Council of the City of Ryde v Azizi

[2021] NSWCA 165

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Council of the City of Ryde v Azizi [2021] NSWCA 165

Hearing dates:

29 July 2021

Decision date:

06 August 2021

Before:

Basten JA at [1];
Meagher JA at [45];
Payne JA at [46]

Decision:

(1)   Grant Ryde Council leave to appeal from the judgment and orders of the Land and Environment Court delivered on 30 April 2021.

(2)   Order that the draft notice of appeal be filed within seven days of the date of this judgment.

(3)   Dismiss the appeal.

(4)   Order that the Council pay the respondents’ costs in this Court.

Catchwords:

COURTS – Land and Environment Court (NSW) – jurisdiction and powers – class 3 jurisdiction – assessment of value of land compulsorily acquired – enforcement of statutory obligation to pay 90% of Valuer General’s assessment pending resolution of claim – power to make freezing order

LAND LAW – compulsory acquisition of land – payment required by Land Acquisition (Just Terms Compensation) Act 1991 (NSW), s 68(2)(a) – whether payment into trust account of acquiring authority’s solicitor satisfied obligation

Legislation Cited:

Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 34, 41, 42, 44, 47, 48, 65, 66, 68; Pt 2, Div 3; Pt 3, Div 4

Federal Court of Australia Act 1976 (Cth), s 32

Civil Procedure Act 2005 (NSW), Pt 8

Land and Environment Court Act 1979 (NSW), ss 5, 16, 19, 20, 22, 23, 24, 25, 57

Uniform Civil Procedure Rules 2005 (NSW), Pt 25, Div 2; Sch 1

Cases Cited:

Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; [1986] HCA 58

Council of the City of Ryde v Azizi [2019] NSWSC 1605

Council of the City of Ryde v Azizi [2021] NSWCA 120

National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7

Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; [1983] HCA 36

Category:

Principal judgment

Parties:

Council of the City of Ryde (Applicant)
Raymond Boutros Azizi (First Respondent)
Alnox Pty Ltd (Second Respondent)

Representation:

Counsel:
Mr M Hall SC / Ms J McKenzie (Applicant)
Mr I Hemmings SC / Mr T Poisel

Solicitors:
Bartier Perry Lawyers (Applicant)
Madison Marcus (First and Second Respondents)

File Number(s):

2021/136736

 Decision under appeal 

Court or tribunal:

Land and Environment Court

Jurisdiction:

Class 3

Citation:

[2021] NSWLEC 40

Date of Decision:

30 April 2021

Before:

Moore J

File Number(s):

2020/168439; 2020/168457

Judgment

1. BASTEN JA: The principal question raised by this application for leave to appeal is whether the Land and Environment Court has power to order an acquiring authority to pay the former owners of three parcels of land 90% of the value assessed by the Valuer-General, prior to the Court’s determination of the compensation to be paid. Further, if it has such power, can it regulate the terms on which such a payment must be made?

Procedural background

2. On 30 April 2021 the Land and Environment Court made orders requiring that the Council of the City of Ryde (“the Council”), which had acquired land from the respondents, pay them sums required to be paid by s 68(2)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“Land Acquisition Act”). The Council acknowledged the statutory obligation to pay those amounts, but said that it was satisfied in the case of each by payment of at least part into its own solicitor’s trust account to be held pending determination of the court proceeding. It did so on the basis that, although it was the respondent owners who challenged the inadequacy of the valuation prepared by the Valuer-General, the Council considered that the valuations were excessive and that the Court would award lower sums. It further considered that, if it paid more than the likely award of compensation, it might not be able to recover the overpayment from the respondents, who, at least at the time the acquisition was made, were impecunious.

3. There is no doubt that the appeal, being from an interlocutory judgment in the class 3 jurisdiction of the Court, requires leave: Land and Environment Court Act 1979 (NSW) (“LEC Act”), s 57(4)(d). Although there are issues of principle involved which potentially have broader significance than the circumstances of the present case, the practical ramifications in the present case may be doubted. The judgment under appeal was given by Moore J on 30 April 2021. ^[1] Although the judge made orders requiring that the Council pay significant sums to each of the respondents, those orders have been stayed pending the hearing of this appeal. ^[2] Further, although the application for leave to appeal and the prospective appeal were listed for a concurrent hearing on 29 July 2021, the Land and Environment Court heard the compensation case on two days in June. At the hearing in this Court, the parties advised that the judgment of the Land and Environment Court might be delivered in a little over a week, at which time the amount of compensation payable would be resolved. The parties both asserted, however, that the outcome of the present application would have continuing significance, in part because of the likelihood of the unsuccessful party appealing.

   1. Azizi v Council of the City of Ryde; Alnox Pty Ltd v Council of the City of Ryde [2021] NSWLEC 40. (“Azizi (LEC 2021)”).

   2. Council of the City of Ryde v Azizi [2021] NSWCA 120 (“Azizi (C/A 2021)”).

4. In the circumstances, the issues of principle having ongoing significance, this Court should grant leave to appeal and resolve the appeal. However, the resolution of the appeal (which should be dismissed) may not resolve the dispute in its entirety.

Factual background

5. In 2016 the Council resolved to rezone an area including three parcels of land on Epping Road, North Ryde, then used for residential purposes to allow their use for public recreation. One parcel was owned by Mr Azizi personally; the other two by Alnox Pty Ltd, a company controlled by his two sons. The parcels were surrounded on three sides by Blenheim Park. On 24 August 2018 the Council compulsorily acquired the three parcels, to be incorporated into Blenheim Park.

6. Part 3 of the Land Acquisition Act provides for a person claiming compensation to lodge a claim with the acquiring authority. It is not clear that such a claim was lodged in the present case by either of the respondents, but that may have been because the acquisition resulted from an owner-initiated process on the basis of hardship pursuant to Pt 2, Div 3 of the Land Acquisition Act. Section 41 empowers the Valuer-General to determine the amount of compensation to be offered to a former landowner whether or not a claim has been made for compensation. The Valuer-General issued determinations for each parcel on 21 December 2018.

7. Pursuant to s 42 of the Land Acquisition Act, the acquiring authority was required to give a “compensation notice” to all former owners, including “the amount of compensation offered (as determined by the Valuer-General)”. The notice was to be given within 45 days of the publication of the acquisition notice. The logic underlying the timing of the various steps envisaged by the Land Acquisition Act, Pt 3, is not entirely clear. The power of the Valuer-General to determine the amount of compensation is conferred by s 41(2), without any temporal limit. Section 41 is found in Div 2, headed “Claims for compensation”. Section 47, however, which appears under Div 3, entitled “Post-acquisition procedures relating to compensation”, imposes an obligation on the Valuer-General to determine the amount of compensation to be offered, but again without prescribing a time within which that step is to be taken. Nevertheless, s 42 envisages (perhaps unrealistically) that a determination will have been made within 45 days of the date of the publication of the acquisition notice. The first determinations made by the Valuer-General were issued on 21 December 2018 (119 days after the publication of the acquisition notice).

8. The Council, believing there were errors in the exercise undertaken by the Valuer-General, did not immediately issue compensation notices under s 42, but rather sought judicial review of the Valuer-General’s determinations in the Common Law Division. It also sought interlocutory relief “staying” the legal effect of the determinations; orders to that effect were made by consent, but on conditions.

9. With respect to Mr Azizi (the first respondent) the condition required that the Council pay an amount of $2 million to him, subject to deductions of an amount necessary to discharge a mortgage over the property and two amounts on account of Council rates. The Council was also required to make an additional payment of a little over $2 million into a controlled money account on trust for the first respondent “against the contingency that the [Council’s summons may be dismissed].”

10. A similar stay was granted with respect to Alnox Pty Ltd, the amounts involved being a payment of $3 million to the company subject to similar reductions, and a further sum in the order of $3 million to be paid into a controlled money account.

11. On 20 November 2019 judgment was handed down in the Common Law Division declaring that the determinations of the Valuer-General of 21 December 2018 were void and of no effect. ^[3] However, the Council’s success in this respect was achieved on a limited basis. Further compensation determinations were made by the Valuer-General, dated 25 February 2020, which resulted in small reductions in the earlier determinations. In round figures, the parcel of land formerly owned by Mr Azizi was valued at $4 million and the two parcels owned by Alnox Pty Ltd were together valued at $6 million.

    3. Council of the City of Ryde v Azizi [2019] NSWSC 1605 (“Azizi (2019)”).

12. In the proceedings in the Common Law Division, Payne J had expressed doubt about the appropriateness and effect of orders purporting to stay the operation of a statute. ^[4] In deference to those views (but in the absence of an authoritative ruling of this Court), the Council issued compensation notices which included the fresh determination of the Valuer-General as to the amount of compensation offered for the interests acquired. The notices informed the recipients, in accordance with s 44 of the Land Acquisition Act, that if the amount of compensation offered were to be accepted, payment would be made within 28 days. The notices further informed the recipients that if they did not accept the compensation offered, they should lodge an objection with the Land and Environment Court within 90 days. In that event, the notices each contained a final paragraph which, in the case of Mr Azizi, was in the following terms:

“If you lodge an objection with the Land and Environment Court you will be paid an amount of $1,754,386.83 being 90% of the difference between the determination of compensation of $3,981,185 (inclusive of GST) and the advance payment of $2,031,866.30 paid on 29 March 2019, within 28 days after notice of institution of proceedings is given to [the Council] and the matter of compensation will be determined by the Land and Environment Court.”

A similar notice was given to Alnox Pty Ltd, the amount to be paid being $2,651,974.70, calculated on the same basis.

4. Azizi (2019) at [170]-[175].

13. On 5 June 2020 the respondents commenced proceedings in the Land and Environment Court objecting to the amount of compensation offered, pursuant to s 66 of the Land Acquisition Act.

14. Despite the last statement in the compensation notices, the Council did not pay to each respondent the amount calculated as the outstanding balance of 90% of the offer, after allowance for payments already made. Rather, as stated in a letter from the Council’s solicitors, Bartier Perry Lawyers, dated 12 October 2020, the Council offered to make payments of 90% of any additional disturbance claims made by the respondents since the last payments (of March 2019) and further:

“Council will continue to hold the balance of the Valuer General’s determinations for compensation, to which your client is prima facie entitled under s 68(2)(a) of the Act, in the existing trust account. Those funds will be paid out in accordance with the final resolution of your clients’ compensation claim.”

15. The reason proffered for this arrangement was that, in the event that the Court assessed compensation in the amount considered by the Council to be correct (which was below 90% of the Valuer-General’s assessment) the respondents would have to repay the difference and the Council was “very concerned that one or both of your clients will then be unable to repay the amount of the overpayment.” ^[5]

    5. Bartier Perry letter, 12 October 2020, par 6.

16. On 14 January 2021 the applicants each filed a notice of motion in the Land and Environment Court proceedings seeking orders that the Council pay each applicant 90% of the amount of compensation offered in the compensation notice. On 30 April 2021, Moore J handed down the judgment now under appeal. In respect of Mr Azizi, he ordered that the Council pay an additional sum of $1,981,185 (plus interest from 24 August 2018) within 14 days of the date of the orders (30 April 2021). The order with respect to Alnox Pty Ltd was to the same effect, but in an amount of $2,994,438 plus interest.

17. On 20 May 2021 the Council filed a summons in this Court seeking leave to appeal from the interlocutory judgment of the Land and Environment Court. The white folder filed with the summons was manifestly deficient in that it contained few of the documents which were ultimately necessary for consideration of the application and the appeal. It did, however, contain a draft notice of appeal and a summary of argument, together with the judgment of the Land and Environment Court sought to be impugned. On 31 May 2021 the Council sought a stay of the orders made in the Land and Environment Court. The stay was granted by Payne JA, with a direction that the matter be determined expeditiously and be listed for a concurrent hearing on 29 July 2021. ^[6]

    6. Azizi (C/A 2021) at [11].

Issues of jurisdiction and power

18. There was a degree of confusion, both in the Land and Environment Court and in this Court, as to whether the parties differed on the question whether a judge of the Land and Environment Court had jurisdiction, in class 3 proceedings, to make the orders sought by the respondents in their notices of motion of 14 January 2021. Council’s argument, as presented on the stay application, was that if the respondents sought to enforce an entitlement to payment under s 68(2)(a) of the Land Acquisition Act, they were obliged to seek mandamus in the Supreme Court as Moore J did not have power to make such an order. ^[7] The respondents, submitted that while the judge had power to make the order, if the Council feared their insolvency, they should have sought an injunction in the nature of a freezing order; the Council submitted in reply that the Land and Environment Court had no power to grant a freezing order. ^[8]

    7. Azizi (C/A 2021) at [9].

    8. Azizi (C/A 2021) at [10].

19. Neither position appears to have been entirely consistent with that identified by the Council in its grounds of appeal, the first three of which read as follows:

“1   The Judge erred … in holding that the Land & Environment Court lacked power to impose conditions, including the conditions sought by the Appellant, on any order for payment of monies made on the Respondents’ motions.

2   In the alternative to [1], the Judge erred in holding that he had power to make the orders sought on the Respondents’ motions.

3   Having mistakenly apprehended … that power to make the orders sought on the Respondents’ motions was not disputed, the Judge erred in failing to give reasons for his decision that the Land & Environment Court possessed power to make the orders sought by the Respondents but not those sought by the Appellant.”

20. The differences in position are relevant to the grant of leave to appeal. There is an issue of general importance as to whether the Land and Environment Court has jurisdiction to enforce statutory obligations under the Land Acquisition Act, or whether such orders can only be sought in the Supreme Court. Indeed, the respondents did not ultimately resist a grant of leave with respect to the grounds set out above.

21. The statutory scheme is as follows. Although the Land and Environment Court is declared by its constituting statute to be “a superior court of record”,^[9] it is a court of limited statutory jurisdiction. Thus, in National Parks and Wildlife Service v Stables Perisher Pty Ltd ^[10] this Court held that the Land and Environment Court had no power to consider a claim in tort for damages resulting from the respondent incurring costs in carrying out work pursuant to a development consent which was void for failure to comply with a provision of the Environmental Planning and Assessment Act 1979 (NSW) requiring the preparation of an environmental impact statement. Although a dispute as to the validity of a consent was a matter within the jurisdiction of the Land and Environment Court, a claim for consequential loss said to flow from invalidity was not. As Gleeson CJ noted, there was no express conferral of jurisdiction with respect to such a claim, and no provision similar to s 32 of the Federal Court of Australia Act 1976 (Cth) which vested in the Federal Court jurisdiction in relation to “associated matters”.

    9. LEC Act, s 5(1).

    10. (1990) 20 NSWLR 573 (Gleeson CJ, Kirby P and Meagher JA).

22. Since that time, s 16 of the LEC Act has been amended by the addition of subs (1A) and now provides:

16   Jurisdiction of the Court generally

(1)   The Court shall have the jurisdiction vested in it by or under this or any other Act.

(1A)   The Court also has jurisdiction to hear and dispose of any matter not falling within its jurisdiction under any other provision of this Act or under any other Act, being a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act.

(2)   For the purposes of this Act, the jurisdiction of the Court is divided into 8 classes, as provided in this Division.

23. It will be necessary shortly to consider the extent to which the jurisdiction otherwise vested in the Court is expanded by reference to a matter that is “ancillary” to the core jurisdiction.

24. As noted in s 16(2), the jurisdiction is divided into eight classes. However, before identifying the relevant class, it is convenient to identify the source of jurisdiction. In relation to compensation claims, the relevant jurisdiction is conferred by s 24, which provides:

24   Claim for compensation in compulsory acquisition cases

(1)   If—

(a)   a claim is made for compensation because of the compulsory acquisition of land in accordance with the Land Acquisition (Just Terms Compensation) Act 1991, Division 2 of Part 12 of the Roads Act 1993 or any other Act, and

(b)   no agreement is reached between the claimant and the authority required to pay the compensation,

the claim is (subject to any such Act) to be heard and disposed of by the Court and not otherwise.

(2)   The Court shall, for the purpose of determining any such claim, give effect to any relevant provisions of any Acts that prescribe a basis for, or matters to be considered in, the assessment of compensation.

25. It is apparent from the words in parentheses in subs (1), “subject to any such Act”, that the conferral of jurisdiction with respect to claims under the Land Acquisition Act will be subject to any provision in that Act for the hearing and determination of such claims. Similarly, pursuant to subs (2), the criteria identified in the Land Acquisition Act will govern the assessment of compensation for the purposes of that Act. From a time pre-dating the insertion of subs (1A) in s 16, s 25 made express provision with respect to jurisdiction to determine the nature of the estate or interest of a claimant in the acquired land:

25   Determination of estate, interest and amount

(1) In hearing and disposing of any claim referred to in section 24, the Court shall have jurisdiction to determine the nature of the estate or interest of the claimant in the subject land and the amount of compensation (if any) to which the claimant is entitled.

(2)   In the exercise of its jurisdiction under subsection (1), the Court may order that any other person who claims to have had or who may have had an interest in the subject land at the date of acquisition or taking be joined as a party to the proceedings and may then proceed to determine the nature of the estate or interest of that person and the amount of compensation (if any) to which the person is entitled.

26. Provisions analogous to ss 24 and 25 pre-dated the enactment of the Land Acquisition Act in 1991; they were replaced with the introduction of that Act with the result that, in enacting s 24, the legislature must have had in mind the simultaneous conferral of jurisdiction to hear and dispose of a person’s claim for compensation, provided by s 66 of the Land Acquisition Act. Further, the legislature may have assumed that the combination of s 66 and s 16 in its original form would not have permitted the Court to determine the matters set out in s 25.

27. The next step is to identify the class of the Court’s jurisdiction which is invoked by lodgement of an objection to an offer of compensation. The answer is that s 19, which sets out the jurisdiction designated as “class 3” jurisdiction includes in par (e) “claims for compensation by reason of the acquisition of land, referred to in Division 2”, Division 2 encompassing s 24 and 25.

28. Finally, it is appropriate to note the terms of s 22 and s 23, which provide:

22   Determination of matter completely and finally

The Court shall, in every matter before the Court, grant either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by that party in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters may be avoided.

23   Making of orders

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, as the Court thinks appropriate.

29. Section 22 reproduces the common form of provision which is also found, with the same number, in the Federal Court of Australia Act. As observed by Gibbs J in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd,^[11] the history of s 22 suggested that it “deals with power and not with jurisdiction” (in contrast to s 32 of the Federal Court Act conferring jurisdiction in associated matters), and also that s 22 “assumed that there is a matter which the Federal Court has jurisdiction to hear and determine, and the section, on that assumption, gives the court the power and imposes on it the duty to dispose of the matter completely and finally.” ^[12] The same reasoning applies with respect to ss 22 and 23 in the LEC Act: they confer powers but not jurisdiction.

    11. (1981) 148 CLR 457 at 489; [1981] HCA 7.

    12. Philip Morris at 490.

30. Dealing with the scope of the associated jurisdiction, Mason J in Philip Morris stated that the jurisdiction extended to “an attached non-severable claim.” ^[13] He continued:

“The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction.”^[14]

13. Philip Morris at 512.

14. See also Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 291 (Mason, Brennan and Deane JJ); [1983] HCA 36.

31. To return to the question of “ancillary” jurisdiction, the jurisdiction vested in the Federal Court provides little assistance. The concept of an “associated matter” connotes a matter of substance which is not necessarily subordinate in any respect to the federal claim to which it relates. By contrast, an “ancillary” matter is one which is subordinate or subservient to the matter with respect to which jurisdiction is expressly conferred.

32. Viewed from the perspective of the legislative scheme, there are two matters which may be said to be ancillary to the purpose of the Land Acquisition Act, providing for the payment of just terms compensation to a former landholder. One such aspect is the provision in s 68(2) for the payment, in a case where objection is taken by the former landholder, of 90% of the amount offered, prior to determination of the proceeding. A second aspect is the provision in s 48(4) of the Land Acquisition Act for repayment of any advance payment in excess of the compensation awarded. These are mechanical provisions which have no relevance to the assessment of compensation in accordance with Pt 3, Div 4 of the Land Acquisition Act, which includes ss 54-65 and sets out the criteria to be applied in assessing compensation.

33. Looked at from the perspective of the Court, the jurisdiction expressly conferred is to hear and dispose of the claim for compensation. By way of contrast, an order to enforce a statutory entitlement to payment of 90% of the offer bears the hallmarks of a claim for mandamus against a statutory authority. The enforcement of such an obligation would naturally fall within class 4 jurisdiction of the Land and Environment Court, which includes jurisdiction to hear and dispose of proceedings “to enforce any right, obligation or duty conferred or imposed by a planning or environmental law …”: LEC Act, s 20(2)(a). That jurisdiction extends to commanding the exercise of a function conferred or imposed by a planning or environmental law and making declarations in relation to any such right, obligation or duty or the exercise of any such function: s 20(2)(b) and (c). However, such jurisdiction is not available in relation to rights, obligations or functions arising under the Land Acquisition Act, which does not fall within the definition of a “planning or environmental law” in s 20(3). On the other hand, the Land and Environment Court has all the powers of enforcement available under Pt 8 of the Civil Procedure Act 2005 (NSW) and the relevant Uniform Civil Procedure Rules 2005 (NSW). The provisions of ss 68(2) and 48(4) of the Land Acquisition Act could be said to involve the impositions of obligations enforceable in a court of general civil jurisdiction for payments of money; alternatively they could be seen as interlocutory steps which will only arise once proceedings have been commenced in the Land and Environment Court.

34. As a matter of principle, legislation should not be read narrowly in such a way as to create a division of jurisdiction between two institutions if an alternative reading allowing for matters to be disposed of in one court only can be adopted. That approach is consistent with the provision of complete and final relief in a single court, as reflected in s 20(2) of the Land and Environment Court Act and as reflected in the reasoning of Kirby P in Stables Perisher,^[15] referred to above. On that approach, the Land and Environment Court has jurisdiction both to enforce the obligation for payment of a proportion of the compensation offer, on an interlocutory basis, and, in making final orders, to provide for any overpayment that may have been made on an interim basis.

    15. Stables Perisher at pp 585D-586A.

35. It remains to consider the proposition that, if such relief is available, the Land and Environment Court must be able to impose conditions on the grant of such relief, including by way of freezing order, where appropriate. Such an order was identified in the course of submissions as a “Castlemaine Tooheys order”, referring to the judgment of the High Court in Castlemaine Tooheys Ltd v South Australia. ^[16]

    16. (1986) 161 CLR 148; [1986] HCA 58.

36. The judgment of Mason ACJ in Castlemaine Tooheys is a useful source of reference in relation to the considerations which may apply in granting an injunction in the nature of a freezing order. However, use of the case as a label for a power diverts attention from the source of the power being exercised. There is specific provision for freezing orders in Pt 25, Div 2 of the UCPR. There is no exclusion in Sch 1 to the UCPR of any aspect of Pt 25 from the powers available in the Land and Environment Court, including in its class 3 jurisdiction. Accordingly, and contrary to a submission by the applicant in the stay application in this Court, there is no reason to doubt the power of the Land and Environment Court to make such an order.

Application of legal principles

37. The respondents’ case before the Land and Environment Court, and in this Court, rested on the simple proposition that a payment by the Council into its solicitor’s trust account did not constitute a payment to them: it therefore did not constitute compliance with s 68(2)(a).

38. The Council’s response had several elements to it. First, it observed that it was a matter of implication that the payment to be made under s 68(2)(a) was a payment to the former owner; the section did not expressly say so. Secondly, there might be good reason for the absence of such an express statement. Section 65(2) envisaged that a part of the compensation otherwise payable to an owner might be payable to a mortgagee and, if so paid, would reduce the amount payable to the owner. Thirdly, pursuant to s 34(4), any unpaid rent or other money due to the acquiring authority “may be set off against the compensation payable under this Act.” These provisions had been relied upon by the Council in the present case, without objection, and had resulted in part only of the payment made by the Council by way of compensation being payable to the former owners. Thus, amounts outstanding by way of unpaid rates and amounts payable to the NAB as mortgagee of all three parcels of land, had been set off or paid away in reduction of the amounts paid to the respondents. Fourthly, there was a suggestion, not fully articulated, that because the payment to the Council’s solicitor had been made pursuant to an order of the Court ultimately made by consent, the payment had been made on the instruction of the respondents, so as to constitute a payment made to a third party at the direction of the respondents.

39. There was also a suggestion, not fully articulated, that the money could, if required, be transferred to a controlled money account not under the sole control of the Council’s solicitor, but under the joint control of the solicitors for both parties. For reasons which will be explained shortly, this suggestion may be put to one side.

40. As to the first two objections, the possibility of payments being made by way of set off or to a mortgagee may well explain the absence of an express requirement in s 68(2)(a) that the payment be made to the former landowners. However, nothing turns on that point. Final payments of compensation are subject to the same qualifications; thus the full amount of the compensation may not be paid directly to the former land owner, but part may be paid to a mortgagee and part may be deducted by way of set off. It does not follow that the final payment of compensation (for the balance owing) is not required to be made to or at the direction of the former land owner. Thus, the obligation in relation to the final payment may be qualified as to the amount but not as to the ultimate recipient of any outstanding balance. The same must apply to the interim payment under s 68(2)(a). The judge was correct so to conclude and in making due allowance in his order for payments which had been made by way of set off and to the mortgagee.

41. As to the third matter, the status quo was established, not by consent (although the form of order in each case was by consent), but in the face of an indication by the Court that an order generally to the effect sought by the Council would be granted. There was no payment made to the solicitors at the direction of the respondents.

42. As to the final suggestion, the foregoing does not deny the possibility that some alternative regime might have been imposed had a freezing order been found to be appropriate. However, no alternative regime was adopted because none was proposed; what the Council sought was simply a maintenance of the status quo. To obtain a freezing order the Council needed to establish at least a reasonably arguable case that the amount to be awarded would be lower than the assessment of the Valuer-General which comprised the compensation offer. In fact, the primary judge accepted that there was, in the terms articulated in Castlemaine Tooheys, a serious question to be tried. However, it remained necessary to explain why the balance of convenience favoured a freezing order. A significant element in the balance must be that there were reasonable grounds to suppose that, if the Council were successful on the assessment of compensation, it would not be able to recover the repayment of the overpaid amount pursuant to s 48(4). In part, the Council relied upon a case that the respondents were impecunious. They themselves had established that for the purposes of making a hardship application and requiring the Council to proceed with the acquisition. However, as the primary judge observed, that was the case prior to the payments which the Council had in fact made and which had relieved the respondents of their liability for unpaid rates and removed the liability for further payments to the NAB under the mortgages.

43. Ground 4 in the draft notice of appeal complained that the judge erred in assuming without evidence that the amounts which had been paid to the respondents remained undisbursed and would so remain until a final order of the Land and Environment Court. In its submissions in reply, filed one day before the hearing of the appeal, that ground was limited to amounts paid to Mr Azizi. That was because the judge had accepted impecuniosity in relation to the corporate respondent, Alnox Pty Ltd. ^[17] However, the Council’s position in relation to the corporate respondent appears to have been based on the proposition that the additional amount to be paid to the company (assumed to be in the order of $1.6 million) exceeded the amount which had been paid to the company in March 2019. It is by no means clear that that was the correct calculation. Rather, the question was whether the additional $1.6 million, together with any remaining funds from the payment in March 2019, but reduced by any further disbursements, would leave an available balance of $1.6 million to be repaid to the Council, were it ultimately successful. More importantly, that was not necessarily the calculation which would have been undertaken had a freezing order been sought. It would be likely that evidence would be given of the funds which had been and would be transferred to the company, and as to the proper expenditure of those funds in the ordinary course of business, including funding the company’s pursuit of the current litigation. As a matter of fact, the Council did not run its case on that basis in the Land and Environment Court. Accordingly, there was no error on the part of the primary judge in (a) declining to make an order maintaining the status quo and (b) declining to make a freezing order, which was not in terms sought.

    17. Azizi (LEC 2021) at [118].

Conclusion

44. It is appropriate to grant leave to appeal in respect of all four grounds in the proposed appeal. Nevertheless, the appeal must be dismissed. The Court should make the following orders:

1. Grant Ryde Council leave to appeal from the judgment and orders of the Land and Environment Court delivered on 30 April 2021.

2. Order that the draft notice of appeal be filed within seven days of the date of this judgment.

3. Dismiss the appeal.

4. Order that the Council pay the respondents’ costs in this Court.

45. MEAGHER JA: I agree with Basten JA.

46. PAYNE JA: I agree with Basten JA.

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Endnotes

Decision last updated: 06 August 2021