Kettering Pty Ltd v Noosa Shire Council B50/2002

[2003] HCATrans 841

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  Nos B17 and B50 of 2002

B e t w e e n -

KETTERING PTY LTD

Applicant

and

NOOSA SHIRE COUNCIL

Respondent

Applications for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON WEDNESDAY, 25 JUNE 2003, AT 9.32 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR R.S. LITSTER, for the applicant in each matter.  (instructed by Hopgood Ganim)

MR S.L. DOYLE, SC:   If the Court pleases, I appear with MR T.N. TROTTER, for the respondent in matter.  (instructed by Wakefield Sykes)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Thank you, your Honours.  Your Honours, these applications concern the two decisions of the Queensland Court of Appeal which appear in the application book at pages 44 and 56.  The second of them, if I could come to that first, involves, in our submission, a serious irregularity in which the Court of Appeal against the agreed position of the parties, decided adversely to us an issue not before it.  The basis on which it did so was that the reasoning of its first decision rendered that issue otiose and to accede to the agreement of the parties would be, as their Honours said at page 58, paragraph [8]:

to encourage pointless further litigation.

Your Honours will see, if I could go to page 58, that in paragraph [8] it was said:

That reasoning of this Court therefore –

and that is the reasoning in the first judgment:

precludes argument on the so‑called first option.

Your Honours, may I deal with what was meant by that, the “first option”?  This case relates to the gazettal, as part of the planning scheme, for the respondent of a development control plan which affected our land and other land and the effect of a development control plan can be seen from the Local Government (Planning and Environment) Act 1990 which is in volume 1 of these materials. It is part of the planning scheme. That is provided for by section 2.1 of the Local Government (Planning and Environment) Act 1990 which appears at page 14. The pages are numbered in the bottom right‑hand corner. Your Honours will see, then, 2.1(d). It consists of, amongst other things, the:

development control plan –

Your Honours will see, then, section 2.5 on the page numbered 15, that it “is to include” the three things there set out, and then upon publication in the Gazette the planning scheme, including the development control plan, has the force of law as provided for at page 20 by section 2.15(8)(b). Then the next provision, section 2.16(1) provides that:

A Local Authority is to implement, administer and enforce every planning scheme . . . and is bound thereby.

CALLINAN J:   Just about everything seems to be part of the planning scheme, even the statement of intent, I see.

MR JACKSON:   Indeed, your Honour, yes.  Your Honour, could I say one sees in section 4.4(3) at page 46 that:

In considering an application to amend a planning scheme –

your Honours will see then paragraph (c) one matter to be considered is:

whether the inclusion of the land in the zone . . . would . . . conflict with . . . the intent of a development control plan -

Now, could I go on to say that in the particular case the development – I should also say, we have referred in our written submissions to some provisions.  They are referred to at pages 94 to 95, sections 4.4(5A) and two other provisions.  In fact, there has been an error in that regard.  Those provisions came into effect a little after the introduction of the development control plan in this case, but the matter was then covered by relevant by‑laws and if I could give your Honours copies of the by‑laws with the parts highlighted that indicate where that is so.  I do not think I need to go to the detail of it.

The introduction of a development control plan does not itself prohibit or restrict things, but it does place a rather moist blanket over the prospects of development of property and it was not an issue that, subject to the disqualifying provisions of the Act, its coming into force gave rise to an entitlement to compensation for injurious affection.

Could I come then to the proceedings, your Honours.  A direction was made in the Planning and Environment Court that we set out the basis of our claim.  Your Honours will see that at page 114, about line 43.  It is referred to in a letter, paragraph 2, the last paragraph on that page.  The direction was given that we set out the basis of our claim.  This was done by a letter which appears at page 123.  It is described as the letter of “29 August 2000”.  Your Honours will see on page 124, commencing at line 13 and going through to line 29, two options are set out.  The first option was “town planning consent”.  The second option was “rezoning”.

Now, your Honours, on the respondent’s application an order was made for the second issue to be determined separately.  Your Honours will see that at page 27 where the order is set out at the bottom of the page:

That the question; whether s.3.5(4) and (5) of the Local Government (Planning and Environment) Act operates to preclude the payment of compensation –

and your Honours will see at the top of the next page:

upon the “second –

basis of the claim.  That is to “be tried and determined separately”.  That issue was heard by Judge Skoien.  His reasons – they commence at page 19 - make it clear that he was determining that issue, the second option.  Your Honours will see that referred to at page 19, paragraph [1] and then, in particular, page 21, paragraph [6] where he indicates more precisely the question.

Now, your Honours, he decided the issue in our favour.  His formal order at page 26 may have gone a little too far in our favour by not specifying the second option, but it is clear there was no misunderstanding by the parties and one sees the counsel’s notice of appeal to the Court of Appeal at page 29 and your Honours will see the ground 2, which is the only ground, refers precisely to “the second option”.

GLEESON CJ:   If the Court of Appeal’s construction of the town planning legislation was correct why did not that dispose of a claim based on the first option as well as a claim based on the second option?

MR JACKSON:   Your Honour, it did not dispose of it because the first option - in the first place it did not require rezoning and also because we were simply in a position where we had an entitlement prior to the coming into effect of the development control plan to use the land in the particular ways referred to in the first option.  Now, the effect of the development control plan was to reduce the possibility of doing that and in reducing the possibility of doing that the question was whether it did or did not fall within the terms of the provisions of (4)(d).

Now, in doing that, in our submission, the position was that it simply, even if one took the views adopted by the Court of Appeal it just simply was not something that fell within it.  We would also say that the decision of the Court of Appeal was erroneous in the first matter and the first aspect of it and that would follow through into the second.

GLEESON CJ:   Are you devoting so much time to the second aspect of the matter because the legislation has been repealed?

MR JACKSON:   That is a factor, of course, your Honour, but what we do say is that in relation to the second one it is clear, in our submission, that what the Court of Appeal did was something that it did not have power to do or should not have done.  Its determination of that was based in part, at least, or on the correctness of its first decision, and we would say both of those are wrong.

GLEESON CJ:   In relation to its first decision, if you look at pages 47 and 48 of the application book – at the bottom of 47 and the top of 48 in paragraph [10] – what is your answer to the point made there, particularly in the second sentence in paragraph [10]?

MR JACKSON:   Your Honour will see that his Honour picks up Justice Davies.  The central part of Justice Davies reasoning is at page 52, paragraphs [25] to [28].  Now, your Honours, if one goes to paragraph [25] the first two sentences of that are correct, but the words that he then goes on to use in the other three paragraphs are ones where he speaks of “direct and immediate” and “remote or indirect” at, for example, page 52, about line 33, in our submission, are not very illuminating.

If one goes to the conclusion which he drew at page 53 in paragraph [27], the first sentence, what your Honours will see is that the terms of section 3.4 that ‑ ‑ ‑

CALLINAN J: Section 3.5(4) or 3.4?

MR JACKSON: Section 3.5(4)(d), your Honour, are ones where the provision looks to:

the use of land or . . . building . . . for a particular purpose –

The terms of the provision in fact say so twice.  Your Honours will see that provision at page 39, the first volume.  You will see that the right to compensation is given on page 38, 3.5(1) where you have:

an interest in premises . . . injuriously affected –

by one of two things.  Then, if one goes to subsection (4) on page 39 it says:

Compensation is not payable –

(a)  in respect of –

a number of things.  One of them is (d) which says:

where an interest in premises is affected by a planning scheme which by its operation prohibits or restricts the use of land or the erection or use of a building or other structure thereon for a particular purpose –

That expression “for a particular purpose” you will see also, later, in the same paragraph.

Your Honours, the effect of 3.5(4)(d), in our submission, is simply that a prohibition or restriction on particular purposes does not give rise to compensation unless one had a right beforehand, right being interpreted in accordance with 3.5(5).  In our submission, there is no very good reason why one would treat the exceptions, as it were, as providing for the rule and one sees that 3.5(1)(a) is a larger provision giving a larger right than the terms of prohibition or restriction which one sees in (4)(d).  The use in 3.5(4)(d) of the expression:

which by its operation prohibits or restricts –

suggests, in our submission, that it is speaking of provisions which themselves have that effect.  That is why, in our submission, the decision in the first place was erroneous because section 3.5(1) gives a large right.  There are particular exceptions and this simply did not fall within them.

CALLINAN J:   …..the Justice Davies characterisation of “remote or indirect effect” seems to be something that his Honour, in effect, invented.  It is not the language of the section, or ‑ ‑ ‑

MR JACKSON:   Yes, your Honour.  It is a gloss on the language of it.

CALLINAN J:   It is a fairly large gloss, too, I would have thought.

MR JACKSON:   It is a gloss.  It is polishing it, your Honour, with respect, but the situation really is that you have the provision which gives a wide entitlement and then there are some restrictions on it.  You either do or do not fall within them.

CALLINAN J:   Mr Jackson, when you were invited to make written submissions in respect of the application to reopen there was no oral hearing on this?

MR JACKSON:   No.

CALLINAN J:   Just written submissions.  Did they go into the detail of the sort of argument that people want to advance in this Court, or ‑ ‑ ‑

MR JACKSON:   No, your Honour.  What they did - your Honour will see the written submissions set out at page 114 and they ‑ ‑ ‑

CALLINAN J:   You have never really had a full argument before the Court of Appeal with respect to the matter that you say is still open, that is, option 1?

MR JACKSON:   That is so, your Honour.  In relation to that, that issue has never been argued substantively and it is a really curious thing, with respect, because what there was was a situation where both parties agreed that the order of the Court of Appeal should be varied in the suggested manner.

CALLINAN J:   It is really a natural justice point, too, perhaps, or a concealed natural justice point.

MR JACKSON:   There is, your Honour.  Your Honour, I do not think I need to go through the events that happened.

CALLINAN J:   No.

MR JACKSON:   Could I just take your Honours to page 112 where the respondent in response to the Court of Appeal’s request said in the second sentence:

The Council agrees that the order should be amended to limit the scope of the judgment to the “second option”.

And, your Honours will see what is set out in the remainder of that letter.  We agreed to the form of order proposed.  Your Honours, it was really very clear, in our submission, even at the time when the first application for special leave was before this Court in the sense of the papers being filed but the second judgment of the Court of Appeal not having been given.

If one goes to page 74 under the heading “Factual issues” your Honours will see what was said by the respondent in relation to the first application, and also paragraph 3 on the preceding page.  Now, in relation to that, our submission is that the two decisions are bound together and it would be an appropriate case for there to be a grant in respect of both.

GLEESON CJ:   Thank you.  Yes, Mr Doyle.

MR DOYLE:   Your Honours, might we start with the first application which is the second option. The question in that case is a question of construction of section 3.5(4)(d) of the now repealed Planning and Environment Act and, in particular, whether the development control plan is to be characterised as one:

which by its operation prohibits or restricts the use of land . . . for a particular purpose –

and that is the question.

GLEESON CJ:   Does the significance of the resolution of that particular question of construction go beyond the parties to this litigation?

MR DOYLE:   There is no material to suggest that, your Honour, but I cannot tell you that.  I do not know that that is the case.  Of course, I only represent Noosa Shire Council.  It is likely there are DCPs from other ‑ ‑ ‑

CALLINAN J:   There would be hundreds, at least a hundred, would there not, or something, municipalities or shires in Queensland?

MR DOYLE:   Quite, but this is quite old now, because we are talking about something that happened under the P & E Act which itself is quite old and there is a limitation of three years, I think, within which to make a claim for compensation, so there would be an ever diminishing class of people that might be eligible.

CALLINAN J:   Three years from when, though, Mr Doyle?  There used to be some difficulty about that, I think.

MR DOYLE:   From the injurious affection.

CALLINAN J:   From the actual.  When is that?

MR DOYLE:   It would be at the time of the ‑ ‑ ‑

CALLINAN J:   The coming into force of the provision or the different provision in the scheme.

MR DOYLE:   Whatever it might be, yes.  So, if there are others it is likely to be very small numbers that have not been resolved prior to now and we are not aware – that is, I am not able to tell your Honour from the material that there are any.

CALLINAN J:   But the claim here I think is for 9 million, is it not?  It is probably ambitious but, nonetheless a fair amount of money.

MR DOYLE:   Claimants seldom ask for less than over‑the‑top, your Honour, in these respects, but the question which the Court of Appeal had to decide was just that, the question of whether this DCP had that particular effect.  It found in our favour, obviously, and we submit, plainly rightly.  I will be brief about why rightly, but it is important to take your Honours to this.

The first proposition is that the DCP does restrict the use of land.  Now, our learned friend’s contention below was that it could not be characterised as a scheme provision which prohibited or restricted the use of land because it did so indirectly rather that directly.  The way it is put in the written submissions is that it affects the intensity of development rather than the use of land.  But, both of those, with respect, are wrong.  The DCP has the effect – the land which is presently zoned rural pursuits, if you want to use it for residential purposes or group housing, which is what they contend for, would either have to be rezoned or you would have to give the Council town planning consent.

The introduction of the DCP has the effect that for precincts within that land it is intended to be preserved for open space, that is, it cannot be used for residential purpose, so that it is a plan, it was a scheme amendment, which is directed to the use which can be made of land.  It is remote only in the sense that it is something which guides the exercise by the Council of its discretion whether to give town planning consent or, indeed, its discretion whether to consent to the rezoning, but it is an amendment which is directed to use.

CALLINAN J:   Does that mean that your side should not have agreed or there was no need for your side to accede to two questions, that one question would have been enough, option B?  Why was not it contended before Judge Skoien in the first hearing before the Court of Appeal that the determination of option B adversely to the applicant meant that there was no need for option A at all to be considered.

MR DOYLE:   Could I ask your Honours to go, to answer that, to our learned friend’s bundle at page 40 to subsection (5)?  I am sorry, I should really start with subsection (4)(d) which is the exception.  That is compensation is not payable:

where an interest in premises is affected by a planning scheme which by its operation prohibits or restricts the use of land –

et cetera.  Then your Honours will see there is an exception to the exception:

unless the applicant establishes that the applicant had a legal right immediately before the provision in question . . . came into force to use the land –

et cetera.  We are told in subsection (5), somewhat circularly, that for the purposes of section (4)(d):

it is not to be taken that an applicant did not have the legal right . . . by reason only that the applicant’s right depended upon an exercise of discretion by the Local Authority –

So that if one gets to this subsection a use which can be activated merely by the consent of the counsel will enliven this subsection, or at least will arguably do so, but a use which requires a rezoning it has been determined it cannot because it depends upon not simply the consent of the local authority but the consent of the Governor in Council.

So, a complete answer to option B is that even if you assume everything else in our learned friend’s favour, which gets you to subsection (5), it fails because to be able to get a rezoning you need two consents and not just one.  That is the rationale for the attempt to separately determine question B first.  But, in the course of answering that the Court of Appeal has articulated, obviously, what section (4)(d) means in a different way.

CALLINAN J:   And without the benefit of full argument on it, Mr Doyle.

MR DOYLE:   For the moment I am confining myself to the second option.  They did not just go to subsection (5) and say, “You lose for that reason”.  They went through subsection (4)(d) and said, “You lose for that reason as well”.  I am sorry, they answered both.  They described the extent of the operation of (4)(d).  Having done that they said, “You cannot get under (5)” because of the point I have just taken your Honours to.  In answering (4)(d) they have said things about the construction of (4)(d) for all purposes.

GLEESON CJ:   Does that mean that the construction they placed on (4)(d) was different from the construction urged by you?

MR DOYLE:   No.  We urged the proposition of the DCP was a provision which prohibited or restricted the use of land.

GLEESON CJ:   But if you were urging a construction of (4)(d) which, if adopted, would eliminate both options how did it come about that you agreed that the form of order to be made should deal only with one of them?

MR DOYLE:   We did not urge an option that would eliminate both.  We urged the construction that the DCP falls within (4)(d) and that was where we joined issue with our learned friends.  They contended that the DCP did not fall within (4)(d).

GLEESON CJ:   Do you now say that on the true construction of the legislation both options were eliminated?

MR DOYLE:   In accordance with the court’s reasons that is so.

GLEESON CJ:   Is that in accordance with your submission?  Was it in accordance with your submission to the Court of Appeal?

MR DOYLE:   We did not address submissions to the Court of Appeal with respect to option 1.

CALLINAN J:   That is what concerns me, Mr Doyle.

MR DOYLE:   I understand, your Honour.

CALLINAN J:   I said to Mr Jackson that it seems to be a natural justice point here.  You might well be right on what you say.  The Court of Appeal might well be right, but it is very difficult to say that on a special leave application without the benefit of a decision based upon a full argument ‑ ‑ ‑

MR DOYLE:   Can I deal with the first option and say something – I will be brief.  There is not much I wish to say.  They have determined the proper construction of (4)(d).  Your Honour the Chief Justice took my learned friends to a passage in the reasons of Justice McPherson which we adopt.  It was urged by the applicants below that (4)(d) only applied to an indirect restriction or prohibition.

Justice McPherson, in the passage that your Honour took us to a moment ago, rejects that as being illogical, and we support that.  It would be an odd result if – I am sorry, it was the other way around.  My learned friends contended that it was only if the restriction was direct and not indirect that section (4)(d) applied and Justice McPherson rejected that because of the reason that it would mean the most direct injurious affection is the subject of the exclusion and the more remote injurious affection is not the subject of the exclusion which cannot, in our submission, be the right construction.

The result that the Court of Appeal came to as to the operation of the exclusion in section (4)(d) is plainly right, in our submission, certainly with respect to a rezoning case.  It is right and it is consistent with another unanimous Court of Appeal decision of Re Sparke which concerns the operation in a rezoning case of subsection (5).  So that within Queensland, for the purposes of the application of section (4)(d) and (5) to rezoning cases there are two unanimous Court of Appeal decisions marching in the same direction, in our submission.

GLEESON CJ:   It seems to be suggested against you that there are some New South Wales decisions that are inconsistent with that.

MR DOYLE:   There are two – in our learned friend’s submissions two first instance decisions referred to.  They are not inconsistent.  They are explained by Justice Davies in this case as being consistent with the construction he has adopted.  They are concerned with the question whether if – and I will take an example – a scheme affected directly affected use but could also be said to coincidentally affect other things such as subdivisions or areas around buildings.

It would fall within the exception which applies to use and would not fall within the exception which applies to subdivision or spaces around buildings.  That is a characterisation question.  Do you characterise the scheme amendment as one which is a prohibition or restriction on use or do you characterise it as one which is a prohibition or restriction on subdivision?  That was what was done by the first instance decisions in New South Wales and is consistent, in our submission, with what has been adopted in Queensland and consistent with what we urge here.

This DCP is a DCP which can only be characterised as a restriction or prohibition on use.  It takes this land.  It breaks it up into four precincts and in respect of most of it it says it is intended to be preserved for open space which is plainly, in our submission, a restriction directed to use, not to be directed to other things although, obviously, if you cannot use it for residential purposes it will have an impact upon buildings and so on, but its characterisation is a prohibition which clearly falls within (4)(d).  So, there is no departure, in principle, between the course adopted by the Court of Appeal here and those first instance decisions.

CALLINAN J:   It sterilises the use of the land, does it not?

MR DOYLE:   It expresses an intention to do so.

CALLINAN J:   Yes.

MR DOYLE:   So that when you come to ask for consent to use it for that purpose or rezoning to use it for that purpose you will find it harder, if I can put it that way.

CALLINAN J:   Are there any rules about construing statutes that have the effect of sterilising property values?

MR DOYLE:   We are not directly concerned with that.

CALLINAN J:   But it is the inevitable consequence.

MR DOYLE:   If your Honour says that we accept that because that, in a sense, defeats our learned friend’s contention that the DCP does not affect use.  The harder one says the DCP operates to sterilise use, the clearer it is a restriction upon use and, therefore, the clearer it is that it falls within (4)(d).  The only reasons why the first application is one which ought not be the subject of special leave is because it is a repealed piece of legislation.  It is, as far as we are able to tell, unique, now, to Queensland.

The comparable decisions in New South Wales to which our friends referred were under an Act which was repealed in 1980.  It is in Queensland now obsolete because it has been replaced by the Integrated Planning Act which itself adopts an entirely different language. So that the question of the construction of (4)(d) is of historical interest throughout Australia and also in Queensland.

Your Honours, with respect to the second application, we would urge that there really is no natural justice point because our learned friends – if I could ask your Honours to go in the application book to page 110 - that is the form in which the submissions were requested.

CALLINAN J:   It still was not the issue nominated by the notice of appeal.

MR DOYLE:   It was our notice of appeal, of course, because we lost at first instance.

CALLINAN J:   Exactly.

MR DOYLE:   It is right to say that the second decision is to be considered, we would submit, separately from the first for today’s purposes.  In the second decision two questions are necessary to be answered. One is the construction of (4)(d), whether the DCP is a scheme which restricts or prohibits the use of land for a particular purpose.  That, in our submission, has been decided as a matter of construction by the Court of Appeal, and rightly so.  There is no proper basis for granting special leave to re‑agitate that question.

The second question which was not the subject of submissions in the first Court of Appeal hearing was the application of subsection (5) to the

first option and that is the only additional question which arises with respect to the first option because that is a case where, in order to use the land for group housing, a rezoning was not required but rather the consent of the Council was required.  So, it is arguable, the applicants would say, that they fall within subsection (5).

You only get to that because you have determined that subsection (4)(d), on its proper construction, applies.  In our submission, there would be no basis for reopening the question of the proper construction of (4)(d) and the only question is whether subsection (5) applies.  Now, the Court of Appeal has in its reasons answered that.  It has said that because the effect on the legal right is only indirect or remote, not immediate and direct, that that subsection cannot apply.

We did not make any submissions with respect to that and our learned friends were asked to do so, but it is fair to say it did not make submissions in respect to that question, but that is the only question which the second of these applications raises.  Even to that, in our submission, it is not a case for special leave, because the Court of Appeal has determined the question, obviously.  It has done so under what is a repealed piece of legislation which is unique to Queensland.  Those are our submissions.

GLEESON CJ:   Thank you, Mr Doyle.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, if one goes to what the Court of Appeal said in its second reasons at page 58, what one sees in paragraphs [6] and [7] is that it said in paragraph [6] that:

One reason why this Court reached a conclusion . . . is that it held that section 3.5(4)(d) . . . excluded a right to compensation where, speaking generally, the coming into force of a provision of a planning scheme has only a remote or indirect . . . effect.

And it then goes on to say, your Honours, that:

It is true that a claim based upon the first option . . . would require evidence to be heard in order to determine whether . . . the appellant had a legal right –

And then it goes on to say:

However even if it did have such a right, it was not one which the coming into force of a development control plan prohibited or restricted –

Well, the test, your Honours, really is, if one looks at what 3.5(1) says, the entitlement to compensation is not limited to cases where there is a prohibition or restriction.  The entitlement to compensation is larger than that.  Your Honours, if one goes to the terms of section 3.5 one sees, at page 38 of volume 1, you will see in 3.5(a)(i) that it uses the expression:

by the coming into force of any provision –

and then, secondly:

by any prohibition or restriction –

If one goes then to subsection (4), one sees in (c) and (d) that it is dealing with in (c) a planning scheme “which by its operation prescribes the space” et cetera, and deals with a number of other particular aspects, and that is the provision that is referred to in the New South Wales cases.  Then, dealing, your Honours, with very precise aspects, so too is (d):

by its operation –

and then it uses the words of 3.5(1)(a)(ii) only:

by its operation prohibits or restricts the use of land –

et cetera –

for a particular purpose –

and then the particular purpose is again adverted to in the concluding words.  What we are submitting, your Honours, is that by its operation the exclusion is only where there is a prohibition by the scheme or restriction on land for particular purposes.

It does not apply, in our submission, to a case where what there is is a provision of the plan which simply has the effect that in its operation there are to be taken into account various matters.  Your Honours will see that there is not an absolute prohibition or restriction on the land for particular purposes.  What there is is simply a matter to be taken into account.  One sees that, for example, at page 119 in the right column, the first two new paragraphs.

Your Honour, one has a situation, in those circumstances, where, as this land was in (a), (b), (c) and (d), the effect of the introduction of the development control plan was that the possibility of obtaining the consent after it was reduced.

GLEESON CJ:   In these two matters there will be a grant of special leave to appeal.

AT 10.10 AM THE MATTERS WERE CONCLUDED