Kilmaley Investments Pty Ltd v City of Wanneroo
[2019] WASCA 156
•11 OCTOBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: KILMALEY INVESTMENTS PTY LTD -v- CITY OF WANNEROO [2019] WASCA 156
CORAM: MURPHY JA
BEECH JA
PRITCHARD JA
HEARD: 1 & 2 May 2019
DELIVERED : 11 OCTOBER 2019
FILE NO/S: CACV 11 of 2018
BETWEEN: KILMALEY INVESTMENTS PTY LTD
First Appellant
SHEAN PTY LTD
Second Appellant
AND
CITY OF WANNEROO
Respondent
FILE NO/S: CACV 63 of 2018
BETWEEN: CITY OF WANNEROO
Appellant
AND
KILMALEY INVESTMENTS PTY LTD
First Respondent
SHEAN PTY LTD
Second Respondent
ON APPEAL FROM:
For File No: CACV 11 of 2018
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: TOTTLE J
Citation: KILMALEY INVESTMENTS PTY LTD -v- CITY OF WANNEROO [No 2] [2017] WASC 307
File Number : CIV 1516 of 2012
For File No: CACV 63 of 2018
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: TOTTLE J
Citation: KILMALEY INVESTMENTS PTY LTD -v- CITY OF WANNEROO [No 2] [2017] WASC 307 (S)
File Number : CIV 1516 of 2012
Catchwords:
Acquisition of land - Compensation for land taken - Assessment of compensation - Valuation of land taken - Likely zoning of land before the taking - Whether judge erred in finding business zoning of land unlikely before the taking - Comparable sales evidence - Whether judge erred in finding base price of comparable sale - Severance damage - Injurious affection - Whether judge erred in rejecting claim for severance damage and injurious affection
Assignment - Statutory entitlement - Whether judge erred in finding statutory entitlement to compensation for compulsory acquisition of land not assignable
Practice and procedure - Costs - Offer of compromise - Rules of the Supreme Court 1971 (WA) O 24A r 10 - Offer expressed as inclusive of costs - Whether judge erred in ordering costs in favour of plaintiff
Legislation:
Land Administration Act 1997 (WA), s 15(1), s 202(1), s 208(1), s 208(2), s 209, s 210, s 241(2), s 241(7)(a), s 241(7)(b), s 241(8)
Property Law Act 1969 (WA), s 6, s 20
Rules of the Supreme Court 1971 (WA), O 24A r 3, O 24A r 10(1), O 24A r 10(2), O 24A r 10(3), O 24A r 10(5)
Result:
Appeals dismissed
Category: B
Representation:
CACV 11 of 2018
Counsel:
| First Appellant | : | M Hotchkin |
| Second Appellant | : | M Hotchkin |
| Respondent | : | K M Pettit SC & D W McLeod |
Solicitors:
| First Appellant | : | Hotchkin Hanly |
| Second Appellant | : | Hotchkin Hanly |
| Respondent | : | McLeods |
CACV 63 of 2018
Counsel:
| Appellant | : | K M Pettit SC & D W McLeod |
| First Respondent | : | L Rowley |
| Second Respondent | : | L Rowley |
Solicitors:
| Appellant | : | McLeods |
| First Respondent | : | Rowley Legal |
| Second Respondent | : | Rowley Legal |
Case(s) referred to in decision(s):
Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720
Brewster v BMW Australia Ltd [2019] NSWCA 35; (2019) 366 ALR 171
Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386
Chapman v Luminis [No 4] [2001] FCA 1106; (2001) 123 FCR 62
Chief Executive Officer, Department for Child Protection and Family Support v IGR [2019] WASCA 20
Child and Adolescent Health Service v Mabior [2019] WASCA 151
Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215
Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124
Dawson v Great Northern and City Railway Co [1905] 2 KB 260
Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 113 ALR 225
Durham Holdings Pty Ltd v New South Wales [2001] HCA 7; (2001) 205 CLR 399
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Frank Robertson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679
Jones v Hyde [1989] HCA 20; (1989) 63 ALJR 349
Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307
Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307 (S)
Mabo v Queensland (No 2) (1992) 175 CLR 1
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
National Mutual Property Services (Aust) Pty Ltd v Citibank Savings (1995) 132 ALR 514
Poulton v The Commonwealth [1953] HCA 101; (1953) 89 CLR 540
Pritchard v Racecage Pty Ltd (1997) 72 FCR 203
Smart v Power [2019] WASCA 106
Spencer v Australian Capital Territory [2007] NSWSC 303; (2007) 13 BPR 24,307
Tavitian v City of Playford [2014] SASCFC 82; (2014) 202 LGERA 87
Thistlethwayte v The Minister (1953) 19 LGR (NSW) 87
Table of contents
Introduction
The issues in the appeal against the primary decision
Background
The land and the taking
The planning instruments and their history
1987 report
Rural Strategy Plan 1988
North-West Corridor Structure Plan - 1992
Metropolitan Region Scheme Amendment 1994
District Planning Scheme No 2 - 6 July 2001
The Industrial Development Zone in DPS2
Agreed Structure Plan Cell 8 - 9 April 2002
The MRS zoning of lot 6 - 1994 - 2003
The zoning of lot 6 in DPS2 in 2003 and the City's report of 4 November 2003
Zoning at the time of taking
The Road Extension Project – Roadworks 2011
The planning issue
The appellants' contentions - overview
The evidence
The judge's findings
The appellants' submissions
Disposition
Valuation issue - the Masters' site
Ground 5
Disposition
The severance/injurious affection issue
The judge's findings
Primary decision [484] - [485]
Primary decision [449]
Ground 6
Disposition
The assignment issue
The relevant legislation
The LA Act
Property Law Act
The appellants' submissions
The City's submissions
Disposition
The costs issue
Background
Order 24A
The judge's findings
Grounds of appeal
Disposition
Conclusion
JUDGMENT OF THE COURT:
Introduction
Kilmaley Investments Pty Ltd and Shean Pty Ltd (collectively, the appellants) brought proceedings seeking compensation pursuant to s 241 of the Land Administration Act 1997 (WA) (LA Act) arising from the compulsory acquisition of part of certain land in Wangara known as lot 6 Gnangara Road, Wangara (lot 6).
In Kilmaley Investments Pty Ltd v City of Wannero [No 2][1] (primary decision), the primary judge, Tottle J, awarded compensation in an amount of approximately $1.9 million. Appeal CACV 11 of 2018 is an appeal against the primary decision (substantive appeal). In effect, the appellants contend that the amount of compensation awarded should have been higher.
[1] Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307.
Appeal CACV 63 of 2018 (costs appeal) is an appeal by the respondent, the City of Wanneroo (City), against the costs orders made by the judge in a supplementary decision on costs (costs decision).[2]
[2] Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307 (S).
Lot 6 comprised an area of 2.9103 ha. An area of 7,727 square metres was taken from lot 6. In the primary decision and the costs decision, the land that was taken from lot 6 was referred to as lot 505. After the taking, the remaining area was 2.1376 ha. This remaining area was referred to as lot 703 in the primary decision and the costs decision.[3]
[3] Primary decision [21].
A taking order was made by the Minister for Lands on 19 October 2010 pursuant to s 177(1) of the LA Act. By s 151(1) of the LA Act, the date of taking was the date the taking order was registered, being 3 November 2010. The land was taken at the request of the City.[4]
[4] Primary decision [18] ‑ [19].
At the time of the taking, lot 6 was co-owned by the first appellant (Kilmaley) and Mannor Holdings Pty Ltd (Mannor) as tenants in common. Mannor had, in April 2009, granted a registered mortgage over its interest in lot 6 to the second appellant (Shean) as security for loans of $2.8 million made by Shean to Mannor. Shean and Kilmaley were companies controlled by a Mr and Mrs Frawley. By a deed dated April 2013, Mannor assigned to Kilmaley its interest in lot 6, and to Shean its entitlement to compensation for the taking.[5] There was a dispute in the primary proceedings, and there is an issue in the appeal, as to whether Mannor's right to compensation was assignable.
[5] Primary decision [505] - [507].
The appellants sought compensation as follows (figures are approximate):[6]
[6] Primary decision [3].
1.Compensation under s 241(2) of the LA Act for the value of the land taken (ie, the 7,727 square metres taken) in the sum of $2.96 million.
2.Compensation under s 241(7)(a) and s 241(7)(b) of the LA Act in the sum of $5.3 million.
3.Solatium under s 241(8) of the LA Act at 10% of the total amount of compensation payable.
The issues in the appeal against the primary decision
In broad terms, there are four principal issues raised by the appellants in relation to the primary decision. The first is a planning issue[7] - whether the judge erred in finding that in a situation unaffected by the taking, the hypothetical purchaser would have known that lot 6 would not have been zoned, in effect, 'Business'. The appellants contended, in effect, that in the unaffected situation, lot 6 would have had a Business zoning, which would have led to a correspondingly higher value for lot 6 than that found the primary judge. They contended, in effect, that the judge's finding that the land would not have been zoned Business was not open on the evidence, and that the only finding reasonably open on the evidence was that the land in its unaffected state would have been zoned Business. They accordingly contended that the judge erred in his findings as to the permissible uses in the unaffected situation.
[7] The planning issue was raised by grounds 1, 2, 3 and 4 of the substantive appeal.
The second issue concerns the valuation of lot 6 in its unaffected state and, in particular, the judge's findings on evidence of certain comparable sales in relation to a site known as the 'Masters' site'.[8]
[8] The valuation issue was raised by ground 5 of the substantive appeal.
The third issue concerns the appellants' claim for severance/injurious affection.[9]
[9] The severance/injurious affection issue was raised by grounds 6 and 7 of the substantive appeal.
The fourth issue concerns the assignability of an entitlement to compensation under the LA Act.[10] It is whether s 208 of the LA Act, on its proper construction, permits the assignment of a right or claim to compensation under the LA Act.
[10] The statutory construction issue was raised by ground 8 of the substantive appeal.
A fifth issue arises in the costs appeal in which the City is the appellant. It concerns the proper construction and application of O 24A r 10 of the Rules of the Supreme Court 1971 (WA) (Rules).
The City filed a notice of contention in the substantive appeal. Ground 1 of the notice of contention concerned the proper construction and application of s 241(2) of the LA Act ‑ what was the 'proposed public work', the positive or negative impact of which on value had to be discounted under s 241(2) of the LA Act?[11] Ground 2 of the notice of contention was to the effect that the judge should have found that a Business zoning was unavailable for lot 6 in the unaffected situation because such a zoning was inconsistent with the Industrial zone provided for in the Metropolitan Region Scheme: s 123(1), s 124(1) and (4), s 125 and s 127 of the Planning and Development Act 2005 (WA).
[11] The public works issue was raised by contention 1 of the respondent's notice of contention.
There was also a notice of contention in the costs appeal. It is unnecessary in these reasons to deal with the notice of contention in either appeal. For the reasons which follow, both appeals should be dismissed.
Background
The land and the taking
Broadly speaking, lot 6 was an area of land in the shape of a right‑angled triangle. The base of the triangle was on Gnangara Road to the south, the hypotenuse fronted Sydney Road (later renamed Destiny Road) to the west/northwest, and the right‑angled side was on the east, joining Sydney Road to the north and Gnangara Road to the south. Gnangara Road ran along a west/east access and carried a lot of traffic at the time of taking. In due course, the traffic along the relevant portion of Gnangara Road was eased by the extension of Ocean Reef Road, as a major arterial thoroughfare, to the north of lot 6, running from the west to the east in the northern corridor.[12]
[12] Primary decision [14].
Lot 6 was located on the eastern edge of an area of land referred to as the Wangara industrial area. Further to the east of lot 6 was a residential development. To the north of lot 6 was the Gnangara industrial area, and to the south of lot 6 was the Landsdale industrial area.[13]
[13] Primary decision [13].
The taking was preceded by a notice of intention to take dated 16 November 2009 (Notice of Intention). The Notice of Intention stated the purpose of the public work for which the taken land was to be designated was:[14]
[14] Primary decision [16].
widening of Gnangara Road and extension of Mirrabooka Avenue, Gnangara ‑ City of Wanneroo.
The planning instruments and their history
The relevant planning instruments and their history, as outlined below, are taken from the primary decision, unless otherwise indicated.
East Wanneroo is within the area described for planning purposes as the 'North-West Corridor' of metropolitan Perth.[15]
[15] Primary decision [57].
1987 report
In 1987, the State Planning Commission of Western Australia published a report entitled, 'Planning for the Future of the Perth Metropolitan Region' (1987 Report). That report proposed a broadening of the North‑West Corridor incorporating East Wanneroo as a future urban area, and recommended the expansion and amalgamation of the existing Wangara and Lansdale industrial estates by an additional 400 ha, including land both north and south of Gnangara Road.[16]
[16] Primary decision [58].
Rural Strategy Plan 1988
In September 1988, the City published a 'Rural Strategy Plan'. That plan recorded that there had been a deficiency in industrial land in the north‑west corridor, and that it had agreed that the shortfall in industrial land would be accommodated on the land between the Wangara and Lansdale industrial areas, south of the then proposed Ocean Reef Drive alignment. The Rural Strategy Plan identified six strategy options, each including the requirement for industrial expansion to provide a 'much needed regional employment base' for the manufacturing, processing and service sectors of the region. The industrial expansion was to be catered for initially by extensions to the Lansdale and Wangara industrial areas. The strategy options involved developing the road network servicing the area in different ways as shown on maps incorporated into the report. Although all strategy options showed Ocean Reef Road being extended further east than lot 6, they did not show any proposal for roads involving a taking of land from lot 6.[17]
[17] Primary decision [59] ‑ [60].
The Rural Strategy Plan included the following, upon the last paragraph of which counsel for the appellants placed particular reliance in this appeal:[18]
[18] Appeal ts 10 - 12, 36 ‑ 37; GB vol 5, 2120.
In an effort to cater for the increasing population of the northern corridor, industrial expansion is considered necessary to provide a much needed regional employment base for the manufacturing, processing and service sectors of the region - a region which has the highest rate of population growth in the state but is lacking in employment opportunities.
This growth will initially be catered for by extensions to the Landsdale and Wangara industrial areas resulting in some 400 ha of new industrial land. Landsdale and Wangara currently comprise 234.8 ha. The new land could readily be staged to cater for demand as it occurs and is Class 1 land for industrial [development] under the Land Capability Study.
Long-term industrial requirements will be catered for by extensions to the Flynn Drive industrial area. Expansion of this area was advocated in the 1977 Planning Structure for the North‑West Corridor and the Corridor Review. Details of this expansion varies between strategy options.
A problem often associated with industrial land, particularly where it abuts residential land, is the conflict of land uses in the interface area between the two zones. In an attempt to avoid this problem it is proposed to grade the uses within the industrial zones permitting general industrial development in the centre with light industrial and service/commercial uses at the boundaries. This would be done by the appropriate zoning.
North-West Corridor Structure Plan - 1992[19]
[19] Primary decision [61] - [64].
In March 1992, the Department of Planning and Urban Development published a 'North-West Corridor Structure Plan'. This was an advisory document intended to provide a framework for the development of the north‑west corridor to the year 2021. It identified the land bounded by the proposed alignment of Ocean Reef Road to the north, Wanneroo Road to the west, and Gnangara Road to the south, and the then proposed Mirrabooka Avenue extension to the east as 'Industrial and Mixed Use Business Area', subject to two minor qualifications.
Part 1 of the North-West Corridor Structure Plan set out the planning context and it recorded, amongst other things, that (1) strategic industrial areas had been designated at Flynn Drive and Lansdale, (2) mixed business areas had been identified at Wangara and Gnangara, and (3) mixed business areas would also be supported close to Strategic Regional Centres and on the fringe of industrial estates.
The North-West Corridor Structure Plan also addressed the regional road network. It referred to the 'current philosophy' as mostly extending or upgrading existing roads, including: (1) the extension of Mirrabooka Avenue northwards, to Ocean Reef Road, and (2) the extension of Ocean Reef/Gnangara Road (and Burns Beach/Neaves Road) as major east/west routes which would link the North‑East to the North‑Western Corridors.
Although the North‑West Corridor Structure Plan proposed that Mirrabooka Avenue be extended north to join the then proposed extension of Ocean Reef Road to the east, it recorded that other options had been considered. Those options involved an extension to the east of Ocean Reef Road but no extension of Mirrabooka Avenue - and thus no taking of land from lot 6.
Metropolitan Region Scheme Amendment 1994
Metropolitan Region Scheme (MRS) Amendment 948/33 was gazetted to give effect to the proposals contained in the North-West Corridor Structure Plan.It was endorsed by the State Planning Commission on 11 July 1994. The amendment expanded the Wangara and Gnangara Industrial areas by adding some 300 ha of industrial zoned land. It also effected the reservations which were required for the extension of the north of Mirrabooka Avenue to Ocean Reef Road, and the extension of Ocean Reef Road. Under the amendment, Ocean Reef Road and portions of Gnangara Road and Mirrabooka Avenue were designated as 'Other Regional Roads (Blue Roads)'.[20]
[20] Primary decision [65] - [66].
District Planning Scheme No 2 - 6 July 2001[21]
[21] Primary decision [67] - [68].
The City's District Planning Scheme No 2 (DPS2) was gazetted on 6 July 2001.
Clause 3.1 of DPS2 set out various zones for the classification of land in the Scheme Area. They relevantly included (1) Business, (2) General Industrial, (3) Service Industrial, and (4) Industrial Development.[22]
[22] GB 1803.
The Business zone is outlined in DPS2 cl 3.6, the General Industrial zone is outlined in cl 3.11 and the Service Industrial zone is outlined in 3.12. The General Industrial zone is described as a zone intended to provide for industrial development which the City considered to be 'obtrusive in or detrimental to the amenity of the Service Industrial Zone', and that 'this zone would however potentially result in a more obtrusive form of development on this site than other options and would seem to be clearly contrary to the views of the local community'.[23]
[23] Primary decision [81].
The Service Industrial zone is a zone intended to provide a 'range of business, industrial and recreational developments which the [City] may consider would be inappropriate' in other zones, namely the Commercial, Business and General Industrial zones.
Each of the Business, General Industrial and Service Industrial zones are referred to in a zoning table which incorporates specified classes of use and uses symbols 'P', 'D', 'A' and 'X' to signify whether, and to what extent, each class of use is permitted in each zone.[24]
[24] GB 1803, 1897 - 1900.
In cl 3.2.2 of DPS2, the symbols 'P', 'D' and 'X' are defined as follows:[25]
[25] GB 1803 - 1804.
'P' = A use class that is permitted but which may be subject to any conditions that the Council may wish to impose in granting its approval;
'D' = A use class that is not permitted, unless the Council grants its approval after following the procedures laid down by subclause 6.6.2.
'X' = A use class that is not permitted expect where provision is made specifically for Council to approve an otherwise prohibited use.
The Industrial Development zone in DPS2 is not in the zoning table. Rather, the uses in the Industrial Development zone are to be determined in accordance with the provisions of an 'Agreed Structure Plan': DPS2, cl 3.15. Structure plans are dealt with in pt 9 of DPS2. The purpose of the Industrial Development zone is outlined in cl 3.15.1 and cl 3.15.2, as noted below.[26]
[26] GB 1809 - 1810.
The Industrial Development zone in DPS2
Clause 3.15 of DPS2 refers to the Industrial Development zone and includes the following:[27]
[27] GB 1809 - 1810.
3.15.1The purpose of the Industrial Development Zone is to provide for the orderly planning of larger areas of land proposed for industrial use in an integrated manner within a regional context whilst retaining flexibility to review planning with changing circumstances.
3.15.2The objectives of the Industrial Development Zone are to:
(a)designate land for future industrial development;
(b)provide for the orderly and comprehensive planning and development of large areas of industrial land for industrial and employment purposes;
(c)enable planning to be flexible and responsive to changing circumstances throughout the development stages of the area. (emphasis added)
Agreed Structure Plan Cell 8 - 9 April 2002[28]
[28] Primary decision [71].
On 9 April 2002, the City resolved to adopt a Local Structure Plan for Cell 8 within the area of DPS2 and submit it to the Western Australian Planning Commission (WAPC) for approval.On 17 May 2002, the WAPC adopted the Structure Plan for Cell 8 (Cell 8 Structure Plan), which included lot 6.
The Cell 8 Structure Plan incorporated a plan that identified the Structure Plan Area and provided that infrastructure contributions were to be determined in accordance with DPS2 and set out various environmental conditions.
The Cell 8 Structure Plan did not allocate specific land use or zoning to lot 6, or indeed to any land within the Structure Plan Area.
The MRS zoning of lot 6 - 1994 - 2003
Upon Amendment 948/33 to the MRS in 1994, lot 6 retained a 'Rural' zoning under the MRS. It was not zoned Industrial at that time. This was consistent with concerns expressed over environmental issues arising from the proximity of lot 6 to wetlands and a 'Bush Forever Site'.[29]
[29] Primary decision [72].
Also at this time, the land immediately to the east of lot 6 was zoned 'Urban Deferred' and the land immediately to the west (on the west side of Sydney Road) retained its Rural zoning.[30]
[30] The land to the west was later rezoned 'Industrial' in the MRS in 2013; primary decision [72].
On 14 January 2003, pursuant to an amendment to the MRS, lot 6 was rezoned to 'Industrial'. The amendment report recorded that lot 6 was not included in the wetland area, and that it was suitable for industrial development.[31]
[31] Primary decision [73].
The zoning of lot 6 in DPS2 in 2003 and the City's report of 4 November 2003
The rezoning of lot 6 to Industrial under the MRS obliged the City to amend DPS2, in order to be consistent with the amended MRS. On 29 April 2003, the City initiated an omnibus amendment (amendment 28) to DPS2, to ensure the zoning under DPS2 of lot 6 and three other areas of land within the City of Wanneroo were consistent with MRS zoning.[32]
[32] Primary decision [74].
Initially, the City proposed that lot 6 be rezoned 'General Industry'. A report was prepared which indicated that it was conceivable that someone in the consultation process might wish to argue that a type of industrial zone other than General Industry may be appropriate for lot 6.[33]
[33] Primary decision [75].
Following advertisement and the receipt of submissions, a further report was prepared by a City officer for a council meeting held on 4 November 2003, which referred to a number of possible 'options' with respect to zoning.[34] The officer's report stated that a Business zone 'may have some merit' in relation to lot 6, but that observation was immediately qualified by the cautionary observation that a Business zone would facilitate the independent subdivision and development of lot 6 which would prejudice the opportunity to coordinate the development of land to the west of Sydney Road.[35]
[34] Primary decision [76] - [81].
[35] Primary decision [81], [253].
At the meeting on 4 November 2003, the City resolved to change the proposed zoning of lot 6 from General Industrial to Industrial Development. The reason for this was because of the outstanding environmental issues associated with lot 6 and the adjacent land to the west of Sydney Road, and, secondarily, to provide the City with some flexibility in determining the particular industrial uses for which lot 6 might be developed. In the latter case, it was considered that the zoning would limit adverse impacts on residential areas to the east, whilst at the same time ensuring that it was not an impediment to the industrial development of land to the west of Sydney Road.[36]
[36] Primary decision [82].
Zoning at the time of taking
It was common ground that the environmental issues had been resolved by the date of taking. At the date of taking (3 November 2010), lot 6 was zoned Industrial under the MRS. It was zoned Industrial Development under DPS2.[37]
[37] Primary decision [83] - [84].
The Road Extension Project – Roadworks 2011
Between April and December 2011, the following roadworks were in fact carried out:[38]
[38] Primary decision [91] - [94].
1.Mirrabooka Avenue was extended north to Gnangara Road (the road on the southern boundary of lot 6 at the base of the lot 6 triangle), and then further north to Ocean Reef Road (along the right‑angled side of the lot 6 triangle).
2.The extension of Mirrabooka Avenue north to Gnangara Road also involved the construction of a roundabout at the junction of Gnangara Road and the extended Mirrabooka Avenue. (The extension north of that roundabout up to the intersection with Ocean Reef Road was renamed Gnangara Road).
3.The extension of Ocean Reef Road eastwards, from Prestige Parade (west of lot 6) through to Alexander Drive (considerably to the east of lot 6). Ocean Reef road changed its name to Gnangara Road east of where it intersects with the Mirrabooka Avenue extension.
4.The creation of a permanent cul‑de‑sac of the old Gnangara Road east of the Mirrabooka Avenue extension.
5.The creation of a cul‑de‑sac by truncating Sydney Road (the hypotenuse of the lot 6 triangle) at a point south of the Ocean Reef Road alignment and north‑west of lot 6.
6.The bifurcation of Gnangara Road within about 50 metres west of the roundabout at the junction with Mirrabooka Avenue.
As a result, there is no road immediately abutting the northern boundary of lot 6, but Ocean Reef Road runs west/east to the north of it.[39] Also, the extension of Ocean Reef Road from west to east caused significant reductions in traffic along the southern boundary of lot 6 (along Gnangara Road).[40]
[39] Primary decision [89] - [94].
[40] Primary decision [289].
The planning issue
The appellants' contentions - overview
Grounds 1 - 3 of the appeal deal with the planning issue. The success of Ground 4 hinges upon the appellants succeeding on grounds 1 ‑ 3.[41] It is unnecessary to set out these grounds in detail. As noted earlier, in substance, by grounds 1 ‑ 3, the appellants contended[42] that the only finding reasonably open on the evidence was that in the 'before' situation, lot 6 would likely have been given a Business zoning.
[41] Appeal ts 73 ‑ 74.
[42] Appeal ts 4, 7 - 8, 12, 17 - 18, 23 - 25, 30 - 31, 34 - 35, 46, 51.
The evidence
The expert evidence was given by Mr Hajigabriel for the appellants, and Mr Bracone and Mr Moran for the City (planning witnesses). Mr Hajigabriel and Mr Moran were consultants on planning matters. Mr Bracone was employed by the City. Planning witnesses prepared witness statements and conferred with a view to narrowing the issues of dispute between them. As a result, they prepared a 'Conferral of Planning Experts' memorandum (Conferral Memorandum).[43]
[43] Primary decision [208] - [212]; GB 2069.
The judge outlined the expert evidence and the issues for determination in considerable detail in terms which are not challenged on appeal.[44] His Honour also observed that the planning witnesses gave oral evidence concurrently over the course of two and a half hearing days.[45]
[44] Primary decision [206] - [266].
[45] Primary decision [212].
In the Conferral Memorandum, the planning witnesses addressed (relevantly) the question of whether in the 'before' situation, lot 6 would likely have been zoned Business, either by a rezoning of lot 6 to the Business zone, or by an amendment to the Cell 8 Structure Plan to apply the Business zone to the land.[46]
[46] Conferral Memorandum, par 16; GB 2079.
Mr Bracone considered that the most likely zoning for lot 6 would have been 'General Industry' zoning.[47] He did not consider that lot 6 was required as a transition zone between residential and industrial land.[48]
[47] Primary decision [229]. See also Mr Bracone's witness statement, pars 48 - 49, 51 - 53; GB 1144 - 1145; Conferral Memorandum, par 14; GB 2077.
[48] Primary decision [237].
On the other hand, both Mr Moran and Mr Hajigabriel considered that lot 6 would likely have been considered a transitional area between industrial and residential land. Mr Moran, said, in effect, that uses consistent with the Service Industrial zone would serve as the appropriate transition. Contrary to Mr Moran's evidence, Mr Hajigabriel said that higher order uses consistent with the Business zone would provide the appropriate transition.[49]
[49] Conferral Memorandum, par 14; GB 2077.
Mr Hajigabriel's views as to the likelihood of lot 6 having a Business zoning were expressed in the context of a plan, produced by another witness for the appellants, Mr Hindley, showing how lot 6 might be developed to accommodate a number of Business uses.[50] The Business uses in Mr Hindley's plan had been selected in consultation with (relevantly) Mr Hajigabriel.[51]
[50] Primary decision [222].
[51] Primary decision [223].
Mr Hajigabriel's reasons for concluding that the most likely outcome for lot 6 in the 'before' situation was a Business zoning included the following:[52]
[52] Primary decision [249].
1.A Business zone would have provided a transition between General Industrial uses to the west, and residential uses to the east and south‑east.
2.The Furniss Road Business Precinct in Landsdale, governed by the Cell 6 Structure Plan, showed that a Business zone could operate as a transition between industrial and residential areas.
3.The City's report of 4 November 2003 (see [44] above) indicated that 'there was a clear contemplation that [lot 6] could also be included within the "Business" zone by virtue of its location on the periphery of the Wangara industrial area'.
4.The objections by residents in 2003 to the zoning of lot 6 to General Industry suggested that zoning other than an industrial zoning would be preferred.
Mr Moran considered that a Business zoning for lot 6 would have been highly unlikely. In that regard, Mr Moran's evidence included the following:[53]
[53] Primary decision [230], [259] - [264]. See also trial ts 340 - 341.
1.It would not be in accordance with orderly and proper planning to permit uses that would generate high volumes of traffic such as those contemplated in Mr Hindley's design concept for Business uses to which Mr Hajigabriel had regard.
2.It was important that the industrial potential for the land to the west of Sydney Road would not be prejudiced by a Business zoning of lot 6. It was in the State's interest to have large parts of industrial land available, and there was a potential to prejudice the development of land to the west of Sydney Road if lot 6 was given a Business zoning.
3.The Furniss Road Business Precinct could not be regarded as a relevant example of a Business zone providing a transition between industrial and residential uses. The Cell 6 Structure Plan, which governed the Furniss Road Business Precinct, provided that many of the uses normally permitted in a Business zone were not permitted unless the council exercised its discretion to permit the use. Clause 4.3 of the Cell 6 Structure Plan provided that a number of uses were 'not considered appropriate and should be excluded' from the Furniss Road Business Precinct.
4.The Service Industrial zone was the most 'commercial' of the industry zones in DPS2, and P and D uses from Service Industrial plus some (only) Business uses, might be permitted on lot 6.
Mr Bracone also agreed that lot 6 would likely not have been zoned for Business uses, because (amongst other things) a Business zoning would have the capacity to prejudice industrial development to the west.[54]
[54] ts 340.
All the expert witnesses agreed that the ultimate use to which lot 6 might be put was to be determined by a process of negotiation between the landowner and the City, which culminated in an amendment to the Cell 8 Structure Plan. This approach reflected orderly and proper planning, and was the approach contemplated by DPS2, albeit that any amendment to the Cell 8 Structure Plan had to be endorsed by the WAPC.[55]
[55] Primary decision [239].
In cross‑examination, Mr Hajigabriel, having acknowledged that a structure plan may potentially adopt zoning other than a conventional zoning under DPS2,[56] referred to the possibility of a structure plan adopting a 'bespoke set of land use criteria':[57]
[56] ts 274.
[57] ts 199, 274.
The District Planning Scheme, which is the local campaigning [sic - planning] scheme, is required to be consistent with the [MRS]. That designates a series of other zones. Predominantly the zones are zones such as residential, commercial, public open space reserves, and so on, but there is also what we call the development zones, and you have both residential development zones and industrial development zones. The intent of the development zone is to cover areas where there may be a multiplicity of land ownership or there might - there might be some other issue which justifies a requirement for a structure plan to be undertaken within a particular area. The development zones, themselves, don't allocate land use. It's then upon the structure plan to designate land use. And through the structure plan the land use can be designated by reference to a zone in the scheme or you can come up with a bespoke set of land uses that are applicable to a particular piece of land.
…
WITNESS, HAJIGABRIEL: With a structure plan, you can either allocate a zone which, for convenience sake, is exactly the same as the zone in the scheme.
TOTTLE J: Yes.
WITNESS, HAJIGABRIEL: Or you can come up with a bespoke set of land use criteria - - -
TOTTLE J: Yes, yes.
WITNESS, HAJIGABRIEL: - - - applicable to the land. I think that's - - -
TOTTLE J: Yes. So you could just say it's everything allowed by DPS2 but - - -
WITNESS, HAJIGABRIEL: Except for - - -
TOTTLE J: Except for - I understand. (emphasis added)
Mr Hajigabriel agreed that the best outcome for lot 6 from a planning perspective was Industrial Development zoning with the potential for amendments to the structure plan to provide a 'bespoke' solution, because it was a solution that provided the greatest flexibility without imposing rigid restraints upon the land use.[58]
[58] Primary decision [240]; trial ts 289.
In oral evidence, Mr Moran agreed with Mr Hajigabriel that a structure plan could provide a 'bespoke' set of uses, and said that a 'bespoke' set of uses, involving some of the Service Industrial zone uses and some uses from the Business zone, was very likely for lot 6 in the 'before' situation.[59]
[59] Trial ts 274 - 275.
Despite the potential for a 'bespoke' set of uses to be incorporated into a structure plan, Mr Hajigabriel maintained that in relation to lot 6, the type of use likely to be approved in the situation before the taking were uses consistent with a Business zone.[60]
[60] ts 338 - 339.
Mr Moran was subsequently cross‑examined on the topic of lot 6 likely having a number of 'bespoke' uses, including certain Business zone uses.[61] He concluded that in the 'before' situation, the 'bespoke' uses likely to be incorporated into an amended Cell 8 Structure Plan would be the P and D uses in the Service Industrial zone, and certain Business zone uses, ie, a consulting room, a medical centre, and 'private recreation'.[62]
[61] ts 431 - 432.
[62] Primary decision [262], [264], [267(i)]; ts 433; 'Private recreation' is defined in sch 1 of DPS2 to include playgrounds and sports arenas: GB 1920.
The judge's findings
The judge found that each of Mr Hajigabriel, Mr Bracone and Mr Moran presented as credible witnesses.[63] The judge nevertheless had reservations about aspects of Mr Hajigabriel's evidence, which he took into account in making his findings as to the likely zoning of lot 6 in the 'before' situation.[64]
[63] Primary decision [231].
[64] Primary decision [251], [275].
The judge relevantly found, in effect, that in the 'before' or 'unaffected' situation:[65]
[65] Primary decision [267].
1.It is likely that lot 6 would have been zoned Industrial Development in DPS2 with the consequences that:
(a)no development could take place until the Cell 8 Structure Plan had been amended to provide for stipulated uses; and
(b)any amendment to Cell 8 Structure Plan would likely have provided for a 'bespoke' list of uses drawn from P and D uses in the Service Industrial zone in the DPS2 zoning table, together with some limited Business uses identified by Mr Moran: consulting room, medical centre and private recreation.
2.Alternatively, if not zoned Industrial Development in DPS2, lot 6 would likely have been zoned Service Industrial under DPS2.
3.In any event (and contrary to the appellants' case), lot 6 would not likely have been zoned Business.
The judge gave, in effect, the following reasons for these conclusions:
1.An Industrial Development zoning would recognise the State's need for industrial land as recorded in the Rural Strategy Plan and North‑West Corridor Structure Plan. In short, regional planning had long recognised the need to accommodate the demand for land for industrial uses and, conversely, there was no evidence of an unmet need for land for business uses. In other words, there was nothing to suggest that in the 'before' situation, the requirement for industrial land would be displaced by a requirement for land to be used for business purposes.[66]
[66] Primary decision [269].
2.The Industrial zoning of lot 6 under the MRS tended to confirm the importance of setting aside land for industrial use in Wangara and Gnangara, and the statutory requirement for DPS2 to be consistent with the MRS[67] increased the likelihood of some type of industrial zoning for lot 6.[68]
[67] Planning and Development Act 2005 (WA), s 123.
[68] Primary decision [270].
3.The judge accepted the views of Mr Hajigabriel and Mr Moran, that lot 6 would have been capable of functioning as a 'transitional' area attenuating the potential conflict between the industrial area to the west and the residential areas to the east and south‑east. The uses permitted in the Service Industrial zone in DPS2 would not have the same capacity for disruption to neighbouring residents as General Industrial uses. Thus, the zoning of lot 6 as Industrial Development, on the basis that it would ultimately incorporate a range of uses from Service Industrial in the implementation of an amendment to Cell 8 Structure Plan, would reflect orderly and proper planning.[69]
[69] Primary decision [271].
4.The Furniss Road Business Precinct, which had been cited by Mr Hajigabriel as an example of a Business zone acting as a transitional zone, could not be invoked to support a Business zoning for lot 6 permitting the uses identified by Mr Hindley's plan. That is because many of the uses in Mr Hindley's plan, and, in particular, those depending on high volumes of passing traffic, are uses not considered appropriate by the Cell 6 Structure Plan which governs the Furniss Road Business Precinct.[70]
[70] Primary decision [272].
5.A Business zoning for lot 6 would not have reflected orderly and proper planning in that it would have the potential to restrict the range of industrial uses on the land to the west of Sydney Road.[71]
[71] Primary decision [273].
6.The judge rejected Mr Hajigabriel's evidence about the prospect of lot 6 being zoned Business. The judge expressed a number of reservations about Mr Hajigabriel's evidence,[72] including the fact that the opinions expressed by Mr Hajigabriel had shifted over the course of the litigation from an expression of opinion that lot 6 'could' have been zoned Business, to an expression of opinion that it was 'highly likely' that lot 6 would have been zoned Business.[73]
[72] Primary decision [252] - [257].
[73] Primary decision [257].
7.On the other hand, the judge preferred the evidence of Mr Moran over Mr Hajigabriel, having identified which particular aspects of Mr Moran's evidence the judge found to be persuasive.[74]
[74] Primary decision [231], [258] - [264], [267(i)].
The appellants' submissions
The appellants' submissions, in support of the contention that the only finding reasonably open on the evidence was that lot 6 would likely have had a Business zoning in the 'before' situation, were in substance to the following effect:
1.It is the owner of the land who would typically initiate an amendment to the Cell 8 Structure Plan, on advice from a planner, and it is unlikely the owner of lot 6 would instigate, or be advised to instigate, an amendment to the Cell 8 Structure Plan which did not incorporate a Business zoning in relation to lot 6.[75]
[75] Appellants' written submissions, pars 27, 32 ‑ 35, 39; WAB 12 - 14, 16; appeal ts 16 - 17, 30 - 33, 51 - 52, 60, 64.
2.The judge failed to have proper regard to the Rural Strategy Plan (1988) referred to at [21] above.[76]
[76] Appeal ts 36 - 38.
3.The only evidence to support a finding that lot 6 would not have been zoned Business, through an amendment to the Cell 8 Structure Plan, was the evidence of Mr Bracone and Mr Moran.[77] No planner gave evidence that they would have advised a purchaser that lot 6 would not be zoned Business.[78]
[77] Appellants' written submissions, pars 22, 24, 30 - 31, 36; WAB 11 - 14, appeal ts 31 - 32, 47, 49 - 50, 59 - 60, 62.
[78] Appellants' written submissions, par 29; WAB 13.
4.Mr Bracone's evidence was rejected by the judge.[79]
[79] Appellants' written submissions, par 37; WAB 14 ‑ 15; appeal ts 59.
5.Mr Moran's evidence was not consistent in that he initially said that lot 6 would have had either General Industrial or Service Industrial uses, and he made no mention of a range of uses appropriate for lot 6 as a transition area. After the conferral of planning witnesses, in the Conferral Memorandum he agreed that lot 6 would likely be a transition zone, but said that it would likely not involve a Business zoning. At trial, his evidence was that there would be a range of permissible Service Industrial uses together with a selection of additional Business uses, forming a 'bespoke' set of uses.[80]
[80] Appellants' written submissions, pars 22, 24; 31; WAB 11 - 13; appeal ts 46 - 48, 61 - 62, 66 - 67, 71 - 72.
6.The main plank of the City's case at trial had been that a General Industrial zoning was required for lot 6 in order to make the range of permissible uses consistent with the amended MRS,[81] and there was a 'sudden … turning point [in] the trial' in which there was evidence of 'bespoke' uses, which was a 'thought bubble' of Mr Moran.[82] His evidence in cross‑examination revealed that he had not given the notion of bespoke uses any serious consideration.[83]
[81] Appellants' written submissions, par 38; WAB 15 - 16; appeal ts 47, 60 ‑ 61.
[82] Appeal ts 17 - 19 and, generally, appeal ts 22 - 24, 31 - 35, 61 - 62.
[83] Appeal ts 70 - 72.
7.Mr Moran's late change of mind was not something the hypothetical purchaser would have been advised of, so that the judge either applied the wrong test,[84] or reached a conclusion that was not open on the evidence.[85]
[84] Appellants' written submissions, pars 26 - 28; appeal ts 6.
[85] Appellants' written submissions, par 29; appeal ts 7.
8.Given the inconsistency in Mr Moran's evidence and the lack of cogency of his evidence, it was not open to the judge to accept his evidence, which was 'glaringly improbable'.[86] The reasons given by the judge[87] for finding that a Business zoning would not have been approved were unsupported by evidence, and unsupported by a 'proper chain of logic',[88] in that:
[86] Appeal ts 12, 18 - 10, 23, 46 - 47, 63.
[87] The reasons are at primary decision [269] ‑ [274] and are summarised in [67] above.
[88] Appellants' written submissions, par 40; WAB 16.
(a)the State's general need for industrial land did not 'mandate' that lot 6 be used for industrial purposes, and there was no evidence that a planner would have advised a hypothetical purchaser that the State needed lot 6 for industrial land;[89]
[89] Appellants' written submissions, par 41; WAB 16; appeal ts 36.
(b)there was no evidence a planner would have advised that the MRS zoning of lot 6 as 'Industry' meant that lot 6 could only be set aside for industrial uses; and the local authority is better suited to plan land uses at the boundaries of zoning, to limit conflicting land uses in close proximity;[90]
[90] Appellants' written submissions, par 42; WAB 16; appeal ts 36, 38 - 39, 53.
(c)a review of the zoning table indicates that:
(i)Service Industrial uses could not have been suitable if lot 6 were a transition zone;[91] and
[91] Appellants' written submissions, pars 43 - 45; WAB 17.
(ii)a Business zoning would be a 'better fit' for a transitional area as opposed to Service Industrial uses, and in any event, Service Industrial uses are not a better fit for a transitional area than Business zone uses;[92]
[92] Appeal ts 38 - 43, 45.
and
(d)any conflict between land uses, with lot 6 being a transitional site, could, on Mr Hajigabriel's evidence, be appropriately managed at the land development stage, rather than at the zoning stage.[93]
[93] Appellants' written submissions par 46(a); WAB 17; appeal ts 43 - 44, 49.
10.The judge was bound to accept Mr Hajigabriel's evidence; his failure to do so reveals error.[94] The judge wrongly expressed reservations about Mr Hajigabriel's evidence, and misconstrued or misunderstood it, in that:[95]
(a)he attributed to Mr Hajigabriel a conclusion that he drew 'support' from a report before the City on 4 November 2003 that a Business zone was warranted when Mr Hajigabriel merely said that the City had entertained it as a possible zoning for the subject site;
(b)the judge implied that Mr Hajigabriel should not have referred to the report to the City on 4 November 2003 because it related to the 'after' position, rather than the 'before' position. However, even if it was directed to the affected 'after' position, that fact 'did not logically preclude the view that a "Business zoning" of lot 6 was approvable by the [City] before [the relevant road extensions]';
(c)the judge's finding that Mr Hajigabriel did not give enough weight to the City's decision to zone lot 6 as Industrial Development was a conclusion unsupported by any evidence, and Mr Hajigabriel was not cross‑examined as to the weight he gave it;
(d)the criticism of Mr Hajigabriel being 'overly optimistic' was unfair and based on implications drawn by the court, not cross‑examination directed to attacking the credibility of Mr Hajigabriel; and
(e)the judge's criticism that Mr Hajigabriel's confidence increased over the course of the litigation 'cannot be a valid criticism if his increased confidence was justified'.
Disposition
[94] Appeal ts 35.
[95] Appellants' written submissions, par 47; WAB 18 - 19; appeal ts 52 - 59.
The submission that there was no evidence to support the judge's finding is plainly incorrect. The submission ignores the evidence of Mr Moran, whose evidence the judge accepted.
Moreover, to show appellable error, the appellants must establish that in accepting the evidence of Mr Moran (whom the judge found to be a credible witness), the judge, notwithstanding the advantages he had as a trial judge, made findings that were glaringly improbable or contrary to compelling inferences, or were flawed by reference to incontrovertible facts or uncontested testimony.[96] Those well‑established principles apply to findings derived, to any substantial degree, from the judge's assessment of competing expert witnesses.[97] The appellants' written submissions were not framed by reference to those criteria. Although, in oral argument, the appellants sought to address these criteria, their submissions in this regard did not rise above mere assertion of glaring improbability.[98] None of the matters raised by the appellants in argument is capable of establishing error in accordance with those criteria.
[96] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [28] ‑ [29]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [76]; Frank Robertson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [43]; Jones v Hyde [1989] HCA 20; (1989) 63 ALJR 349, 351 ‑ 352; Smart v Power [2019] WASCA 106 [104].
[97] Smart v Power [131] and cases cited therein; Child and Adolescent Health Service v Mabior [2019] WASCA 151 [94].
[98] Appeal ts 12, 23.
In relation to the particular submissions referred to in [68] above:
1.As counsel for the appellants accepted, the hypothetical purchaser would be endowed with the knowledge of what is likely to be planning outcomes through the application of orderly and proper planning principles.[99] The planning outcome of whether the Cell 8 Structure Plan would have been amended to apply Business zoning (only) would depend upon the application of orderly and proper planning principles. The judge's findings were made on that basis.[100] The implicit suggestion in the appellants' submissions that the wishes of the landowner, who may initiate an amendment to the structure plan, are paramount, is incorrect. The judge did not apply the wrong test.
[99] Appeal ts 5.
[100] Primary decision [213] - [215], [267].
2.As counsel for the appellants accepted, the Rural Strategy Plan does not indicate that a Business zoning was the only likely outcome for lot 6.[101]
[101] Appeal ts 37.
3.It is true that Mr Moran and Mr Bracone both considered that it was unlikely that lot 6 would have been zoned Business. Clearly that does not demonstrate error. It is not to the point that their opinions were not expressed in terms of the advice they would have given to the hypothetical purchaser. The judge proceeded in the conventional manner, resolving the conflict in expert evidence and attributing the findings thus made to the hypothetical purchaser.[102]
[102] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [162] and cases cited therein.
4.Whilst Mr Bracone's evidence as to the likelihood of lot 6 being zoned General Industrial was rejected, the judge accepted the proposition, advanced by both Mr Bracone and Mr Moran, that lot 6 would likely not have been zoned Business. As noted earlier, Mr Bracone agreed with Mr Moran that a Business zoning would have prejudiced industrial development to the west.
5.Whilst Mr Moran's evidence evolved as to the range of uses likely to be approved via a structure plan for lot 6, his views remained throughout that lot 6 would likely not have had a Business zoning applied to it. In substance, he remained of the view that Service Industrial uses would likely apply to lot 6 in any amendment to the Cell 8 Structure Plan, and accepted that some particular Business uses would also likely be included, consistently with Mr Hajigabriel's evidence that structure plans may incorporate a range of 'bespoke' uses. The particular Business uses referred to by Mr Moran were, on his evidence, consistent with orderly and proper planning principles in a way in which a full‑scale Business zoning would not be.
6.Whilst Mr Bracone's evidence at trial was that a General Industrial zoning only would have been applied to lot 6, that was not the evidence of Mr Moran. Thus the City's case at trial went beyond a case that lot 6 would only have been zoned General Industrial. The question of whether lot 6 was amenable to a range of 'bespoke' uses was raised by Mr Hajigabriel, and the subject of considerable evidence at trial. The contention that Mr Moran's evidence was a 'thought bubble' merely masks the appellants' failure to engage seriously with the principles of appellate interference referred to at [70] above.
7.We repeat what is said as to point 3 above.
8.The judge's findings were supported by the evidence of Mr Moran, and, to some extent, Mr Bracone (see point 2 above). It was open to the judge to accept Mr Moran's evidence. It was not put to Mr Moran in cross‑examination that his evidence as to 'bespoke' uses was illogical. Indeed, the prospect of applying bespoke uses had been raised by Mr Hajigabriel. Moreover, the judge's reasoning in the primary decision at [269] ‑ [274] is logical and cogent; the appellants' complaints (referred to in par 7 of [68] above) are without merit:
(a)The question is not whether the State's longstanding need for industrial land in this area 'mandated' lot 6 to be used for industrial purposes, but whether and to what extent that consideration would inform orderly and proper planning in relation to the likely zoning of lot 6 in the 'before' situation. Similarly, it is not a question of whether a planner would have advised that the State needed lot 6 for industrial land, but the likely zoning outcome for lot 6 on the application of orderly and proper planning principles.
(b)Again, the question is not whether a planner would have advised that the MRS zoning of lot 6 as Industrial meant that lot 6 could only be used for industrial purposes. The question was how the Industrial zoning of lot 6 under the MRS would have informed the application of orderly and proper planning principles in the ultimate zoning of lot 6 through an amendment to the Cell 8 Structure Plan.
(c)This court is not in a position to gainsay the opinions of the experts by undertaking its own review of the zoning table in DPS2 and forming its own views as to (1) the suitability of P and D uses in the Service Industrial zone for lot 6, and (2) whether the Business zone would be a 'better fit' for lot 6 as a transitional area. The appellants are, in substance, inviting this court to make its own findings about matters involving or capable of involving expert opinion without having established error by the primary judge, and without pointing to expert evidence in support of the proposed finding. Moreover, it was not contended by the claimants at trial that the judge could form his own conclusions based on the zoning table in disregard of the expert evidence.[103]
[103] Appeal ts 39 - 42.
(d)Whilst Mr Hajigabriel's view was entitled to respect, after two and a half days of oral evidence on the planning issues, the judge was entitled to prefer the evidence of Mr Moran. In having observed the expert witnesses express, explain and debate their competing views, the judge had a considerable advantage over this court. In any event, the appellants' submission does not address the P uses in the Business zone. Nor does it establish, more generally, why the wholesale application of Business zone uses would have been the only proper planning outcome for lot 6.
The judge was not bound to accept Mr Hajigabriel's evidence. The weight to be given to it was a matter for his Honour to evaluate. There is no merit in the appellants' contention that the reservations expressed by the judge about Mr Hajigabriel's evidence were not open to his Honour. Mr Hajigabriel drew support from the City officer's report of 4 November 2003. He said that there was a 'clear contemplation that [lot 6] could also be included within the Business zone'. [104] The judge accepted Mr Moran's evidence that the report was, in substance, directed to the 'after' situation (although the report was prepared before the taking), as there was express reference to the merit of a Business zone for lot 6 with the future extension of Mirrabooka Avenue.[105] The contention that the report 'did not logically preclude' a Business zoning fails to engage with, much less undermine the force of, the judge's finding that Mr Hajigabriel's reasoning was, to some extent, less than compelling in relation to the likely planning outcome in the 'before' situation, insofar as he relied on observations directed to the 'after' situation when lot 6 would be affected by the public work including the extension of Mirrabooka Avenue.[106]
[104] Primary decision [253]; Mr Hajigabriel's report dated 17 March 2015, pages 9, 11; GB 153, 155.
[105] Primary decision [254]. This point seemed to have been accepted by counsel for the appellants: appeal ts 58.
[106] Primary decision [254].
The judge's observation that Mr Hajigabriel did not give sufficient weight to the City's decision to zone lot 6 as Industrial Development was open to his Honour. The judge's point was that whilst Mr Hajigabriel used the City officer's report to infer that a Business Zoning for lot 6 was in 'clear contemplation', he apparently set no real store in the fact that when the City subsequently decided how to zone lot 6, the City zoned it Industrial Development, the objectives of which have been set out in [35] above. We agree with the judge's observation[107] that the fact the Council decided to zone lot 6 Industrial Development is a matter of greater significance than the contemplation by a planning officer of the potential to zone lot 6 Business.
[107] Primary decision [255].
The judge gave instances where Mr Hajigabriel's evidence had the tendency to conflate theoretical possibilities with realistic options. There is no challenge to these findings. There is no error in the judge's assessment that his evidence tended to reflect views which were overly optimistic in relation to the prospect of lot 6 being zoned as a Business zone.[108] Also, it is to be noted that there is no challenge to the finding that the Furniss Business Precinct did not support Mr Hajigabriel's reasoning.
[108] Primary decision [256].
It was open to the judge to take into account that on the fundamental point as to the prospect of lot 6 being zoned Business, Mr Hajigabriel's evidence had shifted somewhat from his statement that lot 6 'could' have been included within a Business zone, to the proposition that a Business zone was 'highly likely'.[109]
[109] Primary decision [257]; see also Mr Hajigabriel's report dated 17 March 2015, par 5.2, first par, GB 156, and his 'conclusion' at GB 174.
Grounds 1 ‑ 4 should be dismissed.
Valuation issue - the Masters' site
Ground 5
Ground 5 alleged that the judge erred in finding that the 'base' price of a comparable site known as the Masters' site was $302 per square metre, when he ought to have found that the 'base' price was $348 per square metre.
The context of this ground is as follows.
The judge considered that the sale of a site, purchased by the Masters Group (a hardware chain), for the establishment of a Masters' hardware store, was a comparable sale for valuation purposes for lot 6.[110]
[110] Primary decision [371], [374], [387].
The contracts for the sale of the Masters' site provided that the consideration would (in effect) be a base price of $13.2 million exclusive of GST. This gave the Masters' site a 'base' price of (approximately) $302 per square metre.[111] Under the contracts for sale of the Masters' site, the base purchase price of $13.2 million would be increased by $2 million (exclusive of GST) if an amendment to the General Industrial zoning were obtained permitting both a hardware store use and a showroom use. As events transpired, a zoning amendment was obtained, permitting a hardware store use but not a showroom use. The consideration was consequently increased by $1.7 million (exclusive of GST) rather than by the full $2 million (exclusive of GST).[112]
[111] Primary decision [371].
[112] Primary decision [375].
The evidence of Mr Dix, the valuer called by the appellants regarding the Masters' site, proceeded on the following basis.[113] First, he took the base contract price of the Masters' site of $301.19 per square metre[114] and added GST, to get a GST‑inclusive figure of $331 per square metre for the base price. He then applied what he described as the 'Business use bonus' of $1.7 million (which he erroneously thought was inclusive of GST), to arrive at an adjusted figure of $390 per square metre, inclusive of GST.[115]
[113] Primary decision [377].
[114] Base price of $13,152,755.94, excluding GST, deferment and vendor bonus.
[115] The reference to $390 is rounded up. The precise figure was $389.72 per square metre.
Mr Dix then considered 'further' adjustments. As to upwards adjustments, he took into account the superior exposure of lot 6 in the absence of the public work and, in particular, the significantly increased traffic volume. He then considered downward adjustments, arising from the shape of lot 6 and the certainty that zoning had been achieved for the Masters' site.
Although Mr Dix considered that the advantages of lot 6 over the Masters' site outweighed the negative factors, he 'conservatively' considered that lot 6 had a value of at least $390 per square metre.[116]
[116] Rounded up from $389.72 per square metre.
Mr Dix then considered deferment, and found the purchaser of the Masters' site would have allowed holding costs for three years in valuing the Masters' site.
Mr Dix then deducted the cost 'of additional earthworks required for lot 6 as advised by the Civil Group' amounting to $189,200. This gave a net land value of $383.22 per square metre.
Mr Dix then applied the figure of $383.22 per square metre to the size of lot 6. He concluded that lot 6, in its unaffected value, had a value of $11,152,886 inclusive of GST (being 29,103 square metres multiplied by $383.22 per square metre).
Leaving aside the discrepancies and errors arising from Mr Dix working on the basis of a GST‑inclusive price, the effect of ground 5 is that the judge erred in finding that the 'base' price for comparison purposes was $302 per square metre (by reference to the 'base' purchase price of $13.2 million) when he ought to have found that the 'base' price for comparison purposes was $348 per square metre (having regard to the additional $1.7 million paid for the Masters' site on the obtaining of zoning for a hardware store).[117]
[117] Appeal ts 77 - 79. However, it appears that the appellants' figure of $348 per square metre is based on a purchase price for the 43,669 square metre Masters' site of $15,200,000, implying the 'base' price figure was based on the proposed additional sum of $2 million, rather than the $1.7 million associated with the hardware zoning.
The appellants submitted that the Masters' site was made more comparable with lot 6 by reason of its zoning change to include hardware store uses, and thus the higher purchase price of the Masters' site incorporating the added price for hardware store uses, was the relevant price to calculate the 'base' price. The appellants' argument appeared to be that in the General Industrial zone (in which the Masters' site was situated), a hardware store use and a showroom use were 'X' uses. They were not 'X' uses in Service Industrial. Having obtained zoning for the hardware store, the zoning for the Masters' site was effectively then equivalent to the zoning for lot 6, on the assumption that lot 6 was zoned Service Industrial. The appellants alleged that the judge erred in failing to treat lot 6 as having a base value of at least the value of the Masters' site with zoning for a hardware store, ie, $348 per square metre.[118] The appellants contended that this was a 'mathematical error' by the judge, and that an adjustment from $302 per square metre to $348 per square metre was not dependent upon expert evidence.[119]
[118] But see the apparent error in the appellants' figure referred to in fn 117 above.
[119] Appellants' written submissions, pars 54 - 58; appeal ts 76, 79 - 80, 86.
The appellants also, inconsistently, contended that it was open to the judge to reject the additional value arising from the hardware store zoning, but said that the judge was in error for failing to give any explanation for adopting the base figure of $302 per square metre.[120] There was no ground of appeal alleging error in failing to give adequate reasons, and the appellants applied, in reply, to amend ground 5 to add the words:[121]
[120] Appeal ts 85 - 86, 175.
[121] Appeal ts 177.
Alternatively, that the learned trial judge did not give reasons for rejecting the rate of $348 per square metre as a base price from which to make valuation adjustments.
Disposition
Ground 5 in its unamended form has no merit. The question of whether, and to what extent and with what adjustments, the Masters' site was a comparable sale was a matter for expert evidence. The suggested equivalence between the permissible uses of the Masters' site having regard to the hardware zoning, and the permissible uses of lot 6 with an assumed Service Industrial zoning, is, and was, a matter for expert evidence.[122] It is, and was, not merely a mathematical exercise as the appellants contended.
[122] McKay v Commissioner of Main Roads No 7 [2011] WASC 223 [163] - [167], [2216]; Kelliher v Commissioner of Main Roads No 2 [2015] WASC 478 [110] - [112].
As to the proposed amendment to ground 5, the application was first raised in reply, and no, or at least no proper, reason was given for the lateness of the application. A ground alleging an absence of reasons if it were thought to have any arguable merit, could and should have been included in the appellants' case when first filed, or at least by the time they filed their re‑amended appellants' case. Even if the point had any merit, which it does not for the reasons given below, the lateness of the application and the disruption to the orderly conduct and resolution of the appeal militate against the grant of leave to amend.
As to the merits of the proposed amendment, the relevant principles in relation to the adequacy of reasons are well known.[123] The judge's reasons were not inadequate. First, Mr Dix treated the additional consideration of $1.7 million in relation to the Masters' sale as an adjustment to the base price.[124] The appellants cannot complain that the judge erred in not explaining why he used the $302 per square metre figure as the base price, when the judge effectively accepted the evidence of the appellants' expert witness as to the base price. The respondent's experts' responsive analysis also worked from Mr Dix's base price.[125] Mr Dix added the $1.7 million as an adjustment. Thus there was no occasion, or requirement, for giving reasons for using $302 per square metre as the base price. That, in itself, is a complete answer to the amended ground. For completeness, we add the following, which amply explains why, more broadly, his Honour did not accept what Mr Dix had said.
[123] See, for example, Chief Executive Officer, Department for Child Protection and Family Support v IGR [2019] WASCA 20 [112].
[124] See [81] above, primary decision [377], GB 551.
[125] Primary decision [382], [384].
Secondly, the judge found expressly that Mr Dix's evidence, including his adjustment to the base price of $302 per square metre, proceeded on an assumption, which was incorrect, that it was likely that lot 6 would be zoned Business in the unaffected situation.[126] Thirdly, Mr Dix's evidence, that the figure based on an adjustment for the extra $1.7 million consideration[127] should be used for comparison, took into account other, unquantified, adjustments, both upwards and downwards. The judge had, and expressed, reservations about Mr Dix's evidence in that regard.[128] Fourthly, the judge gave reasons for adopting $302 per square metre as a base price and then adjusting it downward by having regard, amongst other things, to other comparable sales.[129] Fifthly, the judge evidently had doubts about the credibility of Mr Dix and found aspects of his evidence to be 'unsatisfactory' or to have an 'air of artificiality' about them for the reasons he expressly gave.[130] Also, the judge referred to the inconsistencies in Mr Dix's evidence on the question of whether there was any relevant distinction between land zoned as General Industrial and land zoned as Service Industrial, and observed that '[t]his unexplained inconsistency [reflected] adversely on the reliability of Mr Dix's evidence generally'.[131] Further, the judge expressly stated that he preferred the evidence of the City's valuers (despite his concerns about aspects of their evidence) over the evidence of Mr Dix, because their evidence was 'transparent' and, in important respects, Mr Dix's reasoning was impossible to understand from his evidence.[132]
[126] Primary decision [386(i)].
[127] Which Mr Dix said was $389.72, per square metre, see GB 551, but which, for the purposes of the appeal, is said to be $348 per square metre.
[128] Primary decision [386(iii)].
[129] Primary decision [465] - [472].
[130] Primary decision [452] - [455].
[131] Primary decision [394].
[132] Primary decision [464].
The judge's reasons were plainly adequate. The application to amend ground 5 should be refused and ground 5 should be dismissed.
The severance/injurious affection issue
Ground 6 relates to the claim for severance damage and/or injurious affection of $5,305,745. The claim, as originally formulated, was described as 'severance damage'.[133] It was so described by Mr Dix, the appellants' expert valuer,[134] in his report in support of the claim.[135] By a late amendment, the appellants also pleaded that the claim for $5,305,745 was based on injurious affection.[136]
[133] Primary decision [347], [474].
[134] Primary decision [49].
[135] Primary decision [478].
[136] Primary decision [475].
Mr Dix's evidence was to the effect that the claim for 'severance damage' was effectively based on the proposition that the claim for reduction in value was attributable to the decline in traffic, and that otherwise there was no real basis for a claim for injurious affection.[137]
[137] Primary decision [478] - [480].
The judge did not determine the claim by reference to the form of the claim, but by reference to the substantive arguments advanced in support of it. By reference to those substantive arguments, his Honour dismissed the claim.[138]
[138] Primary decision [483] - [485], read with primary decision [449]. Note the judge allowed $120,000 for the injurious affection claim, reflecting the costs of excavating and relaying HV cables and a gas main, increased by the road widening: see primary decision [487] - [489].
It is convenient to set out the judge's findings explaining his Honour's reasons for dismissing the claim before turning to the terms of ground 6.
The judge's findings
Primary decision [484] - [485]
The findings at [484] ‑ [485] of the primary decision are to the effect that the judge rejected the two bases on which the appellants made their claim for severance damage and/or injurious affection. Those two bases were:
1.Damage had been caused by the reduction in passing traffic - on the basis that in the unaffected situation, lot 6 would have had a Business zoning, and that with such a zoning, its value was dependent upon a high volume of passing traffic.[139]
[139] Primary decision [483] - [484(i)].
2.Damage was caused by the fact that the 'flatter, more easily developable' part of lot 6 had been taken, leaving lot 6 'with more significantly topographically challenged land on the west'.[140]
[140] Primary decision [483].
The judge's reason for not accepting the claim on the first basis was essentially that the first basis relied on the premise that, in the unaffected situation, lot 6 would have been zoned 'Business'. That premise was not sound. The judge found that, given the zoning of lot 6 in the unaffected situation, being Industrial Development, its value would not have been adversely affected by a reduction in passing traffic.[141]
[141] Primary decision [484(i)].
The judge noted that the claim in relation to the second basis was inconsistent with Mr Dix's evidence that 100% of the reduction in value was attributable to the reduction in traffic, rather than the shape of the remaining developable land.[142]
[142] Primary decision [484(ii)]; see also primary decision [479].
Further, the claim rested entirely (relevantly) on Mr Dix's unaffected and affected valuations, and Mr Dix's 'affected valuation' evidence could not be accepted for the reasons given in the primary decision at [448] ‑ [449].[143]
[143] Primary decision [484(iii)].
The judge also said, in relation to the second basis, that although the triangular shape of lot 703 possibly reduced the value of lot 703, there was no 'before and after' evidence about the increase in the cost of preparing the land for sale as an englobo lot from which inferences might be drawn as to the extent to which the value of lot 703 has been reduced due to those costs.[144] The evidentiary deficiency in this regard could not be made good by reference to Mr Pember's 2009 assessment of 'injurious affection'.[145] That was because his assessment was not supported by a reasonable explanation of how he calculated the financial effect on the value of lot 703 of the taking, and the appellants did not put their claim on the basis of Mr Pember's 2009 assessment, and it would be unfair to the City for the judge to adopt that assessment to make good the deficiency in the appellants' evidence.[146]
[144] Primary decision [485(v)].
[145] Primary decision [485(vi)]. Mr Pember gave evidence for the City. He was of the opinion that no severance damage had been suffered: primary decision [481].
[146] Primary decision [485(vi)].
The overall effect of these findings was that once the appellants had failed on the Business zoning point, there was no, or no cogent evidence otherwise to support a claim for severance and/or injurious affection as alleged.[147]
[147] Save for the $120,000 awarded for the costs of excavating and relaying HV cables and a gas main, increased by the road widening: see primary decision [487] - [489].
Primary decision [449]
Insofar as the judge's findings at [484] - [485] relied on his Honour's conclusion, at [449], that he could not accept Mr Dix's evidence as to the affected value of lot 703, the judge provided the following reasons at [448]:
1.Mr Dix referred to the shape of the remaining land (lot 703) as 'uneconomical and unmarketable'.[148] However, his calculations reflecting deductions to the value of the remaining land (lot 703) were directed to area rather than shape,[149] and he did not explain the relationship, if any, between area and shape or how that relationship was reflected in his percentage reduction.[150]
[148] Primary decision [447]; GB 572.
[149] Primary decision [447]; GB 572.
[150] Primary decision [448(i)] ‑ [448(iv)].
2.His analysis did not involve a comparison of the area and shape of lot 6, on the one hand, and the area and shape of the remaining land (lot 703), on the other. In other words, there was no before and after calculation of the area and shape of the land and Mr Dix used data, being the difference between the developable area of another comparable site (Callaway Street) and the developable area of lot 703, which had no rational connection with the shape of lot 703.[151]
[151] Primary decision [448(v)].
3.Mr Dix applied his percentage reduction in area to a measurement of value - dollars per square metre of developable area - that is insensitive to a reduction in area. Had the evidence included an estimate of the developable area of lot 6, compared with the developable area of lot 703, it may have been possible to draw conclusions as to reduction in value due to the taking, if such a comparison demonstrated a difference in the percentage of developable area of lot 703 compared with the percentage of developable area of lot 6. However, no such estimate was included in the evidence.[152]
[152] Primary decision [448(vi)] ‑ [448(vii)].
4.Mr Dix did not explain how he had factored in engineering costs and rates and taxes over the holding period referred to in his calculations.[153]
[153] Primary decision [448(viii)].
5.Mr Dix applied a deferment rate of 8.5% in his affected valuation, whereas in the unaffected situation he adopted a deferment rate of 7.25%. This suggested that Mr Dix was setting out to reduce the value in the affected situation.[154]
[154] Primary decision [448(ix)].
6.For the purposes of his affected valuation, Mr Dix constructed a transaction in the manner described earlier, rather than drawing conclusions from a sale or sales actually transacted in the market. A transaction constructed in that way is less reliable a foundation upon which to draw conclusions than actual sales transacted in the market.[155]
[155] Primary decision [448(x)].
7.There was force in the criticism of Mr Zucal (another expert witness of the City) regarding Mr Dix's fundamental premise that the value of the land could be determined by reference to the developable area, in that Mr Dix's approach did not reflect the most likely use of the land, which would not involve the construction of buildings covering as much area as permissible.[156]
[156] Primary decision [448(xi)].
8.Mr Dix failed to address the significant difference between the (affected) price achieved on the sale of the Masters' site (a base price of $302 per square metre) and his valuation of lot 703 in the affected situation (which was $123 per square metre).[157]
[157] Primary decision [448(xii)].
9.In summary, Mr Dix's methodology was flawed and the difficulties understanding his methodology were compounded by the fact that he had not undertaken the calculations in the manner stated in his report.[158]
[158] Primary decision [448(xiii)].
The judge made two further observations arising from Mr Dix's analysis of the affected situation. First, Mr Dix appeared to regard the triangular shape of lot 703 as less advantageous than the rectangular shape of the Callaway Street site and made a reduction of 25% for lot 703's inferior shape. If that were correct, then it would mean that the downward adjustments for shape made by Mr Pember and Mr Zucal, when comparing lot 6 with the Masters' site, were conservative. Secondly, Mr Dix agreed that lot 703 was no more isolated from Enterprise Park in the affected situation than lot 6 had been in the unaffected situation. The effect of his oral evidence was that, in the affected situation, lot 703 would not have the benefit of traffic flowing north and south along Sydney Road. His downward adjustment on that basis, of between 10% ‑ 15%, was broadly consistent with the adjustments made by Mr Pember and Mr Zucal to account for what they considered to be lot 6's inferior address compared with the Masters' site in the unaffected situation.[159]
[159] Primary decision [450].
Ground 6
By ground 6, the appellants alleged, in effect, that the judge erred in finding, at [484] ‑ [485] of the primary decision, read with [449], that his Honour should not have any regard to Mr Dix's evidence as to the difference in value of lot 703 after the public work. The appellants allege that this finding was erroneous, because it was (allegedly) based on the following (allegedly) incorrect findings, to the effect that:[160]
[160] Referring to primary decision [449], [484] - [485].
(a)Mr Dix should not have assumed a Business zoning for either lot 6 or lot 703 was likely, in its unaffected state;
(b)Mr Dix had misunderstood the evidence of Mr Bowyer;[161]
[161] Referring to primary decision [386(ii)].
(c)there was no difference in value for lot 6 and lot 703 if they were a Service Industrial zone or a General Industrial zone in their unaffected state, and Mr Dix had given inconsistent evidence on that topic;[162]
[162] Referring to primary decision [394], [433].
(d)Mr Dix had not explained why the Masters' site was not a suitable comparator for lot 703 in its affected state;[163] and
[163] Referring to primary decision [442].
(e)the methodology of Mr Dix was flawed, in valuing the negative adjustment as a smaller triangle for lot 703 in its affected state.[164]
[164] Referring to primary decision [448].
Counsel for the appellants at the hearing of the appeal seemed to suggest that ground 6 was targeted at challenging the judge's adverse finding as to Mr Dix's credibility.[165]
[165] Appeal ts 92, 97 - 101.
In essence, the appellants submitted that if a party has a genuine commercial interest in receiving an assignment of a statutory right to compensation under the LA Act, which is not of a bare right to litigate, then unless an assignment of the right is expressly or impliedly excluded by the LA Act, the statutory right is assignable at law, either under s 20 of the Property Law Act, or under the general law.[203]
[203] Appellants' written submissions, par 93; WB 27, referring to primary decision [528] ‑ [529].
The appellants submitted that under the general law, property is typically allowed to be conveyed and transferred, and that s 208 of the LA Act does not interfere with a person's right to deal with their property under the general law.[204] The appellants also submitted that s 6 of the Property Law Act did not apply to affect the operation of s 20(1) of that Act to Mannor's entitlement to compensation.[205]
[204] Appeal ts 118.
[205] Appellants' written submissions, par 93; WB 27.
The appellants submitted the purpose of the compensation provisions of the LA Act was to ensure that a person in the position of Mannor was not unjustly deprived of its asset in lot 6. In essence, it was submitted that Mannor's ability to 'trade' the asset (the entitlement to compensation) was consistent with the purpose of the compensatory provisions of the LA Act.[206]
[206] Appellant’s written submissions, par 95 - 97; WB 27 - 28.
Counsel for the appellants referred to the words in s 208(1) 'whether or not the person has the power to sell and convey the interest', and submitted that these words 'encompass[ed] the fact that a person need not have an interest to sell in terms of the interest in the land'.[207] He submitted that a distinction is to be drawn between the right to compensation and the interest in land at the time a claim for compensation is made, and that it was 'evident from that … that the common law rules as to assignment are not excluded by necessary implication' in s 208 of the LA Act.[208]
[207] Appeal ts 118.
[208] Appeal ts 119.
Counsel for the appellants also contended, in effect, that in s 208(1) of the LA Act, the word 'made' in the phrase 'a claim for compensation may be made by any person' includes 'commenced but not continued to completion'.[209]
[209] Appeal ts 115.
The City's submissions
The City made no submissions on the substantive issue.
Disposition
The right to compensation created by s 202 of the LA Act is purely a creature of that statute. Compensation for compulsory acquisition of land is not a doctrine of the common law.[210] There is no common law or constitutional right to compensation when a person is deprived of property by State law.[211]
[210] Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215, 218; Leppington Pastoral Co Pty Ltd v Commonwealth (1997) 76 FCR 318, 338.
[211] Durham Holdings Pty Ltd v New South Wales [2001] HCA 7; (2001) 205 CLR 399 [14] (Gaudron, McHugh, Gummow & Hayne JJ); Brewster v BMW Australia Ltd [2019] NSWCA 35; (2019) 366 ALR 171 [91]; Tavitian v City of Playford [2014] SASCFC 82; (2014) 202 LGERA 87 [13]; Spencer v Australian Capital Territory [2007] NSWSC 303; (2007) 13 BPR 24,307 [29].
The LA Act effectively makes the payment of compensation the price payable for the compulsory acquisition of an interest in land. The statutory entitlement to compensation is a chose in action which, as the judge found, is not, and is not analogous to, a bare right of action personal to a plaintiff for breach of contract or for tortious conduct by the defendant.[212]
[212] cf Poulton v The Commonwealth [1953] HCA 101; (1953) 89 CLR 540, 593, 602; Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 145; Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386 [73] ‑ [74].
In Dawson v Great Northern and City Railway Co,[213] a landholder's right to compensation for injurious affection was held not to be invalid as an assignment of a bare right of litigation. The court in that case held that the right to compensation for the landholder effectively ran with the land upon its transfer, and said, moreover, that even without a transfer of the landholder's interest, the landholder's right to compensation was assignable as property in equity and, accordingly, assignable at law under the English predecessor to s 20(1) of the Property Law Act. The court distinguished between, on the one hand, a personal right of action for breach of contract or in tort (which was not assignable), and a right of compensation which was the price payable for the exercise of the power to compulsorily acquire land (which was 'property' and thereby was assignable).[214]
[213] Dawson v Great Northern and City Railway Co [1905] 2 KB 260.
[214] Dawson (270 ‑ 271), (275). See also Thistlethwayte v The Minister (1953) 19 LGR (NSW) 87, 90.
However, the LA Act both creates and shapes the nature of the chose. Being conferred by the LA Act, the entitlement to compensation extends only to those for whom the Act so provides, and subject to any limits arising upon the proper construction of the LA Act. The question of whether it is assignable or not ultimately depends upon whether the LA Act[215] expressly or impliedly precludes the assignment of the entitlement to compensation.[216]
[215] Section 6 of the Property Law Act does not operate in these circumstances to preclude the operation of s 20(1) of the Property Law Act.
[216] Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 113 ALR 225, 233; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720 [49] ‑ [55]; Chapman v Luminis [No 4] [2001] FCA 1106; (2001) 123 FCR 62 [205]; Heydon JD, Leeming MJ and Turner PG, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (2015, 5th ed, LexisNexis Butterworths) [6‑010], [6‑480(g)].
Section 82 of the former Trade Practices Act 1974 (Cth), provided that 'a person who suffers loss or damage by [contravening conduct] of another person may recover the amount of the loss or damage by action …'.
Cases firmly established that a cause of action under s 82 (and its equivalent under the Fair Trading Acts in each State) was not assignable, because, on a proper construction of s 82:
(1)only a person who fell within the ambit of the statutory description 'a person who suffered loss or damage' could bring a claim under s 82; and
(2)an assignee is not within the ambit of that statutory description.[217]
[217] National Mutual Property Services (Aust) Pty Ltd v Citibank Savings (1995) 132 ALR 514, 539; Pritchard v Racecage Pty Ltd (1997) 72 FCR 203, 218 - 219; Chapman v Luminis Pty Ltd [No 4] [204] ‑ [207]; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720 [49] ‑ [55]
In our view, for the reasons that follow, an analogous conclusion is to be drawn concerning an entitlement to compensation under the LA Act. Only a person who is 'entitled to compensation under [pt 10]' is permitted, by s 208, to make a claim for compensation; as explained below, an assignee is not so entitled.
We turn, first, to consider the entitlement to compensation, before turning to consider whether the provisions of the LA Act permit the assignment of an entitlement to compensation.
Under s 202, the entitlement to compensation is limited to a person 'having an interest in land which is taken'. (Sections 203 and 204 confer other entitlements to compensation, but, for present purposes, they do not need separate discussion.) The use of the present tense indicates that the entitlement depends on the person having an interest in land at the time that that interest is taken.
Further, subject to the special cases provided for in s 208(2) and s 209 (which are discussed further below) a claim for compensation under s 208(1) is able to be 'made' by any person entitled to compensation. The word 'made' is a form of the verb 'make'. One of the uses of the word 'make' is to 'bring into existence by construction or elaboration'.[218]
[218] Oxford English Dictionary (online).
The terms of s 208(1) thus link the authority to bring a claim for compensation with a present entitlement to compensation. In that context, the word 'made' should be understood as referring to a claim for compensation being brought, and pursued to completion, by the person whose interest in land was taken. The word 'made' in the context of making a claim for compensation does not ordinarily connote the meaning that a claim is commenced by one person, but completed by another.
That conclusion is also supported by the terms of s 211(1) which requires a claim for compensation to state the nature and particulars of the claimant's interest in land. That is, the legislature clearly contemplated that the only person bringing the claim for compensation would be the person whose interest in land was taken.
The ordinary meaning of these provisions supports the conclusion that only the person whose interest in land was taken is entitled to bring a claim for compensation.
Furthermore, there is no express provision in the LA Act permitting assignment. Section 202(1) does not refer to a person having an interest in the land 'or their assigns'. On the other hand, there is no express prohibition against assignment in the LA Act. It thus becomes necessary to consider whether pt 10 of the LA Act impliedly reveals an intention that the entitlement to compensation is not an assignable chose in action. It is to be recalled that under s 202(1), the entitlement to compensation of the person having an interest in the land is made 'subject to' pt 10.
Section 208(1) provides that a claim for compensation 'may be made by any person entitled to compensation' under pt 10. As we have said, a person 'entitled to compensation' is, by s 202(1), every person having an interest in the land which is taken. Section 208(1) then expands the categories of persons who may claim compensation to include the executors or administrators of the 'person entitled to compensation'. It evidently proceeds on the basis that, absent express provision, the entitlement to compensation is not transmissible to the person's legal representatives and does not form part of their estate upon death. It also provides, in effect, even if the person with the interest in land has no power to sell or dispose of the interest,[219] that matter does not preclude that person or their legal representatives (after their death) from making a claim for compensation. The reference to an absence of power to sell or dispose of the interest emphasises that having the interest in the land which is taken is fundamentally the requisite condition to entitlement. It does not imply that the entitlement to compensation is severable and assignable from the underlying interest in the land.
[219] As to which, see [125] - [126] above in relation to the LA Act's reference to native title 'interests'.
Section 208(1) operates to ensure that a person's entitlement to compensation passes to their estate, and that the claim is available whether or not the person had the power to sell or dispose of the interest giving rise to the entitlement to compensation. Both aspects of s 208(1) elaborate upon and shape the nature of the entitlement of the person having the interest in the land, and do so in a way which indicates that the entitlement is not intended to be a separate, assignable, chose in action. Only the person with the interest in the land may make a claim for compensation, subject only to the specific express provision to the contrary enabling trustees and guardians to make a claim in relation to interests held by beneficiaries, wards or incapable persons.
Section 208 cannot be construed in a manner that would mean that an assignee is a 'person entitled to compensation under this part [ie, under pt 10]'. Only someone upon whom is conferred, by s 202, s 203 or s 204, an entitlement to compensation is a 'person entitled to compensation under [pt 10]'.
Further, the appellant's proposed construction of the word 'made' in s 208(1) (see [136] above) gives the word a strained and artificial meaning. As we have observed, the word 'made' in the context of making a claim for compensation does not ordinarily connote the meaning of commenced by one person, but completed by another. However, the appellants' construction of 'made' is a necessary aspect of their contention that an entitlement to compensation is assignable.
Section 208(2) also has, as its focus, the person entitled to compensation under s 202(1). Section 208(2) explains the way in which that person may claim compensation where the person is a beneficiary of a trust and, (read with s 209), where the person is an infant or incapable person.
Section 210(1) provides the machinery for paying compensation where the 'person entitled to compensation' is absent from the State. The machinery provisions in the remainder of div 2 of pt 10 are all directed to the 'claimant', ie, the 'person entitled to compensation under [pt] 10'.[220] The procedures in div 3 are also all directed to the 'claimant'.
[220] Definition of 'claimant' in s 151 of the LA Act.
It is necessarily implicit in s 208(1) that a person's entitlement to compensation is not transmissible save as expressly provided, for the benefit of their estate. It is also necessarily implicit in the legislative scheme in pt 10 of the LA Act, read as a whole, that the entitlement to compensation is only vested in the person having an interest in the land within the meaning of s 202(1), and is only exercisable by those persons referred to in s 208(1) and (2), read with s 209. In other words, the entitlement to compensation is constituted and conferred in a manner that makes the entitlement inalienable. There is no scope in the statutory scheme for an assignee to claim compensation.
On its proper construction, the LA Act does not permit an assignment of the right to compensation. That conclusion tends to be confirmed by[221] reference to the Motion and Clauses Notes for the Land Administration Bill 1997. The Motion and Clauses Notes referred to cl 202(1) in the following terms:[222]
[221] Interpretation Act 1984 (WA), s 19.
[222] Motion and Clauses Notes, Legislative Counsel, Land Administration Bill 1997 (WA) 168.
A person is entitled to claim compensation where his or her interest in land has been taken. The term 'interest' is widely defined in the definitions at the commencement to Part 9 and includes interests registered under the TLA, unregistered interests, mining and petroleum rights, native title interests, management orders and any other interests or rights granted over the land.
Clause 208 was referred to as follows:[223]
[223] Motion and Clauses Notes, Legislative Counsel, Land Administration Bill 1997 (WA) 171.
This clause sets out the parties entitled to claim compensation.
Finally, two practical considerations militate against the conclusion on the proper construction of the relevant provisions, that the right to claim compensation is assignable.
First, the assignment of any such right would ordinarily involve an estimate of the value of the amount of compensation likely to be awarded. The possibility would necessarily exist that compensation under the LA Act might ultimately be assessed at a value higher than that paid by the assignee for the right, so that the assignee would make a profit from the assignment of a statutory right to compensation. Such an outcome would be antithetical to the underlying principle that 'compensation' is paid for the taking of the land taken.
Secondly, under the principles governing the assessment of compensation under the LA Act, compensation is payable for damage arising from severance and injurious affection, which in the present case was said to result from the reduction in the value of the land which remained after the taking.[224] In this case, the assignee of the right to compensation, Shean, did not own the land which remained after the taking. At least in a case where the assignee of the right to compensation has not purchased the remaining land, it is unlikely that the legislature would have intended that the loss suffered by the owner of the remaining land would instead be reflected in an award of compensation payable to a third party. Again, such an outcome would be antithetical to the requirement for the payment of 'compensation' under the LA Act.
[224] Primary decision [483].
Ground 8 should be dismissed.
The costs issue
The costs issue is raised in CACV 63 of 2018 by the City. The City contended that the judge erred in ordering costs in favour of Kilmaley, despite an earlier offer of compromise.
Background
On 18 April 2016, the City's solicitors sent a letter marked 'without prejudice - save as to costs' to Kilmaley's solicitors.[225] By that letter (the 18 April letter), the City made an offer of compromise to Kilmaley to settle the action. Relevantly, the letter read as follows:[226]
[225] As at the date of the 18 April 2016 letter, Kilmaley was the sole plaintiff in the action: costs decision [4] ‑ [5], [12].
[226] Costs decision [4].
In a further attempt to settle the proceedings, we are instructed to make an offer of compromise in the amount of $2,050,000 including costs as explained below.
This offer:
(a)is made in accordance with Order 24A of the Rules of the Supreme Court 1971;
(b)is open to be accepted for a period of 28 days from the date of this letter;
(c)includes an offer to pay a contribution to the Plaintiff's costs in the sum of $100,000, which takes into consideration Master Sanderson's order for costs in favour of the Defendant in relation to the further and better discovery application;
(d) is inclusive of all compensation pursuant to s 241 of the [LA Act], including solatium, resulting from the compulsory acquisition of Lot 505 on Deposited Plan 62910 formerly part of Lot 6 on Diagram 30763 and includes the $1,460,970 part payment in August 2011, the amount of which would be deducted from the total figure payable;
(e) does not include interest, which is intended to be payable in accordance with s 241(11) of the [LA Act]. (emphasis added)
Kilmaley did not accept the offer in the 18 April letter. The judge ultimately awarded compensation in the sum of $1,916,937.[227]
[227] Primary decision [540].
In the primary proceedings, the City contended that the presumptive rule referred to in O 24A r 10(5) of the Rules applied, and that it should have its costs after 18 April 2016 paid by Kilmaley. The City submitted that:[228]
[228] Costs decision [12].
1.On the proper construction of the 18 April letter, it conveyed an offer exclusive of costs.
2.Alternatively, even if the offer were, properly construed, inclusive of costs, O 24A r 10(2) effectively struck down the term which made the offer inclusive of costs, with the result that it was an offer exclusive of costs and thereby O 24A r 10(5) applied as to the cost consequences for Kilmaley rejecting the offer.
3.As a further alternative, even if the first two points were wrong, the offer, as an offer inclusive of costs, triggered the presumptive rule in O 24A r 10(5) because Kilmaley's taxed costs would have been less than the difference between the amount offered, $2,050,000, and the amount awarded, $1,916,937, ie, approximately $133,000.
Order 24A
Order 24A r 3 and O 24A r 10 of the Rules provide, relevantly, as follows:
3.Time etc. for making, accepting etc. offer
(1)An offer may be made at any time before the time prescribed by subrule (8) in respect of the claim to which it relates.
…
(4)An offeree shall, within 3 days after service, serve a written acknowledgment of receipt on the offeror.
(5)An offeree may accept the offer by serving notice of acceptance in writing on the offeror before -
(a)the expiration of the time specified in accordance with subrule (3) or, if no time is specified, the expiration of 28 days after the offer is made; or
(b)the time prescribed by subrule (8) in respect of the claim to which the offer relates,
whichever is sooner.
…
(9)Where an offer is accepted under this rule, any party to the compromise may apply to the Court for such judgment or order as he may be entitled to and on the hearing of the application the Court shall give such judgment or make such order as it thinks fit.
…
10.Costs
(1) Upon the acceptance of an offer of compromise in accordance with rule 3(5), the plaintiff may, unless the Court otherwise orders, tax his costs in respect of the claim against the defendant up to and including the day the offer was accepted and, if the costs are not paid within 4 days after the signing of a certificate of the taxation, enter judgment against that defendant for the taxed costs.
(2) If a notice of offer contains a term which purports to negative or limit the operation of subrule (1), that term shall be of no effect for any purpose under this Order.
(3)Subrules (4) and (5) apply to an offer which has not been accepted in the time prescribed by rule 3(5) if the Court is satisfied by the party who made the offer that the party was at all material times willing and able to comply with the terms of the offer.
…
(5)Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim up to and including the day the offer was made, taxed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for his costs in respect of the claim thereafter, taxed on a party and party basis, except as provided in subrule (7A). (emphasis added)
The judge's findings
It appears that the judge found, in effect, that the City had not established any basis for the operation of the presumptive orders as to costs under O 24A r 10(5) because (1) the offer in the 18 April letter was an offer in the sum of $2,050,000, inclusive of costs,[229] (2) the offer of $2,050,000, inclusive of costs, was not more favourable to Kilmaley than the amount ultimately awarded, being the sum of $1,916,937, exclusive of costs,[230] and (3) if the offer were to be read as an offer exclusive of costs, he was not satisfied, for the purposes of O 24A r 10(3), that the City was willing and able to pay the sum of $2,050,000 plus costs.[231]
[229] Costs decision [14] - [16].
[230] Costs decision [22]; in that regard, the judge accepted that as at 18 April 2016, Kilmaley's taxed costs would substantially have exceeded $133,000.
[231] Costs decision [17] ‑ [19].
Alternatively, the judge in effect said that if the City's offer fell within O 24A r 10(3) and (5), he would have exercised his discretion not to make the presumptive costs orders contemplated by subrule (5), because the offer was ambiguous.[232]
[232] Costs decision [21].
Also, the judge said that even if Kilmaley had construed the offer as exclusive of costs, and accepted it on that basis, he was not satisfied that the City would not have then argued that the offer was, in truth, inclusive of costs, and that the court should exercise its discretion under O 24A r 10(1) to make an order that the presumptive costs consequences under that subrule should not apply.[233]
[233] Costs decision [21].
On 31 May 2018, the primary judge made costs orders as follows:[234]
[234] Costs decision [33]; BB 1.
1.[Kilmaley and Shean] pay [the City's] costs of the application to amend the writ of summons to join [Shean] as a party and the costs of, and thrown away by, the consequential amendment to the amended statement of claim, together with [the City's] costs incurred in relation to the allegation that [Mannor] had assigned its entitlement to compensation to [Shean], such costs to be taxed if not agreed.
2.Save as provided for in order 1 of these orders [the City] pay [Kilmaley's] costs of the action from 18 April 2016, such costs to be taxed if not agreed.
Grounds of appeal
It is unnecessary to set out in terms the grounds of appeal. In substance, they raise one point - whether the judge erred in law by failing to find that O 24A r 10(2) applied to make ineffective any limitation as to costs in the City's offer in the 18 April letter.[235] This appears to be the second point that had been raised before the judge referred to in [168.2] above.
[235] Citing costs decision [20] - [21].
The City contended, in effect, that (1) O 24A r 10(2) required the City's offer to be read as an offer exclusive of costs, (2) the offer on its proper construction was, thereby, exclusive of costs, (3) there could, on that basis, be no scope for ambiguity as found by the judge, which might enliven the discretion under O 24A r 10(5), and (4) accordingly, the presumptive costs consequences in O 24A r 10(5) were necessarily applicable.[236]
[236] Appeal ts 22 - 25.
Disposition
The following observations are directed to O 24A r 10 where the plaintiff claims pecuniary relief from the defendant, and the defendant makes an offer of compromise.
Subrule (1) of O 24A r 10 provides, in effect, that 'upon acceptance of an offer in accordance with r 3(5)', the plaintiff (1) may (unless the court otherwise orders) have his taxed costs 'in respect of the claim' up to the date of the acceptance, and for that purpose proceed to tax his costs, and (2) may enter judgment for his taxed costs if they are not paid within four days of signing the certification of taxation.
Order 24A r 10(1) is to be read and understood in the context of O 24A r 10 as a whole, and, in particular, O 24A r 10(5). Subrule (1) looks to, and informs, the position where the plaintiff accepts the defendant's offer, and provides for a presumptive rule that the plaintiff will have their costs up to the acceptance of the offer. It plainly contemplates, and is only capable of operating where, an offer is exclusive of costs. It distinguishes between the plaintiff's 'claim' and his costs.
Subrule (5) is the obverse of subrule (1). It looks to the situation where a defendant's offer is not accepted. It applies presumptive costs consequences in favour of the defendant, from the date the offer is not accepted, where its criteria are met. Like subrule (1), it distinguishes between the plaintiff's 'claim' and the costs of the action. It can only operate where there is a sum offered exclusive of costs, which the plaintiff might have accepted and thereby obtained the benefit of the presumptive costs rule in subrule (1). It is only a figure exclusive of costs against which the ultimate 'judgment on the claim' can be measured.
In this context, subrule (3) effectively safeguards the plaintiff by requiring the judge to be satisfied, in effect, that the defendant's offer was a genuine offer of settlement, before the defendant has the benefit of the presumptive costs consequences in subrule (5).
Subrule (2) reinforces the structure of O 24A r 10. It does so by ensuring that a plaintiff who receives an offer for a sum exclusive of costs does not lose the benefit of a presumptive costs order in accordance with subrule (1), where the offer purports to contain other terms which, if effective, would serve to negative or limit the plaintiff's prima facie entitlement to costs under subrule (1).
Thus, in this case, subrule (2) would have operated if, eg, the offer (1) had provided that the sum of $2,050,000 was exclusive of costs and that upon acceptance, Kilmaley forewent any right to have its costs taxed in accordance with subrule (1), or (2) that costs would be payable outside of the four‑day period referred to in subrule (1).
The offer in the City's letter of 18 April was, as the judge correctly found, an offer to pay $2,050,000, inclusive of costs. The offer contained only one term - a composite and indivisible offer to pay $2,050,000 inclusive of costs. The matters in pars (a) ‑ (e) of the 18 April letter were the matters by which the City sought to justify its offer, as the words 'explained below' in the first paragraph of the letter indicate. The reference in par (c) to the offer including a 'contribution' towards Kilmaley's costs of $100,000 was not a term of the offer, but part of the explanation for the sum offered.
The City's single and indivisible offer of $2,050,000 inclusive of costs was incapable of invoking the operation of subrules (1) and (5), because it was not an offer exclusive of costs. The City's offer did not, within the meaning of subrule (2) of O 24A r 10, contain a 'term' which 'purported to negative or limit' subrule (1), because it was not an offer to which subrule (1) otherwise applied. Alternatively, if the City's offer in its letter of 18 April did contain a 'term' which purported to negative or limit the operation of subrule (1), the 'term' was an indivisible offer to pay a sum inclusive of costs, upon which subrule (2) operated to render the offer 'of no effect'. In either event, subrule (5) had no potential application.
That conclusion is sufficient to dispose of the appeal. Further, even if the above construction of O 24A r 10 were wrong, the judge was correct to exercise his discretion so as not to apply the presumptive costs consequences under subrule (5). That is because the City's letter failed to explain that, although expressed as inclusive of costs, the offer should be read by Kilmaley as an offer exclusive of costs by reason of the operation of subrule (2). The City's construction of subrule (2) and its application to the 18 April letter, produces such a contrary result that no reasonable reader in Kilmaley's position could have discerned the result contended for, without detailed elaboration in the letter making the offer.
The appeal in CACV 63 of 2018 should be dismissed.
Conclusion
The appellant's application to amend ground 5 in CACV 11 of 2018 should be dismissed. Each of the appeals should be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SL
Research Associate/Orderly to the Honourable Justice Beech11 OCTOBER 2019
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