Supreme Court of WA|2009-12-22|Before: Heenan J

WEST AUSTRALIAN PLANNING COMMISSION -v- NAVARAC PTY LTD [2009] WASC 399 (22 December 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : WEST AUSTRALIAN PLANNING COMMISSION -v- NAVARAC PTY LTD [2009] WASC 399

MATTER : An arbitration between the WA Planning Commission and Navarac Pty Ltd

Commercial arbitration - Leave to appeal - Appeal - Reservation of land for public purpose - Injurious affection - Claim for compensation - Planning and Development Act 2005 (WA) s 183 - Reference to Board of Valuers - Whether condition for determination of compensation for injurious affection

BMD Constructions Pty Ltd v Golding Contractors Pty Ltd [2000] QSC 057

Bond Corporation Pty Ltd v Western Australian Planning Commission [1999] WASC 157

Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257

Manders (Property) Estates Ltd v Magnet House Properties Ltd [1989] 2 EGLR 126

Masawa Australasia Pty Ltd v JCorp Pty Ltd [2000] WASC 5

New Generation Enterprises Pty Ltd v Western Australian Planning Commission [2007] WASCA 89

Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9

Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1980] 3 WLR 326

Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203

Re Caf-Grains [1994] 2 Qd R 252

Thiess Contractors Pty Ltd v Water Corporation of Western Australia (Unreported, WASC, Library No 970561, 28 October 1997)

1 EM HEENAN J: Is it essential for an owner of land that is subject to injurious affection due to or arising out of the land being reserved under a planning scheme for a public purpose and who gives notice of intention to sell the land and claim compensation to apply to the Board of Valuers in the prescribed manner for a valuation of the land as not so affected unless the responsible authority waives that requirement and for the Board to make the valuation before the determination of the compensation for the injurious affection can proceed? In other words, is the reference to the Board of Valuers contemplated by s 183(1) of the Planning and Development Act 2005 (WA) mandatory, unless the responsible authority waives the requirement?

2 These are the questions which arose in an arbitration between the present parties over the determination of the amount of compensation payable for injurious affection to the respondent's land near Jandakot, affected by the reservation of part of the land under a planning scheme. The appointed arbitrator, as he was requested to do by the parties, determined this as a preliminary point in the arbitration and decided that reference to the Board of Valuers was not mandatory and that, accordingly, without it the arbitration to determine the value of compensation for injurious affection could proceed. The present applicant seeks leave to appeal from that decision and to have the point decided by this court notwithstanding that the arbitration has not completed its course. Its reasons for doing so are that it contends that this is an essential preliminary step and that, unless the authority waives that requirement, the arbitration cannot be conducted according to law without such a reference and valuation. The parties are agreed that this point of law has never been authoritatively determined before.

3 On 13 November 2002 amendment number 1038/33 to the Metropolitan Region Scheme took effect. This was known as the Thomsons Lake Regional Centre Amendment. Part of the effects of the amendment was to reserve for a public regional road portion of the land in what ultimately became lot 9501 Armadale Road, Jandakot (lot 9501). At the time of the amendment the registered proprietor of the whole of that land was Navarac Pty Ltd, the respondent.

4 By a contract of sale dated 13 April 2007 Navarac agreed to sell its interest in lot 9501 to Violene Pty Ltd for the sum of $28,600,000 including GST. Completion of that contract of sale was due on 1 November 2007 or on such other date as the vendor and the purchaser might by writing agree.

5 On or about 24 May 2007 Navarac delivered to the Western Australian Planning Commission (the Commission) a document giving notice of its intention to sell lot 9501 purportedly pursuant to s 178(3)(a) of the Planning and Development Act 2005 (WA) and reg 3(1)(a) of the Metropolitan Region (Valuation Board) Regulations 1967. The correspondence accompanying that notice disclosed that the land was already then the subject of the contract of sale to the South Central Joint Venture for a total of $28,600,000. The letter from the respondent's solicitors to the Commission giving notice of this intention to sell included a paragraph:

As the property is already the subject of a Contract of Sale there is, in my view, no purpose to be served in making an application to the Board of Valuers under s 183(1) PD Act and reg 3(1)(b) MRVBR as my client will proceed with a claim for compensation based on the affected value of the land following settlement. I accordingly request that the Western Australian Planning Commission waives the requirement for an application to be made to the Board pursuant to s 181(1) of the PD Act.

6 Despite this request, no waiver of the 'requirement' for application to be made to the Board of Valuers was ever given by the Commission.

7 By transfer registered at the Land Titles Office on or about 6 November 2007 Navarac transferred its interest in lot 9501, including the reserved land, to South Central WA Pty Ltd. It is common ground that Violene Pty Ltd was previously the trustee of the South Central Joint Venture but had, since entering in the contract of sale of 13 April 2007, retired and had been replaced as trustee of that joint venture by South Central WA Pty Ltd.

8 By a claim dated 29 April 2008, Navarac sought injurious affection compensation from the Commission as the former owner of lot 9501 asserting that:

The said land has been injuriously affected by reason of the following:

the land is partly affected by a regional road reservation (extension of North Lake Road) under the Metropolitan Region Scheme and has been sold by Navarac Pty Ltd at a lesser price than the owner might reasonably have been expected if it had not been affected by the reservation...

that claim was lodged following the completion of the sale as required by s 178 (1)(a)(i) of the Planning and Development Act.

9 Any person whose land is injuriously affected by the making or amendment of a planning scheme is entitled to obtain compensation in respect of the injurious affection from the responsible authority - s 173(1). In the circumstances of this case the determination of the amount and manner of payment of the sum to be paid as compensation for injurious affection is to be in accordance with the Commercial Arbitration Act (1985) unless the parties agree on some other mode of determination (s 176(2)). Accordingly, Navarac's claim was referred to the arbitrator who, after several preliminary conferences and at the request of the present applicant, directed the hearing of a preliminary issue relating primarily to the application of ss 182 and 183 of the Act.

10 The preliminary issue submitted for the arbitrator's determination was:

Is the arbitrator precluded from proceeding to consider and determine the quantum of injurious affection compensation - if any - payable by the Commission to Navarac in the absence of a determination made by the Board of Valuers as to the value of the land unaffected by the region scheme reservation, in circumstances where the claimant did not apply to the Board of Valuers for such a valuation to be carried out?

11 The learned arbitrator answered that preliminary issue in the negative. It is from that determination that the present application for leave to appeal is made.

12 By an order for directions made by Master Sanderson in this court on 11 August 2009 it was ordered that the application for leave to appeal should be heard together with the appeal.

13 Apart from establishing the necessary foundations for a claim for compensation for injurious affection to be determined by arbitration there is nothing special in the background facts which affects the question of law sought to be raised if leave to appeal is granted. The question of whether or not a reference to the Board of Valuers under s 183 is mandatory for the determination of the quantum of entitlement to compensation for injurious affection or not, unless waived, is one of general application and importance and is not peculiar to the particular circumstances of this present claim.

14 The learned arbitrator treated as significant the absence within s 183 of the Planning and Development Act, and indeed the absence from elsewhere in that Act, of any express provision to the effect that the determination of the amount of compensation, if any, for injurious affection for land subject to a reservation which the landowner had decided to sell, could not proceed or be completed without a reference to a Board of Valuers and a valuation of the land in its unaffected state at the date of sale being made by the Board. The arbitrator observed that the Act makes no provision or connection or limitation or constraint on an arbitrator otherwise proceeding in accordance with the exercise contemplated under s 176(2). That point must, of course, be accepted. Nevertheless, the real question is whether or not the language of s 183(1) is in its terms and effect imperative.

15 The learned arbitrator made reference to the decision of the Full Court in Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257 with regard to the issue of whether or not the provisions of s 183(2) which provided that such a valuation by the Board of Valuers is final 'for the purposes of this Division' meant that the valuation was final with respect also to the determination of the value of the land as not so affected by the reservation referred to in s 179(1)(b) which, like s 183, is also contained in Div 2 pt 11 of the Planning and Development Act. In the Bond Corporation case the focus was on s 36C(2) of the Metropolitan Region Town Planning Scheme Act 1959 which in its terms was comparable to s 183(1) and (3) of the present Planning and Development Act 2005. Of that section Ipp J said at [45]:

Section 36C contains a number of obscurities and both parties accepted that it was difficult to construe. Not least of these difficulties is the reference in s 36C(2) to a valuation by the Board being final 'for the purposes of s 36'.

The appellant submitted that 'for the purposes of s 36' is a reference to s 36(6)...

16 [which for present purposes may be regarded as being comparable to s 179(1)(b) of the present Act] and thereupon his Honour continued:

It is indeed difficult to conceive of any other part of s 36 to which s 36C(2) could be referring when it provides that a valuation by the Board is final 'for the purposes of s 36'. Under s 36C(1) the Board is required to value the land 'as not so affected' by the reservation and s 36(6)(a)(ii) concerns 'the value of the land is not so affected'. This appears to be the link between the two sections. If this is correct, it follows that the Board is required to value the 'unaffected' land as at the date the land is 'sold' (as required by s 36(6)(b)).

17 After dealing with some other matters Ipp J observed at [48]:

I do not think it necessary to decide on the true meaning of s 36C. It is sufficient to say that I do not regard the section as being helpful in any way in the construction of s 36(4)(a)(ii).

18 [which for present purposes can be regarded as equivalent to the provisions of s 177(3)(a) in the present Act.] Wallwork and Owen JJ each agreed with the observations of Ipp J in the Bond Corporation case (supra).

19 The learned arbitrator appears to have treated the decision in the Bond Corporation case as casting a shadow over the meaning of s 36C of the Metropolitan Region Town Planning Scheme Act and one which left the same cloud over the meaning of s 183(1) and (3) of the Planning and Development Act. I readily accept that the Bond Corporation case did not formally determine the meaning of an effect of s 36C of the Metropolitan Region Town Planning Scheme Act but that is only because it was unnecessary to do so and because the court was satisfied that doing so would not conduce towards the determination of the issues which had to be decided in that case. So far as the reasoning of Ipp J went in the Bond Corporation case it supports the conclusion that the reference to 'for the purposes of this division' in s 183(2) includes the purpose of determining the unaffected value of the land subject to reservation as required by s 179(1)(b) of the Act which is the proposition for which the applicant contends in this case.

20 The learned arbitrator also attached significance to the fact that the process of application by the landowner to the Board of Valuers and for the Board of Valuers to make a determination of the unaffected value of the land subject to the reservation as at the date of sale applied only to cases in which an entitlement to compensation for injurious affection was established ('triggered') by the subject land being first sold following the date of the reservation (s 177(1)(a)). The arbitrator noted that no such alleged obligation to apply to the Board of Valuers for the determination by the board of the unaffected value of the land at the requisite date arose on other occasions when an entitlement to the payment of compensation for injurious affection was first established ('triggered'). These other occasions are where the responsible authority refuses an application under the planning scheme for approval of development on the land or grants approval of development on the land subject to conditions unacceptable to the applicant - s 177(1)(b)(i) and (ii). The learned arbitrator observed that the point of such a distinction was not apparent because, in each case, a claim for compensation would require, in effect, a determination of the before and after value of the land.

21 After noticing that assumed anomaly the arbitrator passed on to consider what role s 183(3) had to play and concluded that it performed a function, essentially, for the benefit of the landowner. The arbitrator concluded that, as had occurred in this present case, the landowner could effectively decline to take advantage of that benefit by agreeing to sell the land before the s 183(3) process was completed, or had even begun.

22 These conclusions led the arbitrator on towards his ultimate decision that the s 183 process only had a part to play if the landowner had not already agreed to sell the land but that if he had, or for any other reason did not wish to avail of the procedure which would lead to potential protections being provided under s 183(3), it was neither necessary nor essential for the landowner to follow that process and hence unnecessary to apply to the Board of Valuers. That conclusion was reinforced by the arbitrator's observation that under s 183(1) a valuation conducted by the Board of Valuers was not necessarily fixed as to time as is the mandatory requirement contemplated by s 179(2). This led the arbitrator to observe at [42]:

In other words, even if a valuation was undertaken by the Board, and even if in those circumstances it was final, it would not necessarily accord with that which is required to be addressed by valuers for the purpose of s 179(2) and be dealt with by an arbitrator under s 176.

23 However, with respect, this does not appear to recognise the force and application of s 183(2) which makes the valuation of the Board of Valuers final for the purposes of that Division which, so I am satisfied, includes for the purposes of s 179(2) of the Act.

When is land 'sold' as referred to in s 178(1)(a)

24 The date of sale is, as already mentioned, the date to be chosen for the valuations of the land as so affected by the existence of the reservation and as not so affected. In this case, the respondent entered into a binding contract of sale with a third party to sell the land at an agreed price on 13 April 2007 and completion of that contract by registration of a transfer of lot 9501 including the reserved land to the purchaser occurred on 6 November 2007. Nothing turns in this application for leave to appeal or in the proposed appeal over which of those dates is the date of sale.

25 However, one of the facts agreed by the parties for the purposes of the arbitration and for this appeal is that the application for compensation for injurious affection was lodged on 29 April 2008, being a date within six months following the completion of the sale as specified by s 178 of the Act. That date is within six months of the date of completion or settlement of the contract of sale but is more than 12 months after the date of the contract of sale. Plainly, therefore, the parties have treated the date of sale as being the date of the completion of the contract rather than the date when binding obligations to sell and purchase were mutually agreed.

26 This is consistent with the special meaning of 'sale' within the context of s 178(1)(a)(i) and s 179(2)(a) of the Planning and Development Act which was given to the equivalent former sections of the Metropolitan Region Town Planning Scheme Act in Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257. In that case, with the agreement of Wallwork and Owen JJ, Ipp J said at [37]:

That is to say, I prefer the argument that Parliament intended the Scheme Act to provide the payment for compensation should - only be made when the owner of land actually receives less money for the land than he or she would have received had there been no reservation, or when the genuine intention of the owner to develop the land is frustrated by a development refusal brought about by the reservation. On this basis 'sold' in s 36(3) should be construed as meaning 'conveyed'.

27 In this respect, the Full Court reached a different conclusion than the learned Judge at first instance who also addressed this issue. In Bond Corporation Pty Ltd v Western Australian Planning Commission [1999] WASC 157 Miller J concluded that 'sell' in this context and the 'date of sale' both referred to the occasion when a binding contract for sale was first agreed upon. Miller J set out many of the cases, in this State and elsewhere, where the term 'sell' is usually treated as meaning an agreement to sell (see [15], [18] and [28]). In the Bond Corporation Pty Ltd litigation that issue arose in the setting of whether a conditional contract for the sale of land, containing various possibilities for defeasance, would constitute a 'sale' within the meaning of the equivalent provisions of the Scheme Act and, after examining the potentialities for such a contract to fail for want of fulfilment of one or more of the specified conditions, Ipp J concluded that the better meaning, within the special setting of this legislation, was that the statute referred to a completed sale at which time the vendor actually received the agreed purchase price. His Honour selected the date of conveyance, by which presumably was meant the date of registration of the transfer, as being the date of that 'sale'.

28 No challenge to that conclusion has been made in this present case but there are certainly a number of features which the decision in Bond Corporation Pty Ltd do not seem to address, namely the position of an owner who is a vendor under an unconditional terms contract of sale under which the sale price is payable by instalments over a lengthy period with no transfer of title until the last instalment is paid, and situations where the benefit of the agreement to sell is assigned to a third party either unconditionally or by way of charge. The benefits of such a contract of sale are certainly assignable and, the terms of an assignment might easily achieve for the vendor an immediate payment of a discounted value of the purchase price - see Rennick v Robertson [1894] VicLawRp 39; (1894) 20 VLR 165; Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9; and Voumard, Sale of Land (6th ed, LBC) [4170]. Those situations were not addressed in the Bond Corporation litigation and they perhaps may require direct consideration if they ever gave rise to an issue about when the date of sale occurs in claims for compensation for injurious affection in the event of such a 'sale'. Obviously, however, the rule in the Bond Corporation case as declared by the Full Court has been established in relation to conditional contracts of sale, at least before they become unconditional.

29 By virtue of s 38(2) of the Commercial Arbitration Act 1985 (WA), an appeal by a party to an arbitration agreement lies to the Supreme Court on any question of law arising out of an award but only if the other parties to the arbitration agreement so consent or the court grants leave - s 38(4). There are restrictions upon the grant of leave because s 38(5) provides:

The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that:

(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and

(b) there is -

(i) a manifest error of law on the face of the award; or

(ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.

30 By s 4(1) an award is defined as including an 'interim award'.

31 In this case the parties are not, at least in the conventional sense, parties to an arbitration agreement. Nevertheless, the resolution of the amount of the payment of compensation for injurious affection is to be determined by arbitration under and in accordance with the Act, unless the parties agree on some other method of determination (Planning and Development Act s 176(2)) and this requirement for the claim to be determined in accordance with the Act has the result that they are to be treated as if they were parties to a conventional arbitration agreement and bound by the terms of the Commercial Arbitration Act on that basis.

32 The respondent opposes the grant of leave to appeal and submits that for a point of law to be of sufficient practical importance to justify the grant of leave it must not be minor: Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1980] 3 WLR 326, 335 and that the determination of the point of law must have a substantial effect on the value of the rights of a party to the arbitration: Manders (Property) Estates Ltd v Magnet House Properties Ltd [1989] 2 EGLR 126. The respondent submits that for an error to be manifest it must be obvious: Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203, 226 and New Generation Enterprises Pty Ltd v Western Australian Planning Commission [2007] WASCA 89 [4] per Steytler P - see also Re Caf-Grains [1994] 2 Qd R 252, 258 and BMD Constructions Pty Ltd v Golding Contractors Pty Ltd [2000] QSC 057 [10] and that in addition to the requirements for leave set out in s 38(5)(a) and (b) of the Commercial Arbitration Act this court has an unfettered discretion whether or not to grant leave, which should be considered after considering all the circumstances of the case - Masawa Australasia Pty Ltd v JCorp Pty Ltd [2000] WASC 5 [8] per Parker J.

33 Counsel for the respondent submits that even if the requirements of s 38(5)(a) and (b) of the Act are satisfied leave should be refused because the arbitrator gave the preliminary issue 'careful and conscientious consideration' - Thiess Contractors Pty Ltd v Water Corporation of Western Australia (Unreported, WASC, Library No 970561, 28 October 1997) 36 and because the determination of the preliminary issue will not determine the outcome of the arbitration or assist in the finality of the process but would merely result in the respondent having to attend to another process before the arbitration could resume.

34 However, if the applicant is correct in its submission that, in circumstances such as these, reference by the land owner to the Board of Valuers under s 183 of the Planning and Development Act is mandatory unless the responsible authority waives that requirement, then the determination made by the arbitrator will have been shown to be wrong as a matter of law and, in that case, constitute an error which is directly manifest on the face of the award. In addition, as this point of interpretation of s 183 of the Planning and Development Act has not previously been the subject of any judicial determination, the applicant submits that its determination by the appeal for which leave is sought may be likely to add substantially to the certainty of commercial law.

35 Insofar as the respondent submits that there is a general discretion to refuse leave to appeal, notwithstanding satisfaction of the requirements of ss 38(5)(a) and (b) is concerned, the applicant submits that the proper interpretation of Div 2 of the Planning and Development Act not only renders, in circumstances such as the present, reference to the Board of Valuers compulsory but shows that the result of such a reference will be a final determination of unaffected value of the subject land by the Board of Valuers which is an essential step in the process of determining the amount of compensation due to be determined by the arbitrator. As such, the applicant submits that acceptance of its submission should considerably limit the scope of the arbitration and potentially even avoid the necessity for an arbitration due to the finality that will attach to the Board of Valuers' determination of unaffected value.

36 I accept the submissions of the applicant in this regard. If the interpretation of s 183 of the Planning and Development Act contended for by the Commission is correct, then that will demonstrate a manifest error on the face of the record and the consequences of that error upon the scope of the arbitration will be such that the course of the uncompleted arbitration would be likely to miscarry unless leave to appeal were granted and the error corrected. Accordingly, in this present case, I am satisfied that if the applicant can make good its primary submission that reference to a Board of Valuers under s 183 of the Planning and Development Act was mandatory in the present case, that leave to appeal should be granted and the appeal allowed. Accordingly, it is to that vital question that I now turn.

Is reference to the Board of Valuers mandatory under s 183?

37 As earlier noted, the entitlement of a landowner whose land is injuriously affected by the making or amendment of a planning scheme to compensation for injurious affection is established by s 173(1) of the Act. In case of land reserved for a public purpose under a planning scheme compensation is not payable by the responsible authority for injurious affection until one of more of several events occur. One such triggering event to an entitlement to compensation for injurious affection occurs when the land is first sold following the date of the reservation (s 177(1)(a)) in which case the compensation is payable to the person who was the owner of the land (s 177(2)(a)). In those circumstances, before compensation for injurious affection is payable, the person appointed to determine the amount of compensation must be satisfied that:

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

(ii) before selling the land the owner gave written notice to the responsible authority of the owner's intention to sell the land; and

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

These obligations are imposed by s 177(3) together with other requirements which do not apply in this present case.

38 By s 179 it is provided that the compensation payable for such injurious affection in a case such as the present is not to exceed the difference between:

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

(a) the value of the land as so affected by the existence of the reservation is to be assessed at the date on which the land is sold; and

(b) the value of the land as not so affected is to be assessed as at the date on which the land is sold.

39 In the present case the date of the contract of sale of lot 9501 by Navarac Pty Ltd was 13 April 2007 and the transfer of that land to the purchaser pursuant to that contract of sale, but to a different trustee, was effected on or about 6 November 2007. The consideration for that sale, namely $28,600,000, including GST, will be regarded as prima facie evidence of the value of the land as affected by the existence of the reservation. The difference between that sum, if accepted by the arbitrator as the value of the land as so affected by the existence of the reservation and the value of the land as not so affected will, subject to some further considerations yet to be mentioned, by the mere process of subtraction, determine the amount of compensation payable to the respondent for the injurious affection. Obviously, this reveals that an important feature of the determination of that compensation will be the ascertainment of the value of the land as not so affected by the reservation as at the date of that sale.

40 Importantly, however, the applicant submits that the determination of the value of the land as not affected by the existence of the reservation and the date of the sale is not a matter which is at large and, by implication, is not an issue which can be canvassed or contested in the course of the arbitration presently pending before this arbitrator. This is because, in the submission of the applicant, and subject to a qualification which is not material in the present case, it is the responsibility of the Board of Valuers to make that valuation and, once it is so made, the Board's valuation is final - s 183(2).

41 Accordingly, on the submission of the applicant, if the respondent applies to the Board of Valuers in the prescribed manner for the valuation contemplated by s 183(1) that will initiate a process which will lead to a final and binding determination of the unaffected value of the land, from which the sale price under the contract of sale (if it is accepted as being the value of the land at the date of sale as affected by the reservation) will be deducted, leaving the difference as the amount of compensation payable for the injurious affection. That process will, so the applicant submits, limit considerably the scope of inquiry and determination by the arbitrator because it will exclude any prospect of the respondent adducing evidence before the arbitrator in an attempt to establish the value of the land at the date of sale as not affected by the reservation, or of attempting to contest the value of the land at the date of sale as not affected by the reservation, which has by then been determined by the Board of Valuers.

42 At this point it is necessary to explain why I earlier referred to the sale price of the land under the contract of sale to the purchaser on 13 April 2007 as being prima facie evidence of the value of the land at that date as affected by the reservation. The reason for that qualification is because, as already mentioned, s 177(3)(a) requires the person determining the amount of compensation to be satisfied that the price achieved on such a sale was less than the owner might reasonably have expected to have obtained had there been no such reservation; and that the owner sold the land in good faith having taken reasonable steps to obtain a fair and reasonable price for the land. Under s 177(3) the arbitrator is also to be satisfied that before selling the land the owner gave written notice to the responsible authority of his intention to sell. That obligation is accompanied by the obligation for which the applicant contends is imposed by s 183, namely, unless the responsible authority waives the requirement, to apply to the Board of Valuers for a valuation of the unaffected value of the land - s 183(1).

43 The Board of Valuers is established by s 182 and is comprised of four members, including a chairman, each of whom is to be an associate or a fellow of the Australian Property Institute and appointed by the Governor. Schedule 9 of the Act applies to the Board as so established.

44 Upon a landowner of land subject to injurious affection due to or arising out of the land being reserved under a planning scheme giving notice of intention to sell the land and claiming compensation applying to the Board of Valuers, the Board must thereupon make a valuation of the unaffected value of the land at the appropriate date. In a case such as the present the date will be the actual or proposed date of sale which, in many such instances, can be expected to be in the near future. Just how far off the date of sale may turn out to be and the significance, if any, of such delay upon the attributed value of the land is a matter to which I shall return because it forms a significant part of the submissions raised by the respondent.

45 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.

46 In the present case, however, the chronology shows that the contract of sale of lot 9501 was entered into by the respondent with the purchaser before notice of intention to sell the land was given to the Commission by the landowner. By concluding a binding agreement to sell the land to the purchaser before the responsible authority could give the landowner notice of the minimum price referred to by s 183(3) this respondent effectively excluded itself from receiving any of the advantages which the process established by s 183(3) was intended to deliver to it. However, there has been no suggestion that entering into an agreement to sell the land before the Board of Valuers conducts its valuation or the responsible authority gives notice of a minimum price is not permitted. If a landowner chooses to follow this course and commits to sell the land at an enforceable price without the benefit of such notification from the responsible authority that is a risk which the landowner itself must be regarded as having accepted. Presumably, that is why, in the present case, the advisers to the respondent notified the Commission by their letter of 24 May 2007 that in their view there was 'no purpose to be served in making an application to the Board of Valuers under s 183(1)'. The respondent was quite free, as I have already indicated, to follow an initiative which left it without the advice and potential protection that notification of a minimum price by the responsible authority under s 183(3) might otherwise have provided, but that is not the only purpose or effect which a determination of the unaffected value by a Board of Valuers in accordance with the request under s 183(1) would accomplish.

47 Without the application by the landowner to the Board of Valuers as contemplated by s 183(1) there would be no determination by the Board of the unaffected value of the land and no finality to the determination of that issue which, as already explained, is an important step in the calculation of the compensation for injurious affection, if any, which would be payable. It is because of the consequences of the failure to achieve a determination of the unaffected value by the Board of Valuers, and the absence of any finality on that issue, which the applicant submits is why compliance with s 183(1) should be regarded as mandatory.

48 It is at this point that the respondent's submissions about timing must be considered. The respondent's contention is that the determination by the Board of Valuers of the unaffected value of the land at the date of sale will, at least in most cases, have to be conducted prospectively, that is before the actual date of sale, if there is to be any utility in the procedure of communicating the value to the landowner and to the responsible authority and for the responsible authority to give notice to the landowner of the minimum price at which the land may be sold without affecting the amount of compensation payable. While in many cases this might be so, it would not always be so, and the present case is an example of where any application to the Board of Valuers by the landowner, in the circumstances which happened, would have been after a binding agreement to sell the land at a fixed price had been reached with the purchaser.

49 The point which the respondent seeks to make from these submissions, however, is that in cases where the unaffected value of the land at the date of sale is to be determined prospectively that must be regarded as an impossibility because it must necessarily involve putting a value on land at some future date, at a time when it cannot be known what are the precise circumstances and factors affecting value when that time comes. The submission was supported by explanations that there might be a sudden and catastrophic fall in land prices due to some general economic decline or, alternatively, that there may be a rapid and unexpected rise in land prices due to booming economic conditions. Accordingly, so the submission ran, it cannot have been intended that a prospective valuation was to be made and that even if it were made such a valuation could not amount to a proper determination of the unaffected value of the land at some future date.

50 With all respect to this submission, I consider that it is far more theoretical than realistic. Almost all valuations of land undertaken for the purpose of considering an actual or possible sale are conducted prospectively in this sense. The purpose of the valuation is to obtain, so far as it is possible to do so, a realistic estimate of the value of the land on some future occasion, realising, all the while, that the more distant the occasion the more approximate the valuation may need to be. This is well accepted and must be regarded as being recognised by Parliament in framing this legislation. Moreover, although people in this State are very familiar with the changing values of land over time, usually but not always being a steady increase in value according to the currency of the moment, with occasional but fortunately temporary declines, such changes are seldom extreme. In short, the fortunate experience of this community has been that, generally speaking, land in this State holds its value and is not generally prone to major fluctuations over comparatively short spaces of time. I consider that that is the background against which this legislation has been framed and one which justifies the convention which has been adopted of assuming that a valuation determined by the Board of Valuers will be reasonably accurate and applicable for the period or periods likely to be of significance for the purposes of determining entitlements to compensation for injurious affection.

51 This potential for the value of the land to change over time is explicitly recognised by s 183. Subsection 183(4) provides that where land in respect of which such a valuation has been made is not sold within six months from the making of the valuation the Board of Valuers may, at the owner's request and if in the circumstances it thinks it is just to do so, review the valuation and either confirm the valuation or vary it. Where a valuation is reviewed the Board is to notify the owner of the land and the responsible authority accordingly and, in that eventuality, the procedure contemplated by s 183(3) requiring the responsible authority to give notice to the landowner of the minimum price at which the land may be sold without affecting the amount of compensation payable applies with necessary modifications. This means that the determination of the unaffected value by the Board of Valuers may be subject to review after six months so that, if the owner considers that values have materially altered, there will be an opportunity for a higher valuation to be substituted and, in that eventuality, it will be the higher valuation which will be final.

52 For the procedure contemplated by s 183 to take effect, and in particular for the valuation of the unaffected value of the land to be determined by the Board of Valuers and thereupon to become final, at least for six months, it is essential for the landowner to apply to the Board of Valuers in the prescribed manner for such a valuation when giving notice of intention to sell the land and claim compensation or as soon thereafter as practicable. The express language of the section in s 183(1) is that:

The owner of the land... is to, unless the responsible authority waives the requirement, apply to the Board of Valuers in the prescribed manner for a valuation of the land as not so affected...

and is imperative in its terms. That imperative is confirmed by the purpose of the section and the role of the Board of Valuers and is, accordingly, mandatory.

53 The respondent submitted, in the alternative, that if as a matter of language s 183(1) suggested that a reference to the Board of Valuers were mandatory that suggestion should be declined and an interpretation 'benevolent' to the landowner should be preferred. However, I see no ambiguity in the language of s 183(1) nor any other basis for departing from an adoption of its clear meaning. I am satisfied that the meaning adopted is consistent with the purpose of the legislation and should advance that purpose - Interpretation Act 1984 (WA), s 18.

54 For that reason, therefore, I consider that the learned arbitrator has made an error of law in determining the preliminary issue in the negative. Accordingly, I am satisfied that the basis for the grant of leave to appeal under s 38(5) of the Commercial Arbitration Act has been demonstrated and that leave to appeal should be granted.

55 Accordingly, I consider that the appeal should be allowed and that the interim award should be set aside.

56 As the determination by the learned arbitrator was restricted to the preliminary point there has been no submission that the arbitrator cannot or should not continue to determine the arbitration and therefore I consider that the appropriate order should be that the matter should be remitted to the arbitrator to complete the arbitration but on the basis that compliance with s 183(1) by the landowner by application to the Board of Valuers in the prescribed manner for a valuation of the land as not affected by the reservation is mandatory. Before me both parties, by their counsel, accepted that an application to the Board of Valuers as required by s 183(1) could still be made and that, upon the Board of Valuers determining the unaffected value, it would be possible for the arbitration to determine the amount of compensation payable for injurious affection to proceed to its conclusion.

Development Act 2005

Arbitration Act 1985

Region (Valuation Board) Regulations 1967

Region Town Planning Scheme Act 1959

WEST AUSTRALIAN PLANNING COMMISSION -v- NAVARAC PTY LTD [2009] WASC 399 (22 December 2009)

At a glance

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Judgment (99 paragraphs)

WEST AUSTRALIAN PLANNING COMMISSION -v- NAVARAC PTY LTD [2009] WASC 399 (22 December 2009)

When is land 'sold' as referred to in s 178(1)(a)

Is reference to the Board of Valuers mandatory under s 183?

Legislation Cited (4)

Cases Cited (2)