Capela v Minister for Energy, Environment and Climate Change
[2018] VSC 360
•6 July 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION & PLANNING LIST
S CI 2017 02426
| MARIA CAPELA & ANNA SLUKA (as joint executors of the Will of Ana LIPTAK) | Plaintiffs |
| v | |
| MINISTER FOR ENERGY, ENVIRONMENT AND CLIMATE CHANGE | Defendant |
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JUDGE: | EMERTON J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 February 2018 |
DATE OF JUDGMENT: | 6 July 2018 |
CASE MAY BE CITED AS: | Capela v Minister for Energy, Environment and Climate Change |
MEDIUM NEUTRAL CITATION: | [2018] VSC 360 |
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VALUATION AND COMPENSATION — Amendment to the Melton Planning Scheme — Imposition of Public Acquisition Overlay for Western Grasslands Reserves — Compensation for planning ‘blight’ —Land-owner died without making a compensation claim — Executors of the estate propose to sell the land and distribute the proceeds to beneficiaries — Executors seek declaratory relief that they are not ineligible to claim compensation for financial loss suffered as a natural, direct and reasonable consequence of the reservation upon on a sale of the land —Availability of declaratory relief — Whether executors are ‘owners’ of the land affected by the reservation for the purposes of s 98(1) of the Planning and Environment Act 1987 — Halwood Corporation Ltd v Roads Corporation [1998] 2 VR 439 and Halwood Corporation Ltd v Roads Corporation (1995) 89 LGERA 280 followed — Planning and Environment Act 1987 ss 98, 99(b), 101, 106 and 108.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr Michael Rush | Rennick & Gaynor |
| For the Defendant | Ms Lisa Hannon | Victorian Government Solicitor’s Office |
HER HONOUR:
Introduction
This proceeding concerns the entitlement of executors and trustees of a deceased estate to make a claim for compensation under Part 5 of the Planning and Environment Act 1987 (the ‘PE Act’) for the diminution in the value of land forming part of the estate resulting from its reservation for public purposes.
On 31 July 2008, Ana Liptak became the sole registered proprietor of land at 490–506 Downing Street, Mount Cottrell (the ‘Land’).[1]
[1]The land is more particularly described as Lot 4 on Plan of Subdivision 073154 in Certificate of Title Volume 8627, Folio 602.
On 6 August 2010, Notice of Approval of Amendment VC68 to the Melton Planning Scheme was published in the Government Gazette, introducing Public Acquisition Overlay 5 (the ‘Reservation’) into the Scheme. The Reservation affected the whole of the Land, reserving it for a public purpose as ‘Western Grassland Reserves’.
Ana Liptak died on 22 January 2016 and, on 22 March 2016, probate was granted of her last will and testament (the ‘Will’). By the Will, Ana Liptak appointed the plaintiffs and Michael Liptak[2] as executors and trustees of her estate, which included the Land. Mrs Liptak’s real and personal estate was devised to her trustees upon trust to be divided among her children and grandchildren.
[2]On 28 September 2012, Michael Liptak died, leaving the plaintiffs as the surviving executors of the Will and trustees of Mrs Liptak’s estate.
On 27 May 2016, the plaintiffs gave the Minister for Environment, Climate Change and Water (the ‘Minister’) notice in writing of their intention to sell the Land in accordance with the requirements of s 106(1)(b) of the PE Act. In that letter, the plaintiffs also sought confirmation from the Minister that a claim for compensation for planning blight made by them would constitute a claim by the ‘owners’ of the Land for the purposes of s 98 of the PE Act.
On 10 February 2017, the solicitor for the Minister wrote to the plaintiffs stating, among other things, that it would not be appropriate for the Minister to form a view on a claim not yet made, and that there might be ‘a real issue’ as to the entitlement of the plaintiffs, as executors, to make a claim under s 98(1) of the PE Act by reason of the decision of this Court in Halwood Corporation Ltd v Roads Corporation.[3] In brief, the Court of Appeal in Halwood held that the word ‘owner’ in s 98(1) of the PE Act meant the owner of the land at the time of the imposition of the reservation or other prescription. It is uncontroversial that Mrs Liptak was the registered proprietor of the Land when the Reservation was imposed.
[3][1998] 2 VR 439 (‘Halwood’).
The plaintiffs now seek declaratory relief from this Court as to their ability, in their capacity as joint executors of the estate of Mrs Liptak, to make a claim for compensation as ‘owners’ of the Land in circumstances where the Land is affected by the Reservation.
Specifically, the plaintiffs seek declarations that the plaintiffs in their capacity as joint executors of the estate of the late Ana Liptak:
(a)are, for the purposes of ss 98(1)(a), 99(b), 101, 106 and 108(1) of [the PE Act] the owners of [the Land];
(b)are not, by reason of s 108 of the Act, ineligible to claim compensation from the defendant under s 98(1)(a) of the PE Act;
(c)pursuant to ss 98(1)(a) and 99(b) of the PE Act, have a right to compensation from the defendant and the defendant has a liability to pay compensation to the plaintiffs on a sale of the Land by the plaintiffs and satisfaction of the requirements in s 106(1)(a) of the Act;
(d)are, pursuant to ss 98(1)(a) and 101 of the Act, entitled to claim from the defendant legal, valuation and other expenses reasonably incurred in preparing and submitting a claim for compensation to the defendant, on a sale of the Land by the plaintiffs and satisfaction of the requirements in s 106(1)(a) of the Act.
In support of their Originating Motion, the plaintiffs rely on the following affidavits:
(a) affidavit of Maria Capela sworn on 13 June 2017;
(b) affidavit of Ana Sluka sworn on 13 June 2017;
(c) affidavit of Pavel Sluka sworn on 24 May 2017;
(d) affidavit of Susan Struhs sworn on 24 May 2017;
(e) affidavit of Michael Liptak[4] sworn on 1 June 2017; and
(f) supplementary affidavit of Michael Liptak sworn on 29 July 2017.
[4]I note that the Michael Liptak who has sworn the affidavits referred to in paragraphs (e) and (f) above is the son of the Michael Liptak who was, until his death, a joint executor of the Will.
No claim for compensation has yet been made under the PE Act.
The plaintiffs submit that the declarations sought in the Originating Motion are directed to providing them with clarity and certainty about their standing to make a claim for compensation under the PE Act if they sell the Land at a lower price than might reasonably have been expected had the Land not been reserved for a public purpose. They say that if a claim for compensation is not available, they propose to retain the Land pending its compulsory acquisition. However, if the Court makes the declarations sought, then the plaintiffs, as executors, will take steps to sell the Land. The beneficiaries of the Will have provided their consent to this course.
The Minister agrees that the question of whether the plaintiffs are possessed of a right under s 98(1)(a) of the PE Act is one which may be capable of being the subject of declaratory relief. However, she submits that declarations as to the existence of a ‘right’ under s 98(1)(a) ought to be generally refused on discretionary grounds prior to and in the absence of a claim for compensation having been made, other than in special circumstances.
The difficulty with this submission and, indeed, the difficulty for the plaintiffs in administering Mrs Liptak’s estate, is that under the statutory arrangements, it is not possible for them to make a claim for compensation until the Land is sold. If they sell the Land in order to put themselves in a position to make a claim for compensation and the Land sells for less than the amount for which it would have sold without the Reservation, and they are then denied the opportunity to claim compensation under the PE Act because they were not the ‘owners’ of the Land at the relevant time, the estate will suffer a loss. The estate would not suffer such loss if the plaintiffs waited for the compulsory acquisition of the Land.
The making of a declaration as to the plaintiffs’ ability to claim compensation under s 98(1)(a) of the PE Act as owners of the Land for any diminution in value resulting from the Reservation would therefore have a real purpose and consequence. A declaration of the kind sought in paragraph (a) of the originating motion would directly affect the way in which the estate was administered in the interest of beneficiaries.
In these circumstances:
(a) the proceeding does not involve a question that is merely abstract or hypothetical; and
(b) the declaration sought, if made, would not relate to circumstances that may never happen or produce no foreseeable consequences for the parties.[5] To the contrary, the plaintiffs have stated that they propose to sell the Land and proceed to claim compensation for financial loss suffered as a consequence of the (already existing) planning blight constituted by the Reservation.
[5]See Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; Knight v Wise [2014] VSC 76.
There is also a proper contradictor in this proceeding in the form of the Minister.
In my view, this would be an appropriate case for the Court to make a declaration of the kind sought in paragraph (a), should the declaration reflect the law.
It is necessary, therefore, to consider whether the declarations sought by the plaintiffs reflect the law. This depends on the construction of the statute. Unfortunately, the provisions in question are notoriously difficult to construe.
Statutory scheme
The provisions governing statutory compensation for planning blight are contained in Pt 5 of the PE Act. Part 5 does not deliver compensation for the compulsory taking of land but, rather, for any adverse effects on the use or ability to dispose of land as a result of a reservation. It presupposes that the land remains in the ownership or occupancy of the claimant and therefore provides a right to compensation in a narrower set of circumstances than for the compulsory taking of land. Access to compensation is restricted in a number of ways. For example, compensation is available only to owners and occupiers,[6] as opposed to any person who has an interest in the land, and only upon the happening of certain ‘trigger’ events.[7] Any compensation paid is recorded on title[8] and can be later recovered if the reservation is removed.[9] Compensation paid is to be taken into account in any later claim under Pt 5[10] and if the land is later compulsorily acquired.[11]
[6]PE Act s 98(1).
[7]Ibid s 99.
[8]Ibid s 110.
[9]Ibid s 111.
[10]Ibid s 102.
[11]Land Acquisition and Compensation Act 1986 s 41(7) (‘LAC Act’).
It is convenient to set out the relevant provisions in full, because the authority with which the parties must grapple concerning the proper construction of s 98(1) and who, as the ‘owner’ of the land may claim compensation — Halwood — concerns a claim arising from the refusal of a permit rather than a claim arising upon the sale of land. There are specific provisions in the PE Act for the latter contingency with which the Court is concerned in this proceeding.
Sections 98(1) and (2) of the PE Act provide:
Right to compensation
(1)The owner or occupier of any land may claim compensation from the planning authority for financial loss suffered as the natural, direct and reasonable consequence of—
(a)the land being reserved for a public purpose under a planning scheme; or
(b)the land being shown as reserved for a public purpose in a proposed amendment to a planning scheme of which notice has been published in the Government Gazette under section 19; or
(c)a declaration of the Minister under section 113 that the land is proposed to be reserved for a public purpose; or
(d)access to the land being restricted by the closure of a road by a planning scheme.
(2)The owner or occupier of any land may claim compensation from a responsible authority for financial loss suffered as the natural, direct and reasonable consequence of a refusal by the responsible authority to grant a permit to use or develop the land on the ground that the land is or will be needed for a public purpose.
Section 99 relevantly provides:
When does the right to compensation arise?
A right to compensation and the liability of a planning authority or responsible authority to pay compensation arises—
(a)under section 98(1)(a), (b) or (c) after—
(i)the responsible authority has refused to grant a permit for the use or development of the land on the ground that it is or may be required for a public purpose; or
(ii)the Tribunal directs that a permit must not be granted on the ground that the land is or may be required for a public purpose; or
(iii)the responsible authority—
(A)fails to grant a permit within the period prescribed for the purposes of section 79; or
(B)grants a permit subject to any condition which is not acceptable to the applicant—
and the Tribunal disallows any application for review of the failure or condition on the ground that the land is or may be required for a public purpose; or
(b)under section 98(1)(a), (b) or (c), on the sale of the land concerned under section 106; or
(c)under section 98(1)(d), on the coming into operation of the relevant provision of the planning scheme; or
(d)under section 98(2), on the refusal of the permit.
Section 106(1) provides:
Loss on sale
(1)The owner of land may claim compensation under section 98 after the sale of the land if—
(a)the owner of the land sold it at a lower price than the owner might reasonably have expected to get if the land or part of the land had not been reserved or proposed to be reserved; and
(b)before selling the land, the owner gave the relevant authority not less than 60 days notice in writing of the owner's intention to sell the land.
Section 108 precludes claims for compensation from certain persons. It provides:
Persons who are not eligible to claim compensation
(1)A person does not have a claim for compensation in respect of any land if that person was not the owner or occupier of the land at the time the right to claim compensation arose.
(2)A person does not have a claim for compensation in respect of the sale of land which the person acquired after—
(a)notice is published in the Government Gazette under section 19 of a proposed planning scheme or amendment to a planning scheme which shows the land as being reserved for a public purpose; or
(b)the approval of a planning scheme or amendment reserving the land for public purposes; or
(c)a declaration under section 113 that the land is proposed to be reserved for public purposes—
unless a subsequent amendment to the planning scheme provides or proposes more stringent planning controls over the use or development of the land.
Having regard to the fact that the Court is here concerned to determine whether the plaintiffs, as the executors of the estate of Mrs Liptak and as persons who are or are entitled to become the registered proprietors of the Land, qualify as the ‘owners’ of the Land for the purposes of s 98(1)(a) upon its sale, the statutory scheme is, in short, as follows:
(a) The owner of land may claim compensation from the planning authority for ‘financial loss suffered as the natural, direct and reasonable consequence’ of the land being reserved for a public purpose under a planning scheme (s 98(1)(a)).
(b) A right to compensation and the liability of a planning authority to pay compensation arises under s 98(1)(a) on the sale of the land under s 106 (s 99(b)).
(c) The owner of land may claim compensation under s 98(1) after the sale of the land if the land sold for a lower price than the owner might reasonably have expected to get if the land had not been reserved for a public purpose (s 106(1)(a)).
(d) A person does not have a claim for compensation in respect of any land if that person was not the owner of the land at the time the right to claim compensation arose (s 108(1)).
(e) A person who acquired land after its reservation does not have a claim for compensation in respect of financial loss suffered from its sale (s 108(2)).
‘Owner’ is defined in s 3 of the PE Act to include the person who is registered or entitled to be registered as proprietor, or the persons who are registered or entitled to be registered as proprietors, of an estate in fee simple in the land.
It is uncontroversial that the plaintiffs, as the executors of the Will, are now the ‘owners’ of the land for the purposes of the compensation provisions in the PE Act because, by operation of s 49 of the Transfer of Land Act 1958, they are entitled to become registered as proprietors of the Land. However, in August 2010, when the Reservation was imposed, the plaintiffs were not yet entitled to become the registered proprietors of the Land. Mrs Liptak was still alive and was the sole registered proprietor of the Land.
Plaintiffs’ submissions
The plaintiffs submit that their right to claim and obtain compensation under the PE Act for any financial loss suffered by the estate on the sale of the Land as a result of the Reservation is reflected in the objects of the legislation, one of the objectives of planning in Victoria being to provide ‘compensation when land is set aside for public purposes and in other circumstances’.[12] Section 98 of the PE Act identifies five situations in which an owner of land may claim compensation, including when the owner suffers financial loss as the ‘natural, direct and reasonable consequence’ of ‘land being reserved for a public purpose under a planning scheme’. Section 98 also defines the person against whom that right to claim is exigible, in this case, the Minister as the planning authority. The ‘trigger’ which gives rise to the right to be paid and to the liability to pay is provided by s 99 of the PE Act which, in this case, is the sale of the land under s 106.
[12]PE Act s 4(2)(l).
In this context, so the plaintiffs submit, the proper construction of s 98(1) of the PE Act is that the ‘owner’ is the person who sells the land and suffers loss as a consequence of the blight on it. They submit that the use of the words ‘financial loss’ and ‘was suffered’ in the chapeau to s 98(1) establish that the pecuniary loss must have been suffered before any right exists, which, in the case of reserved land which is sold, must occur after the sale of the land. The financial loss which is critical to the conferral of a right under s 98(1) is informed by the text of s 106(1).
The construction of s 98(1) advanced by the plaintiffs relies, in part, on the fact that the same words — ‘the owner [or occupier] of [any] land may claim compensation’ — are used in the chapeau to both s 98(1) and s 106(1). The chapeau to s 106(1) continues with the words, ‘under section 98’, and the plaintiffs submit that s 106 should therefore be read to mean, ‘[t]he owner may claim compensation under s 106 from the planning authority for financial loss suffered as a natural, direct and reasonable consequence of the reservation’. Hence, according to the plaintiffs, s 106 is not limited to specifying when the entitlement to bring a claim arises; rather, it informs the existence of any right under s 98(1). Where the financial loss that must be suffered for the purposes of s 98(1) is the financial loss on the sale of the land, the person who is the ‘owner’ of the land is the person who suffers that financial loss. In this case, it will be the plaintiffs.
As to the operation of s 108(2), the plaintiffs submit that the question the Court has to address is whether the term ‘acquired’ includes a situation where property is transferred upon the death of the registered proprietor to that person’s personal representative, in this case, Mrs Liptak’s executors. The word ‘acquired’ must take its meaning from the text in which it is found, from the surrounding circumstances and from the purposes of the PE Act. The plaintiffs submit that they, as executors, did not ‘acquire’ the Land upon Mrs Liptak’s death. There is no active sense in which they participated in a transaction with Mrs Liptak. Instead, by operation of law, the Land vested in them. The word ‘transmission’ better describes what occurred pursuant to s 13 of the Administration and Probate Act 1958, and by Part 4, Division 2 of the Transfer of Land Act 1958.
Analysis
The construction advanced by the plaintiffs based on the interaction between ss 98 and 106 of the PE Act is attractive. These provisions must be read together in the context in which they appear, including Pt 5 of the PE Act as a whole and, where appropriate, related or complementary provisions of the Land Acquisition and Compensation Act 1986 (the ‘LAC Act’).
It is clear that the word ‘owner’ in s 106(1) — both in the chapeau and in paragraphs (a) and (b) — refers to the owner of the land at the time of its sale. Section 106 provides that the owner of the land at the time of its sale is entitled to claim compensation under s 98 if he or she has suffered financial loss as a result of the diminution in the value of the land as a consequence of the reservation or proposed reservation of the land.
There is a presumption — albeit a readily rebuttable one — that words are used consistently in a statute.[13] If ss 98 and 106 are read together and given their ordinary and current meaning, the ‘owner’ who has sold the land and suffered loss in accordance with s 106 will also be the ‘owner’ upon whom a substantive right to claim compensation is conferred by s 98(1). Furthermore, because compliance with s 106(1) means that the causal connection is satisfied, financial loss suffered by the owner resulting from the sale of his or her land ‘at a lower price than the owner might reasonably have expected to get’ if the land had not been reserved will be ‘financial loss suffered as the natural, direct and reasonable consequence’ of the reservation by the same owner for the purposes of s 98(1). Hence, if regard is had only to the language of these two provisions, the ‘owner’ in s 98(1) need not necessarily be the person who owned the land at the time of the reservation. Insofar as Pt 5 should be construed as denying compensation to an owner who acquired the land after reservation and in full knowledge that it was subject to a reservation (and thereby, presumably, paid a price for it reflecting the existence of the reservation), s 108(2) prevents such an owner from claiming compensation in respect of the sale of land.[14] It is unnecessary to construe s 98(1) restrictively to achieve this purpose.
[13]Registrar of Titles (WA) v Franzon (1975) 132 CLR 611, 618.
[14]Unless a subsequent amendment is made imposing more stringent controls over the use and development of the land.
However, it is necessary to consider the construction of s 98(1) advanced by the plaintiffs by reference to Halwood and the decision below in Halwood Corporation Ltd v Roads Corporation.[15] The claimant in Halwood was a developer who purchased land in the knowledge that part of the land was subject to a road reservation. The vendor of the land had neither claimed nor been paid any compensation for loss arising from the reservation. On being refused a permit to develop the reserved land because it was affected by the road reservation, the developer asserted a right to be paid compensation under Pt 5 of the Act. The developer claimed compensation under both s 98(1) in relation to the reservation of the land by the respondent as a ‘planning authority’ and under s 98(2) in relation to the permit refusal by the responsible authority.
[15](1995) 89 LGERA 280 (‘Halwood at first instance’).
The decision of the Court at first instance had the effect of denying the developer compensation, principally for the reason that the developer’s loss from the refusal of the permit could not in law be a financial loss that was the ‘natural, direct and reasonable consequence’ of either the reservation of the land or the permit refusal on the stipulated ground. However, the Court at first instance, and then the Court of Appeal, also considered whether the developer was the ‘owner’ of the land for the purposes of s 98(1)(a), holding that the ‘owner’ referred to in s 98(1) must be the owner of the land at the time the reservation was imposed or proposed.
In Halwood at first instance, Batt J ordered and conducted a trial of two preliminary questions referrable to the operation of ss 98(1) and s 98(2) respectively:[16]
[D]oes the fact that the reserved land was reserved for a public purpose under a planning scheme at the date of the purchase mean that any financial loss which the purchaser has suffered cannot in law be a financial loss suffered as the natural, direct and reasonable consequence of—
(a)the land being reserved for a public purpose under the planning scheme; or
(b)a refusal by the responsible authority to grant a permit to develop the land on the ground that the land is or will be needed for a public purpose?
[16]Ibid 282.
In relation to both the s 98(1) claim and the s 98(2) claim, Batt J held that the fact that the land was already reserved for a public purpose under the planning scheme at the date of purchase by the developer meant that any financial loss which the developer later suffered could not in law be a financial loss suffered as the ‘natural, direct and reasonable consequence’ of the land being reserved for a public purpose.[17] However, Batt J also undertook the task of construing s 98(1) of the PE Act generally and specifically as to the meaning of the word ‘owner’ in that section. As a result of this analysis, his Honour held that the ‘owner’ referred to in s 98(1) was the owner at the time of the reservation or proposed reservation, not the owner at the time of the permit refusal referred to in s 99.
[17]Ibid 304, 307.
The starting point for his Honour’s analysis was that s 98 specifies the rights to and liabilities for compensation, whereas s 99 merely specifies the precondition or ‘trigger’ to the right to claim and the liability to pay compensation.[18] Section 98 is substantive, whilst s 99 is procedural and temporal.[19] In this regard, Batt J followed earlier decisions of the Court in City of Nunawading v Day[20] and Cape Developments Pty Ltd v City of South Barwon.[21] In the Nunawading Case, JD Phillips J, considering the nature and effect of a reservation and the relationship between ss 98 and 99, said:[22]
reservation does little more than subject all changes in use to the requirement that the responsible authority first grant a permit; it does not finally commit the land in question to the purpose behind the reservation.
Reservation alone, or even proposed reservation, can nevertheless justify a claim for compensation under s 98(1) and it is appropriate that s 99 should then provide a ‘trigger’ to give rise to the right to claim compensation and the liability to pay compensation. That is the purpose of s 99(a) and (b).
[18]Ibid 286.
[19]Ibid.
[20][1992] 1 VR 211 (‘Nunawading Case’).
[21][1982] VR 1011.
[22]Nunawading Case [1992] 1 VR 211, 226.
After discussing the difference between the language of s 99(a) and that of s 98(2), JD Phillips J continued:[23]
Thus, in my opinion, s 98 and 99 are different in kind and in effect. The first defines the subject matter of a claim for compensation and the second is but the ‘trigger’ to the right to compensation in the claimant and the liability to pay compensation in the respondent, its terms are irrelevant to the definition of the subject matter of the claim. The distinction I have drawn between the two sections is in line with the view of Gobbo J in Cape Developments … about earlier legislation.
[23]Ibid 226–7 (citation omitted).
Although concerned with a claim for financial loss arising from the refusal of a permit and not with a loss on sale, Batt J also analysed the relationship between the substantive right in s 98(1) and the ‘triggering’ event in the form of a sale under s 106 by contrasting it with the relationship between the substantive right in s 98(2) (the right to make a claim against the responsible authority for a permit refusal) and the relevant triggering event in s 99(d) (the refusal of the permit). His Honour observed that the triggering event for a claim under s 98(2) is, by s 99(d), the very event which s 98(2) requires as causative of financial loss, namely, the refusal of a permit. However, this is not the case for claims under s 98(1). The triggering events for claims under s 98(1) are events which the claimant can either precipitate by the claimant’s own action in applying for a permit or can bring about in the case of a sale. His Honour held that where a sale of the land is the triggering event, the subject matter of the claim which a seller may make is defined by, and the right to claim is conferred by, s 98(1), not by s 106. Section 106 quantifies the loss caused.[24]
[24](1995) 89 LGERA 280, 287.
The analysis carried out by Batt J turned in large part on s 108 of the PE Act, the developer having submitted that s 108 recognises that a subsequent owner has a claim for loss otherwise than on sale because, if it were not so, s 108(2) would be unnecessary. Justice Batt stated that s 108(1) enabled the analysis of ss 98 and 99 ‘to be carried further forward’,[25] which I take to mean beyond the distinction drawn in the Nunawading Case between the substantive right in s 98 and the procedural ‘trigger’ in s 99. As a result of carrying the analysis forward in this way, Batt J concluded that a person such as the developer, who was not the owner or occupier at the time of the imposition of the reservation, could not make a claim under s 98(1)(a) because s 98(1), properly construed, required the ‘owner’ to be the owner of the land at the time the reservation was imposed or proposed.
[25]Ibid 290.
Justice Batt reasoned that because the refusal of a permit on the stated ground was the causative and constituent event under s 98(2) and the corresponding triggering event under s 99(d), even without s 108(1), for a person to be eligible to claim compensation under s 98(2), the person had to be the owner or occupier at the time of refusal of the permit. However, in the case of claims under ss 98(1)(a), (b) and (c), the causative and constituent events referred to in those paragraphs were not the same as the triggering events stipulated in s 99(a). The triggering events in s 99(a) (permit refusals and variations on permit refusals) necessarily occurred after the events referred to in s 98(1) (the imposition or proposal of a reservation). Section 108(1), which provided that a person did not have a claim for compensation if the person was not the owner at the time the right to claim compensation arose, related to the triggering events only. Accordingly,[26]
to avoid s 108(1) being merely repetitive of part of s 98(1) and so surplusage, s 98(1), when referring to ownership and occupation, must be read as referring to ownership and occupation at the time of the occurrence of the causative and constituent events there mentioned, that is at the time of the imposition or proposal of the reservation. This is in any case, in my view, the natural meaning of s 98(1), but s 108(1), as indicated, serves to confirm that meaning …
Section 108(2) … tends to support this interpretation of s 98(1) because it emphasises the importance, in the scheme for compensation, of ownership at the time of the imposition or proposal of the reservation.
[26]Ibid 290–291.
As to why s 108(2) was necessary, Batt J reasoned that a sale under s 106 not only expressly constituted the trigger (under s 99(b)) for a right to compensation under ss 98(1)(a), (b) or (c) but, by virtue of s 106(1)(a), the sale furnished both the measure of the owner’s loss and the satisfaction of the causal requirement of s 98(1). Because s 106 meant that a person claiming compensation in respect of a sale did not, as a practical matter, have to satisfy the express or implied requirements of s 98(1) as to ownership, loss and causation, s 108(2) was necessary in order to ensure that persons who did not satisfy those requirements could not bypass them by means of s 106. Thus, s 108(2) was designed to deal with the particular problem raised by s 106 and it did not, by implication, say anything about any other claims for compensation under s 98(1).[27] The expression of the ownership requirements for them was to be found in s 98(1), as well as s 108(1).
[27]Ibid 289.
I find the reasoning in Halwood at first instance difficult to grasp. I do not, for example, understand why s 108(2) is necessary if the ownership requirements for a claim under s 98(1) are already contained in s 98(1) and s 108(1). Is it to be inferred that the ownership requirements where there is a claim for a loss on sale are not contained in s 98(1)? This would involve the word ‘owner’ in s 98(1) bearing a different meaning depending on whether the claim was made on the basis of a permit refusal or a loss on sale.[28]
[28]The parties were asked by the Court to identify authority in which a word such as ‘owner’ in a statutory provision was held to bear different meanings depending on circumstances. The Court was not referred to any useful authority.
Furthermore, so far as claims for financial loss arising from a permit refusal are concerned, Batt J made it tolerably clear that he considered that the ‘owner’ in s 98(2), who has a right to claim compensation for a permit refusal under that section, is the owner at the time of the refusal:[29]
because the refusal of a permit on the stated ground is both the causative and constituent event under s 98(2) and the corresponding triggering event under s 99(d), it is obvious, even without s 108(1), that for a person to be eligible to claim compensation under s 98(2) the person must be the owner or occupier at the time of the refusal of the permit.
[29]Ibid 290 (emphasis added).
That this means the claimant under s 98(2) does not need to be the owner at the time of reservation is, in my view, confirmed by other passages in the judgment in Halwood at first instance. Justice Batt described the right under s 98(2) as being ‘never inchoate, but instantaneously mature’[30] and stated that, unlike the right in s 98(1), under s 98(2) no question of the (subsequent) purchaser’s standing to claim arose.[31] This reflects his Honour’s description of the two forms of entitlement to claim compensation conferred by s 98: one, under s 98(1), ‘arising out of’ various forms of planning prescriptions; the other, under s 98(2), ‘arising out of’ the refusal of a permit on a specified ground.[32] The planning prescription is the source of the right in s 98(1) and the refusal of the permit is the source of the right in s 98(2).
[30]Ibid.
[31]Ibid 286.
[32]Ibid.
If I am correct about the availability of a claim under s 98(2) where a claim under s 98(1) would be precluded because of the ownership requirement, I do not understand the legislative purpose (insofar as one can be imputed) in allowing an owner who was not the owner at the time the reservation was imposed or proposed to make a claim for compensation under s 98(2) following a permit refusal, but denying the same owner the right to make a claim under s 98(1) for compensation triggered by a permit refusal. While the respondent to each claim may be different — or, if the same, acting in a different capacity — the ‘blight’ on private property and the financial loss suffered upon the refusal of a permit will be the same.
In my view, the anomaly that might, in this case, permit the plaintiffs to make a claim under s 98(2) for the compensation that they are barred from claiming under s 98(1), raises doubt as to the correctness of the construction of s 98(1) reached by the judge at first instance.
Having regard to the complexity of Batt J’s reasoning, there may have been scope to find, in the interstices of the judgment text, the possibility that the ownership requirement in s 98(1) applied to a claim for compensation for a permit refusal but not to a claim for loss on sale. However, in upholding the decision below and endorsing the reasoning of the trial judge, the Court of Appeal confirmed in definitive and arguably more expansive terms the holding that the ‘owner’ in s 98(1) is the person who was the owner or occupier at the time the reservation was imposed or proposed.
Justice Tadgell (with whom Brooking and Ormiston JJA agreed) recognised the ‘essential reason’ for Batt J’s answer to the preliminary question concerning the operation of s 98(1) to be that an owner could never demonstrate ‘financial loss suffered as the natural, direct and reasonable consequence of’ a planning prescription of the kind specified in s 98(1).[33] However, Tadgell JA also considered and agreed with the further basis for Batt J’s answer to the first preliminary question, namely, that s 98(1) did not allow compensation to a claimant who was not an owner or occupier of the subject land at the time that the relevant planning prescription was imposed or proposed. Part 5 was designed to compensate for financial loss flowing from the imposition of a prescription to which s 98(1) refers and, upon the assumed facts, the developer could not be said to have suffered loss which flowed from the imposition of the relevant reservation rather than from the purchase of already blighted land.[34]
[33][1998] 2 VR 439, 443.
[34]Ibid 447.
Justice Tadgell recorded and rejected the ‘fundamental submission’ made by the appellant/developer that the substantive entitlement to compensation under Pt 5 was derived not from s 98 alone, but from s 98 in combination with s 99, and that s 99 ensured that compensation was not available to an owner or occupier of land except by reason of the operation of the relevant planning scheme, which could not occur until the prescription actually had an impact on the use and development of the land. In response, Tadgell JA stated that what was said in the Nunawading Case was accurate, save as follows:[35]
I should prefer to say that the right to claim is given by both sub-ss (1) and (2) of s 98, and that s 99 provides a ‘trigger’ to give rise to a right to be paid and a liability to pay. In the case of a claim made under s 98(1)(a), (b) or (c) the ‘trigger’ available to the claimant by virtue of s 99 may be one of two kinds: either (i) the claimant’s failure to obtain a permit in circumstances described in s 99(a) or (ii) a sale in the circumstances described in s 106(1).
[35]Ibid 447–8 (emphasis in original).
His Honour expressly rejected the developer’s submission that the reservation of land under a planning scheme could not per se depreciate the land’s value and went on to consider the developer’s argument that the terms of s 98(1) recognised that the right to claim compensation depended not upon the claimant’s financial loss suffered as the consequence of an event, being the imposition of a planning prescription, but upon a circumstance or state of affairs namely, ‘the land being reserved for a public purpose under a planning scheme’. On this basis, so the developer submitted, compensation was available to a claimant, being an owner or occupier who suffered financial loss at any time as the consequence of a relevant reservation, whether or not the claimant was owner or occupier when the reservation was imposed.
In response to this argument, Tadgell JA said:[36]
The evident purpose of s 98(1)(a), in my opinion, is not to prescribe a qualifying characteristic of land which entitles its owner or occupier to claim compensation, but to specify substantively the owner or occupier of land who may claim compensation for financial loss as a consequence of a designated act in relation to land, namely the land’s reservation for a public purpose under a planning scheme. To adopt the dichotomy referred to above, it is the act of reserving the land, rather than the land’s condition or state of reservation that is the prescribed criterion.
[36]Ibid 449.
Justice Tadgell held that reservation alone could justify a claim for compensation under s 98(1). This, his Honour said, was sufficient to gainsay the contention that no right to claim compensation arose until compensation could be adequately quantified and became payable by virtue of the happening of an event described in s 99. His Honour said:[37]
Having considered all the arguments, I am satisfied that none of the provisions relied on for the appellant is inconsistent with the conclusion that s 98, to the exclusion of s 99, is the source of entitlement to a claim for compensation under Pt 5, and that the entitlement to claim under s 98(1)(a) is confined to those who were owners and occupiers at the time of the imposition of the relevant planning reservation.
[37]Ibid 450 (emphasis added). The provisions relied on by the appellant are recorded as being ss 102, 106 and 108 as well as, of course, s 99.
The proper construction of s 98(1) is, therefore, that the entitlement to claim under s 98(1)(a) is confined to those who were owners and occupiers at the time of the imposition of the relevant planning reservation. In so holding, Tadgell JA drew no distinction between claims made under s 98(1) triggered by a permit refusal and those triggered by a loss on sale.
As to whether s 98(1) is qualified by any of the other provisions in Pt 5, Tadgell JA said:[38]
Section 99(b) does not in terms describe circumstances in which a person has a claim for compensation: those circumstances are described in s 98(1) and (2); and s 99 defines the conditions precedent to a right to be paid and the corresponding liability to pay the compensation … I consider that the learned judge was right to conclude that s 98(1) is not overridden or qualified by the other provisions of Pt 5, and that his interpretation of s 98(1) was correct.
[38]Ibid.
Justice Tadgell considered and rejected the developer’s argument that s 108 recognises that a subsequent owner has a claim for loss otherwise than on sale because s 108(2) would be unnecessary in the absence of such an entitlement. Justice Tadgell reasoned simply that to say a person has no claim for compensation in respect of the sale of land acquired after the occurrence of any of the events stipulated in s 108(2) does not logically suggest that the person has a claim for compensation if none of those events occurs.[39]
[39]Ibid 450.
In summary, the Court of Appeal in Halwood construed s 98(1) of the PE Act so as to confine the right to make a claim under s 98(1)(a) to persons who were the owners or occupiers of the land at the time the reservation was imposed or proposed. In so doing, the Court of Appeal confirmed that the trial judge was correct to conclude that s 98(1) is not overridden or qualified by the other provisions of Pt 5.
The question, then, is whether I am bound to hold that, in circumstances where the estate of Mrs Liptak will suffer financial loss as described in s 106(1)(a) upon the sale of the Land, her executors have no entitlement to claim compensation under Pt 5 of the PE Act because they were not the owners of the Land when the Reservation was imposed in August 2010. Halwood was concerned with the entitlement of a subsequent purchaser to claim compensation upon the refusal of a planning permit, not with any entitlement to claim compensation following a loss on sale in accordance with s 106 of the PE Act. Furthermore, the principal reason for denying the entitlement to compensation to the developer was a break in the chain of causation: in circumstances where the purchaser had acquired the land knowing that part of it was reserved for a public purpose, it could not be said that any financial loss suffered as a result of the permit refusal was the ‘natural, direct and reasonable consequence’ of the reservation of the land.
However, it cannot be said that Halwood has nothing to say about the availability of compensation for a loss on sale. In the course of his judgment, Batt J considered the meaning of s 106 and its relationship with s 98(1), stating that where a sale of the land was the triggering event, the subject matter of the claim which a seller might make was defined by, and the right to claim was conferred by, s 98(1), not by s 106. Section 106 quantified the loss caused.[40] This is consistent with the holding by the Court of Appeal that s 98 is the source of the entitlement to claim compensation, that it defines the subject matter of the claim and that it is not qualified by the other provisions in Pt 5.
[40](1995) 89 LGERA 280, 287.
It is clear that 106 does not, in and of itself, create an entitlement to compensation for a loss on sale. The chapeau to s 106 provides that the entitlement to claim compensation arises ‘under section 98’, which confers on the owner of the land an entitlement to claim compensation for financial loss caused by the reservation of the land. Based on the language of s 98(1)(a), it is the reservation of the land — not its sale — that gives rise to an entitlement to claim compensation.
It is true that the chapeau to s 106 contains the same or similar words, ‘[t]he owner of land may claim compensation’, as the chapeau to s 98(1), and contemplates that the claim will be made ‘after the sale of the land’. Part 5 of the PE Act generally recognises that financial loss to the owner of land as a consequence of its reservation or proposed reservation can only occur after the reservation or proposed reservation of land. It does so in two circumstances: where a permit to develop the land is refused because of the existence of the reservation and the development potential of the land cannot be exploited; and where the land is sold at a lower price than would otherwise have been achieved because of its limited development potential. Both of these things necessarily occur after the act of reservation that is deemed, by reason of s 98(1), to be the event that is causative of financial loss. ‘[A]fter the sale of the land’ in s 106(1) is one of the points in time at which a quantifiable financial loss resulting from the reservation of land can be ascertained.
In the case of a claim for financial loss that occurs by reason of the sale of the land at less than its pre-reservation value, s 106(1) informs the meaning of s 98(1) to the extent that the ‘financial loss’ in s 98(1) is the financial loss described in s 106(1)(a). However, this does not mean that s 98(1) confers the substantive entitlement to claim compensation in combination with s 106. Halwood is authority for the proposition that s 98(1) describes the subject matter of the claim and that the entitlement to claim compensation under s 98(1) is derived, not from the experience of financial loss upon a sale or permit refusal, but from the imposition (or proposal) of the reservation itself. In this context, Tadgell JA distinguished between ‘being reserved’ as a quality of the land — a state of affairs that will extend over time — and the act of reservation, which takes place in a moment fixed in time. His Honour held that was is the fact of imposing or proposing the reservation per se that gave rise to the substantive right to claim compensation. Further, such an entitlement to compensation belongs to the person who owns the land at that critical point in time, that is, at the time the reservation was imposed or proposed.
If s 98(1) is the sole and unqualified source of the entitlement to claim compensation from the planning authority for the imposition of a reservation, s 106 serves the same purpose as s 99, in that it enables the claim to be advanced by quantifying the loss suffered as a consequence of the reservation of the land. It also ensures that the causal connection between imposition of the reservation (or proposed reservation) and the loss on sale is satisfied.
Based on the authority of Halwood, which binds me, I must conclude that the plaintiffs, although they will be the owners of the Land at the time financial loss is suffered of the kind described in s 106(1), were not the owners of the Land at the time the Reservation was imposed and are therefore not entitled to claim compensation under s 98(1)(a).
In the special circumstances of this proceeding, which were surely not contemplated by the drafters of Pt 5 or by the Court of Appeal in Halwood, the requirement that the person making a claim under s 98(1) be the owner of the land affected by the reservation at the time of its imposition or proposal works a significant unfairness. Mrs Liptak’s entitlement to claim compensation from the planning authority for financial loss caused by the Reservation effectively dies with her. There is an argument to be made that this is not consistent with the objective of the planning framework established by the PE Act ‘to provide for compensation where land is set aside for public purposes’.[41]
[41]PE Act s 4(2)(l).
It seems to me, however, that the plaintiffs’ ownership status at the time the Reservation was imposed may not preclude them from making a claim for compensation under s 98(2), were they to apply for a permit to develop the Land and the permit be refused. However, as the Court heard no argument about the availability of compensation under s 98(2), I say nothing about the plaintiffs’ prospects of successfully making such a claim. I observe only that, following Halwood at first instance, the ownership requirement under s 98(2) appears not to be as restrictive as under s 98(1), notwithstanding that both sections provide for claims for compensation upon the refusal of a permit.
As a final matter, were it necessary to decide, I would hold that the plaintiffs, as executors of the Mrs Liptak’s estate, did not ‘acquire’ their interest in the Land for the purposes of s 108(2) of the PE Act.
Alternative argument: ‘owner’ is ambulatory
The plaintiffs advanced a further argument, albeit faintly, on the assumption that s 98(1) required the owner of the land to be the owner at the time the Reservation was imposed. The argument is a simple and unpersuasive one. At the time of the Reservation — 6 August 2010 — Mrs Capela and Mrs Sluka had been nominated by Mrs Liptak in the Will as her executors and, by reason of that nomination, were the designated persons ‘entitled to be registered’ as proprietors of the Land for the purposes of the definition of ‘owner’ in s 3 of the PE Act. According to the plaintiffs, this definition is not restricted to persons who have an accrued or presently enforceable right to be registered as proprietors of the land in question.
I reject this submission. As at 6 August 2010, the plaintiffs were persons named as executors in the will of a living person and they had no entitlement to be registered as proprietors of the Land. Pursuant to s 49 of the Transfer of Land Act 1958, they could only make application to be registered as proprietors once the testator was deceased.
The definition of an ‘owner’ of land in s 3 of the PE Act applies throughout the PE Act in a variety of different contexts. Extending the definition to include persons who may in the future have an entitlement to become registered proprietors contingent upon the operation or continued operation of some kind of instrument or contract will create considerable uncertainty and may defeat the purpose of any number of provisions that were drafted on the basis that the definition of ‘owner’ in the PE Act applied to a limited and easily ascertainable class of persons.
Conclusion
For the reasons given, the Court will not make the declaration in paragraph (a) of the originating motion and the other declarations sought fall away. The originating motion will be dismissed.