Am HT Development No. 4 Pty Ltd v Secretary to the Department of Transport
[2023] VSC 3
•13 January 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION AND PLANNING LIST
S ECI 2022 01419
| AM HT DEVELOPMENT NO. 4 PTY LTD (ACN 601 643 930), AM HT DEVELOPMENT NO. 9 PTY LTD (ACN 625 184 590), and AM HT DEVELOPMENT NO. 10 PTY LTD (ACN 625 184 607) | Applicants |
| v | |
| SECRETARY TO THE DEPARTMENT OF TRANSPORT | Respondent |
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JUDGE: | Richards J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 14 October 2022 |
DATE OF JUDGMENT: | 13 January 2023 |
CASE MAY BE CITED AS: | AM HT Development No. 4 Pty Ltd v Secretary to the Department of Transport |
MEDIUM NEUTRAL CITATION: | [2023] VSC 3 |
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LAND ACQUISITION AND COMPENSATION – Applicants entered into development agreement to facilitate development of land owned by Development Victoria – Staged sale of land subject to conditions precedent in development agreement – No contract of sale entered into – Land divested as part of the West Gate Tunnel project for the purpose of constructing a veloway – Applicants claim compensation under s 145 of the Major Transport Projects Facilitation Act 2009 (Vic) for divestment of their interest in the divested land – Whether the applicants have a ‘legal or equitable estate or interest in land’ within the meaning of s 145 – Construction of s 145 – Applicants do not have a legal or equitable estate or interest in land – Major Transport Projects Facilitation Act 2009 (Vic), s 145.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr S Morris KC with Mr R Chaile | Gadens Lawyers |
| For the Respondent | Ms L Hannon KC with Ms J Trewhella | Matthew Hocking, Victorian Government Solicitor |
TABLE OF CONTENTS
Introduction................................................................................................................................... 1
Development Agreement............................................................................................................. 5
Legislative scheme...................................................................................................................... 15
MTPF Act............................................................................................................................ 15
LAC Act............................................................................................................................... 19
Suburban Rail Loop Act amendments to the MTPF Act............................................. 20
Construction of s 145(1), MTPF Act.......................................................................................... 21
Applicants’ submissions................................................................................................... 21
Authority’s submissions................................................................................................... 23
Consideration..................................................................................................................... 26
Did the applicants have a relevant ‘interest’ in the Divested Land?................................... 30
Applicants’ submissions................................................................................................... 30
Authority’s submissions................................................................................................... 33
Consideration..................................................................................................................... 36
Disposition................................................................................................................................... 38
HER HONOUR:
Introduction
The Waterfront City precinct is a roughly triangular area of land at the northern end of Melbourne’s Docklands. It is bordered by Footscray Road along its north-eastern boundary, Docklands Drive to the south, and Pearl River Road and the Moonee Ponds Creek to the west. As at 2018, the registered proprietor of all of the WCP Land was Development Victoria, a statutory corporation established under the Development Victoria Act 2003 (Vic).
In October 2018, Development Victoria entered into a Development Agreement for the staged development of the WCP Land. The other parties to the Development Agreement are nine companies that are related entities of AsheMorgan Investments Pty Ltd, which include the applicants in this proceeding:
(a) AM HT Development No. 4 Pty Ltd ACN 601 643 930 (Developer 4);
(b) AM HT Development No. 9 Pty Ltd ACN 625 184 590 (Developer 9); and
(c) AM HT Development No. 10 Pty Ltd ACN 625 184 607 (Developer 10).
The Development Agreement contemplates that the WCP Land will be subdivided and sold in stages to the various Developers, subject to the fulfilment of a number of conditions. These stages are shown in the Staging Map in Schedule K to the Development Agreement, which appears at Figure 1 below. The Development Agreement envisages that Developer 4 will purchase Stage 4A, Developer 9 will purchase Stage 4B-1, and Developer 10 will purchase Stage 4B-2. All three stages are located along the Footscray Road frontage of the WCP Land, and are to be developed as commercial offices.
Figure 1: Staging Map at Schedule K to the Development Agreement.
On 30 April 2019, the Governor in Council made an order divesting a strip of the WCP Land along Footscray Road, under s 134(1) of the Major Transport Projects Facilitation Act 2009 (Vic) (MTPF Act). The land was divested for the purposes of the West Gate Tunnel Project, specifically for the construction of a veloway – a bicycle freeway – along Footscray Road. The Divested Land is an area of 819 square metres that sits across Stage 4A and Stage 4B-1 of the WCP Land, and is the blue area in Figure 2 below. Immediately before the divestment, Development Victoria was the registered proprietor of the Divested Land.
Figure 2: Plan LEGL./19-021 annexed to the Order in Council published in the Victorian Government Gazette dated 30 April 2019.
At the same time, the West Gate Tunnel Authority indicated its intention to temporarily occupy a larger area of land adjoining the Divested Land, in order to carry out the works required to construct the veloway. The Works Land comprises approximately 2,137 square metres, extends across Stages 4A, 4B-1 and 4B-2, and is the green area shown on Figure 3 below.
Figure 3: Map showing total land required for works, dated 16 May 2019.
In this proceeding, Developer 4 and Developer 9 claim compensation for the divestment of their interest in the Divested Land, under s 145 of the MTPF Act. In addition, all three applicants claim compensation for loss resulting from the temporary occupation of the Works Land, under s 169 of the MTPF Act.
The Secretary to the Department of Transport, as the acquiring Authority, disputes both claims. The Authority maintains that Developer 4 and Developer 9 had no ‘legal or equitable estate or interest’ in the Divested Land and are not entitled to compensation under s 145 of the MTPF Act. It says further that, until it has entered onto and occupied the Works Land and carried out the works, any claim under s 169 is premature.
On 21 July 2022, after considering a joint memorandum from the parties, I ordered that the following separate question be heard and determined before the trial of the proceeding:[1]
Did AM HT Development No. 4 Pty Ltd and AM HT Development No. 9 Pty Ltd have a relevant ‘interest’ in the Divested Land within the meaning and for the purposes of s 145 of the Major Transport Projects Facilitation Act 2009 (Vic)?
[1]Pursuant to r 47.04(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
For the reasons that follow, the answer to the separate question is ‘No’.
Development Agreement
The Development Agreement comprises a Deed of Variation and Restatement of Development Agreement dated 2 October 2018, between Development Victoria, as the Authority, and Developer 4, Developer 9, Developer 10, and six other companies, as Developers. It varies and restates an earlier agreement to develop the WCP Land, between Development Victoria, AM HT Development No. 1 Pty Ltd (Developer 1), AM HT Development No. 2 Pty Ltd (Developer 2), AM HT Development No. 3 Pty Ltd, and Developer 4. AsheMorgan is not a party to the Development Agreement, and was not a party to the previous agreement.
The recitals to the restated Development Agreement set out some of the background:
A The Authority[2] was established by the Act for the purpose of facilitating development of the Docklands Area.
B The Authority is not the registered proprietor of the Residual Land.
C Under the Deed of Variation dated 10 October 2016 between the Authority, Developer 1, Developer 2, Developer 4 and AM HT Development No. 3 Pty Ltd ACN 601 643 921, the parties agreed to remove AM HT Development No. 3 Pty Ltd ACN 601 643 921 from this Agreement because the land the development of which it was responsible was sold to Capital Alliance 5 Pty Ltd ACN 603 225 896 and Capital Alliance 6 Pty Ltd ACN 603 225 740.
D The Authority has agreed to sell the Developer each of Stage 1C-2, Stage 2B-3, Stage 3, Stage 4A, Stage 4B-1, Stage 4B-2, and Stage 4B-3 on the terms and conditions contained in the Land Sale Contract relating to a Stage and this Agreement.
E The Authority and the Developer have agreed to the terms and conditions which will regulate the use and development of the Land.
F The Authority and the Developer acknowledge that the development of the Land will need to be dynamic to achieve the Objectives.
G The Authority and the Developer acknowledge that further terms and specifications may need to be agreed between the parties to ensure the development of the Land in accordance with the Objectives.
H The Authority and the Developer have agreed to act, co-operate and negotiate in good faith to agree such further terms and specifications and to ensure the development of the Land in accordance with the Objectives.
[2]Development Victoria is referred to in the Development Agreement as ‘the Authority’. It is not to be confused with the Secretary to the Department of Transport, the acquiring Authority and the respondent to this proceeding.
The ‘Objectives’ are objectives for the development of the WCP Land set out in cl 2(c) of the Development Agreement. These include:
(i) the development of the Docklands Area as a place of character and quality in which to live and work, creating both a tourism asset and a boost to Melbourne's prosperity;
(ii) development responsive to the characteristics of the Land and complementary with the characteristics of Melbourne;
(iii) development allowing a diversity of public uses and recreational and business activities;
(iv) development accessible to a diverse range of locals and visitors;
(v) development which promotes visitation and tourism;
(vi) development which promotes recreational, social and cultural activities; and
(vii) development which is creative, innovative and ecologically sustainable.
There is a comprehensive dictionary in cl 1.1 of the Development Agreement, which includes the following relevant definitions:
Deposit means an amount equal to 10% of the Total Land Price.
Developer includes:
(a) each of Developer 1, Developer 2, Developer 4, Developer 5, Developer 6, Developer 7, Developer 8, Developer 9 and Developer 10;
(b) in the case of a corporation, its successors and permitted assigns; and
(c) in the case of a natural person, his or her heirs and permitted assigns.
Developer 4 means AM HT Development No. 4 Pty Ltd ACN 601 643 930;
Developer 9 means AM HT Development No. 9 Pty Ltd ACN 625 184 590;
Developer 10 means AM HT Development No. 10 Pty Ltd ACN 625 184 607;
Future Stages means at any given point in time any part of the Land which has not been released to the Developer or any Stage Nominee in accordance with clause 4.1;
Land means the land contained in all of the Stages, identified as such and described in Schedule K. Where the Developer’s Project requires or relates to air rights and other interests in land, the expression ‘Land’ encompasses those other interests in the form and with the conditions negotiated between the Developer and the Authority;
Land Sale Contract means any contract of sale between the Authority and the Developer for each of the Stages except the Stages which comprise the Residual Land substantially in the form set out in Schedule S;
Residual Land means Stage 1B-6 (Retail), Stage 1B-6 (Commercial), Stage 2B-2 (Retail) and Stage 2B-2 (Future Development) being the land shown hatched on the plan attached as Schedule JJ.
Risk Allocation Table means the table contained in Schedule G.
Stage means:
(a) Stage 1C-2;
(b) Stage 1B-6 (Retail);
(c) Stage 1B-6 (Commercial);
(d) Stage 2B-2 (Retail);
(e) Stage 2B-2 (Future Development);
(f) Stage 2B-3;
(g) Stage 3;
(h) Stage 4A;
(i) Stage 4B-1;
(j) Stage 4B-2;
(k) Stage 4B-3; and
(l) such other sub-stages as agreed by the Authority;
Stage 4A means Stage 4A being part of the land in Lot D on PS810947S contained in Volume 11971 Folio 234, identified as such and described in Schedule K;
Stage 4B-1 means Stage 4B-1 being part of the land in Lot D on PS810947S contained in Volume 11971 Folio 234, identified as such and described in Schedule K;
Stage Price means the price the Developer must pay under a Land Sale Contract for each of the Stages except the Stages which comprise the Residual Land as set out in Schedule C;
Total Land Price means the aggregate of all amounts the Developer must pay under the Land Sale Contracts to purchase the Land in each of the Stages except the Residual Land;
Tripartite Security Concession Deed means a deed substantially in the form set out in Schedule H;
…
Clause 3.1(a)(ii) provides that the Developer must on or before the date of the Development Agreement pay the Deposit, receipt of which is acknowledged. The Developer acknowledges in cl 3.1(b) that the Deposit is non-refundable in any circumstances.
In fact the Deposit, an amount of $190,920, was paid by the original developer, ING. When AsheMorgan purchased ING’s rights as developer, it agreed to an adjustment of the sale price to reflect the deposit that had been paid by ING. As a result, AsheMorgan assumed the economic burden of the deposit.
Clause 4 makes detailed provision for the staged sale of the WCP Land to the various Developers. It provides, relevantly:
4. LAND
4.1 Release of Stage
This clause 4.1 applies to all the Stages except the Stages which comprise the Residual Land.
(a) Subject to clause 4.2, the Authority and the Developer must enter into a Land Sale Contract for the purchase by the Developer, or a Stage Nominee, of each Stage for the Stage Price on or before the Stage Release Date for that Stage.
(b) If the Developer or a Stage Nominee wishes to enter into a Land Sale Contract for a Stage before the relevant Stage Release Date, it must:
(i) give the Authority at least 6 months’ notice; and
(ii) pay all costs relating to the Authority procuring the degree of possession required under the Land Sale Contract, including any payment or compensation to an occupier of the Stage.
If, after using reasonable endeavours, the Authority cannot procure the degree of possession required under the Land Sale Contract, the Authority may without penalty extend the settlement date under the Land Sale Contract until the relevant Stage Release Date by notice to the Developer.
(c) The Developer acknowledges that the sale of Stages under each Land Sale Contract will be subject to the following encumbrances affecting each stage:
(i) easements reasonably required for the provision of infrastructure or services servicing the Land or the Docklands Area whether or not it directly benefits the Developer’s Project;
(ii) all encumbrances specified in Schedule Q; and
(iii) any encumbrances that the Developer otherwise requests or approves.
(d) At settlement under the Land Sale Contract the Developer or the relevant Stage Nominee must pay to the Authority the relevant amount set out in Schedule C and the amount referred to in clause 4.15(e)(iv).
4.2 Conditions Precedent to release of Stage
This clause 4.2 applies to all the Stages except the Stages which comprise the Residual Land.
The Authority will not be under any obligation to enter into a Land Sale Contract for any of the Stages except the Stages which comprise the Residual Land, or permit the Developer or any Stage Nominee to take possession of a Stage or of the Land unless the Authority is satisfied, acting reasonably:
(a) that the Developer or Stage Nominee (as the case may be) has available to it sufficient funding to finance the Stage and any other financial obligations under this Agreement pertaining to that Stage and the Developer’s Infrastructure;
(b) that the Developer or Stage Nominees (as the case may be) has obtained all relevant Approvals, including, without limitation, Planning Approval for the Developer’s Project (including the Design Documentation) in respect of the Stage and that there is no current breach of the Planning Permit conditions at the time of Stage Release;
(c) that the Developer or Stage Nominees (as the case may be) has delivered the Performance Security to the Authority which complies with the requirements of clause 4.8;
(d) that the Developer or Stage Nominee, as the case may be, has obtained an exemption or permit from the responsible authority under the Planning Scheme which will permit it to remove, modify or demolish any existing structure required for that Stage to enable the Developer to comply with the Master Plan;
(e) that the Stage Development Cost for the Stage has been determined;
(f) as to the viability of the Development of the Stage, supported by an up-to-date feasibility model together with evidence of the financial arrangements and any appropriate pre-commitments. Where the Stage to be developed is to be used predominantly for retail purposes, the requirement to provide appropriate or minimum pre-commitments is waived;
(g) as to the content of the plan for the Developer’s Infrastructure;
(h) as to the content and Approval of the Site Based Environmental Management Plan for the relevant Stage and that it has been approved of by the relevant Government Agencies in accordance with clauses 7.1 and 7.2;
(i) as to the contents of the Developed Design Documentation for the Stage;
(j) that the Stage is consistent with the Staging Plan;
(k) that the Plan of Subdivision for the Stage has been approved and registered in accordance with clause 22;
(l) as to the contents of the Works Programme for the Stage;
(m) as to the contents of the Stage Site Presentation Plan;
(n) that the Developer or Stage Nominee, as the case may be, is a party to a binding contract or contracts for construction of the Works relating to that Stage under which the construction contractor's obligations are consistent with the obligations of the Developer under this Agreement;
(o) that the Developer is not currently relying on a Force Majeure Event which has prevented the Developer from, or delayed the Developer in, performing any of its obligations in relation to that Stage;
(p) that there is no subsisting Default Event in respect of which notice has been served under clause 21.1;
(q) that the Developer has provided a report prepared by a qualified and experienced ESD consultant confirming that, in the opinion of the consultant, the Works have been designed in a manner which will enable the Developer to obtain the higher of:
(i) a 5 Star ‘Green Star Design’ rating from the Green Building Council of Australia; and
(ii) the Melbourne Planning Scheme clause 22.19 (Energy, Water and Waste Efficiency) design requirement (as that requirement may be amended or replaced from time to time),
in respect of the Developer's Project (such rating being determined as at the Stage Release Date for the relevant Stage);
(r) that the Developer has delivered to the Authority the following documents executed by all parties to the document other than the Authority:
(i) Docklands Marks Licence Agreement;
(ii) any Registrable Agreement referred to in Schedule Q;
(iii) the Independent Assessor Deed;
(iv) where the Stage is to be developed by any Stage Nominee, a Stage Development Agreement; and
(v) any instrument required to effect the transfer of the Stage;
(s) that the Developer has entered into any Section 173 Agreement referred to in clause 32.2;
(t) that the Developer has notified the Authority of the Key Consultants for the Stage;
(u) that the Developer has provided an updated GFA Table (together with supporting evidence for any changes which meets the requirements of the Authority) setting out the GFA used in, and that remaining available for, the Developer's Project as at the date of release for the relevant Stage;
(v) as to the contents of the Master Plan;
(w) that the Developer has provided to the Authority:
…
(iv) where the Stage is Stage 4A, Performance Security 4A; or
(v) where the Stage is Stage 4B-1, Performance Security 4B-1; or
…
(x) that none of the Developer entities are in breach of their obligations under this Agreement,
and the Developer acknowledges that it has no right, entitlement or interest in relation to the Land until all conditions in clause 4.2 are satisfied or waived in accordance with clause 4.4.
…
4.4 Satisfaction/waiver of conditions
(a) The parties acknowledge that the conditions in clause 4.2 and clause 4.3 are for the benefit of the Authority and may only be waived by the Authority.
(b) The Developer must:
(i) report at times reasonably required by the Authority on its progress in satisfying the conditions in clause 4.2; and
(ii) respond reasonably and promptly to the requirements of the Authority or any Government Agency whose consent or approval the Developer must obtain to satisfy any condition in clause 4.2 by the Conditions Precedent Date.
(c) If the Authority:
(i) is not satisfied (including without limitation being unable to be satisfied because of a failure of the Developer to do or procure anything implicitly or explicitly required under clause 4.2) in relation to; or
(ii) has not waived,
the conditions in clause 4.2 by the Conditions Precedent Date then the provisions of clauses 21.1 to 21.4 apply.
4.5 Entry to Land before satisfaction of conditions precedent
(a) Prior to satisfaction or waiver of the conditions precedent in clause 4.2, the Developer may with the prior approval of the Authority enter parts of the relevant Stage under a non-exclusive licence to perform landscaping or remediation required by this Agreement, market the Developer’s Project to potential end-users in a manner approved by the Authority or for any other purposes approved by the Authority and for a licence fee determined by the Authority. The indicative fees for the licence are set out in Schedule Y. Despite the indicative fees set out in Schedule Y, the Authority reserves the right to charge a commercial licence fee and to vary the fees at any time upon giving not less than 30 days written notice to the Developer.
(b) The Authority may require the Developer to execute a licence agreement on the terms and conditions set out in the Standard Access Licence before allowing the Developer to enter onto a Stage prior to its Stage release. The Developer must pay or reimburse the legal and other costs of the Authority in relation to the licence and any variation of the licence.
(c) In exercising a right under clause 4.5(a), the Developer must not unreasonably interfere with any other licensee of the relevant Stage or the Authority's use of that Stage.
(d) If this Agreement is terminated, and if requested by the Authority, the Developer must immediately make good the Land.
(e) The Developer acknowledges that any licence granted to it under clause 4.5(a), or any other Project Document does not entitle it to possession of or any legal or equitable estate in any part of the Land.
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4.11 No caveat
This clause 4.11 applies to all the Stages except the Stages which comprise the Residual Land.
The Developer must not lodge (or permit the Financiers to lodge) a caveat:
(a) against all or any part of the Stage or the Land until the parties have entered into a Land Sale Contract for that Stage; and
(b) unless it relates to an interest arising directly from that Land Sale Contract.
Clause 5 is headed ‘Developer’s Risk’. In cl 5.1(a), the Developer unreservedly accepts responsibility for all risks relating to the project which are allocated to it as set out in the Risk Allocation Table. Schedule G contains the Risk Allocation Table. In that table, the risk that the Developer cannot be granted appropriate title to the land is allocated to Development Victoria.
Clause 21 deals with default events. Clause 21.4(c) provides:
Notwithstanding any other provision of this Agreement, the Authority may terminate this Agreement by notice in writing to the Developer if, in relation to any Stage, all of the conditions in clause 4.2 are not satisfied by the Developer or waived by the Authority by the relevant Stage Release Date.
Clause 22 provides for subdivision of land, as follows:
22. SUBDIVISION OF LAND
(a) The Developer and the Authority acknowledge and agree that subdivision of the Land (including in relation to air space) for a Stage may be needed by the Developer to allow it to comply with clause 4.2(k) or for any other purpose.
(b) If the Developer at any time proposes that the Land be subdivided it must submit to the Authority for its approval a Plan of Subdivision together with any proposed body corporate rules or arrangements between different areas or proposed land owners within the Stage or the Land. The Authority may in its absolute discretion withhold its approval or give its conditional approval to any Plan of Subdivision submitted by the Developer unless the Plan of Subdivision complies or is consistent with the Staging Plan in relation to which the Authority is satisfied under clause 4.2(j), and includes necessary rights of support in relation to air space, in which case the Authority must not unreasonably withhold its consent.
(c) If the Authority approves a Plan of Subdivision the Developer may proceed to have the Land subdivided in accordance with the Plan of Subdivision approved by the Authority and the Authority must consent and provide any necessary assistance for the registration of any such Plan (at the sole cost of the Developer).
(d) The Developer must not amend the Plan of Subdivision, the body corporate rules or other arrangements in respect of the Land without the prior written consent of the Authority (which must not be unreasonably withheld).
Schedule C to the Development Agreement provides for financial and other requirements. Part A of Schedule C contains the agreed Stage Prices:
PART A - STAGE PRICE(S):
Part A of this Schedule C applies to all the Stages except the Stages which comprise the Residual Land
$1,909,202 payable in accordance with the relevant Land Sale Contracts and to be apportioned as follows:
·Deposit: 10% non-refundable cash deposit of the Stage Prices, being $190,920, which amount has been paid.
·Balance: Balance of each Stage Price, payable at or before Stage Release Date, being the balance (90%) of the amount for each Stage set out in Table 2:
Table 2
Stage Stage Price ($) as at the Base Date Stage 1C-2 1 Stage 2B-3 604,695 Stage 3 133,411 Stage 4A 345,417 Stage 4B-1 235,308 Stage 4B-2 498,214 Stage 4B-3 92,156
Each of the amounts in this Part A of Schedule C will be escalated by a rate of 7.165% compounded annually, from 30 June 2002 (Base Date).
Schedule H contains the agreed form of the Tripartite Security Concession Deed. In cl 3.4 of the Development Agreement, the Authority agrees to enter into a Tripartite Security Concession Deed with the Developer and the Financier in certain circumstances. Clause 3.4(a) contemplates entry into a Tripartite Security Concession Deed, in relation to the purchase of the WCP Land, on or before the date that the Developer becomes the registered proprietor of any part of the WCP Land. Clause 5.1 of the Tripartite Security Concession Deed in Schedule H says that Development Victoria agrees that the Developer is entitled to be granted securities including ‘a mortgage over the Developer’s interest in the Land’.
Schedule K is the Staging Plan, including the following table and the Staging Map shown at Figure 1 above.
Stage Building Use Type 1B-6 (Retail) Retail/Commercial/Residential Apartments 1B-6 (Commercial) Retail/Commercial/Residential Apartments 1C-2 Cinema, Entertainment/Leisure Retail, Puppet Theatre, Bowling 2B-2 (Retail) Retail/Commercial/Residential Apartments 2B-2 (Future Development) Retail/Commercial/Residential Apartments 2B-3 Retail/Car Park Ramps/Service Road 3 Hotel or Serviced Apartments 4A Commercial Offices 4B-1 Commercial Offices 4B-2 Commercial Offices 4B-3 Commercial/Residential Apartments
Schedule S contains a template Land Sale Contract between Development Victoria and the purchaser of each Stage.
The Development Agreement has been varied by three deeds of variation, dated 28 September 2020, 5 August 2021 and 26 August 2021. All of those variations post-date the divestment and none is relevant to the determination of the separate question.
Legislative scheme
MTPF Act
In 2021, a number of amendments were made to the MTPF Act by the Suburban Rail Loop Act 2021 (Vic). These amendments took effect after the divestment, and so are of limited relevance to the determination of the separate question. The following outline of relevant provisions relates to the MTPF Act as in force at 30 April 2019, the date of the divestment.
The purpose of the MTPF Act is to facilitate the development of major transport projects.[3] Its objects are set out in s 5, as follows:
[3]Major Transport Projects Facilitation Act 2009 (Vic) (MTPF Act), s 1.
The objects of this Act are—
(a) to create public value through improvements to the efficiency, integration and sustainability of Victoria's transport system; and
(b) to streamline the development of major transport projects that are of economic, social or environmental significance to the State or a region of the State by providing for a single approval for major transport projects, through a process for the assessment of the project—
(i) that has regard to Victoria's environmental, planning and other legislative standards (including risk-based assessment where appropriate); and
(ii) that maintains opportunities for public consultation; and
(c) to improve productivity and timeliness in the assessment and delivery of major transport projects.
A key term in the MTPF Act is ‘project area’, which is defined to mean the area of land designated for a declared project or an approved project. Part 4 provides for the designation of an area of land as the project area, by Order published in the Government Gazette.
Part 6 of the MTPF Act concerns project delivery. It is arranged as follows:
(a) Division 1 deals with acquisition of land in the project area;
(b) Division 2 provides for acquisition of native title rights and interests;
(c) Division 3 deals with acquisition of land outside the project area;
(d) Division 4 relates to provision of public land and Council land;
(e) Division 5 concerns entry into possession of certain project land;
(f) Division 6 deals with acquisition of stratum land below ground level;
(g) Division 7 provides for management of land for a project;
(h) Division 8 deals with road management;
(i) Division 9 provides for restricted access areas; and
(j) Division 10 concerns other matters.
The Divested Land was divested under Pt 6, Div 4 of the MTPF Act, and it is the provisions of that division that are most relevant here. Subdivision 1 provides for the surrender or divesting of land of public authorities and Council. Section 134 provides:
134 Surrender or divesting of land of public authorities and Councils
(1) The Governor in Council on the recommendation of the Project Minister, by Order published in the Government Gazette, may—
(a) require a public authority or Council in which land in the project area is vested to surrender that land to the Crown; or
(b) divest land in the project area from a public authority or Council.
(2) Subsection (1) applies whether or not that land was vested in the public authority or Council by or under an Act or by any other means.
(3) Subsection (1) does not apply to land that is reserved under the Crown Land (Reserves) Act 1978.
(4) A public authority or Council must comply with a requirement under subsection (1)(a).
(5) A public authority or Council that receives notice of a requirement under subsection (1)(a) must notify the Project Minister and the project authority of any lease, licence or other interest in the land that is being divested.
(6) The Project Minister must give notice to any public authority, Council or person affected by an Order under subsection (1) within 10 business days after the Order is published.
(7) An Order under subsection (1) is not a legislative instrument within the meaning of the Subordinate Legislation Act 1994.
On the publication of an Order under s 134(1)(b), the land specified in the Order ‘is taken to be unalienated land of the Crown and is freed and discharged from all trusts, limitations, reservations, restrictions, encumbrances, estates and interests’.[4]
[4]MTPF Act, s 136(2).
Subdivision 5 of Pt 6, Div 4 provides for compensation for surrendered or divested or reserved land. Section 145 provides:
145 Compensation – surrender, divesting or revocation of reservation
(1)Subject to this Act and the Land Acquisition and Compensation Act 1986, a person has a claim for compensation if the person immediately before the publication of an Order under Subdivision 1 or 2 had a legal or equitable estate or interest in the land to which the Order applies.
(2)The Land Acquisition and Compensation Act 1986 (except sections 31 to 36) applies to the determination of compensation payable under this section as if the publication of an Order under Subdivision 1 or 2 were a notice of acquisition of that estate or interest and the project authority had acquired that estate or interest.
(3)Section 43 of the Land Acquisition and Compensation Act 1986 applies to the determination of compensation under this section as if after section 43(1)(b) there were inserted –
“(ba)any special suitability or adaptability of the land in which the acquired interest subsists for a purpose for which it could be used under the Major Transport Projects Facilitation Act 2009 for the purposes of an approved project within the meaning of that Act;”.
(4) This section does not apply to –
(a) an estate or interest held by a public authority; or
(b)an estate or interest (other than an interest in fee simple) held by a Council.
At the time of the divestment, the MTPF Act did not include a definition of ‘interest’ in land.
Section 145 applies the provisions of the Land Acquisition and Compensation Act 1986 (Vic) (LAC Act) to the determination of compensation payable under the section. Section 145 is one of several provisions in Pt 6 of the MTPF Act that apply the LAC Act. Some other provisions are:
(a) Section 113, which applies the LAC Act, as modified by s 118, in aid of the power to acquire an interest in land given by s 112;
(b) Section 127(2), which applies the LAC Act to the compulsory acquisition of native title rights or interests in land under s 127(1); and
(c) Section 163(3), which applies the LAC Act, except ss 31 to 36 and 53, to the determination of compensation payable under s 163(2) for the acquisition of underground land held in fee simple.
LAC Act
The purposes of the LAC Act are to establish a procedure for the acquisition of land for public purposes, and to provide for the determination of compensation payable in respect of land so acquired.[5] Section 3(1) of the LAC Act defines ‘interest’, in relation to land, to mean:
(a) a legal or equitable estate or interest in the land; or
(b) an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land;
[5]Land Acquisition and Compensation Act 1986 (Vic) (LAC Act), s 1.
Section 4 of the LAC Act provides:
An Authority which is empowered under a special Act to acquire an interest in land by compulsory process must not acquire that interest by compulsory process or by agreement except in accordance with this Part.
A ‘special Act’ is defined in s 3(1) of the LAC Act to mean ‘an Act or provision of an Act which is expressed to be a special Act for the purposes of this Act’. Section 3(3) provides that, if a provision of a special Act is inconsistent with a provision of the LAC Act, the provision of the LAC Act prevails.
Section 30 of the LAC Act provides for a right to compensation, as follows:
30 Right to compensation on acquisition
Subject to this Act, every person who, immediately before the publication of a notice of acquisition, had an interest in land that is divested or diminished by the acquisition of the interest to which that notice relates has a claim for compensation.
The measure of compensation is provided for in Pt 4 of the LAC Act, and the procedure for determining disputes about compensation is set out in Pt 10.
Suburban Rail Loop Act amendments to the MTPF Act
As mentioned, since the divestment the MTPF Act has been amended by the Suburban Rail Loop Act. The amendments came into effect on 1 December 2021. They included the insertion of a definition of ‘interest’, in relation to land, and a new definition of ‘land’ in s 3 of the MTPF Act, as follows:
interest, in relation to land, means—
(a) a legal or equitable estate or interest in land; or
(b) an easement, right, charge, power or privilege in, under, over, affecting or in connection with land;
land includes—
(a) buildings and other structures permanently fixed to land; and
(b) land covered with water; and
(c) any interest in land; and
(d) a stratum of land;
The Explanatory Memorandum for the Suburban Rail Loop Bill 2021 said of the amendments to the MTPF Act:[6]
The Bill also amends the Major Transport Projects Facilitation Act 2009, particularly Part 6 of that Act. The Bill provides for additional powers in that Act that will be available to Suburban Rail Loop projects and other transport projects to which that Act applies. The amendments to that Act also improve the operation of existing powers available for the delivery of transport projects.
[6]Explanatory Memorandum, Suburban Rail Loop Bill 2021 (Vic) 1.
In relation to the inclusion of definitions of ‘interest’ and ‘land’, the following explanation was given:[7]
The new definition of land provides that, in addition to a stratum of land, land includes an interest in land as that term is defined. “Interest in land” is added to the definition to enable the Major Transport Projects Facilitation Act 2009 to consistently refer to land, when the Act enables dealing with any interest in land.
[7]Explanatory Memorandum, Suburban Rail Loop Bill 2021 (Vic) 57; see also the explanation of the amendment made to s 112(1) of the MTPF by cl 144, at 63.
The reasons for enabling a project authority to deal with any interest in land were made explicit in the Minister’s second reading speech for the Bill:[8]
Important amendments to the [Major Transport Projects] Facilitation Act included in the Bill provide project authorities with the explicit power to deal with interests in land, such as easements, licences and leases, irrespective of whether the land that is needed for the project is being divested from public authorities or compulsorily acquired from private landowners. This provides more flexibility and precision when dealing with land. Instead of acquiring land parcels in full, the amendments make it possible to acquire only the land which is required for the project. These amendments offer the opportunity to avoid unnecessarily displacing the existing commercial or residential uses of the land. It also reduces land management and disposal costs when the land that is not needed is confirmed as surplus to requirements.
[8]Victoria, Parliamentary Debates, Legislative Assembly, 8 September 2021, 2940 (Jacinta Allan, Minister for Transport Infrastructure and Minister for the Suburban Rail Loop).
Construction of s 145(1), MTPF Act
The applicants’ claim for compensation is made under s 145(1) of the MTPF Act.[9] It will be recalled that it provides that, subject to the MTPF Act and the LAC Act, ‘a person has a claim for compensation if the person immediately before the publication of an Order under Subdivision 1 or 2 had a legal or equitable estate or interest in land to which the Order applies’. There is a question as to the proper construction of s 145(1), in particular the meaning of the words ‘legal or equitable estate or interest in land’.
[9]For convenience, in the balance of this judgment I refer to Developer 4 and Developer 9 as ‘the applicants’.
Applicants’ submissions
The applicants contended that ‘legal or equitable estate or interest in land’ in s 145(1) should be interpreted to include ‘an easement, right, charge, power or privilege in, under, over, affecting or in connection with land’. They said that the correctness of their approach was affirmed by the recent amendment of the MTPF Act to include a definition of ‘interest’, in relation to land, that is consistent with their position.
The applicants referred to familiar principles in relation to the interpretation of statutes, which require primacy to be given to the text of the relevant provision, understood by reference to the context in which it appears and the general purpose and policy of the provision.[10] They submitted that the words ‘legal or equitable estate or interest in land’ should be given their natural and ordinary meaning, ‘without limitations or qualifications not found in the statute itself’.[11] They further submitted that a broad and beneficial approach should be taken to construing the concept of ‘interest’ in s 145, which they characterised as a remedial provision.[12]
[10]Referring to Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, [47] (Hayne, Heydon, Crennan and Kiefel JJ); Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193, [30] (Gleeson CJ, Gummow, Hayne and Heydon JJ); K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309, 315 (Mason J); CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ); Australian Education Union v General Manager of Fair Work Australia (2012) 246 CLR 117, [27] (French CJ, Crennan and Kiefel JJ); Taylor v The Owners– Strata Plan No 11564 (2014) 253 CLR 531, [65] (Gageler and Keane JJ); Independent Commission Against Corruption v Cuneen (2015) 256 CLR 1, [57] (French CJ, Hayne, Kiefel and Nettle JJ); SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362, [14] (Kiefel CJ, Nettle and Gordon JJ).
[11]Referring to Secretary to the Department of Economic Development, Jobs, Transport and Resources v MG Pastoral Company Pty Ltd (2016) 214 LGERA 413, [87].
[12]Referring to Marshall v Director-General, Department of Transport (2001) 205 CLR 603, [38] (Gaudron J); MG Pastoral, [87].
In support of their contended construction, the applicants relied on the interaction between the MTPF Act and the LAC Act. In particular, the applicants relied on the statement in s 113 of the MTPF Act that the LAC Act applies to the MTPF Act and for that purpose the MTPF Act is a ‘special Act’. They pointed out that the application of the LAC Act is subject to Pt 6, Divs 1 and 6, but not to Div 4 – the division in which ss 134 and 145 are found. The applicants argued that the effect of s 113 of the MTPF Act is that Pt 6, Div 4 of the MTPF Act is a ‘special Act’ for the purposes of the LAC Act. They said that the modification of the LAC Act by s 118 of the MTPF Act applies only to an acquisition under Pt 6, Div 1 of the MTPF Act, and does not apply to a surrender or divestment under Pt 6, Div 4. They also relied on the fact that s 145(1) is expressed to be subject to the LAC Act.
As a result, the applicants submitted, s 145 of the MTPF Act should be interpreted consistently with the LAC Act – in which ‘interest’, in relation to land, is (and was at the time of the divestment) defined to mean ‘a legal or equitable estate or interest in land’ or ‘an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land’.
By way of context, the applicants relied on the entitlement to compensation in s 30 of the LAC Act. They also referred to the statement of compatibility for the Major Transport Projects Facilitation Bill 2009, in which the Minister stated:[13]
Section 20 of the charter provides that a person must not be deprived of his or her property other than in accordance with law. This means that any law that deprives a person of his or her property must be sufficiently precise, accessible and should not provide for arbitrary interference with property.
Clause 113 provides that the Land Acquisition and Compensation Act 1986 (Land Acquisition Act) applies, with minor modification, to the acquisition of interests in land for the purposes of an approved project.
As the acquisition land is to be governed by the Land Acquisition Act, the acquisition gives rise to a right to compensation on just terms, and the lawfulness of an acquisition may be tested through judicial review. Further, the Land Acquisition Act sets out clear requirements for notification, procedures for acquisition and determination of compensation.
[13]Victoria, Parliamentary Debates, Legislative Assembly, 13 August 2009, 2726 (Tim Pallas, Minister for Roads and Ports).
During oral submissions, the applicants equated a divestment under s 134 of the MTPF Act with an acquisition of land in accordance with the LAC Act. They said that there was therefore no reason why s 145 of the MTPF Act should not be read consistently with and subject to s 30 of the LAC Act – including giving an ‘interest’ in land the same meaning in s 145(1) of the MTPF Act that it has in the LAC Act.
Authority’s submissions
The Authority’s position was that the clear intent of s 145(1) of the MTPF Act is to provide a sole and restricted right to make a claim for compensation following the publication of an order to which s 145(1) applies. The Authority argued that, by confining the entitlement to claim compensation to holders of a ‘legal or equitable estate or interest in land’, the legislature intentionally limited the class of persons entitled to seek compensation upon the surrender or divestment of publicly held land. That class is narrower than the broader suite of holders of interests in land who may seek compensation following the compulsory acquisition of land under s 112(1) of the MTPF Act, whose entitlement to compensation is conferred by s 30 of the LAC Act.
In the Authority’s submission, the two limb definition of ‘interest’ in relation to land contained in s 3(1) of the LAC Act cannot be applied to enlarge the class of claimants entitled to claim compensation under s 145(1) of the MTPF Act. That would require s 145(1) of the MTPF Act to be read as granting two different entitlements to compensation – one arising under s 145(1), and one arising under s 30 of the LAC Act. The Authority said that this reading of s 145(1) would be inconsistent with the text of s 145(2), which expressly applies certain provisions of the LAC Act to the process of determining the compensation ‘payable under this section’ (that is, s 145). It would also be inconsistent with the purpose and objects of the MTPF Act and conventional principles of statutory interpretation.
The Authority summarised those principles to be:[14]
[14]Referring to Mason v Head, Transport for Victoria (2021) 63 VR 175, [24]-[27], in turn referring to Alcan, [47] (Hayne, Heydon, Crennan and Kiefel JJ); SZTAL, [14] (Kiefel CJ, Nettle and Gordon JJ); Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
(a) The task must begin with a consideration of the text itself.
(b) The language in the text actually employed is the surest guide to legislative intention.
(c) Regard should also be had to the context and purpose.
(d) The language of the statute is to be construed so that it is consistent with the language and purpose of all of the provisions when viewed as a whole.
(e) A construction that would promote the purpose or object underlying the statute is to be preferred to one that would not.[15]
[15]Interpretation of Legislation Act 1984 (Vic), s 35(a).
In relation to legislative purpose, the Authority relied on the purpose set out in s 1 of the MTPF Act, and the objects in s 5.[16] It said that the legislation provides alternative paths for dealing with land in private and public ownership, in order to facilitate the efficient assembly, management and disposal of the land necessary to deliver major projects. The Authority referred to various extracts from the Minister’s second reading speech, in which a distinction was made between the compulsory acquisition of land for the purposes of delivering a major project, and the surrender of publicly held land.
[16]See [26] above.
The Authority also relied on the structure of Pt 6 of the MTPF Act, and the distinct provision made for the acquisition of land in the project area (Div 1), native title rights and interests in land in the project area (Div 2), and land below ground level in the project area (Div 6). It contrasted these divisions with Div 4, which is concerned with the provision of public land and Council land. The Authority submitted that there is a clear difference in the language used in the various divisions of Pt 4 to apply and modify the operation of the LAC Act. Those divisions that concern the compulsory taking of private interests in land generally apply the LAC Act, with some express modifications, both to establishing the entitlement to compensation and to determining its proper quantum.[17] By contrast, those divisions concerned with other aspects of land assembly and management apply the LAC Act to a more limited extent, principally for the purpose of claims management and the determination of the amount of compensation payable. In those divisions, the entitlement to compensation arises under the MTPF Act and not the LAC Act.
[17]The exception being Div 6, concerning underground land.
The Authority submitted that the text of s 145(1) of the MTPF Act evidences a clear intention to limit the right to make a claim for compensation consequent upon the surrender or divestment of public land to those persons with the interest described. It said that the use of the phrase ‘legal or equitable estate or interest in land’ narrows the class of interest holders entitled to make a compensation claim. The Authority argued that, if the legislature had intended to confer an entitlement to compensation on the broader class of interest holders identified by paragraph (b) of the definition of ‘interest’ in the LAC Act, it could have achieved that simply by applying the LAC Act to Div 4 in the same way it is applied to Divs 1 and 2 of Pt 6 of the MTPF Act.
According to the Authority, it would be a most unusual result if the grant of an entitlement to claim compensation to the holder of a ‘legal or equitable estate or interest’ in divested land should be read as extending to what it called a ‘paragraph (b) interest’. It emphasised that the composite phrase ‘legal or equitable estate or interest in land’ should be construed as a whole, and not severed into its constituent parts with each part being separately interpreted and then reassembled. The Authority argued that the phrase is used in s 145(1) to refer to a recognised class of estates or interests in land, being the same class that is captured by the identical words in paragraph (a) of the definition of ‘interest’ in the LAC Act.
Overall, the Authority submitted that the more confined construction of the entitlement to compensation granted by s 145 would better reflect and promote the text, purpose and objects of the MTPF Act, and would operate harmoniously with the provisions of the LAC Act that provide the process for managing claims and quantifying and determining compensation.
For completeness, the Authority made submissions about the effect of the 2021 amendments to the MTPF Act made by the Suburban Rail Loop Act. It said that the amendments did not enlarge the entitlement to compensation under s 145(1), because the definition of ‘interest’, in relation to land, did not alter the meaning of the composite phrase ‘legal or equitable estate or interest in land’. The Authority said that an inference could be drawn that Parliament had intentionally left s 145(1) unaltered when making the other amendments to the MTPF Act. That was because it would have been straightforward for Parliament to simply amend s 145(1) so that it referred only to ‘an interest in land’, but it chose not to do so.
Consideration
The applicants’ claim is made under s 145(1) of the MTPF Act, and not under s 30(1) of the LAC Act. The text of s 145(1) confers a right to claim compensation on a person who, immediately before the publication of the relevant order, had a ‘legal or equitable estate or interest in land’ to which the order applies. I agree with the Authority that the phrase ‘legal or equitable estate or interest in land’ in s 145(1) of the MTPF Act is a composite phrase that should be construed as a whole. It would be wrong to focus solely on the word ‘interest’, at the expense of giving meaning to the entire phrase.
The phrase is also a familiar one. It is used in paragraph (a) of the definition of ‘interest’, in relation to land, in s 3(1) of the LAC Act. It cannot be a coincidence that the same phrase is used in both s 3(1) of the LAC Act and s 145(1) of the MTPF Act. Nor can it be a coincidence that paragraph (b) of the definition in the LAC Act does not appear in s 145(1) of the MTPF Act. This is a clear indication that the legislature intended to confine the right to claim compensation to persons with a ‘paragraph (a) interest’ in the relevant land, and intended to exclude those with a ‘paragraph (b) interest’.
Definitions found in one statute are not generally of assistance in construing another statute.[18] The MTPF Act expressly adopts a number of definitions from other Victorian statutes. One of those is the definition of ‘notice of acquisition’ in the LAC Act.[19] This is a further indication that Parliament did not intend to apply to the MTPF Act other terms that are defined in the LAC Act – including the definition of ‘interest’, in relation to land.
[18]M Collins & Son Pty Ltd v Bankstown Municipal Council (1958) 3 LGRA 216, 220; Yager v R (1977) 139 CLR 28, 43 (Mason J).
[19]MTPF Act, s 3 (definition of ‘notice of acquisition’).
I cannot agree with the applicants that the effect of the introductory words in s 145(1) – ‘Subject to this Act and the Land Acquisition and Compensation Act 1986’– have the effect of importing all of the provisions of the LAC Act into the entitlement to compensation created by s 145(1) of the MTPF Act. That conclusion would be inconsistent with the immediate context of the provision in s 145 and the broader context of Pt 6 of the MTPF Act.
In relation to the immediate context, s 145(2) specifically applies the LAC Act, except ss 31 to 36, to the determination of compensation payable under the section, with the modification provided in s 145(3). This would not have been necessary if the introductory words of s 145(1) had the effect contended by the applicants. That is, if those words applied the LAC Act in its entirety to a claim for compensation under Pt 6, Div 4, s 145(2) would have had no work to do.
As to the broader context, there is a clear distinction between the way in which the LAC Act is applied in Divs 1 and 2 of Pt 6 of the MTPF Act, and its application in Div 4. In Div 1, s 113 applies the LAC Act to the acquisition of an interest in land in the project area – that is, the acquisition is to be effected in accordance with the process prescribed in the LAC Act, which also provides the process for making and determining claims for compensation. Similarly, in Div 2, s 127(2) applies the LAC Act to the acquisition of a native title right or interest in land in the project area. The LAC Act provides the process both for the acquisition of the right or interest, and for making and determining claims for compensation. This contrasts with Div 4, which does not adopt the processes in the LAC Act for the provision of public land and Council land required for a project. That is effected by ss 134, 135 and 139 of the MTPF Act, without reference to the LAC Act. The LAC Act is applied by s 145(2) only to the determination of compensation payable under s 145.
There are difficulties with the applicants’ argument that a divestment of land under s 134 of the MTPF Act is to be equated with an acquisition of land in accordance with the LAC Act. The primary difficulty is that it disregards the text of Div 4 of Pt 6 of the MTPF Act, which does not rely on the LAC Act to effect the surrender or divestment of public land or Council land required for a project. A second difficulty is that the right to claim compensation under s 145 of the MTPF Act is predicated on the publication of an order under Pt 6, Div 4, Subdivs 1 or 2 of the MTPF Act, while the entitlement to compensation under s 30 of the LAC Act follows from the publication of a notice of acquisition under s 19 of the LAC Act. A further difficulty is the fact that the LAC Act is only applied in Div 4 to the determination of compensation payable under s 145 of the MTPF Act, and not more generally. For all of those reasons I consider that a surrender or divestment of publicly owned land under Pt 6, Div 4 of the MTPF Act is a separate and distinct process from the compulsory acquisition of land under the LAC Act. It follows that I do not accept the applicants’ argument that s 145(1) of the MTPF Act is to be read as being subject to s 30 of the LAC Act.
That said, it is the case that the interaction between the MTPF Act and the LAC Act was, before the 2021 amendments to the MTPF Act, less than clear. It was arguable that the LAC Act was not applied consistently across the different divisions of Pt 6 of the MTPF Act. In particular, ss 118(1) and 127(3) of the MTPF Act stated explicitly that s 3(3) of the LAC Act did not apply to the extent that Divs 1 and 2, respectively, were inconsistent with the LAC Act, while there was no equivalent provision in Div 4. This need not be explored further, because the applicants did not contend that there was any relevant inconsistency between the LAC Act and Pt 6, Div 4 of the MTPF Act. Indeed, their claim for compensation is premised on the divestment of the Divested Land having been effected by an order made under s 134 of the MTPF Act.
In the second reading speech for the Major Transport Projects Facilitation Bill 2009, the Minister described Pt 6 as providing ‘the project delivery powers of the project authority’.[20] A component of these powers was ‘a more efficient mechanism for the transfer of public land’[21] – clearly a reference to Div 4. This reinforces my conclusion that the mechanisms for surrender and divestment of publicly owned land in Pt 6, Div 4 of the MTPF Act are separate and distinct from the compulsory processes for acquiring land under the LAC Act, and that the right to claim compensation in s 145(1) of the MTPF Act is not to be read as incorporating the provisions of the LAC Act.
[20]Victoria, Parliamentary Debates, Legislative Assembly, 13 August 2009, 2732 (Tim Pallas, Minister for Roads and Ports).
[21]Victoria, Parliamentary Debates, Legislative Assembly, 13 August 2009, 2732 (Tim Pallas, Minister for Roads and Ports).
The applicants’ construction was not affirmed by the 2021 amendments to the MTPF Act. The insertion of definitions of ‘land’, and ‘interest, in relation to land’ were directed to providing project authorities with ‘explicit power to deal with interests in land, such as easements, licences and leases’, so that they would have ‘more flexibility and precision when dealing with land’.[22] The amendments were not directed to clarifying the eligibility to claim compensation under s 145(1) of the MTPF Act.
[22]Victoria, Parliamentary Debates, Legislative Assembly, 8 September 2021, 2940 (Jacinta Allan, Minister for Minister for Transport Infrastructure and Minister for the Suburban Rail Loop), extracted at [42] above.
Indeed, there is a question as to whether the amendments had the effect of expanding the entitlement, as the applicants appeared to assume. Section 145(1) itself was not amended, and the composite phrase ‘legal or equitable estate or interest’ was not replaced with the word ‘interest’. That question does not have to be resolved in this proceeding.
I am conscious that a statutory entitlement to compensation in a provision such as s 145 of the MTPF Act should be given its full effect, and should not be read as subject to ‘limitations or qualifications not found in the statute itself’.[23] However, there is a clear limitation found in s 145(1) of the MTPF Act. The provision limits the class of persons who may claim compensation to those who had a ‘legal or equitable estate or interest’ in public land. It cannot be read as extending the right to compensation to a holder of a lesser interest in land.
[23]Marshall, [38] (Gaudron J); MG Pastoral, [87].
Did the applicants have a relevant ‘interest’ in the Divested Land?
It follows from my conclusions about the construction of s 145(1) of the MTPF Act that the applicants only had a relevant ‘interest’ in the Divested Land if they had a ‘legal or equitable estate or interest’ immediately before the publication of the order on 30 April 2019. They did not claim to have had any legal estate or interest in the Divested Land. Their contention was that, by reason of the Development Agreement, they had an equitable estate or interest in the Divested Land at the relevant time.
Applicants’ submissions
The applicants submitted that the Development Agreement confers upon them a right to purchase land for development purposes following the satisfaction of the conditions precedent in cl 4.2. They characterised the Development Agreement as a conditional contract for the sale of land or, alternatively, an option to purchase land. They said that either type of agreement was sufficient to confer on Developer 4 and Developer 9 an equitable interest in the Divested Land.
In relation to conditional contracts of sale, the applicants relied on the analysis of the New South Wales Court of Appeal in Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd:[24]
It is not disputed in the present case that, as purchaser under the Sale Contract, SXG had an equitable interest in the Auburn land prior to completion. The nature of the equitable interest of a purchaser prior to completion of a contract for the sale of land was considered by Emmett AJA in Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; 18 BPR 35,407; [2015] NSWCA 100; BC201502656 (at [104]–[105]), his Honour there adopting the analysis propounded by JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis) (MGL) (at [6-055]).
The four “equities” or rights which form part of the purchaser’s interest under a contract for the sale of land include an equity or right in relation to the land which is enforceable against third parties and which is recognised as being an interest capable of competing in a priority dispute. Relevantly, what must be demonstrated is that “the contract is of a type which is capable in due course of being the subject of a decree of specific performance” (MGL at [6-055]); not the matters that would be necessary to be shown for such an order ultimately to be made.
[24](2017) 18 BPR 36,683, [93]-[94] (Ward JA, McColl and Gleeson JJA agreeing).
They referred further to the observation in Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd[25] that, once a contract for the sale of land has been entered into, ‘beneficial ownership is, in a sense, split between the seller and buyer on the provisional assumption that specific performance is available and that the contract will in due course be completed, if necessary by a court ordering specific performance’.[26]
[25](2015) 89 NSWLR 237 (Golden Mile).
[26]Golden Mile, [103] (Emmett JA, McFarlan and Gleeson JJA agreeing).
The applicants acknowledged that the Development Agreement was conditional, in the sense that Development Victoria would only be obliged to sell the land once the conditions in cl 4.2 were satisfied. They accepted they were not yet entitled to specific performance but said that did not alter the analysis, since they would be entitled to other equitable remedies to enforce their interest in the land. They referred to a number of other authorities to the effect that a purchaser under an uncompleted contract for the sale of land has an equitable interest in the land sufficient to support a caveat.[27]
[27]GPT Re Ltd v Lend Lease Real Estate Investments Ltd (2005) 12 BPR 23,217, [55]; Palm Gardens Consolidated Pty Ltd v PG Properties Pty Ltd [2009] SASC 311, [83]; New Galaxy Investments Pty Ltd v Thomson (2017) 18 BPR 36,811, [296] (Sackville AJA, Basten and Gleeson JJA agreeing); Kimberley NZI FinanceLtd v AR Barr Investments Pty Ltd [1990] ANZ ConvR 438, 442.
From the authorities referred to, the applicants drew the following propositions:
(a) a purchaser under a contract for the sale of land has an equitable interest in the land prior to completion of the contract for the sale of land;
(b) the four ‘equities’ or rights which form part of the purchaser’s interest under a contract for the sale of land include an equity or right in relation to the land which is enforceable against third parties and which is recognised as being an interest capable of competing in a priority dispute; and
(c) this interest arises regardless of whether a condition attaching to the completion of the sale remains unfulfilled and regardless of whether the purchaser could obtain a decree of specific performance.
On that basis, the applicants submitted, they had an equitable interest in the Divested Land immediately before the divestment. They posited several scenarios in which they might have obtained equitable relief, such as an injunction, to protect their interests under the Development Agreement.
Alternatively, if the Development Agreement is not in the nature of a conditional contract for the sale of land, the applicants said it could properly be described as involving an option. They submitted that it is settled that an option confers upon the person enjoying the option an equitable interest in the land.[28]
[28]Referring to Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57, 73, 75 (Gibbs J).
The applicants submitted that the acknowledgment in cl 4.2 of the Development Agreement that they have ‘no right, entitlement or interest in relation to the Land until all conditions in clause 4.2 are satisfied or waived in accordance with clause 4.4’ had no relevant effect on the question before the Court. They argued that the statement did not abrogate or affect the legal characterisation of their rights under the Development Agreement, and would not preclude them from obtaining equitable remedies to protect their interest under the Development Agreement.
If the acknowledgement had the effect of defeating their claim for compensation, the applicants argued that it would be unlawful and should be severed from the Development Agreement. They referred to the statement in Westfield Management Ltd v AMP Capital Property Nominees Ltd[29] that it is ‘the policy of the law that contractual arrangements will not be enforced where they operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest’.[30] They said that to interpret cl 4.2 of the Development Agreement to mean that they did not have an interest in the Divested Land would produce an outcome contrary to the intended operation of laws in the public interest that provide compensation for those whose interests in land have been divested. The applicants did not deny that there was an element of circularity to this argument.
[29](2012) 247 CLR 129 (Westfield).
[30]Westfield, [46] (French CJ, Crennan, Kiefel and Bell JJ).
Authority’s submissions
The Authority submitted that an estate or interest in land is an estate or interest of a proprietary nature.[31] It accepted that the question of whether the applicants had an equitable estate or interest in the Divested Land, for the purposes of s 145(1) of the MTPF Act, had to be determined without limitations or qualifications not found in the statute itself.[32]
[31]Referring to Stow v Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295, 311 (Aickin J).
[32]Consistent with the approach articulated in Marshall, [38] (Gaudron J) and applied in MG Pastoral, [87].
The key question, according to the Authority, is whether the terms of the Development Agreement created an equitable estate or interest in the Divested Land. The Authority disputed that the Development Agreement could be characterised as analogous to either a conditional contract of sale or an option, and said that the question should be determined only by reference to the express terms of the Development Agreement.[33]
[33]Referring to MG Pastoral, [89]-[92] and Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554, [158].
The Authority argued that, as a matter of general principle, a contract for the sale of land must contain four essential elements: the parties (the seller and the buyer), the subject matter, the price, and the transfer of property (or the buyer’s acceptance of title).[34] While the Development Agreement arguably includes the first three elements, it does not provide for the transfer of property – that is provided for in the Land Sale Contract to be entered into once the conditions precedent in cl 4.2 have all been satisfied for a Stage.
[34]Referring to Chris Boge, ‘A buyer’s “interest” in land under an uncompleted contract: A return to principle’ (2008) 82 Australian Law Journal 266 (Boge article).
In relation to the Development Agreement, the Authority drew attention to various terms that expressly provide that the applicants do not have an interest in the WCP Land. It relied in particular on the acknowledgement at the end of cl 4.2. It also relied on the following:
(a) the Developer’s agreement not to lodge a caveat against any part of the WCP Land until the parties have entered into a Land Sale Contract in respect of a Stage;[35]
(b) the Developer’s acknowledgement that the grant of licence to it does not entitle it to possession of or any legal or equitable estate in any part of the WCP Land;[36] and
(c) clause 21.4(c) of the Development Agreement, which provides that Development Victoria may terminate the Development Agreement if, in relation to any Stage, all of the conditions in cl 4.2 are not satisfied by the Developer or waived by Development Victoria by the relevant Stage Release Date.
[35]Development Agreement, cl 4.11.
[36]Development Agreement, cl 4.5(e).
The Authority pointed out that a number of the conditions precedent in cl 4.2 of the Development Agreement require third party approval – for example planning approval under cl 4.2(b) or approval of an environmental management plan under cl 4.2(h). It submitted that there is a significant line of authority to support the contention that no equitable interest in land can arise under a contract for the sale of land that is subject to a condition that can only be satisfied by a third party.[37]
[37]Referring to Shanahan v Fitzgerald [1982] 2 NSWLR 513, 515; Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd (2012) 45 WAR 29, [166]-[175] (McLure P, Newnes JA and Le Miere J agreeing); Brown v Heffer (1967) 116 CLR 344, 350, 351.
The Authority referred to the ongoing debate about the precise nature of the interest of a purchaser under an uncompleted contract for the sale of land. It said that critical within that debate is the recognition that the rights a buyer has on entry into such a contract, prior to settlement of the sale, are rights in contract rather than property rights.[38] It submitted that in this case, where the extensive conditions precedent in cl 4.2 of the Development Agreement had not been satisfied or waived, it could not be said that the Development Agreement had progressed to a point where the applicants would have been entitled to seek specific performance. Nor, it said, had the four equities said to comprise the purchaser’s interest crystallised such that injunctions could have been obtained to enforce them – all the more so because (yet to be obtained) third party approvals formed part of the conditions precedent.
[38]Referring to Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315, [53]; Golden Mile, [94], [103]-[105]; and Boge article, 267.
In conclusion, the Authority submitted that, even if the express words in cl 4.2 were ignored, the applicants’ interests in the Divested Land were so limited that they did not constitute an equitable estate or interest. At most, they had a ‘paragraph (b) interest’, which was not compensable under s 145(1) of the MTPF Act.
Consideration
The nature and extent of a purchaser’s interest in land under an uncompleted contract of sale remains unsettled.[39] What is clear is that the relationship between vendor and purchaser is essentially contractual, and that the purchaser’s interest in the land is commensurate with the availability of specific performance under the contract.[40]
[39]See generally the discussion in the Boge article.
[40]Tanwar Enterprises, [53] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ); Golden Mile, [100], [103] (Emmett JA, McFarlan and Gleeson JJA agreeing).
As at 30 April 2019, the performance of the Development Agreement had clearly not reached a point where the applicants could have obtained an order for specific performance. There was not even a separate title for the Stage 4A and Stage 4B-1 land, no plan of subdivision having been lodged or approved by that time. The possibility that the applicants might have obtained an injunction to restrain a hypothetical breach of the Development Agreement does not dictate the conclusion that they had an equitable estate or interest in the Divested Land.
Whether the applicants had an equitable estate or interest in the Divested Land depends entirely on the terms of the Development Agreement. The question is not answered by reasoning by analogy from other decisions about different contracts for the sale of land, as the applicants sought to do.
The Development Agreement is not, in terms, a contract for the sale of land. It is an agreement to sell the WCP Land, in stages, pursuant to contracts for the sale of land that may be entered into in future.[41] The parties to the Development Agreement agreed that Development Victoria is under no obligation to enter into a Land Sale Contract for any Stage until all of the conditions precedent in cl 4.2 have been satisfied in relation to that Stage.[42] They also agreed that, until all conditions in cl 4.2 have been satisfied or waived, ‘the Developer acknowledges that it has no right, entitlement or interest in relation to the Land’.[43] They further agreed that the Developer would not lodge a caveat ‘against all or any part of the Stage or the Land until the parties have entered into a Land Sale Contract for that Stage’.[44] These express terms of the Development Agreement gainsay the applicants’ contention that they had an equitable estate or interest in the Divested Land.
[41]Development Agreement, Recitals.
[42]Development Agreement, cl 4.2, set out in full at [16] above.
[43]Development Agreement, cl 4.2.
[44]Development Agreement, cl 4.11(a), set out in full at [16] above.
The applicants argued that these terms of the Development Agreement should be read down or severed, as an unlawful attempt to contract out of the obligation to pay compensation under s 145(1) of the MTPF Act. This impossibly circular argument cannot be accepted. The impugned terms do not contract out of any rights conferred on the Developers by the MTPF Act or any other statute, and do not ‘operate to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest’.[45] They merely set out the parties’ agreement that the Developers would not acquire any interest in the WCP Land on entering into the Development Agreement, and would not do so in relation to a Stage unless and until a Land Sale Contract was entered into for that Stage. If the Developers had no relevant interest in the WCP Land, they could have no right to claim compensation under s 145(1) of the MTPF Act in the event that part of the WCP Land was divested. Without an interest in the WCP Land, the Developers had no statutory right to compensation to bargain away.
[45]Cf Westfield, [46] (French CJ, Crennan, Kiefel and Bell JJ).
The agreed form of the Tripartite Security Concession Deed contained in Schedule H of the Development Agreement did not support the applicants’ claimed interest.[46] To begin with, the Deed has not yet been entered into by anyone. There was no suggestion that any financier had to date accepted a mortgage over the Developer’s interest in any of the WCP Land. More significantly, what is plainly contemplated by cl 3.4 of the Development Agreement is that a Tripartite Security Concession Deed in the agreed form may be entered into in order to finance the Developer’s purchase of a Stage, at the point where the Land Sale Contract has been, or is about to be, entered into for that Stage. That point had not been reached in relation to the Divested Land before it was divested.
[46]See [21] above.
The applicants sought to make something of the fact that, under the Development Agreement, they did not bear the risk that they might not be granted appropriate title to the Stage 4A and Stage 4B-1 land. That risk was allocated to Development Victoria.[47] It was not clear to me how that supported their contention that they had an equitable estate or interest in the Divested Land – as distinct from having some contractual claim or remedy against Development Victoria.
[47]See [17] above.
The applicants also emphasised the payment of a non-refundable deposit in relation to the WCP Land, which they said supported their claim to have had an equitable estate or interest in the Divested Land. However, neither Developer 4 nor Developer 9 paid the deposit. The evidence was that the deposit was paid initially by the original developer, ING, and that AsheMorgan assumed the economic burden of the deposit when it purchased ING’s rights as developer.
The express terms of the Development Agreement make it unnecessary to consider the Authority’s further argument that the requirement for third party approvals stood in the way of the applicants obtaining any equitable estate or interest under Development Agreement.[48]
[48]Hancock Prospecting, [166]-[175] (McLure P, Newnes JA and Le Miere J agreeing).
The applicants did not have an equitable estate or interest in the Divested Land immediately before the divestment took effect on 30 April 2019.
Disposition
For those reasons, the separate question must be answered ‘No’. I will hear the parties in relation to the costs of the trial of the separate question, and as to any directions they seek for the future conduct of the proceeding.
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