky was summarised by McLure P in Yarri Mining Pty Ltd v Eaglefield Holdings Pty Ltd [2010] WASCA 132; (2010) 41 WAR 134 [40]:

(1) the problem is to be solved in the process of construing the relevant statute. Little, if any, assistance will be derived from the terms of other statutes;

(2) the task of construction is to determine whether the legislature intended that a failure to comply with the stipulated requirement would invalidate the act done, or whether the validity of the act would be preserved notwithstanding non-compliance;

(3) the only true guide to the statutory intention is to be found in the language of the relevant provision and the scope and object of the whole statute;

(4) the intention being sought is the effect upon the validity of the act in question, having regard to the nature of the precondition, its place in the legislative scheme and the extent of the failure to observe its requirement;

(5) it can mislead if one substitutes for the question thus posed an investigation as to whether the statute is mandatory or directory in its terms.

147 In my view, the same approach is to be taken in determining whether the payment of $12,500 to Mrs Greenham is 'compensation' for the purposes of s 36(7) and s 37(5)(b) of the MRTPS Act. I think the payment will not be 'compensation' for that purpose, if and only if it was not a valid payment of compensation. Determining whether there was a valid payment of compensation involves application of the approach explained in Project Blue Sky to an express or implied requirement in the legislation of the power to pay compensation for injurious affection. Of course, there is also the anterior step of construing the legislation to identify any implied requirements.

16. The validity of the Greenham payment: did the statutory scheme permit the MRPA to agree the amount of compensation?

148 In my opinion, for the reasons that follow, payment of compensation in response to a claim for compensation for injurious affection is not invalid (or not 'compensation' for the purposes of s 36(7) and s 37(5)(b) of the MRTPS Act) by reason of the fact that the amount of the compensation was agreed between the MRPA and the claimant and was not fixed by a third party.

149 Whether it was open to the MRPA to agree the amount of compensation involves the proper construction of the statutory scheme. The statutory scheme is constituted primarily by s 11 and s 12 of the TPD Act and s 36, s 36A, s 36B, s 36C and s 37 of the MRTPS Act.

150 The process of statutory construction invites attention to the text of the statute, its context, in the broad sense explained in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408, and considerations of object, purpose and inconvenience of result. See the summary in Mijatovic v Legal Practitioners Complaints Committee [2008] WASCA 115; (2008) 37 WAR 149 [153] [155].

151 In support of its contention that agreement is an impermissible means of determining the amount of compensation, the plaintiff points to:

(b) the language and evident purpose of s 36(4) and s 36(6) of the MRTPS Act;

(c) the fact that payment of compensation for injurious affection involves the expenditure of public money; and

(d) the effect on third parties of a payment of compensation.

152 I begin with the language of s 11(4) of the TPD Act. That language is to be construed in the statutory context created by s 36 of the MRTPS Act. By operation of s 36(1)(c) of that Act, s 11 and s 12 of the TPD Act are to be read and construed as if those provisions included subsections (3), (3a), (4), (5) and (6) of s 36. Nevertheless, the language of s 11(4) is a convenient starting point.

153 The plaintiff submits that the language of s 11(4) supports its contention that agreement between the MRPA and the claimant is not a permissible means of determining the amount of compensation. The plaintiff emphasises the command of the section that, among other things, the amount of compensation 'shall' be determined by arbitration 'unless the parties agree on some other method of determination'. Further, the plaintiff emphasises that the closing words are not 'unless the parties agree on the amount of compensation'.

154 Section 11(4) is, in its terms, directed toward the method of determination of certain species of questions. It governs the determination of 'any question' as to:

(a) whether any land or property was injuriously affected or increased in value;

(b) the amount and manner of payment of the sum to be paid as compensation for injurious affection; and

(c) the amount and manner of payment of the sum which the responsible authority is entitled to recover from the person whose land has increased in value.

155 If the responsible authority and the claimant agree on whether land is injuriously affected, and on the amount and manner of payment of the sum to be paid as compensation then, in my view, there is no 'question' in relation to those matters. Section 11(4) is engaged only when a question exists; if the parties agree, there is no question.

156 For this reason, I do not accept the plaintiff's submission that the language of s 11(4) excludes agreement between MRPA and the claimant as an available means of determining the amount of compensation.

157 Alternatively, if I were wrong on my construction of the concept of a 'question' in s 11(4), I would nevertheless reject the plaintiff's construction of the language of s 11(4). On this hypothesis, I accept the WAPC's submission that s 11(4) can and should be read as meaning that 'some other method of determination' includes agreement between the parties.

158 However, as I have said, the question in this case involves the proper construction of the whole of the statutory scheme, including s 36 of the MRTPS Act.

159 The plaintiff emphasises that the payment of compensation involves the expenditure of public money. I accept that that is a matter to be taken into account in the statutory construction exercise. Of course, there is no inherent inconsistency or impermissibility in a public authority having a power to agree with a claimant about the extent of the claim.

160 To my mind, the construction urged by the plaintiff would have consequences that are sufficiently inconvenient to suggest that that construction is unlikely to have been intended by the legislature. The effect of the plaintiff's construction is that, whenever a claim is made for compensation for injurious affection, a compulsory process involving determination by a third party must be engaged in order that compensation be validly assessed and paid.

161 Of course, any inconvenient consequences of the construction are by no means determinative. Attention must be directed to the language of the statute, its context and evident object and purpose.

162 In my view, the legislative scheme concerning the giving of notice by an owner, the obtaining of an unaffected value valuation from the Board of Valuers, and advice by the MRPA of a minimum sale price without affecting the amount of compensation, provides strong support for a construction that enables the MRPA to agree the amount of compensation with a claimant.

163 An owner of reserved land intending to sell can give notice to the MRPA of the intention to sell the land. It was held by the Full Court in Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257 that such notice did not have to be given until settlement of the sale. Nevertheless, such notice can be given before contracting, if the owner chooses to do so. Given the scheme, it is easy to imagine that, as occurred here, an owner may well choose to give notice before contracting, as receipt of the Board's valuation of the unaffected value and the MRPA's advice may influence the price at which the owner is willing to sell.

164 By s 36C of the MRTPS Act, unless the MRPA waives the requirement, when an owner gives notice of intention to sell the land and claim compensation, the owner must also apply to the Board of Valuers for a valuation of the land unaffected by the reservation. That produces a valuation by the Board of Valuers of the unaffected value that is, for the purposes of s 36, final: MRTPS Act s 36C(2). When the MRPA receives that valuation, it is to advise the owner of the minimum price at which the land may be sold without affecting the amount of compensation payable under s 36: MRTPS Act s 36C(3).

165 In West Australian Planning Commission v Navarac Pty Ltd [2009] WASC 399 [45] EM Heenan J explained the purpose and operation of the corresponding provisions in the PD Act:

Once the Board of Valuers has made the required valuation of the unaffected value of the subject land it is required to communicate that valuation to the landowner and to the responsible authority (s 183(2)). Upon the responsible authority receiving that valuation it is to advise the landowner of the minimum price at which the land may be sold without affecting the amount of compensation, if any, payable to him or her (s 183(3)). Counsel for the applicant submitted, and I accept, that the reason for this requirement is to give assurance to the landowner that he or she may proceed to sell the subject land to some purchaser at or above the price so notified by the responsible authority, without being in jeopardy of being faced with an allegation, in the proceedings for the determination of the amount of compensation payable for injurious affection, that the land was not sold at a price less than its unaffected value as so determined (or that if it were such a sale would exclude or modify any right to compensation for injurious affection) or that the owner had not sold the land in good faith or had failed to take reasonable steps to obtain a fair and reasonable price - see s 177(a)(i) and (iii). Of course, such a notification by the responsible authority would not, and could not, determine what the affected value of the land at the date of sale actually was. The responsibility for that determination rests upon the arbitrator or any other person determining the claim for compensation for injurious affection, but the notification from the responsible authority of the minimum price at which it considered that the land might be sold without affecting the amount of compensation, if any, payable for injurious affection at least forewarns the landowner of the position adopted by the responsible authority and, accordingly, gives the landowner notice of potential consequences if the land were to be sold at less than the price notified by the authority.

166 I respectfully agree with his Honour's observations. I note his Honour's statement that the responsibility for determining the affected value rests on the arbitrator or other person in determining the claim. In the context of the issues before him, I do not consider that those observations are intended to exclude the possibility that such matters be dealt with by agreement.

167 This statutory scheme encompasses what the WAPC characterised as the simple case (first defendant's opening submissions par 44) and the plaintiff characterised as the 'paradigm uncomplicated case' (plaintiff's opening submissions par 37). In the simple case, a claimant is given an unaffected value from the Board's valuation and advice from the MRPA of a minimum sale price under s 36C(3) of the MRTPS Act. Where the claimant then sells the property for not less than the minimum price advised by the MRPA, the claimant would ordinarily claim the difference between the Board's unaffected value and the sale price. The MRPA may be content to pay the amount of the claim. Contrary to the plaintiff's submission (ts 352 354), I do not think the legislature should be taken to have intended that, in such circumstances, the parties must appoint an arbitrator or engage in some other means of third party determination of the amount of compensation.

168 The legislature's contemplation of the 'simple case' is one of the considerations that leads me to reject the plaintiff's contention that the amount (and availability at all) of compensation must be fixed by an arbitrator or some other third party means. However, that does not mean that agreement between a claimant and the MRPA is permissible only when the steps in the simple case have been followed (or validly followed). In my view, the statutory scheme does not condition the MRPA's ability to agree compensation with a claimant on the taking, or valid taking, of those steps.

169 The plaintiff's submissions emphasise the language of s 36(4) of the MRTPS Act. That section prescribes matters of which 'the person lawfully appointed to determine the amount of compensation' must be satisfied before compensation is payable under s 36(3). The plaintiff submits that that language reveals an intention that no compensation is payable, and no compensation can validly be paid, unless and until a person has been appointed (in accordance with s 11(4) of the TPD Act), to determine the amount of the compensation and that person has been satisfied of the matters required by s 36(4)(a) or s 36(4)(b) of the MRTPS Act, as the case may be.

170 I am not persuaded by that submission. In the statutory context as a whole, I do not think s 36(4) denies the capacity of the MRPA to agree the amount of compensation. In my view, s 36(4) applies whenever a question arises between the MRPA and a claimant about the amount of compensation. When a question arises, the person appointed to determine that question must be satisfied of the matters referred to in s 36(4), and only then does a right to compensation occur: see Ex Parte Re Bond Corporation Pty Ltd (Unreported, WASC, Library No 980186, 11 March 1998) 7 8 (Wheeler J). I think what her Honour said in that case is consistent with my construction.

171 In determining its approach to a compensation claim, the MRPA will take into account the requirement in s 36(4) that the person determining the amount of compensation be satisfied of the matters set out in paragraphs (a) or (b), as the case may be.

172 The plaintiff also relies on s 36(6) of the MRTPS Act in two ways. First, the plaintiff contends that the need to comply with the requirements of s 36(6) tends against the availability of agreement between the claimant and the MRPA as a permissible means of determining the amount of compensation. Secondly, and in any event, the plaintiff contends that any agreement reached between the claimant and MRPA that was inconsistent with the requirements of s 36(6) will be invalid. Further to that second contention, the plaintiff points to the opinions on the affected and unaffected value of lot 8 expressed by the valuers in their individual reports, their joint report and in their oral concurrent evidence, and submits that the compensation paid in this case did not comply with s 36(6) because it exceeded the difference between the unaffected and affected values of the land.

173 It is convenient to begin with the second of those submissions. As senior counsel for the WAPC pointed out, this contention by the plaintiff, if accepted, would apply to determinations by arbitrators or other agreed means, as well as to compensation fixed by agreement. I am not persuaded that the statutory scheme reveals a legislative intention that payment of compensation that was subsequently found to have been assessed in breach of s 36(6), by virtue of a subsequent assessment of the values referred to in s 36(6)(a), would be invalid on that account. I refer to the principles set out in section 15 of these reasons. The process of valuation, by its nature, involves matters on which reasonable minds may differ widely, and the exercise of many subjective judgments: McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [163] [166]. Invalidation on the ground of breach of s 36(6) would seem to me likely to lead to continuing uncertainty of a nature and extent that is unlikely to have been an intended by the legislature. I reject the plaintiff's second submission about s 36(6).

174 I turn to the plaintiff's first submission on s 36(6). Unlike s 36(4), s 36(6) is not expressed in terms of something to be done by the person lawfully appointed to determine the amount of compensation. Rather, it is expressed in general terms and is thus applicable to whatever means of determination is used of the amount of compensation payable for injurious affection. In my view, it does not greatly bear on the question of whether it is open to the MRPA to agree the amount of compensation. On my preferred construction, it is a matter that is to be taken into account by the MRPA in deciding its position respecting the amount of compensation, including whether it will agree to pay the amount claimed.

175 The plaintiff also emphasises that the fixing of the amount of compensation, and payment of that amount, do not solely operate between the claimant and the MRPA. Rather, those processes have consequences for third parties. In particular, the effect of the statutory scheme is that a purchaser from the claimant may be affected, as is illustrated by this case. The plaintiff submits that the effect on third parties of the fixing of compensation supports its construction that compensation cannot simply be agreed between claimant and the MRPA, but must be fixed by an independent third party who applies s 36(4) and s 36(6).

176 I accept that the effect of the statutory scheme is that the payment by the MRPA of compensation to the owner who first sells the land after its reservation can affect the rights of the purchaser. Compensation is payable after settlement of the sale: Bond Corporation Pty Ltd v WAPC. The claim for compensation can be made within six months after the land is sold. Upon payment of compensation, the MRPA was entitled to lodge a caveat: MRTPS Act s 36(7). Thus, the caveat may not be lodged until after the purchaser has become the registered proprietor. The payment of the compensation and the caveat had the capacity to affect the rights of the purchaser; see, for example, MRTPS Act s 37(5).

177 Once the caveat is lodged, subsequent purchasers must take subject to the MRPA's rights, but will do so with knowledge.

178 Thus, in my view, the fixing and payment of compensation affected or potentially affected the rights of only a confined class of third parties: the purchaser from the first seller after reservation and any person dealing with the land prior to the caveat being lodged. Any subsequent purchaser will take with knowledge of the MRPA's rights claimed in the caveat. I am not persuaded that the effect on that confined class of third party rights sustains the plaintiff's construction of the statutory scheme (alone, or in combination with the other matters relied on by the plaintiff) that the amount of compensation cannot be agreed between the MRPA and claimant. Apart from anything else, it is open to a purchaser to know of the existence of the reserve and the statutory scheme, and to negotiate with the seller to include an appropriate term about these matters in the contract of sale.

179 The plaintiff submits that the effect of the WAPC's construction, which permits the MRPA to agree the amount of compensation, is that there would be no limits or constraints on the freedom of the MRPA to agree any figure for compensation. I do not accept that submission. Apart from anything else, any power of a statutory authority must be exercised in good faith and for a proper purpose: see, for example, Thompson v Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87, 105 106.

180 Section 36(2a) of the MRTPS Act stipulates how the price of land elected to be acquired under s 36(2) is to be determined 'if the [MRPA] and the owner ... are unable to agree as to the price to be paid for the land by the [MRPA]'. Thus that subsection specifically limits the application of the stipulated methodology to when the MRPA and owner have been unable to agree. Section 11(1) of the TPD Act does not contain corresponding language. In my opinion, that difference in language in two provisions in different Acts does not sustain the plaintiff's construction of s 11(1) of the TPD Act in the statutory context created by s 36 of the MRTPS Act.

181 In summary, in my view, the language of the relevant provisions, the statutory scheme as a whole and the inconvenience that would result from the plaintiff's construction sustain the WAPC's construction.

(1) on a proper construction of the statutory scheme, it was open to the MRPA to agree the amount of compensation with the claimant;

(2) the payment of compensation to Mrs Greenham is not invalid on the ground that the amount of compensation was fixed by agreement between the MRPA and the claimant, and not fixed by a third party;

(3) the payment of compensation to Mrs Greenham is not invalid on the ground that the amount of compensation did not comply with the requirements of s 36(6) of the MRTPS Act. A finding of noncompliance with s 36(6) would not make the payment of compensation valid.

183 I accept the WAPC's submission that, on a proper construction of the statutory scheme, the ability of the MRPA to agree the amount of compensation and then validly pay the amount so agreed is not conditioned on there being in existence (and before the MRPA) a valuation of the Board of Valuers of the unaffected value (valid or otherwise), or on the MRPA having given advice under s 36C(3), or on there being a resolution (valid or otherwise) of the affected value by the MRPA.

184 The MRPA has power under s 36C(1) to waive the requirement for a selling owner to apply to the Board of Valuers for a valuation of unaffected value. In my view, that supports the construction I adopt.

185 For these reasons, I reject the plaintiff's first major contention.

186 I turn to the plaintiff's second contention - that any agreement between the MRPA and Mrs Greenham is invalid on various other grounds.

17. The plaintiff's other attacks on any agreement

187 In its reply dated 29 November 2011, the plaintiff attacks the validity of any agreement between the MRPA and Mrs Greenham on a number of grounds:

(1) the MRPA had no statutory power to enter into any such agreement (reply par 4.1);

(2) any agreement was incompatible with the proper discharge by the MRPA of its statutory functions in that its purpose or effect was to displace or circumvent the requirements of s 36(4) and s 36(6) of the MRTPS Act (reply par 4.6);

(3) any agreement must be executed under common seal and could not be made by conduct (reply par 4.2 and par 4.4);

(4) the agreement was not duly authorised by a resolution of the members of the MRPA (reply par 4.3); and

(5) any agreement did not constitute a valid contract because it was not supported by consideration and because there was no intention to create legal relations (reply par 4.5).

188 In my view, on a proper analysis, the plaintiff's first two contentions are founded on acceptance of its construction of the statutory scheme. Counsel for the plaintiff rightly accepted that the MRPA had power to agree with a claimant, under s 11(4) of the TPD Act, that the question of the amount of compensation be determined by some method other than arbitration (apart from by agreement of the amount). That power would derive from the performance by the MRPA of its function under s 25(f) of the MRTPS Act of doing all such things as are proper and necessary for the purposes and administration of the Act and the MRS. On the plaintiff's submission, the MRPA lacked power to agree the amount of compensation because that was impermissible under s 11(4) of the TPD Act, construed in its context with the relevant subsections of s 36 of the MRTPS Act.

189 In light of my conclusions about the proper construction of the statutory scheme, the plaintiff's power contention falls away. In my view, the MRPA had power to enter into an agreement, with Mrs Greenham or any claimant, about the amount of compensation for injurious affection. That power derived from the performance of its functions under s 25(f) of the MRTPS Act.

190 The plaintiff's incompatibility contention was similarly founded on its construction of the statutory scheme. On my construction, there is no incompatibility.

191 I do not accept the plaintiff's third contention that any agreement about compensation can be made only under the seal of the MRPA, failing which a payment for the agreed amount of compensation would be invalid. In my view, it is not necessary that the MRPA and claimant enter into a binding agreement that is, in law, a contract in order that a payment of compensation in an agreed amount be valid. An instrument to which the seal might be fixed is not an essential step in making a valid payment of compensation in an agreed amount. In my view, in a given case it was open to the MRPA simply to accept that the amount of compensation claimed was appropriate, and to proceed to pay the claim in that amount, so that there would be no occasion for fixing the seal of the MRPA.

192 Consequently, I do not think it is necessary to determine whether the MRPA was legally incapable of entering a contract formed in the way I explained in section 12 of these reasons, or whether the MRPA could enter a contract only by affixing its common seal to an instrument (as to which see Cheshire & Fifoot's Law of Contract (9th Aust ed) [17.71]; Seddon NC, Government Contracts (4th ed) [3.19]; Lindgren KE, 'The Negative Corporate Seal Rule and Exceptions Thereto' [1974] MelbULawRw 4; (1974) 9 Melbourne University Law Review, 411 447).

193 That brings me to the plaintiff's fourth contention: absence of authority in the form of a resolution of the MRPA.

194 I am satisfied by the contents of exhibit TMH2 to Mr Hillyard's affidavit of 24 November 2011 that the previous practice of the MRPA, in the two years leading up to April 1983, was that:

(1) after an owner gave notice of intention to sell, the Board of Valuers would value the land on an unaffected basis;

(2) the MRPA would resolve an affected value and an unaffected value of the land, usually by adopting an earlier resolution of the Finance Committee;

(3) if the land was sold for not less than the resolved affected value, compensation would be agreed by an officer of the MRPA as the difference between the resolved unaffected value and the sale price, and paid, without any reference back to the Finance Committee and the MRPA itself; and

(4) the Crown Law Department would prepare a deed for execution by the claimant, with payment to be made upon or after execution.

195 If the land was not sold for at least the affected value, the matter would be brought back to the Finance Committee (whose resolutions and actions would be ratified by the MRPA). Where there was ground to doubt that the sale was a genuine arms length sale, the matter was brought back (exhibit TMH2, tab 5).

196 On one occasion, the initial resolution expressly required that the claim come back to the Finance Committee for approval (tab 10; and the minutes of 24 February 1982 in exhibit 5). The exceptional expressing of the requirement to bring the claim back to the Finance Committee supports the view that the practice was that, generally, absent such an express statement, that was not required.

197 On 27 April 1983, following Mrs Greenham's notice of intention to sell, the MRPA resolved that the unaffected value of lot 8 was $50,000 and the affected value was $37,500. In my opinion, in the context of the statutory scheme and the consistent previous practice of the MRPA and its officers, that resolution encompassed authority to agree and pay compensation in an amount equal to the difference between the resolved unaffected value and the sale price, so long as the sale price was not less than the resolved affected value.

198 In any event, even if the resolution of 27 April 1983 did not authorise an agreement about compensation to the effect I have explained, I would not be satisfied that the payment of $12,500 compensation is invalid on the ground that there was no authority to agree compensation in the amount of $12,500.

199 By August 1983, Mrs Greenham's claim was for $12,500 compensation. It is an agreed fact that the MRPA paid that sum to Mrs Greenham for her claim. Thus, there is no question of whether the payment was authorised; it was made by the MRPA. By that conduct in making the payment in the amount claimed, the MRPA in effect agreed that compensation was payable in that amount, with the consequence that there was no question between it and Mrs Greenham about those matters. As I have explained in dealing with the plaintiff's third contention, I do not think a legally binding contract or other document like the document of 9 August 1983 is necessary in order for valid agreement by the MRPA on the amount of compensation.

200 For the plaintiff to make good its case it must establish that the payment is void because there was no resolution by the MRPA. It would not be enough to show that the payment was liable to be set aside at the behest of one of the parties to the transaction.

201 I am not persuaded that, on a proper construction of the MRPTS Act:

(a) a resolution of the MRPA was necessary before it could decide to pay and then accordingly pay a compensation claim; and

(b) a decision to pay and the resulting payment are invalid in the absence of a resolution by the MRPA.

See generally Seddon NC, Government Contracts (4th ed) [3.18], referring to [3.13] [3.17].

202 For these reasons, I am not persuaded that the absence of a resolution of the MRPA to make the payment, or to agree compensation in the sum of $12,500, or to make an agreement in the terms reflected in the deed, would, if established, invalidate the payment of compensation to Mrs Greenham.

203 It will be apparent from what I have already written that I do not accept the premise of the plaintiff's fifth contention. As I have said, I do not think that a legal contract is required in order to agree the amount of compensation. In any event, I think an intention to create legal relations is evident from the preparation and execution of a formal document entitled a deed. Thus I do not accept the plaintiff's submission that there were merely consensual dealings that fell short of giving rise to any contract (ts 70 71, 123). Further, there was consideration in the form of the mutual promises summarised in [131] above.

204 These conclusions make it unnecessary to deal with the plaintiff's attacks on the Board of Valuers' valuation of unaffected value and on the resolution by the MRPA, adopting the recommendations of its Finance Committee, of the affected value of lot 8. I accept the WAPC's submission that even if either of those were found not to have been valid (in some sense for some purpose), the validity of the payment in an amount agreed between the claimant and the MRPA would not be affected. Nevertheless, for the sake of completeness, I will state, in summary form, my conclusions about these attacks.

18. The plaintiff's attacks on the Board of Valuers' valuation

205 The plaintiff claims that the valuation by the Board of Valuers is invalid on a number of grounds.

206 First, it claims that on a proper construction of s 36C(1) of the MRTPS Act, the Board of Valuers was required either to value the reserved portion of lot 8 or to value the whole of lot 8 as unaffected by the MRS. The Board of Valuers valued both. The plaintiff contends that that resulted in a valuation that was inherently uncertain.

207 I do not accept this contention. Competing views have been expressed by judges of this court as to whether the Board's valuation must relate to only the reserved portion or to the whole of the land, part of which is reserved. (The competing views were explained in McKay v Western Australian Planning Commission [2011] WASC 109; see also Re the Board of Valuers; Ex parte McKay [2011] WASC 331.) In this action, both parties support the latter approach: that the valuation relates to the whole of the land, part of which is reserved. In any event, the Board valued both. In my view, there was nothing uncertain about the valuation produced by the Board.

208 This contention does not reveal any ground for invalidity.

209 Secondly, the plaintiff claims that the Board's valuation contained mere statements of unsubstantiated opinion and was not supported by any valuation evidence or methodology. I am not prepared to infer that the Board's valuation was unsubstantiated and not supported by any valuation evidence or methodology. The Board was not required to give reasons. The absence of photographs is explicable by the absence of a building on lot 8. Taking into account par 9 of the statement of agreed facts, and what is contained in exhibit G, I infer that, with the exception of valuations prepared by Mr Mickle, the practice of the Board of Valuers generally was not to record and retain methodology and evidence in 1983. Mr Russell's invoice charged for inspection, valuation and report. The fact that notes of sales evidence of Mr Russell cannot now be located does not sustain an inference that there were no such notes and sales evidence. More than 25 years have passed since the valuation.

210 Thirdly, the plaintiff claims that the unaffected value of $50,000 stated in the Board's valuation was so far from the 'actual value' of $37,500 to $38,000 as to be manifestly unreasonable; alternatively it was outside the reasonable range of valuation in that it exceeded $45,000.

211 Five valuers were called: three were called by the plaintiff and two by the WAPC. There was a substantial measure of agreement between the valuers. In the joint statement of valuers dated 22 July 2011 (exhibit E15), the valuers generally agreed a range of $38,000 to $42,000 for the unaffected value. They also agreed that 'a reasonable range' would include values within 10% of those figures, in other words from $34,200 to $46,200.

212 In oral evidence, Mr Richmond adhered to his original opinion (in his report) that the unaffected value of lot 8 was $45,000. At the conferral, he had said that he was prepared to accept a value of $42,000. That had been influenced by learning at the conferral about the sale of lot 7 for the sum of $42,000. He had then understood or assumed that the sale of lot 7 did not include any portion of reserved land. In oral evidence he said that taking into account the reserve over lot 7, the sale of that lot did not, in his opinion, justify him in amending his opinion of the value of $45,000.

213 Mr Wilson explained that, in referring to a 'reasonable range', he meant that if the property had sold at a price 10% above or below his valuation, he would consider his valuation as reasonable in that it did not render him liable for negligence (ts 190). Mr Richmond intended the term 'reasonable' in much the same way (ts 191). Mr Morecombe said that 10% is 'an acceptable range quoted in valuation circles' (ts 193).

214 The rate per square metre to derive an unaffected value of $50,000 was within the range of rates per square metre that unimproved land of the same general character was selling in the vicinity at that time (ts 201: Messrs Richmond and Wilson).

215 Mr Wilson, Mr Richmond, Mr Morecombe and Mr Stoiche all agreed that:

(a) it is common in compensation cases for valuers to express opinions that differ by more than 10%; and

(b) valuers acting honestly and diligently can hold markedly different views about the value of a property (ts 195, 196).

216 The process of valuation is one on which reasonable minds may well differ widely. It involves the exercise of many subjective judgments: McKay (No 7) [164] [165]. That character of the valuation process bears on what must be shown in order to demonstrate Wednesbury unreasonableness.

217 A court will not easily reach a conclusion of Wednesbury unreasonableness, particularly where the decision involves significant elements of judgment or discretion: Re Minister for Resources; Ex parte Cazaly Iron Pty Ltd [2007] WASCA 175; (2007) 34 WAR 403 [253] [257].

218 The evidence of the valuers falls well short of sustaining a conclusion that the Board's valuation was unreasonable in the Wednesbury sense.

219 In my view, there is a very large gap between a conclusion that a valuation was outside a 'reasonable range', rendering the valuer liable in negligence, on the one hand, and a valuation being so unreasonable that no reasonable valuer could have come to that conclusion, on the other.

220 The plaintiff relied on the discussion of the so called 'bracket principle' by Einstein J in Genworth Financial Mortgage Insurance Pty Ltd v Hodder Rook & Associates Pty Ltd [2010] NSWSC 1043. His Honour discussed cases suggesting that there is a margin in valuation of plus or minus 10%, and that being outside that range is some evidence of negligence in the valuation. For my part, with respect, I see force in the cautionary observation of Young JA in the appeal Hodder Rook & Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279 [73] about the dangers of a generalised mathematical formula being used on a question of negligence. More fundamentally, as I have said, the questions of negligence and Wednesbury unreasonableness are very different questions.

221 I am not persuaded that the conclusion of the Board of Valuers, that the unaffected value of lot 8 was $50,000, is invalid on the ground that it was so unreasonable that no reasonable valuer could have reached such a conclusion.

222 Fourthly, the plaintiff claims that there was no proper valuation carried out or rational basis for attributing $14,000 to the reserved section. I am not persuaded that these alleged grounds of invalidity are made out. I refer to my observations and inferences in relation to the plaintiff's second ground. In any event, even if the attribution of $14,000 to the reserved section were 'invalid', I do not think that would have any consequence for the validity of the payment of compensation to Mrs Greenham.

223 Fifthly, the plaintiff claims that the Board of Valuers' valuation could not be a valid valuation as required by s 36(6) of the MRTPS Act because, by s 36(6)(b), the valuation must be conducted at the date of sale, whereas the valuation was done on 25 February 1983. I reject this claim. As I have said, I am not persuaded that a valuation of the affected and unaffected values at the date of sale is a precondition to the making of a valid payment of compensation. Nor am I persuaded that a valuation at the date of sale, as distinct from a few months earlier, is essential to the validity of a payment of compensation.

19. The plaintiff's attacks on the purported determination or resolution of the affected value by the MRPA

224 The plaintiff claims that the purported determination or resolution of the affected value by the Finance Committee on 14 April 1983 was invalid and of no effect. The plaintiff points out, as is common ground, that the Finance Committee had no delegated power from the MRPA. Further, the plaintiff says that the MRPA's letter of 21 April 1983 was sent without authority and was invalid.

225 As I stated above at [204], I do not consider that any of these matters affect the validity of the payment of compensation to Mrs Greenham. On 27 April 1983, the MRPA adopted the Finance Committee's resolution that the unaffected value be $50,000 and the affected value be $37,500, and endorsed the actions taken. In that way, the letter of 21 April 1983 was ratified, and the MRPA determined its view as to affected and unaffected value.

226 The plaintiff further alleges that there was no evidence to support the purported determination of the affected value, in that the percentage difference between the unaffected and affected values of lot 8, properly determined, ranged from 7.25% to 18.4%, with a resultant average of not higher than 12.3%. The plaintiff repeats this point about the percentage differences in its claim that the application of the 25% reduction policy (see [234] [235] below) was irrational.

227 The plaintiff relies on the opinions of the five valuers about the appropriate percentage difference between the unaffected and affected value of the property. The joint report (exhibit E15) states the opinion of each valuer on the appropriate percentage reduction. Mr Morecombe's was 7.25%, although in oral evidence he said that a lower percentage reduction would be appropriate. Mr Zucal's opinion was that the appropriate percentage reduction was 18.4%. His was the highest percentage reduction. In oral evidence, he adhered to this opinion (ts 174).

228 The average of the experts' opinions as to appropriate percentage reduction is about 12.3%. In my view, invalidity of a resolution about value is not established by a departure, even a substantial departure, from the average of a number of valuers' opinions. Nor, in my view, is it enough to demonstrate that the percentage reduction was outside the range of opinion of the five valuers called in this case. I refer to my reasons for rejecting the plaintiff's third contention regarding the Board of Valuers' valuation.

229 In oral evidence, all of the valuers agreed that the affected value should be determined on the basis that the reserved land was less valuable per square metre than the rest of lot 8 (ts 180 181). However, in his written report, Mr Richmond stated that, while he did not consider it the preferable approach, for many valuations of this kind the value of the reserved land is assessed on the basis of the percentage of the whole land: exhibit E4, page 85. That evidence was not contradicted or challenged and I accept it. In my view, this evidence is a substantial obstacle to finding that the MRPA's resolved affected value of 25% less than the unaffected value was Wednesbury unreasonable or irrational.

231 The plaintiff claims that the affected value of $37,500 so far departed from the actual affected value to be manifestly unreasonable, in that the unaffected value was $37,000 to $38,000. I am not persuaded that the affected value valuation was so unreasonable that no reasonable valuer could have reached the conclusion. I refer to my earlier comments at [210] [219] and to what I have said on the previous ground of complaint [227] [229].

232 Moreover, in determining the validity of the payment, insofar as the reasonableness of any view of value affects that validity, attention is to be directed to the position at the time of the decision to make payment in the sum of $12,500. By that time, lot 8 had been sold, in its affected state, to the plaintiff. I accept Mr Nizich's evidence that he, subjectively, did not discount the price that he offered in light of the reserve and that the reserve did not come up in negotiations with Mrs Greenham. Nevertheless, the MRPA was entitled to have regard to the sale to the plaintiff as evidence supporting an affected value of lot 8 of $37,500.

233 The plaintiff alleges that the affected value valuation was not made at the date of the sale, and was therefore invalid. Again, in my view this is not a ground of invalidity. See [223]. Further, by the time the compensation was paid, the sale to the plaintiff for $37,500 had occurred.

234 By an amendment to its statement of claim made on 28 November 2011, the plaintiff also claims that the MRPA and its Finance Committee did not undertake any proper process of assessment of the affected value, but acted in accordance with a fixed policy of taking the affected value to be 75% of the unaffected value of the land.

235 Officers of the MRPA referred in internal documents to the MRPA's 'rule of thumb' that the affected value was 75% of the unaffected value of the land. The existence of such a rule of thumb is supported by the resolutions of unaffected and affected value made by the MRPA in 1981 to mid1983. In almost all cases the resolved affected value was approximately 25% of the unaffected value.

236 Adoption of a rule of thumb or general policy by an administrative decisionmaker is not in itself inconsistent with the valid discharge of its statutory function. A decisionmaker cannot adopt a policy that is applied inflexibly, and cannot apply the policy without regard to the merits of the individual case: Aronson MI & Dyer BD, Judicial Review of Administrative Action (4th ed) [5.120]; Re Romato; Ex parte Mitchell James Holdings Pty Ltd [2001] WASCA 286 [26] [27]; Surinakova v Minister for Immigration, Local Government and Ethnic Affairs [1991] FCA 596; (1991) 33 FCR 87, 98; R v Queensland Fish Management Authority [1993] 2 Qd R 201, 204; Re Drake and Minister for Immigration & Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634, 640 641.

237 The plaintiff pleads that the MRPA acted in accordance with a fixed policy. I take this to be a complaint that the policy was applied inflexibly and without regard to the merits of the individual case involving Mrs Greenham.

238 Whether that complaint is made out must be considered in the context that these events occurred more than 25 years ago, and this complaint was first pleaded on 28 November 2011, four days before the conclusion of the trial on 2 December 2011. There is no evidence, one way or another, about the consideration by the Finance Committee or the MRPA leading to the adoption of a reduction of 25% for the affected value. Of course, the adoption of a reduction of 25% in accordance with the rule of thumb does not in itself demonstrate that the rule of thumb was applied inflexibly and without regard for the individual circumstances of the case. Lot 8 was unimproved rural zoned land. In this case, the area of the reserved land was almost exactly 25% of the area of lot 8. I refer to the evidence of Mr Richmond that many valuations of this kind assessed the affected value based on the percentage of the area of the reserved land to the whole of the land.

239 In these circumstances, I am not satisfied that the MRPA applied its policy inflexibly without regard to the circumstances of the case.

240 In any event, even if I considered that the MRPA applied its rule of thumb inflexibly, or otherwise erred as alleged by the plaintiff in deriving its affected value resolution, that would not lead me to hold that the payment to Mrs Greenham was invalid.

241 As I explained in finding that the statutory scheme permits agreement on the amount of compensation, on my construction of the legislation, the ability of the MRPA to agree the amount of compensation and then validly pay the amount so agreed is not conditioned on there being a valid valuation of the affected value by the MRPA: see section 16 of these reasons.

242 Further, as the WAPC submits, a resolution by the MRPA to adopt an unaffected value and an affected value for a property does not have any determinative legal consequence for any purpose. It does not alter a claimant's rights. It does not, as the plaintiff pleads, purport to be a 'determination'.

243 As regards unaffected value, it is the Board of Valuers' valuation, not any resolution by the MRPA, that is 'final' for the purposes of s 36 of the MRTPS Act; see MRTPS Act s 36C(2).

244 Viewed in the statutory context, the apparent primary purpose of a resolution by the MRPA as to affected value is that it is a step towards providing advice to the owner under s 36C(3). Subject to one qualification, this would be the only purpose: after resolving what the affected value was, the MRPA would advise the owner under s 36C(3) that he or she could sell for not less than that resolved affected value without affecting the amount of compensation payable. As explained by EM Heenan J in Navarac, in the event of dispute between a claimant and the MRPA/WAPC, that advice does not have any controlling significance for the question of affected value. Given these limited consequences of a resolution about affected value, a conclusion that the reasoning process leading to the resolution was infected with legal error would not necessarily lead to the invalidity of the resolution. The resolution itself would not have legal effect, so the question of its validity does not directly arise. The resolution is a step in providing advice under s 36C(3). Adopting the analysis in Project Blue Sky, the question would be whether the statutory scheme reveals an intention that the validity of advice under s 36C(3) is conditioned on a proper assessment by the MRPA of affected value. I do not think it is. Even if it were, in my view, valid advice under s 36C(3) is not a precondition to the power of the MRPA to agree compensation.

245 The qualification is that I have found that the resolution of 27 April 1983 (like the resolutions in the preceding period) authorised payment of a claim for compensation for the difference between the unaffected value and the sale price, so long as the sale price was not less than the resolved affected value. In those circumstances, the question is whether legal error in the resolution as to affected value invalidates that effect of the resolution. More particularly, does the legislation reveal an intention that compensation paid in an amount agreed between the MRPA and a claimant, based on the MRPA's resolution as to affected value, is invalid if that resolution of the MRPA is infected with legal error?

246 I would answer those questions in the negative. That opinion is heavily influenced by my earlier conclusion that, on a proper construction of the statutory scheme, the ability of the MRPA to agree the amount of compensation and validly pay the amount so agreed is not conditioned on there being a resolution, or a valid resolution, by the MRPA of the affected value. That being so, it was open to the MRPA, upon receipt of a compensation claim, to decide to pay the amount claimed. Authority to agree compensation based on a determination of the affected value is not essential to the validity of payment of compensation in an amount agreed by the MRPA. See also [198] [202].

247 I would summarise my major conclusions as follows:

(1) on a proper construction of the contract of sale, the plaintiff is entitled to the Additional Sum if and only if it establishes that the payment of $12,500 to Mrs Greenham was not a valid payment of compensation under s 36 of the MRTPS Act;

(2) on a proper construction of the legislative scheme, it was open to a claimant and the MRPA to agree on the amount of compensation for injurious affection;

(3) the validity of a payment for compensation, the amount of which is agreed, is not conditioned on:

(a) the appointment of a person to determine the amount of the compensation;

(b) that person or any person being satisfied of the matters set out in s 36(4);

(c) an assessment by that person of the difference between the affected and unaffected values of the property;

(d) a valid valuation of the unaffected value of the property by the Board of Valuers or a valid resolution of the affected value of the property by the MRPA; or

(e) a legally enforceable contract between the claimant and the MRPA;

(4) the plaintiff's attacks on the validity of the agreement about the amount of compensation fail;

(5) as a consequence of the conclusions in (2) (4), the plaintiff's attacks on the Board of Valuers' unaffected value valuation and the MRPA's resolution of affected value would not, if successful, lead to the invalidity of the payment of compensation to Mrs Greenham;

(7) consequently, the plaintiff has not established that the payment of compensation to Mrs Greenham was invalid.

248 It follows from these conclusions that the plaintiff's claim should be dismissed. I will hear from the parties on the question of costs.