Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] - [2017] WASC 307

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: KILMALEY INVESTMENTS PTY LTD -v- CITY OF WANNEROO [No 2] [2017] WASC 307

CORAM: TOTTLE J

HEARD: 8-10, 13-17, 20, 22 & 23 JUNE 2016

DELIVERED : 26 OCTOBER 2017

FILE NO/S: CIV 1516 of 2012

BETWEEN: KILMALEY INVESTMENTS PTY LTD
SHEAN PTY LTD
Plaintiffs
AND
CITY OF WANNEROO
Defendant

Catchwords:

Resumption and acquisition of land - Compensation - Land Administration Act 1997 (WA) (the Act) - Valuation of land - Public work - Where pursuant to s 241(2) of the Act any increase or decrease in value attributable to the proposed public work to be discounted - Where extent of public work contested - Meaning of 'public work' considered - Authorities considered - Purpose of the proposed public work set out in the notice of intention to take not definitive - Public work determined by consideration of the primary facts as determined objectively

Assignment - Where entitlement to compensation purportedly assigned to second named plaintiff - Principles considered - Entitlement to compensation under the Act not capable of assignment

Words and phrases - 'Proposed public work' - 'Assignment of entitlement to compensation'

Legislation:

Acquisition of Land Act 1967 (Qld), s 20(3)
Civil Judgments Enforcement Act 2004 (WA)
Land Acquisition (Just Terms Compensation) Act 1991 (NSW), s 56(1)
Land Acquisition and Public Works Act 1902 (WA), s 34(1), s 37
Land Administration Act 1997 (WA), s 151, s 241
Metropolitan Redevelopment Authority Act 2011 (WA)
Public Works Act 1902 (WA), s 2
Trade Practices Act 1974 (Cth), s 82
Transfer of Land Act 1983 (WA), s 129BA

Result:

Compensation awarded

Category: B

Representation:

Counsel:

Plaintiffs: Mr P G McGowan & Ms L Rowley
Defendant: Mr K Pettit SC & Mr D McLeod

Solicitors:

Plaintiffs: Rowley Legal
Defendant: McLeods Barristers & Solicitors

Case(s) referred to in judgment(s):

Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Unreported, FCA, BC9400129 7 November 1994)
AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2007] NSWLEC 397
Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720
Chapman v Luminis Pty Ltd (No 4) [2001] FCA 1106; (2001) 123 FCR 62
Colquhoun v Brooks (1888) 21 QBD 52
Houssein v Under Secretary of Department of Industrial Relations & Technology (NSW) (1982) 148 CLR 88
Jones v The Commonwealth of Australia (1963) 109 CLR 475
Lenz Nominees Pty Ltd v The Commissioner of Main Roads [2012] WASC 6
Leppington Pastoral Co Pty Ltd v Commonwealth (1997) 76 FCR 318
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2010] HCA 2; (2010) 240 CLR 409
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Mount Lawley Pty Ltd v Western Australia Planning Commission [2007] WASCA 226; (2007) 34 WAR 499
Mt Lawley v WAPC [2004] WASCA 149
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Park v Allied Mortgage Corporation Ltd [1993] FCA 404
Pearl Coast Divers Pty Ltd v Cossack Pearls Pty Ltd [2008] FCA 927
Point Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Poulton v Commonwealth (1953) 89 CLR 540
Pritchard v Racecage Pty Ltd (1997) 72 FCR 203
Queensland v Springfield Land Corporation (No 2) Pty Ltd [2009] QCA 381
Road Traffic Authority of New South Wales v Perry [2001] NSWCA 251; (2001) 52 NSWLR 222
Scholle Industries Pty Ltd v ARP Industries (NZ) Ltd [2007] SASC 322; (2007) 99 SASR 178
Springfield Land Corporation (No 2) Pty Ltd v Queensland [2011] HCA 15
State of Queensland v Springfield Land Corporation (No 2) Pty Ltd [2009] QSC 143
The Owners of Habitat 74 Strata Plan 222 v WAPC [2004] WASC 23
The Owners of St John's Court Rivervale Strata Plan 6052 v WAPC [2004] WASC 196
Waters v Welsh Development Agency [2004] UKHL 19; [2004] 1WLR 1304

Table of Contents

Introduction
Nature of the action
Entitlement to compensation not in dispute
The principal issues
Structure of reasons
Part 1 - Overview
The land and its location
The notice of intention to take and taking order
The owners
Compensation claims offer and advance payment
The action and pleaded claims
The pleading of the assignment issue
The pleading of the claims for compensation pursuant to s 241(7) of the Act

The evidence at trial in overview
Part 2 ‑ Applicable legal principles
Part 3 ‑ Planning and development background
Statutory framework
An overview of the planning history
Planning for industrial areas in the North West Corridor
City of Wanneroo District Planning Scheme No 2 (DPS2)

The zoning of lot 6
Progress of development
Part 4 - Events following the taking
The ORR Extension Project roadworks
Renaming of the roads
Restrictive covenant
Part 5 - the public work
An overview of the issue
The relevant provisions of the Land Administration Act
Outline of the parties' submissions
The plaintiffs' submissions
The defendant's submissions

The authorities
Does the statement of the purpose in a notice of intention to take determine the 'proposed public work' for the purposes of s 241(2) of the Act?
If the identity of the public work is not identified by the notice of intention to take, how is it to be identified?
The facts
Conclusion on the 'proposed public work'
Part 6 - Zoning issues
Overview of the zoning issues
The planning witnesses
The importance of orderly and proper planning
The relevant zoning possibilities
Would lot 6 have been situated within Cell 8 with and without the taking?
Did the MRS rezoning of the land as 'Industrial' require it to rezoned General Industrial or Service Industry or did the MRS allow a business zone?
Does DPS2 allow a Business Zone without an amendment to DPS2, if not, what are the prospects of DPS2 being amended to allow a Business Zone?
At the Valuation Date, would lot 6 have had a Business zoning but for the taking and the public work?
The plaintiff's development concept
An overview of the competing opinions on the zoning of lot 6 in the before situation
Assessment of the reliability of the planning witnesses
Common ground on zoning issue in the before situation
Zoning and use of lot 6 must be compatible with adjoining land uses
The structure planning process
No development without mains sewerage
Environmental issues
Sydney Road/Destiny Way
Mr Hajigabriel's opinion on zoning in the before situation
Mr Moran's opinion on zoning in the before situation
Mr Bracone's opinion on zoning in the before situation

Conclusions on zoning in the 'before' situation
If the reduced traffic flow is attributable to the public work, whether the reduced traffic flow reduced the prospects of a re-zoning to Business zone, and whether it reduced the viability of business uses, in the real world as compared to the unaffected scenario?
Part 7 - Access issues
The issues
The parties' contentions
Traffic engineers
Access and traffic matters not in issue
Status of Gnangara Road, Ocean Reef Road and Mirrabooka Avenue extension
Development Control Policy 5.1
WAPC assesses access issues to blue roads for the purposes of subdivision applications
Traffic counts ‑ traffic passing lot 6/lot 703
Cause of reduction in traffic on Gnangara Road
Upgrading of Gnangara Road in the hypothetical before situation
Full movement access from Sydney Road in the before and after situation
Access to and from Gnangara Road in the after situation

Traffic matters in issue
Direct access from Gnangara Road in the before situation
The relevance of the restrictive covenant

Conclusion on direct access to and from Gnangara Road in the before situation
Direct access to lot 703 in the after situation
Access from Madeley Street in the before situation
The traffic engineers' evidence

Conclusion on access from Madeley Street in the before situation
Part 8 - Sydney Road/Destiny Way
The parties' contentions
The evidence regarding Destiny Way
Conclusion on the permanence of the cul-de-sac treatment of Destiny Way
Will lot 703 continue to have access to and from Destiny Way?
Part 9 - Knowledge of the hypothetical purchaser
Unaffected situation
Affected situation
Part 10 - Valuation of the taken land and the s 241(7) claims
Summary of parties' positions
The valuation evidence – overview
Evidence in chief and conferral
Adoption of comparable sales evidence method of valuation
Use of engineering evidence
Assumptions as to zoning
Assumptions as to deferral of development
Access and road network issues
Structure of the balance of this Part

The sales evidence
Analysis of the sales evidence
The Masters' site ‑ lots 9111 and 9112 ‑ Gnangara Road, Lansdale (Dix sale 1)
Mr Dix's analysis of the Masters' site sale
Overview of the approach of Mr Pember and Mr Zucal to the Masters' site
Mr Pember's analysis
Mr Zucal's analysis
Observations on the analyses of the Masters' site
Conclusions drawn from the Masters' site sales evidence
Lot 18 – 46 Windsor Road Wangara (Dix sale 8, Zucal sale 6)
Lot 105 ‑ 56 Luisini Road, Wangara (Dix sale 9, Pember sale 9B and Zucal sale 4)
Lot 106 ‑ 32 Parri Road Wangara (Dix sale 10, Pember sale 3 and Zucal sale 3)
Lot 107 ‑ 42 Parri Road Wangara (Dix sale 11, Pember sale 4 and Zucal sale 2)
Lot 4 ‑ 338 Gnangara Road (Dix sale 12, Pember sale 2A and 2B)
Lot 251 ‑ 118 Motivation Drive (Dix report sale no 13)
Lot 419 Integrity Way and lot 429 Distinction Way (Dix report sale no 14)
Lots 486 ‑ 489 Callaway Street (Dix report sale 15)
Lot 552 ‑ 39 Callaway Street (Pember report sale 6, Zucal sale 10)
Lot 15 ‑ 248 Gnangara Road (Zucal sale 1)

Mr Dix's affected value analysis
Assessment of the reliability of the valuers' evidence
Conclusion on the value of the lot 505 ‑ the taken land
The claims for severance damage and injurious affection
Mr Dix's opinion on injurious affection
Mr Pember's opinion on severance damage and injurious affection
Mr Zucal's opinion on severance damage and injurious affection

Two bases for the plaintiffs' claim
The HV cables claim
Conclusion on s 241(7) claims
Part 11 - The claim for a solatium ‑ s 241(8) of the Act
Part 12 - Interest
Part 13 ‑ To whom should compensation be paid?
The facts
Outline of the parties' submissions
Relevant legal principles
Relevant provisions of the Act
Assignment ineffective
Summary

TOTTLE J:

Introduction

Nature of the action

This is an action for compensation following the taking of 7,727 sqm of a 2.9103 ha vacant development site, lot 6 Gnangara Road (lot 6), in Perth's northern suburb of Wangara. The taking was for the purpose of a proposed public work. The identification of the public work is a central issue in the action.
This action is brought pursuant to s 220 of the Land Administration Act 1997 (WA) (the Act) to determine the entitlement to compensation conferred by s 202 of the Act.
The following compensation is sought:
(i)$2,961,141 for the value of 7,727 sqm taken (s 241(2));
(ii)$5,305,745 for damage suffered on one or both of the following grounds: due to the severing of the taken land (s 241(7)(a)); and, due to a reduction in the value of the remaining land (s 241(7)(b)). How the claim comes to be advanced in this way will be explained later in these reasons.
(iii)A solatium of 10% of the amount of compensation awarded (s 241(8)).
The plaintiffs seek interest on the amount of compensation awarded.

Entitlement to compensation not in dispute

The defendant accepts that compensation is payable but disputes that it is liable in the amount claimed. It also disputes that compensation is payable to the present plaintiffs. Whilst the defendant accepts the first named plaintiff, Kilmaley, is entitled to compensation it disputes that the second named plaintiff, Shean, is entitled to any compensation. Its position is that the original second plaintiff in these proceedings, Mannor Holdings Pty Ltd (Mannor), the co‑owner of lot 6 at the date of the taking, was entitled to compensation jointly with Kilmaley. Mannor purported to assign its entitlement to compensation to Shean.

The principal issues

The valuation issues, the resolution of which determines the quantum of compensation, involve principally two related questions.
(i)What is the proposed public work, whose effect on value must be discounted pursuant to s 241(2) of the Act when assessing the value of the land taken?
(ii)What zoning would have applied to lot 6 if it had not been affected by the proposed public work, that is, in the 'unaffected situation'?[1]
[1] That is on the hypothesis that the public work had not been planned and undertaken.
The plaintiffs contend that the proposed public work encompassed all roadworks described in the defendant's documents as stage 2 of the 'Ocean Reef Road Extension Project' (the ORR Extension Project). They contend that the answer to the second question (the past hypothetical zoning question) is that in the unaffected situation lot 6 would have been zoned 'Business' under the applicable town planning scheme and would have been developed to accommodate 'high order' business uses (such as a drive through liquor store, take-away fast food outlets, a service station, a convenience store, a hardware store and a child care centre) that depend on a high volume of passing road traffic; and, that if developed for business uses, lot 6 would have a higher value than if developed for industrial uses.
The plaintiffs contend the ORR Extension Project had the effect of diverting passing traffic away from lot 6 thereby diminishing its development potential for business uses and thus its value. The plaintiffs contend that s 241(2) of the Act requires the court to disregard the ORR Extension Project and its negative effect on the volume of traffic passing lot 6. They contend that if those matters are disregarded then the development potential for business uses is undiminished, as is its value.
The defendant contends the proposed public work is the road construction and road widening work specified in the statutory notice of intention to take. The defendant says these more limited works are not related in any relevant way to the ORR Extension Project. For that reason the defendant contends that the more extensive ORR Extension Project works and their negative effect on traffic volumes are not to be disregarded, and so lot 6 is to be valued on the basis of lower volumes of passing traffic in which case its value is lower.
The defendant contends that the past hypothetical zoning would be an industrial zoning and not a business zoning.

Structure of reasons

The structure of the balance of these reasons is as follows:
•Part 1 ‑ Overview
•Part 2 ‑ Applicable legal principles
•Part 3 ‑ Planning and development background prior to the taking
•Part 4 ‑ Events following the taking
•Part 5 ‑ What is the public work?
•Part 6 ‑ What would the past hypothetical zoning have been?
•Part 7 ‑ Access
•Part 8 ‑ Will Sydney Road/Destiny Way remain a cul-de-sac and will access continue to be available from Sydney Road/Destiny Way to and from Gnangara Road?
•Part 9 ‑ What facts and circumstances would be known to the hypothetical purchaser in the unaffected and affected situations?
•Part 10 ‑ The valuation issues
•Part 11 ‑ Is it appropriate to add an amount to the compensation (a solatium) for the taking without an agreement and, if so, in what amount?
•Part 12 ‑ Interest
•Part 13 ‑ To whom should compensation be paid?

Part 1 - Overview

The land and its location

Before the taking the land comprised a portion of Swan Location 1237, described as lot 6 on Diagram 30763, being the whole of the land in Certificate of Title Volume 1645 Folio 922.
Lot 6 was located on the eastern edge of what is referred to as the Wangara industrial area. The Lansdale industrial area is to the south of lot 6, the Gnangara industrial area is to its north, and a residential development to its east.
Lot 6 was a right angled triangular shaped lot situated to the east and north-east of the corner of Gnangara Road and Sydney Road, Wangara. At the time of the taking lot 6 had a frontage onto Gnangara Road of 220.75 m and a frontage onto Sydney Road of 334.25 m. Its eastern boundary, which at the time of the taking adjoined lot 3, measured 246.01 m. The boundary along the truncated north corner of the land was 8.53 m. Along its Gnangara Road frontage the land is elevated (54 m) with the highest point located approximately half way along the Gnangara Road frontage. The land slopes down to the north with the northern parts of the land having an elevation of 45 m. The land also slopes down in a westerly direction from its highest point mid-way along the Gnangara Road frontage, east to west. At the time of the taking the land was unimproved with light coastal scrub vegetation.
The location of lot 6 is shown on figure 1.

The notice of intention to take and taking order

The taking order was preceded by a notice of intention to take issued on 16 November 2009.[2] This notice stated the purpose of the public work for which the taken land was to be designated as:
Widening of Gnangara Road and extension of Mirrabooka Avenue, Gnangara ‑ City of Waneroo.
[2] Exhibit P2, 1413.
The notice of intention to take stated the reason why the land proposed to be taken was suitable for, or was needed for, the public work as follows:
The land is required for the widening of Gnangara Road and extension of Mirrabooka Avenue through to Gnangara Road.
The taking was effected by a taking order made on 19 October 2010 by the Minister of Lands pursuant to s 177(1) of the Act.[3] The taking order was registered on 3 November 2010.
[3] Exhibit P2, 1453.
The land was taken at the request of the defendant.
Land was taken along the whole of the southern boundary of lot 6 and from its eastern boundary as shown on figure 2.[4]
[4] Exhibit P2, 1454.
As a consequence of the taking, a new Deposited Plan was prepared and the survey for that Deposited Plan proved the area of lot 6 was 2.9103 ha, so that the balance of the land after the taking of 7,727 sqm is 2.1376 ha. The 7,727 sqm taken became lot 505 on Deposited Plan 62910 Certificate of Title Volume 1645 Folio 922; the balance of lot 6 became lot 703 on Deposited Plan 62910. In this judgment:
•lot 6 or the land are references to the land in the period up to the date of the taking, and includes all of the 2.9103 ha that constituted lot 6;
•lot 505 or the taken land are references to the 7,727 sqm of land taken pursuant to the taking order; and
•lot 703 or the remaining land are references to the 2.1376 ha that remained after the taking date.

The owners

At the time of the taking Kilmaley and Mannor were the registered proprietors of lot 6. Each held an undivided 50% interest in lot 6 as a tenant in common. Kilmaley is a company controlled by Mr Michael Frawley and his wife.
On 2 April 2013 Kilmaley and its directors, Mr and Mrs Frawley, Mannor and its directors, Mr and Mrs Murphy, and Shean, a company also controlled by Mr Frawley, entered into a deed of settlement and release (the April 2013 deed).[5] The April 2013 deed provided for a transfer by Mannor of its interest in lot 6 to Kilmaley and for the purported assignment of its right to compensation under the Act to Shean.
[5] Exhibit P3: statement of Michael Frawley, 33.
The defendant contends that the assignment by Mannor of its claim to compensation to Shean was not effective.
I return to this issue in Part 13.

Compensation claims offer and advance payment

By a claim dated 14 January 2011 Kilmaley and Mannor claimed compensation pursuant to s 241 of the Act in the sum of $3,179,528. The claim stipulated two amounts: $1,854,480 for value of the taken land, $1,036,000 for 'severance damage'. The claim then referred to 'solatium 10%' of the total of the other two compensation items.
In response to a request by the defendant to provide further and better particulars of the claim, Kilmaley and Mannor lodged an amended claim for compensation dated 30 March 2011 in the sum of $5,110,600.

On 28 July 2011 the defendant offered Kilmaley and Mannor compensation in the sum of $1,623,300 made up of $1,546,000 as compensation for the land taken and a 5% solatium together with interest at the rate of 6% per annum, pursuant to s 241(11) of the Act. The offer was rejected. The defendant did, however, make an advance payment of $1,460,970 representing 90% of the offer excluding the interest component.

The action and pleaded claims

The action was commenced by Kilmaley and Mannor on 27 March 2012.
The pleadings defined the issues at a high level of generality. To obtain a more precise definition of the issues I directed the parties to file and serve statements of facts, issues and contentions.[6]
[6] The defendant prepared a statement of facts issues and contentions dated 27 April 2016; the plaintiffs responded by a statement of facts, issues and contentions dated 29 April 2016, which incorporated the plaintiffs' comments into the defendant's statement of 27 April 2016; the defendant prepared a responsive statement on 12 May 2016. For ease of reference I will refer to the plaintiffs' statement of 29 April 2016 simply as the statement of facts, issues and contentions.
It is necessary, however, to refer to the various iterations of the statement of claim for the following reasons:[7]
(i)to understand the change in the plaintiffs' case which occurred in the course of the action;
(ii)to understand the claims made for compensation pursuant to s 241(7) of the Act; and
(iii)to explain my reasons for allowing amendments to the writ of summons and the statement of claim immediately before the commencement of the trial, and for allowing an amendment to the prayer for relief in the statement of claim on day seven of the trial.

The pleading of the assignment issue

[7] The Kilmaley and Mannor indorsed their statement of claim on the writ of summons filed on 27 March 2012. A minute of amended statement of claim dated 30 January 2015 removing Mannor as the second plaintiff was filed on 11 February 2015 and stood as the amended statement of claim. On 7 June 2016 leave was granted for the filing of a further re-amended statement of claim, which names Shean as the second plaintiff. On 23 June 2016, at the conclusion of the trial, I granted leave to the plaintiffs to file an amended statement of claim dated 16 June 2016, and I said I would give my reasons for allowing it in my reasons for judgment.

On 11 February 2015 a registrar of the court made an order that had the effect of removing Mannor as a plaintiff and permitting a minute of amended statement of claim filed on 11 February 2015 to stand as Kilmaley's amended statement of claim.
Kilmaley pleaded in [29] of the amended statement of claim that Mannor had assigned to it the benefit of an entitlement to the claim for compensation that had been lodged by it and Kilmaley. As is apparent from my earlier reference to the April 2013 deed, Mannor purported to assign its interest in the claim for compensation to Shean, not Kilmaley.
In its amended defence filed and served on 27 February 2015 the defendant admitted the plea that Mannor's interest in the claim for compensation had been assigned to Kilmaley. In the course of preparing for the trial the defendant's solicitors realised the error and sought leave to file a further amended defence withdrawing the admission.
This prompted an application by Kilmaley to amend the writ of summons to join Shean as the second plaintiff and to amend [29] of the amended statement of claim to plead that Mannor had assigned its interest in the compensation claim to Shean. I granted leave to Kilmaley to join Shean and to amend the amended statement of claim in the manner described above. The defendant was given leave to withdraw its earlier admission of [29] of the amended statement of claim. My reasons for granting leave were three-fold: first, to ensure that the parties whom Kilmaley contended were the correct parties to the action were joined; second, there was no discernible prejudice to the defendant; and, third, although the defendant maintained its contention that the assignment by Mannor to Shean was ineffective to transfer Mannor's interest in the claim to Shean, it was inappropriate to resolve that issue summarily as a pleading issue.

The pleading of the claims for compensation pursuant to s 241(7) of the Act

In their statement of claim Kilmaley and Mannor pleaded that following the completion of the roadworks that they contended constituted the public work, and the consequent reconfiguration of the road network, there was a reduction in road traffic going passed lot 6.[8] They also pleaded that the best part of lot 6, in terms of exposure and use, was resumed and this detriment would be exacerbated by scheduled landscaping of part of Gnangara Road. They then pleaded:
[8] Amended statement of claim [25], [26].
28.As a consequence of the taking of the Taken Land, the Plaintiffs have suffered:
(a)loss of the Taken Land which is a substantial part of the Land and the more valuable part of it;
(b)loss of exposure by way of reduction in passing traffic flow
(c)constraints on access
(d)reduction in the range of commercially attractive uses to either the Plaintiff or a purchaser
(e)severance damage
(f)reduction in value as a development site
(g)increases in development costs to the Remaining Land.
In the prayer for relief Kilmaley and Mannor claimed:
(1)$2,152,464 as compensation for the Taken Land pursuant to s214(2) of the LAA.
(2)Severance damage in the sum of $2,367,536 pursuant to s241(7)(a) of the LAA.
(3)Reduction in value in the sum of $40,000 pursuant to s241(7)(b) of the LAA.
(4)Consequential losses in the sum of $86,000 pursuant to s241(6) of the LAA.
(5)Solatium of 10% in the sum of $464,600 pursuant to s241(8) and (9) of the LAA.
(6)Interest on the above from the date of receipt of claim 18 January 2011 pursuant to s241(11) of the LAA.
Particulars of the severance damage claimed in the statement of claim were provided by Kilmaley and Mannor on 1 June 2012.
In the prayer for relief of the re‑amended statement of claim Kilmaley and Shean claimed compensation for the taken land in the amount of $2,961,141 and 'severance damage' in the amount of $5,305,745. The claims for 'reduction in value' and consequential losses were deleted entirely.
In the course of his opening submissions senior counsel for the defendant submitted that the claim made pursuant to s 241(7)(a) for what is commonly referred to as 'severance damage' was not supported by the evidence and that the claim was 'classic injurious affection damage'.[9] In response to this submission, on day seven of the trial the plaintiffs proposed a further amendment to the prayer for relief to amend the paragraph that had included the claim for 'severance damage' so that it read:
Damage in the sum of $5,305,745 pursuant to s 241(7) of the LAA.
[9] ts 60.1.
In support of the application for leave to amend the plaintiffs contended that the amendment had no effect on the evidence given and the amendment was 'simply the legal cap that might be worn in relation to the complaint that we make'.[10] As articulated by the plaintiffs' counsel their view was that:
the question as to whether damage to the … remaining land has been incurred under one or both legs of s.241 of the Land Administration Act is ultimately for the Court to decide assisted by submissions from counsel based upon the facts and the evidence.[11]
[10] ts 920.1.
[11] Email from the plaintiffs' solicitors to my Associate of 16 June 2016.
The defendant objected to leave being granted to amend the prayer for relief in this manner. It contended that the plaintiffs' lawyers had been aware of the issue for some time and had left the amendment too late. It contended that the defendant had been denied the opportunity of seeking particulars in 'the pleading sense'.[12]
[12] ts 1313.5.
I granted leave to the plaintiffs to amend the prayer for relief in the manner described above. My reasons were as follows:
(i)the amendment did not have any effect on the evidence nor did the defendant submit that if the amendment had been made at an earlier date, it would have altered its approach to the case;
(ii)the characterisation of the loss as loss recoverable under either s 241(7)(a) or (b) is a question of law and is not a matter to be determined by a label given to it in the pleading;
(iii)the defendant had sought and obtained particulars of the damage claimed when the damage was claimed under s 241(7)(a), albeit that the amount claimed in the statement of claim was less than the amount claimed in the re-amended statement of claim, and there was no suggestion that the damage itself, as opposed to the quantum and legal label ascribed to it, had changed; and
(iv)on the basis of reasons (i) to (iii), I was satisfied that the amendment caused the defendant no prejudice.

The evidence at trial in overview

The only lay witness to give evidence at the trial was Mr Michael Frawley. Mr Frawley and his wife are the directors of Kilmaley and Shean. Mr Frawley described Kilmaley as the superannuation vehicle for his family superannuation fund. His evidence was to the effect that his objective in causing Kilmaley to acquire lot 6 was to provide a suitable asset for he and his wife in their retirement. In his evidence, Mr Frawley outlined the changes in the ownership of lot 6, set out the background to the taking, identified documents emanating from the defendant in which the construction of the Mirrabooka Avenue extension and the widening of Gnangara Road were referred to as forming part of the ORR Extension Project, and described the negative effects on the development potential of lot 6 caused by the taking.
With two exceptions the expert witnesses gave their evidence concurrently with the other experts from their discipline. The two experts who gave their evidence individually were Mr Stephen Hindley and Mr Scott Bellerby. Mr Hindley produced a concept plan showing how lot 6 might be developed for business uses. Mr Bellerby's evidence was directed to the commercial viability of various business uses that might be located on lot 6 in the event that it achieved a zoning which permitted the business uses shown in Mr Hindley's concept plan.
The planning experts were Mr George Hajigabriel, called by the plaintiffs, and Mr Moran and Mr Bracone, called by the defendant. Their evidence was directed principally to the past hypothetical zoning question.
Both parties called engineers specialising in traffic engineering and traffic planning. The plaintiffs called Ms Heidi Herget-Lansdell and Mr Benham Bordbar. The defendant called Mr Darren Levey and Mr Justin McKirdy.
Civil engineers were called to give evidence. Mr Peter Bowyer was called by the plaintiff, and Mr Graham Budge, Mr Peter Knox and Mr Alen Perkov were called by the defendant. The engineers' evidence was directed to the probable cost of developing lot 6 and lot 703 in accordance with various plans and the engineering issues affecting the way in which lot 6 and lot 703 might be developed. Mr Bowyer gave evidence about other matters as outlined in Part 10.
Three valuers gave evidence. Mr Terry Dix was called by the plaintiff, and Mr Rodney Pember and Mr Brian Zucal by the defendant.
Each group of experts conferred prior to giving evidence in order to identify and if possible narrow the issues between them. Memoranda recording the outcome of the conferral processes was tendered.
Witness statements containing evidence that was uncontroversial were tendered by the defendant without the witnesses being required to attend for cross‑examination.
A trial bundle containing relevant documentary material was tendered.[13]
[13] Exhibit P2.

Part 2 ‑ Applicable legal principles

The parties were sharply divided as to the approach the court should adopt to identify the proposed public work. With that exception, there was no controversy as to the applicable principles governing the compensation claims. Accordingly they can be dealt with quite briefly.
In Lenz Nominees Pty Ltd v The Commissioner of Main Roads,[14] Edelman J, drawing on the judgment of Beech J (as his Honour then was) in McKay v Commissioner of Main Roads [No 7],[15] identified 13 'basic legal propositions' applicable to the valuation of taken land for the purposes of s 241 of the Act and cited the authorities supporting those propositions. The propositions are applicable to the plaintiffs' claim and as expressed by Edelman J they are as follows.
[14] Lenz Nominees Pty Ltd v The Commissioner of Main Roads [2012] WASC 6 [66].
[15] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223.
(1)Assessment of compensation must be conducted with regard only to the matters contained in s 241 of the Land Administration Act: s 241(1); Konowalow & Felber v Minister for Works [1961] WAR 40, 41 (Virtue J).
(2)No regard is to be had to the value of any improvements made without the consent of the Minister after the registration of the notice of intention on 13 December 2005: s 241(4) Land Administration Act.
(3)The purpose of the assessment of compensation for resumed land is to ensure that the person to be compensated is given a full money equivalent of his or her loss: Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, 373 ‑ 374 (Dixon J).
(4)Compensation for the value of the resumed land should be assessed in a theoretical, albeit artificial, fashion by assuming that the land had been sold on the date of its acquisition by the resuming authority: Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575, 647 - 649 [265], [271] (Callinan J).
(5)This theoretical approach to assess compensation for the resumption of the land requires the court to identify the price which would be paid under a hypothetical bargain between a person 'desiring to buy the land… to a vendor willing to sell it for a fair price but not desirous to sell': Spencer v The Commonwealth (1907) 5 CLR 418, 432 (Griffith CJ); Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 [25] (the Court).
(6)In assessing the price payable in this hypothetical sale, it must be assumed that the hypothetical purchaser would be purchasing the land for the most advantageous use for which it is adapted: Spencer v The Commonwealth (441) (Isaacs J). This 'most advantageous use' is commonly referred to as the 'highest and best use' of the land: ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180; (2008) 20 VR 447, 458-459 [40] (the Court); Commonwealth Custodial Services Ltd v Valuer-General (NSW) [2006] NSWLEC 400; (2006) 148 LGERA 38, 45 [15] (Biscoe J).
(7)The highest and best use of the land may be a single use or it may be a package of alternative uses: ISPT Pty Ltd v Melbourne City Council 462 [57]. However, in the instance of a package of alternative uses, care must be taken to ensure that those alternative uses are not inconsistent: Lovev Roads Corporation [2011] VSCA 434 [63] - [66].
(8)In assessing the highest and best use, the existing use will be a relevant, although not necessarily determinative, factor: ISPT Pty Ltd v Melbourne City Council 458 - 459 [40]; Commonwealth Custodial Services Ltd v Valuer-General (NSW) 45 [15] (Biscoe J).
(9)The hypothetical purchaser must be assumed to have regard to all relevant available information, and to be cognisant of all circumstances which might affect the value of the land: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259, 276 - 277 [51] (the Court); Boland v Yates Property Corporation Pty Ltd [271] ‑ [274] (Callinan J).
(10)However, the hypothetical sale and the determination of the value of the plaintiff's interest in the land taken, and the compensation payable to the plaintiff must be conducted by 'discounting any increase or decrease in value attributable to the proposed public work': Land Administration Act s 241(2).
(11)In conducting the valuation exercise it has been iterated and reiterated that a court must not usurp the skill and experience of a valuer. In other words, the court must not allow itself to become a 'third valuer': Bronzel v State Planning Authority (1979) 21 SASR 513, 523 (Wells J); Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 544 ‑ 545; Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174; (2002) 125 LGERA 180 [76] (Pullin J).
(12)However, the prohibition against a court becoming a 'third valuer' does not, and cannot, prevent the court from making its own adjustments to the valuations, particularly where a valuer's adjustments to comparative sales are not wholly accepted. Judicial adjustment to the valuation may sometimes be unavoidable because a court cannot adopt adjustments which it has rejected; the court would otherwise be left with no basis to assess the value of the subject land: McKay v Commissioner of Main Roads [2484] (Beech J).
(13)If any doubts exist in assessing the compensation payable, then those doubts should be resolved by a liberal estimate in favour of the dispossessed owner: Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (373 - 374) (Dixon J); Boland v Yates Property Corporation Pty Ltd [100] (Gaudron J), [111] (Gummow J), [356], (Callinan J).

Part 3 ‑ Planning and development background

There was no material difference between the parties on the regional and local planning framework and the background to the zoning of lot 6. The following account is derived from the documentary evidence and those aspects of the evidence contained in the witness statements tendered as the evidence‑in‑chief of witnesses that was uncontroversial. Save to the extent to which I touch on matters of law, the account sets out my factual findings.

Statutory framework

The statutory planning framework was constituted by the following:
(i)The Metropolitan Region Scheme (MRS);[16]
(ii)City of Wanneroo District Planning Scheme No 2;[17]
(iii)East Wanneroo Cell 8 Agreed Structure Plan adopted on 17 May 2002 and subsequently amended;[18] and
(iv)State Planning Policies.

An overview of the planning history

Planning for industrial areas in the North West Corridor

[16] Gazetted pursuant to the Metropolitan Region Scheme Act 1959 (WA) subsequently repealed by the Planning and Development (Consequential and Transitional Provisions Act 2005 (WA).

[17] Exhibit P2, 1020‑1: City of Wanneroo, District Planning Scheme No 2 (17 September 2010) 3‑1.

[18] Exhibit P2, 1059: Prepared pursuant to the provisions of the Part 9 of DPS2.

East Wanneroo is within the area described for planning purposes as the 'North West Corridor' of metropolitan Perth.[19]
[19] Exhibit P2, 14: Review Group to the State Planning Commission of Western Australia, Planning for the Future of the Perth Metropolitan Region (October 1987) III.
In 1987 the State Planning Commission of Western Australia published a report prepared by a 'Review Group' entitled 'Planning for the Future of the Perth Metropolitan Region' (the Corridor Plan Review 1987). 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, comprising land both north and south of Gnangara Road, and a second longer term 400 ha site at Flynn Drive, Wanneroo.[20]
[20] Exhibit P2, 149 -150: Review Group to the State Planning Commission of Western Australia, Planning for the Future of the Perth Metropolitan Region (October 1987) 127 ‑ 128.

In September 1988 the defendant published a Rural Strategy Plan. The Rural Strategy Plan recorded that there had been a deficiency in industrial land in the north-west corridor and that it had been agreed that the shortfall in industrial land would be accommodated on the land between the Wangara and Lansdale industrial areas south of the proposed Ocean Reef Drive alignment.[21]
[21] Exhibit P2, 243: Town Planning Department, City of Wanneroo Rural Strategy Plan (September 1988) 55.
The Rural Strategy Plan identified six strategy options.[22] The report recorded that there were a number of general considerations common to each strategy option. These included the requirement for industrial expansion to provide a 'much needed regional employment base' for the manufacturing, processing and service sectors of the region. This 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 in the report.[23] It is convenient to note that in its submissions the defendant drew attention to the fact that although the various strategy options all 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. The defendant argued that this demonstrated that Ocean Reef Road could have been extended to the east of lot 6 without the necessity of taking land from lot 6, and thus the widening of Gnangara Road and the extension of Mirrabooka Avenue did not form part of the same public work as the extension of Ocean Reef Road to the junction with Alexander Drive.
[22] Exhibit P2, 255: Town Planning Department, City of Wanneroo Rural Strategy Plan (September 1988) 67.
[23] Exhibit P2, 259, 261, 263, 265, 266.
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. The North-West Corridor Structure Plan 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 proposed Mirrabooka Avenue extension to the east as 'Industrial and Mixed Use Business Areas'.[24] Two minor qualifications are required to this description. First, the south-eastern section of this 'Industrial and Mixed Use Business Area' extends south of Gnangara Road. Second, a small area immediately to the west of the proposed alignment of the Mirrabooka Avenue extension, being the area in which lot 6 is located is designated 'Parks and Recreation'.
[24] Exhibit P2, 593: Department of Planning and Urban Development, North-West Corridor Structure Plan (March 1992) 72 (Figure 7).
Further explanation of the 'Industrial and Mixed Use Business Area' is found in Part 1 of the North-West Corridor Structure Plan that sets out the planning context of the plan and which records, amongst other things, that:
Strategic industrial areas have been designated at Flynn Drive and Lansdale. Mixed business areas, which are intended to provide for a mix of industrial, commercial, service/commercial and small scale enterprises, are identified at Wangara and Gnangara. Mixed business areas will also be supported close to Strategic Regional Centres and on the fringe of industrial estates.[25]
[25] Exhibit P2, 543: Department of Planning and Urban Development, North-West Corridor Structure Plan (March 1992) 14.
The North-West Corridor Structure Plan addressed the regional road network. Under the heading 'Regional Road System' the plan recorded that:
A regional road system has been defined in conjunction with the Main Roads Department and the City of Wanneroo to provide major links both within and outside the NW Corridor. It is based on a major road grid which has been used to form distinct boundaries between residential, industrial and commercial precincts.
Ideally, the grid has a spacing of around 1.5 km which is large enough to accommodate a neighbourhood of 1,500 homes, a primary school, local shops and community facilities. In the study area the grid pattern has been modified to take into account physical constraints and planning commitments. As a result the major road grid in the structure plan encloses areas varying in size from one to three neighbourhoods.
…
As a result of public submissions considerable modifications were made to the original draft structure plan road proposals for the area east of Wanneroo Road. Most important was the elimination of the Eastern Perimeter Arterial Road from the plan. The current philosophy, derived from the community consultation process, is to mostly extend or upgrade existing roads. These include:
•the extension of Mirrabooka Avenue north to Ocean Reef Road;
•the extension of Ocean Reef/Gnangara Road and Burns Beach/Neaves Road as major east-west routes linking the NE and NW Corridors;
•the upgrading of Lenore/Franklin Roads to four lanes with a northerly extension of Franklin to join Mariginiup Road then Coogee Road to link Burns Beach Road to Ocean Reef Road, east of Wanneroo Road.
Other roads east of Wanneroo Road serving as district distributors have mostly been kept to the alignment of existing roads.[26]
[26] Exhibit P2, 559: Department of Planning and Urban Development, North-West Corridor Structure Plan (March 1992) 31.
Although the North-West Corridor Structure Plan proposed that Mirrabooka Avenue be extended north to join the proposed extension of Ocean Reef Road, it recorded that other options for the improvement of the road network 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.
MRS Amendment 948/33 was gazetted to give effect to the proposals contained in the North-West Corridor Structure Plan.[27] This amendment to the MRS expanded the Wangara and Gnangara Industrial areas by adding some 300 ha of industrial zoned land. The amendment effected the reservations required for the extension of Mirrabooka Avenue north to Ocean Reef Road and the extension of Ocean Reef Road. Under the MRS amendment Ocean Reef Road, Hartman Drive, portions of Gnangara Road and Mirrabooka Avenue were designated as Other Regional Roads (Blue Roads).[28]
[27] Exhibit P2, 683: State Planning Commission, Metropolitan Region Scheme Amendment No 948/33 (January 2014)
[28] Exhibit D7: statement of Pasqualino Bracone [21].
Amendment No 948/33 to the MRS was endorsed by the then State Planning Commission on 11 July 1994.[29]

City of Wanneroo District Planning Scheme No 2 (DPS2)

[29] Exhibit D7: statement of Pasqualino Bracone [20].

Following compliance with various statutory processes DPS2 was gazetted on 6 July 2001.[30]
[30] Exhibit D7: statement of Pasqualino Bracone [33].
Clause 3.1 of DPS2 stipulated a number of zones for the classification of land within the Scheme area. These zones included Business, General Industrial, Service Industrial, and Industrial Development. The uses permitted within those zones was set out in a Zoning Table. Clause 3.2 set out the provisions applicable to the Zoning Table and it read as follows:
3.2ZONING TABLE
3.2.1The Zoning Table (hereinafter called Table 1) indicates subject to the provisions of the Scheme, the permissibility of use classes within the various zones. The permissibility of any use class is indicated by a symbol determined by cross reference between the list of 'Use Classes' listed down the left hand side of Table 1 and the 'Zones' listed along the top of Table 1.
3.2.2The symbols used in Table 1 have the following meanings:
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;
'A'=     A use class that is not permitted unless the Council has exercised its discretion and has granted planning approval after giving notice in accordance with Clause 6.7;       '
'X'=    A use class that is not permitted except where provision is made specifically for Council to approve an otherwise prohibited use.
The Special Use Zone, Marina Zone, Urban Development Zone, Industrial Development Zone, Rural Community Zone and Centre Zone are not listed in Table 1 and the permissibility of uses in those zones is to be determined by the provisions specifically applying to them in the Scheme or in any Agreed Structure Plan approved under Part 9.
3.2.3Where in Table 1 a particular use is mentioned it is deemed to be excluded from any other use class which by its more, general terms might otherwise include such particular use.
3.2.4Where a building or land is used, or a proposed building is designed, for more than one use, it shall be regarded for the purposes of the Scheme as being used or designed partially for each of those uses.[31]
[31] Exhibit P2, 1020-25: City of Wanneroo, District Planning Scheme No 2 (17 September 2010) 3-1.
Part 9 of DPS2 enabled the defendant to require the preparation of a 'Structure Plan' as a pre-requisite to the defendant's support for a proposal to rezone or reclassify land, or its support for an application to subdivide or amalgamate lots, or for its consideration of a planning application. The defendant was empowered to determine the area to be covered by a 'Structure Plan Area'. Prior to the gazettal of DPS2 the defendant had prepared draft Local Structure Plans for areas in East Wanneroo described as Cells 1‑9 and DPS2 provided for the adoption of these plans.[32]
[32] Exhibit P2, 1020-95: City of Wanneroo, District Planning Scheme No 2 (17 September 2010) 10-1
Part 10 of DPS2 contained provisions which enabled the defendant to recover contributions (Development Contributions) to the cost of providing infrastructure within the Cell areas from owners who wished to develop their land. The Development Contribution rate varied between cells within the Scheme area.
On 9 April 2002 the Council of the defendant resolved to adopt a Local Structure Plan for Cell 8 and submit it to the Western Australian Planning Commission (WAPC) for approval.[33] On 17 May 2002 the WAPC adopted that part of the Cell 8 Structure Plan (Cell 8 ASP).[34] The Structure Plan for Cell 8 was limited. It incorporated a plan that identified the Structure Plan Area. It provided that infrastructure contributions were to be determined in accordance with DPS2 and set out various environmental conditions. The Cell 8 ASP did not allocate specific land use or zoning to lot 6 or indeed to any land within the Structure Plan Area.

The zoning of lot 6

[33] Exhibit P2, 1035; exhibit D7: statement of Pasqualino Bracone [34].

[34] Exhibit P2, 1041; exhibit D7: statement of Pasqualino Bracone [35].

Lot 6 and a small area of adjacent land immediately to the west of Sydney Road was not rezoned 'Industrial' pursuant to Amendment 948/33 to the MRS but retained a 'Rural' zoning. The view expressed by Mr Hajigabriel, the plaintiffs' planning witness, was that the retention of the Rural zoning was because of environmental concerns arising from the proximity of the land to wetlands and a 'Bush Forever Site'. This view was not challenged.[35] It is consistent with reference to concerns about environmental issues in later documents.[36] I find that lot 6 retained its Rural zoning in 1994 because of environmental concerns based on its proximity to wetlands. 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. The land to the west was rezoned 'Industrial' in 2013.[37]
[35] ts 258.8.
[36] Exhibit P5: statement of George Hajigabriel, 75: extract from MRS Amendment No 1037/33 - Amendment report (December 2001).
[37] Exhibit P3: statement of Michael Frawley, 137: agreement of Amendment No 3 to the Agreed Structure Plan No 10 (East Wanneroo Cell 8).
On 14 January 2003, pursuant to an amendment to the MRS, lot 6 was rezoned 'Industrial'. The amendment report recorded that the owner of lot 6 had requested it be rezoned from rural to industrial.[38] The amendment report recorded that lot 6 was not included in the wetland area and that it was suitable for industrial development.
[38] Exhibit P5: Statement of George Hajigabriel, 75 ‑ 76: extract from MRS Amendment No 1037/33 ‑ Amendment report (December 2001).
The rezoning of lot 6 from rural to industrial under the MRS obliged the defendant to amend its town planning scheme to be consistent with the amended MRS.[39] On 29 April 2003 the defendant initiated an omnibus amendment 28 to DPS2 to ensure the zoning under DPS2 of lot 6 and three other areas of land within the City of Wanneroo was consistent with the relevant MRS zoning.
[39] Metropolitan Region Town Planning Scheme Act 1959 (WA) s 35A.
In the case of lot 6 the zoning under DPS2 had to reflect the MRS 'Industrial' zoning. Initially the defendant proposed that lot 6 be rezoned 'General Industry'. The proposed amendment was supported by a report for which the defendant's Director, Planning and Development, was responsible.[40] The report referred to the statutory requirement for community consultation and gave consideration to whether the consultation requirement necessitated 'on site' signage. The plaintiffs argue that the statements made in this section of the report support the conclusion that lot 6 could achieve a 'Business' zoning under DPS2. Those statements were as follows:
Consultation
The Town Planning Regulations require that all Scheme Amendments undergo a process of advertising for public submissions. This normally involves advertisements in the local paper, signs placed on site, if appropriate, and notification of adjoining and nearby landowners and relevant State government agencies.
In this instance, the only location where an on-site sign is considered warranted is for [lot 6], as it is conceivable that someone may wish to argue that a type of industrial zone other than General Industrial may be more appropriate for this site. For the other cases, there is really no practical alternative to the type of zone recommended. Department for Planning and Infrastructure officers have advised that this approach seems reasonable, however have recommended that the WAPC be formally advised on the matter.
The Town Planning Amendment Regulations 1999 indicate that the WAPC's consent to advertise an amendment is not required so long as it complies with the MRS and other planning policies and strategies. In this instance, WAPC consent is not required as the amendments are to reflect those required by the finalisation of the MRS Amendment.[41] (emphasis supplied)
[40] Exhibit P2, 1069: Town Planning Scheme Amendment No 28 ‑ Implementation of various zonings resulting from finalisation of Metropolitan Region Scheme Amendment No 1037/33 ‑ North West Districts Omnibus No 5.
[41] Exhibit P2, 1075.
The proposed amendment was referred to the Environmental Protection Authority (EPA) which advised that the amendment did not warrant an environmental assessment but identified issues to be considered.
The proposed amendment was advertised. Twenty‑nine submissions and one petition containing 254 signatures objecting to the proposed rezoning of lot 6 were received.
A further report was prepared for a meeting of the Council held on 4 November 2003.[42]
[42] Exhibit P2, 1094.
The report referred to the issues identified by the EPA as follows:
Issues are raised concerning the need to consider retention of locally significant vegetation (particularly mature trees) on the site, impacts on the wetland to the northwest of the site (which is protected under System 6 area M8 and the Swan Coastal Plain Lakes Environmental Protection Policy), groundwater protection (industrial development must be sewered), drainage (it is recommended that a drainage, nutrient and water management plan be prepared prior to the local scheme rezoning or subdivision occurring) and buffer setbacks to surrounding land uses as defined in the EPA Draft Policy on Industrial-Residential Buffer Areas.[43]
[43] Exhibit P2, 1094.
The report set out 10 'main' issues concerning the rezoning of lot 6 raised by the submissions from members of the public. Relevantly, these included the following:
Issue 2
There are adequate industrial areas nearby already, so there is no need to rezone this site. Residential or business uses would be more appropriate for the site if it is to be rezoned. Preferably the site should remain rural or be reserved for conservation.
Comment
It is acknowledged that the Wangara and Landsdale industrial areas cover a large land area and substantial future industrial development capacity still remains within this area. The extent of these areas is however based on the need to provide for the manufacturing, service and employment needs of Perth's North West Corridor. It should be noted that the strategic planning for the area (reflected in the NWCSP, the MRS and the East Wanneroo Cell 8 Agreed Structure Plan) shows the reservations of Ocean Reef Road and Mirrabooka Avenue as forming the northern and eastern extent of the Industrial zone (acknowledging that the NWCSP 1992 designated the eastern area comprising the subject land and land to the west of Sydney Road as Parks and Recreation, and the Cell 8 ASP identified this area as 'Area Subject to Further Detailed Planning').
The rational for choosing the General Industrial zone when initiating this amendment was because this zone was consistent with the surrounding portions of the industrial areas to the south and west. An assessment of the various zoning options available to Council is set out in the I 'Other Issues' section of this report.
Recommendation
That the issue be dismissed in part and the range of zoning options that would be consistent with the MRS Industrial zone as set out in the 'Other Issues' section of this report be noted.
Issue 3
Concerns regarding pollution of Lake Gnangara, the nearby wetlands to the west of Sydney Road and groundwater supplies as a result of industrial development. The area is a priority groundwater area and industrial development should be restricted.
Comment
The subject site is located within the Priority 3 Underground Water Pollution Control Area for which all industrial development must be sewered. The EPA has also recommended that a drainage, nutrient and water management plan be prepared for the site prior to the local scheme rezoning or subdivision occurring. Such a management plan has not yet been prepared and it is considered that this should be undertaken prior to the City putting in place the detailed zoning for the land.
Recommendation
That the issue be upheld.
…
Issue 6
Concerns regarding noise, air and visual pollution, traffic and impacts associated with industrial development and the loss of the current 'buffer' between Gnangara Road and the industrial area to the south, particularly given the proximity of residential dwellings in both Sydney Road and the Landsdale residential area.
Comment
Industrial developments will be assessed in accordance with the EPA Draft Policy on Industrial-Residential Buffer Areas which specifies buffer distances between residential and industrial land uses, with the buffer distances varying depending on the specific land use involved. The subdivision design and individual developments will also need to be designed to comply with the City's normal development and environmental health standards, which will ensure that any amenity impacts will be minimised.
Recommendation
That the issue be dismissed.
Issue 7
Residents moved to this area (being the rural and Special Rural areas to the north of the Ocean Reef Road extension) as a lifestyle choice for its quiet, unpolluted rural character and object to the intrusion of industry into this area.
Comment
As indicated in the comments under Issue 1, this land forms part of the Wangara/Landsdale/Industrial area, which extends as far north as the future extension of Ocean Reef Road. This major road alignment provides for a logical and defined boundary between the industrial area and the rural/special rural land to the north. At this point in time, without either the Ocean Reef Road or Mirrabooka Avenue extensions being constructed, it is acknowledged that the boundary between the industrial and rural areas appears unclear onsite.
Recommendation
That the issue be noted.
Issue 8
Rezoning of this site will result in the value of nearby properties being devalued.
Comment
There is no evidence to suggest that the rezoning of this property will impact on the values of nearby properties, particularly as this site forms part of the Wangara/Landsdale Industrial area.
Recommendation
That the issue be dismissed.
Issue 9
The proposal will set an undesirable precedent for further rezonings in this area.
Comment
As the proposal is consistent with the established planning framework for the broader area, subject to resolution of the various environmental and detailed planning issues, it is not considered that the rezoning of this property will create an undesirable precedent for further rezonings in the area.
Recommendation
That the issue be dismissed.

Under the heading 'Other Issues' the report set out the options open to the Council as follows:
Other Issues
The subject site has been rezoned to Industrial under the MRS and the City is legally obliged to bring its DPS2 zoning for the site into conformity with the MRS zoning.
Council does however have several options in respect to the zone it places over the site. These options are as follows:
1.General Industrial Zone
This zone is currently proposed under Amendment 28. DPS2 states that the intent of this zone is to provide for industrial development which the Council considers would be obtrusive in or detrimental to the amenity of the Service Industrial Zone. The rational[e] for choosing the General Industrial zone when initiating this amendment was because this zone was consistent with the surrounding portions of the industrial areas to the south and west. 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.
2.Service Industrial Zone
DPS2 provides that the intent of this zone is to provide for a wide range of business, industrial and recreational developments which the Council may consider would be inappropriate in Commercial, Business and General Industrial Zones and which are capable of being conducted in a manner which will prevent them being obtrusive, or detrimental to the local amenity.
Development in this zone generally comprises lighter forms of industry, showrooms and warehouses, entertainment and recreational activities, and complementary business services. This zone would appear to be more consistent with local resident expectations for the site, although there are still a number of environmental issues that have not been addressed to date. Zoning the site Service Industrial would also facilitate the independent subdivision and development of the land, which would prejudice the opportunity to coordinate development [of] the land to the west of Sydney Road.
3.Business Zone
DPS2 provides that the intent of this zone is to accommodate warehouses, showrooms, trade and professional services and small scale complementary and incidental retailing uses, as well as providing for retail and commercial businesses which requires large areas such as bulky goods and category/theme-based retail outlets that provide for the needs of the community but which due to their nature are generally not appropriate to or cannot be accommodated in a commercial area. This zone has generally been used as a component of larger commercial centres, although has been used along the periphery of Industrial areas in the past, including the Wangara frontage to Wanneroo Road. Given the location of the subject site on the eastern edge of the Wangara Industrial area, with exposure to the future extension of Mirrabooka Avenue, this zone may have some merit in this case. This zone would also appear to be more consistent with local resident expectations for the site. Again however, there are still a number of environmental issues that have not been addressed to date and zoning of the site to Business would also facilitate the independent subdivision and development of the land, which would prejudice the opportunity to coordinate development [of] the land to the west of Sydney Road.
4.Industrial Development Zone
DPS2 states that the 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. This zone would require an Agreed Structure Plan to be in place (or in fact an amendment to the existing East Wanneroo Cell 8 Agreed Structure Plan), which would determine the detailed zoning for the land, prior [to] subdivision or development proceeding. This zoning would enable the City to comply with the legislative requirement of providing a zoning under DPS2 which is consistent with the MRS Industrial zone and also enable the various outstanding environmental and planning issues to be resolved prior to subdivision or development proceeding.
5.Local Scheme Reserve
Given that one of the issues raised by the subdivisions was to reserve the land for conservation purposes, a local scheme reserve has also been included in this assessment of possible options. A local Scheme Reserve would not be considered to be inconsistent with the MRS Industrial zoning if the land is ultimately considered to have significant environmental value. Reserving the land under DPS2 would however expose Council to a possible claim for compensation if the development potential of the land was adversely affected because of the reservation.
Given the outstanding environmental and planning issues associated with this land and the land to the west of Sydney Road, Option 4 to rezone the land to Industrial Development and thereby require an Agreed Structure Plan to be in place prior to subdivision or development proceeding is the recommended option to proceed with. The structure planning process would provide an avenue for the outstanding issues to be resolved and would also provide a further opportunity for consultation with the local community.
It is therefore recommended that the amendment be modified to rezone Lot 6 Corner Gnangara Road and Sydney Road to Industrial Development rather than General Industrial. As no submissions were received on the remaining proposals, it is recommended that Council proceed to finalise the amendment without modification to the remaining proposals.[44] (emphasis supplied)
[44] Exhibit P2, 1101.
At a meeting held on 4 November 2003 the Council resolved to change the proposed zoning of lot 6 from General Industrial to Industrial Development.[45] I infer from the officer's report, and from the fact that the Council passed the resolution recommended by the officer, that the primary reason why lot 6 was zoned Industrial Development under DPS2 was outstanding environmental issues associated with it and the adjacent land to the west of Sydney Road. A secondary reason was to provide the defendant with some flexibility in determining the industrial uses for which lot 6 might be developed in order to limit adverse impacts on residential areas to the east whilst at the same time ensuring that lot 6 was not developed for uses that might be an impediment to the industrial development of land to the west of Sydney Road.
[45] Exhibit P2, 1102.
It is common ground that the environmental issues had been resolved by the date of the taking.[46]
[46] ts 261.5 ‑ 262.2.
At the date of taking lot 6 was zoned 'Industrial' under the MRS and 'Industrial Development' under DPS2.

Progress of development

The planning witnesses described lot 6 as being within a growth area with an 'industrial development front' approaching from the west and a residential development front approaching from the east. Lot 6 was located on the eastern edge of the industrial area with residential development to the east‑south‑east.[47]
[47] Exhibit D9: Memorandum of conferral of planning experts dated 2 June 2017 [1] - [2].
By 1995 Ocean Reef Road had been constructed as a single carriage way to Hartman Drive.
As is evident from the planning documents to which I have referred, the industrial development in East Wanneroo necessitated improvements in the road network. Direct evidence of the connection between the development of land for industrial purposes and the requirement for improvements in the road network is found in the concern in 2006 on the part of one of the developers of land for industrial use in Cell 8, Landcorp, to know the final design of Ocean Reef Road and Gnangara Road. Landcorp developed 'Enterprise Park'.[48] Landcorp was prepared to pre-fund the design of various roads in Cells 5 and 8. An agenda paper on this topic was prepared for a meeting of the Council of the defendant held on 21 November 2006.[49] The officer responsible for this agenda paper was the defendant's Director, Planning and Development. The agenda paper recorded:
To properly integrate the road design with the total development of this area, the City required the design to include Ocean Reef Road from Hartman Drive to Alexander Drive (Cells 5 and 8), Mirrabooka Avenue from Gnangara Road to Ocean Reef Road (Cells 5 and 8) and Gnangara Road from Hartman Drive to Mirrabooka Avenue (Cell 8). Landcorp had indicated that it would pre‑fund the whole of the design work provided it was offset against its future Cell Cost contributions …
[48] Enterprise Park is an 'industrial park' situated to the west of lot 6 and bounded by Hartman Drive in the west, Ocean Reef Road in the north, Gnangara Road in the south and Prestige Parade in the east
[49] Exhibit P9.
By March 2009 Ocean Reef Road from Wanneroo Road to Hartman Drive was expanded to dual carriageway and opened to traffic from Hartman Drive to Prestige Parade.

Part 4 - Events following the taking

The ORR Extension Project roadworks

On 8 March 2011 the Council of the defendant:
(i)resolved to accept the tender of VDM Earthmoving Contractors Pty Ltd trading as Malavoca for the construction of Ocean Reef Road dual carriageway (Stage 2) from Prestige Parade to Alexander Drive; and
(ii)noted:
the permanent closure of Sydney Road south of Ocean Reef Road alignment, and Gnangara Road east of Mirrabooka Avenue/Madeley Street as per the East Wanneroo Structure Plan, will be implemented as part of this project.[50]
[50] Exhibit P2, 1631.
The work the subject of the tender included the widening of Gnangara Road, the extension of Mirrabooka Avenue from Gnangara Road to Ocean Reef Road, the cul-de-sac treatment of Sydney Road and the cul-de-sac treatment and roundabout at the junction of Gnangara and Mirrabooka.
Roadworks were undertaken between April and December 2011 and it is agreed, and I find, that those roadworks included the following:
(i)construction of the roadway from Mirrabooka Avenue (south of Gnangara Road) to Gnangara Road and further north to Ocean Reef Road;
(ii)construction of a roundabout at the junction of Gnangara Road and the extended Mirrabooka Avenue;
(iii)extension of Ocean Reef Road dual-carriage roadway east from Prestige Parade to about Alexander Drive;
(iv)permanent cul-de-sac of the old Gnangara Road (now called Pollino Gardens) east of Mirrabooka Avenue extension;
(v)the bifurcation of Gnangara Road within about 50 m west of the roundabout at the junction with Mirrabooka Avenue; and
(vi)the creation of a cul‑de‑sac by truncating Sydney Road at a point south of the Ocean Reef Road alignment and north west of lot 6 and the creation of a turning circle at what is presently its temporary northern end.

Renaming of the roads

Following the roadworks just described, the road extending north of the roundabout at Gnangara Road to the intersection with Ocean Reef Road was renamed Gnangara Road but was referred to in the course of the hearing as the 'Mirrabooka Avenue extension'.
Sydney Road immediately to the west and north-west of lot 6 has been renamed 'Destiny Way'.
The former extension of Gnangara Road to the east of lot 6 has been named 'Pollino Gardens'. The functional road hierarchy of Pollino Gardens has not yet been allocated. There is no road immediately abutting the northern boundary of lot 6 but Ocean Reef Road runs east/west to the north of it. Ocean Reef Road changes name to Gnangara Road east of the intersection with the Mirrabooka Avenue extension.

Restrictive covenant

By letter dated 2 February 2011, the defendant's solicitors wrote to Kilmaley and Mannor attaching a draft restrictive covenant which they indicated was required to facilitate acquisition of the taken land. The draft restrictive covenant required Kilmaley and Mannor to covenant with the defendant under and by virtue of the provisions of s 129BA of the Transfer of Land Act 1983 (WA) for the benefit of the defendant not to use or permit the use of lot 6 for vehicular access between the points marked A to B shown along the boundary of the Gnangara Road frontage as shown on Deposited Plan 62910.[51]
[51] JSIFC [69] - [70]; exhibit P3: statement of Michael Frawley, 88.
Kilmaley and Mannor Holdings declined to enter into the restrictive covenant.
In April 2012 Kilmaley and Mannor applied to the WAPC to subdivide lot 6 into two lots. The defendant requested the WAPC to impose a restrictive covenant on the subdivisional approval of lot 6 on 21 February 2014. The WAPC resolved to grant approval to the subdivision of lot 6 but declined to impose a restrictive covenant as sought by the defendant.

Part 5 - the public work

An overview of the issue

The plaintiffs' case is that the proposed public work, whose effect on value is to be discounted pursuant to s 241(2) of the Act, is a matter of fact to be determined by the court. As noted earlier in these reasons, the plaintiffs say the proposed public work is the ORR Extension Project. The defendant's case was that the proposed public work is identified by reference to the statement of the purpose of the public work set out in the notice of intention to take and the public work is limited to the roadworks described in the notice of intention to take.
Before outlining the parties' submissions in more detail, it is helpful to set out the relevant provisions of the Act which provide the context for those submissions.

The relevant provisions of the Land Administration Act

The statutory provisions dealing with the compulsory acquisition of interests in land are found in pt 9 of the Act.
Section 161 governs the power to take land for public works. It provides that land may be taken if its use is required for the purposes of the work the acquiring authority has power to undertake. Relevantly it states:
161.Interests in land may be taken etc
(1)Whenever the Crown, the Governor, the Government, any Minister of the Crown, any State instrumentality or any local government is authorised, by this Act, the Public Works Act 1902 or any other Act, to undertake, construct or provide any public work, and the use of any land or any interest in land is required for the purposes of the work, then, unless otherwise specially provided -
(a)any interest in the land held by a person other than the Crown may be taken; …
in accordance with this Part.
A reference to a 'taking' of land is a reference to the extinguishment of every interest in land by virtue of a taking order.[52]
[52] Land Administration Act1997 (WA) s 151.
'Public work' is defined in s 2 of the Public Works Act 1902 (WA) and the definition is incorporated into the Land Administration Act by s 151. 'Public work' and 'work' are defined in terms that include an extensive list of buildings and what might be termed infrastructure work. The list includes 'any road, stock route, viaduct, or canal'. The concluding subparagraphs of the definition include 'any work incidental to any of the aforesaid works' and 'any land required for or in connection with any work as aforesaid'.
Subdivision 2 of pt 9 of the Act governs the procedure for taking interests in land without agreement. Section 170(1) provides that if it is proposed to take an interest in land without agreement, the Minister must issue a notice of intention to take the interest in accordance with that section.
Section 171 governs the content and validity of a notice of intention to take. It states:
171.Notice of intention, content and validity of
(1)A notice of intention must include -
(a)a description of the land required;
(b)particulars of -
(i)the purpose of the public work for which the land is proposed to be designated;
(ii)the nature of the interests to be taken;
(c)if it is proposed to make a disposition or grant to any person out of the interests proposed to be taken, a statement to that effect and particulars of the disposition or grant to be made;
(d)particulars of -
(i)a place where persons interested may at any reasonable time inspect a plan of the land;
(ii)the reasons why the land is suitable for, or is needed for, the public work;
(iii)the date from which the land is likely to be required;
(iv)the name of a contact officer in the acquiring authority; and
(v)an address for lodging objections;
(e)a statement of the effect of section 172; and
(f)a statement of the effect of section 173.
(2)A notice of intention issued in good faith is not invalidated by reason only that it contains an error or omission in the information required by subsection (1)(d), (e) or (f).
It may be noted that s 171(1) requires that the purpose of the public work for which land is required be stated. It is implicit in s 171(2) that a notice of intention to take may be invalid if there is an error in the statement of purpose. When the requirement to state the purpose for which land is acquired is present in statutes such as the Act, the requirement serves a number of ends including enabling the dispossessed land owner to make an assessment of the validity of the compulsory acquisition.[53] In many instances it may well be that the words used to describe the purpose of the public work will, incidentally, describe the public work itself.
[53] Jones v The Commonwealth of Australia (1963) 109 CLR 475, 483 (Dixon CJ).
Once a notice of intention to take is issued, certain dealings with the land will be void,[54] and a person must not construct improvements on the land without the Minister's consent.[55]
[54] Land Administration Act1997 (WA) s 172.
[55] Land Administration Act1997 (WA) s 173.
Section 175 provides for objections to a proposed taking of land. Essentially the owner or occupier of the land may object to the taking of land by serving an objection on the Minister. The objection must specify, amongst other things, the grounds of objection, but the Act does not specify what the grounds may be. The Minister is obliged to consider the objections, and any representations by the objectors, and to determine the objection.
Section 177 provides that where a notice of intention to take has been registered and either there have been no objections or all objections have been determined, the Minister may make a taking order consistent with the notice of intention to take.
Section 178 governs the content of a taking order. For present purposes it is only necessary to refer to subsection (1), which states:
178.Taking order, content of
(1)A taking order must -
(a)identify the land affected by the order;
(b)either -
(i)identify any registered or unregistered interest to be taken; or
(ii)specify that the land is taken, subject to any provision made under subsection (2)(a);
(c)specify that, subject to any provisions made under subsection (2)(d), any interest taken is to be held as Crown land in the name of the State of Western Australia;
(d)designate appropriately any land or interests in land required for the purpose of the public work;
(e)if the land, or interests in the land, required for the public work will be held by a person other than the Crown - specify any covenants in favour of the public work that will apply to the land or the interests; and
(f)if land affected by the order is not under the Transfer of Land Administration Act 1893 ‑ provide that it will be registered under that Act.
Section 179 provides that on registration of a taking order, it has effect according to its terms and (relevantly) every interest in land is extinguished, and every person who formerly held such an interest has that holding converted into a claim for compensation under pt 10.
Part 10 of the Act governs claims for compensation. Division 5 governs the assessment of compensation. For present purposes the relevant provision is s 241, the relevant subsections of which state:
241.How compensation to be determined
(1)In determining the amount of compensation (if any) to be offered, paid, or awarded for an interest in land taken under Part 9, regard is to be had solely to the matters referred to in this section.
(2)Regard is to be had to the value of the land with any improvements, or the interest of the claimant in the land, assessed as on -
(a)in the case of an interest taken for a railway or other work authorised by a special Act - the first day of the session of Parliament in which the Act was introduced;
(b)in the case of an interest taken by agreement under section 168 - the date of the execution of the agreement, unless the agreement provides otherwise; or
(c)in the case of an interest to which paragraphs (a) and (b) do not apply - the date of the taking,
and discounting any increase or decrease in value attributable to the proposed public work.
…

I also accept that the decision in St John's Court provides some support for Shean's submission that the assignment was effective. (The decision in Habitat 74 is relevant only because it forms part of the factual background for the St John's Court decision and it is unnecessary to refer to it further.) I need to refer to St John's Court in more detail to explain why, even though I would ordinarily follow a decision of a single judge of this court, I am not persuaded that it is an authority that I should follow.
In St John's Court the acquiring authority, the WAPC, had identified the applicant strata company as the person entitled to compensation for the taking of part of the common parts of the strata development. The strata company applied for compensation under the Land Acquisition and Public Works Act 1902 (WA) and, until the decision in Habitat 74, the strata company maintained that it and not the owners of the strata units were entitled to the compensation. An advance payment of compensation was paid into court because there were difficulties in giving notice to the owners of the strata units at the date of the resumption of their entitlement to share in the compensation. EM Heenan J referred to the strata company's (the applicant's) change of position and stated (at [13] ‑ [16]):
However, in the light of that decision the applicant now accepts that the persons beneficially entitled to the proceeds of the compensation paid, and to any further compensation possibly to be paid, and interest, are the former proprietors or their respective assignees and it has taken steps to facilitate their identification so that such an eventual distribution can be made.
This reference to the interest of a pro rata share in the compensation moneys and interest of any assignee or assignees of former proprietors is to be taken to be a reference to an assignee or successor to that part of the personal property of an individual former proprietor. Any interest in the land resumed, including common property, was, by fact and virtue of the compulsory acquisition, converted immediately to a right to claim compensation for the compulsory acquisition so changing in character from an interest in land, or a proprietary interest, to a personal claim for money, by reason of s 18(2) of the Land Acquisition and Public Works Act. See also Fletcher v Ashburner (1779) 1 Bro CC 497; 28 ER 1259 and Brown v Heffer (1967) 116 CLR 344. This conversion of a proprietary interest to a personal right therefore affects any succession to the rights of a former unit proprietor. For example, a subsequent sale or disposition of his or her title to the unit by a former proprietor will only convey the interest in the land and not this personal entitlement to compensation (subject of course to any express provision to the contrary in the agreement for sale). Similarly, if the interest of a former unit proprietor has been transferred to another or others after death by will, the interest in the compensation moneys passing in the event of such a succession will be determined by any applicable provision of the will relating to personal property. Consequently, the order made on this application insofar as it relates to interests of former proprietors which have been assigned, relates only to assignments which effect a transfer of that personal interest.
… a peripheral question has arisen over whether or not, in these circumstances, the applicant strata corporation was, or should be taken to have been, acting as agent for the various registered unit proprietors at the date of resumption. Although the question is, largely, outside the scope of these proceedings, it may yet be of significance because of the possibility, or indeed probability, that now that the true entitlement to the compensation has been determined, some or all of the former unit owners may wish to continue with the claim for compensation initiated under the Land Acquisition and Public Works Act 1902 in the name of the applicant.
It is for this reason that the second respondents contend that the claim for compensation which was submitted by the applicant strata company in November 1996 was a claim by, or a claim which should be treated as being made by, the various unit owners at 20 August 1996. Clearly enough the applicant did not make that claim expressly as agent for the registered unit holders at the date of resumption for it continued to assert that it was solely entitled to the compensation moneys until February 2004. However, the first respondent, as the acquiring authority, did not question the title of the applicant to receive the compensation moneys until doubts arose about its ability to give a good and effectual discharge for the advance payment offered and accepted by the applicant and payable in March 2001. Now, both the applicant and the first respondent acknowledge and accept that the parties rightfully entitled to participate in distribution to the compensation are only the registered proprietors of units at the date of acquisition (or their assignees). (emphasis supplied)
One of the orders made by EM Heenan J was in the following terms:
That each of those registered proprietors is entitled to participate in distribution of the compensation paid, together with interest accrued or accruing thereon, in proportion to the unit entitlements of their respective lots in the strata plan recorded at the date of resumption, except where that entitlement to receive compensation for the compulsory acquisition has been assigned in which case the distribution shall be to the assignee, or assignees or further assignees of that entitlement. (emphasis supplied)
Although expressed in different language the provisions of the Land Acquisition and Public Works Act governing who was entitled to compensation (s 34(1)) and who was permitted to bring a claim for compensation (s 37) are not materially different from s 202(1) and s 208(1) of the Act.
As I have acknowledged the passages in EM Heenan J's judgment set out above provide some support for the view that an entitlement to compensation under the Land Acquisition and Public Works Act was capable of assignment and, in turn, this does provide support for the view that an entitlement to compensation under s 202(1) of the Act is likewise capable of assignment. That said, and whilst EM Heenan J's views are to be accorded considerable respect, I note that the ability to assign an entitlement to compensation was not in issue in St John's Court. Against that background his Honour's observations about the entitlement of assignees of owners at the date of resumption were obiter. Moreover, it does not appear that his Honour was referred to the authorities to which I have mentioned dealing with the assignment of statutory entitlements and causes of action and his Honour did not give express consideration to the issue of whether the statute permitted the entitlement to compensation to be assigned. For those reasons and because I consider the correct position is that an entitlement to compensation under the Act is not capable of being assigned I decline to follow the decision in St John's Court.
As the cases dealing with the assignment of causes of action under s 82 of the TPA make clear the starting point is the text of the statute under which an entitlement or cause of action arises.
In this case s 202(1) and s 208(1) of the Act are clear. Only a person who is entitled to compensation, because the person had an interest in the taken land (s 202(1)), or that person's executor or administrator may make a claim.
The inclusion in s 208(1) of provision for a claim to be made by the executor or administrator of a person entitled to compensation as successors to the entitlement by operation of law supports the conclusion that an assignee is not entitled to make a claim.[353]
[353] In making this observation I am conscious that the maxim expressio unius, exclusio alterius is a 'valuable servant, but a dangerous master' (Colquhoun v Brooks (1888) 21 QBD 52, 65 (CA) Lopes LJ; Houssein v Under Secretary of Department of Industrial Relations & Technology (NSW) (1982) 148 CLR 88, 94 (the Court)), but the conclusion supported by the maxim is not inconsistent with other provisions of the Act and nor do the provisions of the Act suggest that this conclusion was unintended.
In its capacity as an assignee, Shean is not a person who had an interest in land taken pursuant to the provisions of Part 9 of the Act, thus it is not entitled to compensation pursuant to s 202(1) of the Act. It follows that it is not a person permitted to bring a claim under s 208(1) of the Act. In short Shean is not a person 'who comes within the terms of the statutory remedy'.[354]
[354] Chapman v Luminis Pty Ltd (No 4) [2001] FCA 1106; (2001) 123 FCR 62 [205] (von Doussa J).
Subject to hearing from the parties when they have had the opportunity of considering these reasons, I will give consideration to whether I should adopt the course proposed by the plaintiffs of ordering that Mannor's share of the compensation be paid into court.

Summary

In summary I have concluded that the entitlements to compensation are as follows:
(i)$1,622,670 under s 241(2).
(ii)$120,000 under s 241(7).
(iii)$174,267 under s 241(8).
(iv)Interest on $1,916,937 under s 241(11) from 16 February 2009 at the rate prescribed under s 8(1)(a) of the Civil Judgments Enforcement Act as at that date in an amount to be agreed or an amount to be the subject of further determination.
I will hear the parties in relation to the orders required to give effect to these reasons and in relation to costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: KILMALEY INVESTMENTS PTY LTD -v- CITY OF WANNEROO [No 2] [2017] WASC 307 (S)
CORAM:   TOTTLE J
HEARD:   31 JANUARY 2018
DELIVERED          :   31 MAY 2018
FILE NO/S:   CIV 1516 of 2012
BETWEEN:   KILMALEY INVESTMENTS PTY LTD
First Plaintiff
SHEAN PTY LTD
Second Plaintiff
AND
CITY OF WANNEROO
Defendant

Catchwords:

Practice and procedure - Costs - Where offer expressed as offer of compromise pursuant to O 24A - Offer expressed as inclusive of costs - Offer of compromise ambiguous - Offer of compromise ineffective

Practice and procedure - Costs - Costs of adducing evidence upon which no reliance was placed

Practice and procedure - Costs - Unsuccessful second plaintiff to pay defendant's costs of joinder application and application on which second plaintiff failed

Legislation:

Land Administration Act 1997 (WA), s 241
Rules of the Supreme Court 1971 (WA)

Result:

Defendant to pay first plaintiff's costs
Second plaintiff to pay defendant's costs in part

Category: B

Representation:

Counsel:

First Plaintiff	:	Ms L Rowley
Second Plaintiff	:	Ms L Rowley
Defendant	:	Mr K Pettit SC & Mr D McLeod

Solicitors:

First Plaintiff	:	Rowley Legal
Second Plaintiff	:	Rowley Legal
Defendant	:	McLeods Barristers & Solicitors

Case(s) referred to in decision(s):

Duncan and Weller Pty Ltd v Mendelson [1989] VR 386
Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307

TOTTLE J:

These reasons concern a dispute between the parties about the costs of this action for compensation under s 241 of the Land Administration Act 1997 (WA). Compensation in the amount of $1,916,937 exclusive of interest was awarded.[355]
[355] Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307.
There are three issues:
(a)Is the defendant entitled to an order that the plaintiffs pay its costs from 18 April 2016 by reason of the failure by the first plaintiff, Kilmaley, to accept an offer made by the defendant by letter on that date?
(b)Should the plaintiffs be ordered to pay costs incurred by the defendant in responding to evidence adduced by the plaintiffs about the probable costs of a hypothetical subdivision of the land?
(c)Should the second plaintiff, Shean, pay the defendant's costs of the action from 26 May 2016 (the significance of that date is explained at [31])?
An order in Kilmaley's favour in respect of the costs of the action from its commencement to 18 April 2016 was made on 18 December 2017.

The costs consequences of the offer of 18 April 2016

On 18 April 2016 the defendant's solicitors sent a letter marked 'without prejudice - save as to costs' to Kilmaley's solicitors stating:
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 LandAdministration Act 1997 (WA) (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 Act.
On 18 April 2016 Kilmaley was the sole plaintiff and the action had been set down for a hearing to commence on 8 June 2016.
Order 24A r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) provides that in any proceedings the plaintiff or the defendant may make to the other an offer to compromise any claim in the proceedings on the terms specified in a notice of offer.
Order 24A r 3A regulates how an offer is to be made and states:
(1)An offer of compromise is made to a party under this Order by serving a notice of the offer on the party.
(2)A notice of offer is to -
(a)be in writing; and
(b)bear a statement to the effect that the offer is made under this Order.
Order 24A r 10(1) and (2) set out the costs consequences that follow from the acceptance of an offer made under O 24A. They state:
(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.
Order 24A r 10(3) - (5) govern the costs consequences if an offer has not been accepted within the time prescribed for acceptance. Subrule (3) states:
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.
Subrule (4) applies when an offer is made by a plaintiff and subrule (5) applies if an offer is made by a defendant. Subrule (5) states:
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).
Order 24A r 7A provides that if the court is satisfied that the failure by the plaintiff to accept the offer made by the defendant was unreasonable, the defendant's costs are to be taxed on an indemnity basis, unless the interests of justice require otherwise.
The defendant contends that the offer made in the letter dated 18 April 2016 was not inclusive of costs and the award of $1,916,937 was less favourable than the offer of $2,050,000. It contends that if the offer had been accepted then, by reason of O 24A r 10(1), Kilmaley would have been entitled to tax its costs up to the date of acceptance of the offer. In the alternative, the defendant says that even if the terms of the offer are construed as being inclusive of costs then, had the offer been accepted, O 24A r 10(2) would have required the court to disregard any purported limitation as to costs contained in the offer irrespective of the defendant's intentions. In the further alternative the defendant says that even if the offer is construed as being a costs inclusive offer and, in the event of acceptance, were the court not to apply O 24A r 10(2), the offer still produced a more favourable result than that constituted by the award. That is, the defendant contends that the plaintiff's taxed costs up to 18 April 2016 were likely to be less than the amount by which the offer exceeded the award, that sum being $133,000.
The plaintiffs' primary submission was that the offer was plainly intended to be inclusive of costs, thus, it was not an offer which complied with O 24A and it should be disregarded. The plaintiffs produced a draft bill of costs to establish that as at 18 April 2016 their costs, excluding costs attributable to the application for further and better discovery referred to in par (c) of the letter of 18 April 2016, would have taxed out at $634,354.
In my view, assessed objectively, the offer was an offer by the defendant to pay a sum of $2,050,000 to settle the plaintiff's claim and its entitlement to costs - it was a costs inclusive offer. This is what the words 'an offer of compromise in the amount of $2,050,000 including costs' mean. That conclusion is reinforced by the words 'as explained below' and the explanation in par (c) that the offer includes an offer to pay a contribution of $100,000 to the plaintiff's costs. If the offer were an offer to pay taxed costs in addition to $2,050,000 then not only would the letter have said so but par (c) would have been irrelevant.
The construction of the offer as a 'costs inclusive' offer is reinforced by the contrast between the use of the words 'including' in the introductory paragraph and 'includes' in par (c) when dealing with the question of costs, and the use of the words 'does not include' in relation to interest in par (e).
The textual indicia of an objective intention to make an offer that was inclusive of costs are compelling. In my assessment, the inference they yield is not negated by the inclusion in par (a) of the statement that the offer 'is made in accordance with Order 24A' because that would attach no significance to the parts of the letter that specified that the offer was inclusive of costs.
Order 24A r 10(3) requires the offeror to satisfy the court that at all material times it was willing and able to comply with the terms of the offer. Only if the court is so satisfied do subrules (4) and (5) apply. As I have said, assessed objectively the defendant's intention was to make an offer of $2,050,000 inclusive of costs and in addition the express terms of the offer give rise to a compelling inference that the defendant's subjective intention was to make an offer of $2,050,000 inclusive of costs.
In order to satisfy the court that at all material times the defendant was willing and able to comply with the terms of the offer, the defendant relied upon a letter dated 29 December 2017 from Mr Mustafa Yildiz, Executive Manager Governance and Legal, to the defendant's solicitor. The letter was written after the issue of whether the offer was inclusive or exclusive of costs arose. In the letter Mr Yildiz stated:
You have informed me that Order 24A Rule 10(3) of the Rules of the Supreme Court give rise to the need for the City to provide confirmation that the City is, and at all material times has been, willing and able to comply with the terms of the Order 24A Rule 2 offer of compromise, a copy of which is attached to this letter.
The City was well aware of the offer before it was made, and authorised the making of the offer. I can unreservedly confirm that the City of Wanneroo was at all material times willing and able to comply with the terms of the offer.

The difficulty presented by Mr Yildiz's letter is that he does not state unequivocally that the defendant was willing to comply with the terms of an offer of $2,050,000 and taxed costs (the defendant's ability to comply with such an offer is not in question). In the particular circumstances of this case I am not satisfied that the defendant was willing to comply with the terms of an offer that required it to pay $2,050,000 and taxed costs. I am satisfied that the defendant was willing to comply with an 'offer of $2,050,000 including costs as explained in paragraph (c)' of the letter of 18 April 2016.
From the defendant's perspective the offer was ambiguous at best. The ambiguity arose from the inconsistency between the express term that the offer was inclusive of costs, and the implication that the reference to the offer being made 'in accordance with Order 24A' meant that the offer was exclusive of costs and that Kilmaley would be entitled to tax its costs if the offer were accepted. An offer of compromise must be expressed in clear and unambiguous terms. As Kaye JA put in Duncan and Weller Pty Ltd v Mendelson an offer of compromise ought not leave the offeree 'in any reasonable doubt about the consequences of its acceptance'.[356] Objectively, the ambiguity in the offer gives rise to a reasonable doubt as to the consequences of acceptance.
[356] Duncan and Weller Pty Ltd v Mendelson [1989] VR 386, 401.
The defendant now argues that if the plaintiff had accepted the offer, it would have been obliged to pay $2,050,000 and taxed costs to the date of acceptance. I am not satisfied, however, that had the offer been accepted, the defendant would not have maintained the position that the offer was plainly inclusive of costs and argued that the court should exercise the discretion in O 24A r 10(1) to 'otherwise order' that the presumptive costs consequences for which that subrule provides should not follow. Given the ambiguity to which I have referred, had I been satisfied that the defendant was willing to comply with the terms of an offer of $2,050,000 and taxed costs - that is, had it satisfied the O 23A r 10(3) requirement - I would have exercised the discretion conferred on the court by O 24A r 10(5) not to make the presumptive costs orders contemplated by that subrule.
Each side adduced evidence about the likely costs that Kilmaley would have recovered if it had accepted the offer. Based on my assessment of the issues, the evidence in this case and the draft bill prepared by Ms Rowley of the plaintiffs' solicitors, I am satisfied that had Kilmaley taxed its costs as at 18 April 2016, they would have exceeded $133,000 by a substantial margin. Thus, I do not accept the defendant's alternative contention that even if the offer is taken to have been inclusive of costs it is more favourable than the award.
Subject to what is said below about the costs of the issue of the validity of the assignment of the entitlement to compensation, the defendant will be ordered to pay Kilmaley's costs from 18 April 2016 to the conclusion of the action.

The hypothetical subdivision evidence

Each side adduced evidence of the probable costs that would be incurred if the land was subdivided and developed. Both sides engaged planning experts to comment on the potential subdivisional and development plans.
On 9 May 2016 the defendant's solicitors wrote to Kilmaley's solicitors and made the point that because none of the valuers relied on a hypothetical subdivision analysis or a hypothetical development analysis, the evidence about the subdivisional and development costs was irrelevant. The defendant's solicitors stated that they had not realised that the evidence was irrelevant until they read the plaintiff's valuer's report in which the valuer, Mr Dix, stated that he had used the hypothetical subdivisional approach solely as a method of checking the valuation conclusions he had drawn on a comparative sales basis. Mr Dix's report was served in January 2016. In their letter of 9 May 2016 the defendant's solicitors stated that if the court found the evidence irrelevant then the defendant would seek indemnity costs for the costs thrown away. The defendant now seeks an order that the plaintiff pay the costs incurred by it in responding to the plaintiff's evidence about subdivisional and development costs on an indemnity basis.
In response to this aspect of the defendant's application the plaintiffs contend that their engineering expert, Mr Bowyer - upon whose evidence the defendant focussed - prepared five reports. The plaintiffs say that Mr Bowyer's first report, which attached engineering costs, was prepared for the severance and injurious affection claims, and was not used to support any hypothetical subdivisional exercise undertaken by the valuer. The plaintiffs say that Mr Bowyer's second and third reports were responsive reports and the fourth and fifth reports were reports used by Mr Dix for the purposes of his comparative sales analysis.
The plaintiffs also draw attention to the evidence of one of the defendant's planning experts, Mr Moran, who in his primary report gave evidence about the potential for the subdivision of the land in the form of plans for subdivision. This was not responsive to Mr Bowyer's evidence.
Conferral between engineering experts, including Mr Bowyer, took place on 5 and 11 May 2016. Counsel and solicitors for the parties attended the conferral. The statement prepared by the engineering experts following conferral records that the issue of probable development costs was one of nine issues discussed by the engineering experts. In the course of the trial the engineering experts were cross‑examined on the range of issues about which they conferred.
For the purposes of reaching a conclusion on the amount of the award of compensation it was unnecessary for me to refer to the evidence given about the cost of the hypothetical subdivision or development of the land as the valuers did not rely on the hypothetical subdivisional method of valuation.
The order sought by the defendant is not dissimilar in nature to an order that a party successful in the result pay the costs of an issue upon which it failed. I am not satisfied that it is appropriate to treat the hypothetical subdivision evidence as though it went to an issue on which the plaintiff failed and, as a consequence, order the plaintiffs to pay the defendant's costs of responding to that evidence. Both parties canvassed the subdivisional potential for the land in their primary evidence, thus it cannot be said that the defendant's evidence was purely responsive. Further, my assessment is that it is not possible to isolate the evidence going solely to the costs of the hypothetical subdivision of land and make a discrete costs order in relation to it.

Shean's position

As the plaintiffs rightly accept, Shean is not entitled to a costs order in its favour. The defendant submits that Shean should pay all its costs from the date it raised the issue about the invalidity of the assignment by Mannor Holdings Pty Ltd of its entitlement to compensation to Shean, that is, from 24 May 2016.[357]
[357] Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307 [32] - [43].
There is no proper basis for ordering that Shean pay all of the defendant's costs when the majority of the issues had to be determined for the purposes of Kilmaley's claim. The costs orders should, however, reflect the defendant's success on the assignment issue. The evidence adduced on this issue was limited. The issue was resolved by applying the relevant legal principles to facts that were not contested, or at least, not contested to any material extent. That said, the defendant is entitled to the costs of the issue, including any costs incurred by the defendant on the application to join Shean as a plaintiff.

Orders

Subject to any submissions the parties may make on the final form of the orders I will make the following orders:
(a)The plaintiffs pay the defendant's costs of the application to amend the writ of summons to join the second plaintiff as a party and the costs of, and thrown away by, the consequential amendment to the amended statement of claim, together with the defendant's costs incurred in relation to the allegation that Mannor Holdings Pty Ltd had assigned its entitlement to compensation to the second plaintiff, such costs to be taxed if not agreed.
(b)Save as provided for in par (a) of these orders the defendant pay the first plaintiff's costs of the action from 18 April 2016, such costs to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JB
ASSOCIATE TO THE HONOURABLE JUSTICE TOTTLE
31 MAY 2018