Candibon Pty Ltd v Minister for Planning

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

MAJOR TORTS LIST

No. 4637 of 2006

CANDIBON PTY LTD (ACN 006 867 358)	Plaintiff
v
THE HONOURABLE JUSTIN MADDEN (IN HIS CAPACITY AS MINISTER FOR PLANNING)	First Defendant
STATE OF VICTORIA	Second Defendant

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JUDGE:	EMERTON J
WHERE HELD:	Melbourne
DATE OF HEARING:	4-7, 11-14, 18, 20-21, 25-26 October, 4, 22-24, 29-30 November, 2-3, 6, 8-10, 14-16 December 2010
DATE OF JUDGMENT:	29 August 2011
CASE MAY BE CITED AS:	Candibon Pty Ltd v Minister for Planning
MEDIUM NEUTRAL CITATION:	[2010] VSC 415

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REAL PROPERTY – Acquisition of land by private treaty – Alleged threat of compulsory acquisition by Minister – Application of Land Acquisition and Compensation Act 1986 (Vic) to a sale by private treaty –- Whether the Minister was ‘empowered’ to compulsorily acquire the land – Whether acquisition was for the purposes of the planning scheme – Compliance with statutory obligations for compulsory acquisition - Right of pre-emption if land sold within 18 months – Consequences of any breach of statutory obligation – Availability of restitutionary remedies – Availability of damages - Land Acquisition and Compensation Act 1986 (Vic) ss 4, 6, 13, 18, 109(2) - Planning & Environment Act 1987 (Vic), ss 98-99, 171-173.

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

TORTS – Negligence – Whether the Minister had a duty to take care to ensure the accuracy of statements in regarding determinations concerning the future development of land – Meaning of determination - Intention of the government as opposed to intentions of the Minister - Reliance on statements made by the Minister – Loss suffered as a result of selling the land to the Minister - When cause of action accrued – Extension of limitation period for fraud or mistake – Whether the plaintiff’s mistake as to the Minister’s intentions was the ‘gist of the action’ or an ‘essential ingredient’ of its cause of action in negligence –– Negligence claim statute barred – Limitation of Actions Act 1955 (Vic), s 5, 27(c).

UNCONSCIONABLE CONDUCT – Whether there was ‘special disadvantage’ arising from alleged statements made by the Minister as to future land use policy - Limitations of actions for equitable relief by analogy – Application of the statutory time limit to the claim for relief from the consequences of unconscionable conduct – Limitation of Actions Act 1955 (Vic), s 5 – Supreme Court Act 1928 (Vic) s 82(1)(c).

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

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Richter QC and Mr L Glick SC with Mr J Manetta and Mr P Connor	Belleli King & Associates
For the Defendants	Mr W F Lally QC with Mr M Clarke	Victorian Government Solicitor

TABLE OF CONTENTS

Introduction

General background

Claims arising from the Minister’s statements

The Statements

The Statements

The circumstances of the meetings

Evidence of the meetings
Events after the meetings
Post settlement events – the involvement of Council
The management agreement
The land swap agreement

Findings

The threat of compulsory acquisition
The government’s need for Greenhills as a buffer
The possibility of commercial development
Conclusions regarding the Statements

Deceit

The elements
The Minister’s intentions for the land

The Intel letter
The land swap
The Motorsports Facility Feasibility Study
The 15 May memorandum

Conclusion

Negligence

Unconscionable conduct

Statutory claims

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

Did the LAC Act apply to the purchase by the Minister?
Was the Minister ‘empowered’ to acquire the land by compulsory process?
Was the private treaty an acquisition ‘by agreement’ for the purposes of s 4 of the LAC Act?
What flows from the service of a notice under s 13 of the LAC Act?

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

Damages

Conclusion

HER HONOUR:

Introduction

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

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

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

(a)pursuant to statutory entitlements arising under the Land Acquisition and Compensation Act 1986 (Vic) (the ‘LAC Act’), which it claims applied to the acquisition of the land by the Minister; and
(b)pursuant to causes of action based on deceit, negligence and for relief from unconscionable conduct as a result of statements that it says were made by the Minister to induce it to sell the land to him and on which it relied to its detriment when agreeing to the sale.

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

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

The issues immediately arising in the proceeding are:

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

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

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

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

General background

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

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

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

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

The land acquired by the Minister comprised lot 6 (the ‘Freeway Corridor’) and the lots to the south of the Freeway Corridor: lots 1, 2, 5 and the house lot (the ‘Southern Parcel’).[2]
[2]Lots 3 and 4 to the north of the Freeway Corridor were not acquired by the Minister and their fate is not directly in issue. So far as they are relevant, they will be referred to as the ‘Northern Parcel’.

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

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

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

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

As a result, Candibon engaged consultants to lobby both the Minister and the Shire of Pakenham[6] to ensure that concepts favourable to the development of Greenhills would be adopted.
[6]The Shire of Pakenham was later replaced by the Cardinia Shire Council. I shall refer to both as ‘the Council’.

In November 1990, the Minister for Planning and Urban Growth[7] released the South‑Eastern Growth Area Plan (the ‘SEGA plan’) and Minister’s Direction.[8] The Minister’s Direction provided, among other things, that when preparing a planning scheme amendment for land within the south-eastern growth area, a planning authority was required to have regard to the SEGA plan.
[7]The Hon Andrew McCutcheon.
[8]Direction No. 3, 23 November 1990.

The SEGA plan was expressed to contain a framework for future growth in the area and contained a set of requirements and plans that related to matters such as urban growth limits, the staging of development and population, activity centres, employment, environment and open space, and transport. It anticipated the preparation of ‘local structure plans’ which would show the layout and location of important uses and facilities, would be approved by the municipal council with the concurrence of the Minister for Planning and Urban Growth and would form the basis for subsequent planning scheme amendments. Figure 2 of the SEGA plan, which describes urban growth limits, shows the Greenhills land south of the freeway reservation as ‘proposed residential’. Figure 3, which shows the staging of development and population, appears to show the Greenhills land south of the freeway reservation as ‘Stage 3’ to be developed in 2005‑2009. Figure 6, which deals with employment, also appears to show the Greenhills land south of the freeway reservation as proposed residential.

In November 1990, the Pakenham Planning Scheme was amended to zone land north and south of the Pakenham township, including Greenhills, as ‘Highway 1’.[9] The objectives of the ‘Highway 1’ zone in the Pakenham Planning Scheme included, relevantly, to “retain the long term option of possible future urban development in the area of land extending easterly from Pakenham Township to the Bunyip River and in the area south of the Officer township and south of the Pakenham township”.[10] The explanatory memorandum stated that the inclusion of land in the ‘Highway 1’ zone identified “the direction and limits of development in the Pakenham area, retains the land in parcels large enough for development efficiency, and provides for appropriate interim uses”. The amendment was said to facilitate government policy by ensuring the programmed release of land and the co‑ordinated supply of infrastructure. Areas would be zoned ‘Urban’ in local section amendments in the context of agreed local structure plans and infrastructure availability.
[9]Shire of Pakenham Planning Scheme (16 February 1988), Amendment L40.
[10]Shire of Pakenham Planning Scheme (16 February 1988), Local Section cl 6.7.2(a).

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

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

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

Once he became Minister for Planning, despite the demands of the role, Mr Maclellan’s keen interest in the development of the township of Pakenham did not diminish. One of his early actions was to reverse a decision that had been taken by the previous Labor government to require the Springvale Cemetery Trust to acquire land on the existing Princes Highway at Pakenham for the purposes of a cemetery. Mr Maclellan believed that the land in question, which became known as the ‘Necropolis site’,[11] should be available for housing and related development,[12] and in early 1993 he directed the Urban Land Authority to re-acquire the Necropolis site and find an alternative site for the cemetery.
[11]Also subsequently known as ‘Pakenham Park’ or ‘Lakeside’.
[12]The Minister also saw the opportunity to address some of Pakenham’s strategic planning issues, including relocation of the Central Primary School and proposed TAFE college onto the property.

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

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

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

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

The Valuer-General concluded as follows:

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

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

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

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

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

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

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

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

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

[13]Emphasis added.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The transfer of the Southern Parcel from the Minister to the Council ultimately took place on 14 October 1999.[14] A little over four years later, in early 2004, the new Minister for Planning, Ms Mary Delahunty, transferred the Freeway Corridor to VicRoads to enable the Pakenham Bypass to be constructed.
[14]On 3 August 2000, amendment C8 to the Cardinia Planning Scheme was gazetted, removing the Minister as responsible authority in respect of the Southern Parcel.

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

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

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

Claims arising from the Minister’s statements
The Statements

The causes of action in negligence, deceit and in respect of unconscionable conduct are based upon statements described in Candibon’s statement of claim[15] as having been made by the Minister, Mr Maclellan, during 1996 and 1997. It is alleged that the Minister said to Mr Mondous “categorically” that the government had determined that:
[15]Second Amended Statement of Claim filed 9 March 2010.

(a)the State required Greenhills for the proposed freeway, and otherwise to be a buffer zone for the proposed freeway;
(b)contrary to Candibon’s wishes, Greenhills was not to be developed for residential or commercial uses;
(c)contrary to Candibon’s wishes, the State, through the Minister, would not permit Greenhills to be rezoned to permit development for residential or commercial uses;
(d)for these reasons the State wanted ownership of Greenhills; and
(e)the Minister was to compulsorily acquire Greenhills on behalf of the State if Candibon was not prepared to sell it by private agreement.

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

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

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

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

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

In relation to the claim in deceit, Candibon alleges that between the Minister’s last making the Statements in 1997 and the contract of sale entered into on 17 March 1998 and completed on 17 April 1998,[17] the Minister implicitly represented to Candibon that, as far as he knew, the government’s position continued to be as described in the Statements (the ‘implicit representation’). This was based on the fact that at no time prior to the contract for sale or settlement did the Minister disclose to Candibon that the government’s position was other than as described in the Statements. However, for the reasons that will be described fully in the detailed consideration of the deceit claim, Candibon alleges that by the time the contract of sale was entered into on or about 17 March 1998, the Minister himself regarded portions of the Southern Parcel as potentially available for commercial development. When the contract for sale was entered into on 17 March 1998, the government’s position was not as described in the Statements and the Minister knew this to be so, or did not care whether or not it was so. Accordingly, Candibon alleges that the implicit representation that the government’s position continued to be as described in the Statements was false and the Minister knew it was false or did not care whether or not it was false.
[17]The pleading refers to 23 April 1998, but Candibon conceded that settlement occurred on 17 April 1998.

The Statements
The circumstances of the meetings

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

Evidence of the meetings

Mr Mondous made two witness statements[18] about the meetings with the Minister at which he alleges the Statements were made. The Minister made two witness statements about the meetings that he had with Mr Mondous.[19] Mr Tom Gibson of Alex Scott & Co Pty Ltd also refers to a meeting that he attended between the Minister and Mr Mondous in his witness statement.[20] The other persons who Mr Mondous says also attended one or more of these meetings, Mr Bruce Gibson and Ms Barbara Mahon, did not provide statements or give evidence. There is a disagreement between Mr Mondous and Mr Maclellan as to whether Mr Mondous ever saw the Minister on his own: Mr Mondous gave evidence that he was always accompanied by an advisor or consultant; Mr Maclellan recalls seeing Mr Mondous alone on at least one occasion.
[18]Dated 7 December 2009 and 4 October 2010.
[19]Dated 2 March 2010 and 12 October 2010.
[20]Dated 7 December 2009.

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

(a)It needed Greenhills[21] for the proposed freeway extension and otherwise to be a buffer zone for the proposed freeway;
(b)Greenhills was not to be developed for residential or commercial uses;
(c)The government would not permit Greenhills to be rezoned for residential or commercial uses;
(d)For these reasons, the government wanted to acquire Greenhills.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Events after the meetings

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

After the meeting with the Minister on 13 September 1996, Candibon wrote to the Minister on 11 November 1996 (the ‘November 1996 letter’) in terms that reveal something about what must have occurred at that meeting.[24] The November 1996 letter is headed “RE: GREENHILLS ESTATE, 199.53ha (493 acres) PAKENHAM” and states as follows:
[24]A draft of Candibon’s November 1996 letter was found during the course of the hearing on Tom Gibson’s file, and Mr Gibson explained that he had drafted the letter after the meeting on 13 September 1996. Both Tom Gibson and Mr Mondous gave evidence that the November 1996 letter accurately reflected what was said at the meeting of 13 September 1996. Tom Gibson agreed in evidence that he put everything of importance that was discussed at the 13 September meeting in that letter.

Further to our recent discussion on the 13th September, 1996 we have given great consideration to your suggestion to explore alternative uses for the land; such as industry/air field rather than rural residential uses.
We have also considered an acquisition by your Government which would be acceptable to us if it was on a compulsory basis with the value established by two independent Valuers and incorporating the acquisition for the proposed freeway (32.43ha – 80 acres).
We believe that the value of our land is very comparable on a per acre basis to the price paid for the land your department purchased between the railway and the Princes Highway in Pakenham as that land is unserviced residential land, where as [sic], our land is serviced land, suitable for many different uses.
I have appointed Alex Scott & Staff Pty Ltd as my Agent/Valuer in this matter and should you require any further particulars please do not hesitate to contact either Tom or Bruce Gibson.

The November 1996 letter is signed by Mr Mondous.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[25]Unless some specific criteria were met.

Mr Dudakov subsequently revised his valuation to $1.85 million.

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

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

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

If you are prepared to reconsider your offer we are willing to engage a valuer.
I am prepared to accept an offer on the house lot containing 42 acres, would the sale of this lot affect your interest in the balance.
I await your response.

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

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

1.We have no intention of incurring further valuation costs over and above the costs we incurred in 1995 as a result of your Governments [sic] previous interest in our property, unless you are prepared to met [sic] their reasonable costs should our negotiations not prove successful.
2.We believe that after many meetings and discussions with local agents and valuers and after considering recent sales and the proposed livestock exchange and industrial site opposite our property, the availability of all services that an amount of 7‑8000 per acre would be readily achieveable [sic] if the property was offered for sale, in its current titles, on todays [sic] market.

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

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

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

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

We refer to your letter of 30th July 1997 regarding the above and advise that we wish to proceed to sell the land mentioned above. We ask you as to whether or not your intentions have changed and if not are you prepared to resubmit a higher offer for our perusal and possible acceptance.
Should we not hear from you within 14 days from the date of this letter we will assume that you are no longer interested and will therefore proceed to sell it on the open market.

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

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

A Planning Certificate has not been sighted, however, advice from the Town Planning Department at the Shire of Pakenham indicates that the land is partly within a “Highway 1” zone and partly within a proposed main Road zone and comes under the provisions of the Pakenham Planning Scheme. The property’s current use conforms with this zone.
The property is also within an area identified by the Ministry of Planning as being outside an area for future Residential Development. A new planning scheme is currently on exhibition showing that the land is to be zoned “Rural” and for which the Minister for planning is the responsible authority. I have been advised that this is so because it enables the minister to negotiate the purchase of the subject property, and is no more onerous than if the Cardinia Shire was the responsible authority.
The proposal to rezone to “Rural” appears to be a blanket change to all highway 1 zoned land, Council have indicated that the proposed zone will be no more onerous than the previous zone. The minister supports Industrial not Residential type use for the property.

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

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

A conference between valuers was arranged in November 1997. The evidence includes a file note dated 12 November 1997, which appears to be a file note of the valuers’ meeting. It records “Tom Gibbons, Russell Maunder, BD, PD, Murray Carman” being in attendance,[28] and the existence of two opposing valuations: $1.83 million and $2.465 million.
[28]I take “Tom Gibbons” to be Tom Gibson, “BD” to be Brian Dudakov, and “PD” to be Mr Dudakov’s assistant Paul Donovan. Murray Carman was a senior monitor with the Victorian Government Land Monitor.

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

We discussed each others comparables [sic] sales and agreed on the approach to value. The main differences being the dates of valuation which meant that Brian was unaware of sales I relied heavily on and the degree of compatibility of value to Lot 6 due to the proposed freeway.
I agreed to increase the discount allowance on Lot 6 and Brian agreed to increase his assessment on the house lot and marginally increase his assessments on the other lots. He increased his opinion to $2,020,000 and left to consider the degree of compatibility of the sale of the Mullane Road property.
Since the conference we have sold 100 acres in Coop Road at $400,000 ($4,000 per acre) and the Development of the Victorian Livestock Exchange Industrial Park has commenced. Both of these I believe add weight to my argument that Brian should Increase [sic] his assessment.
As a result of the conference I have revised my opinion of the current market value of the property described in my report to you dated 3^rd November, 1997 to Two Million Two Hundred Thousand Dollars. $2,200,000.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a)the Freeway Corridor was destined to be required, and compulsorily acquired, for freeway construction in February 2004;
(b)no compensation was destined to be paid under Part 5 of the Planning & Environment Act to any owner or former owner of the land at any time prior to its compulsory acquisition in February 2004;
(c)as at February 2004, had the Freeway Corridor never been the subject of a proposed main road reservation, it would have been zoned ‘Residential 1’ under the prevailing Cardinia Planning Scheme;
(d)Candibon was to retain ownership of the Southern Parcel, the Freeway Corridor and lots 3 and 4 adjoining the Freeway Corridor to the north until the compulsory acquisition of the Freeway Corridor in February 2004; and
(e)as at February 2004, had the Freeway Corridor never been the subject of a proposed main road reservation, the Southern Parcel would have been zoned ‘Residential 1’ under the then prevailing Cardinia Planning Scheme.

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

(a)the Southern Parcel was destined to undergo the rezoning process that has led to its present day zoning; and
(b)the concept of rezoning the land to its present day zoning was first approved in principle by the Council and the Minister for Planning in mid 1998.

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

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

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

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

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

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

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

Conclusion

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

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

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

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

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

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

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

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

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

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

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

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

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

The proceeding is dismissed.

As was discussed between Counsel on 1 March 2010, the defendants believe that there are deficiencies in the plaintiff’s discovery.
Please provide discovery of the following documents:
1. All documents setting out the plaintiff’s financial position between 1 July 1996 and 30 June 2001 …

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

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

[2010] VSC 415

29 August 2011