McKay v Western Australian Planning Commission - [2011] WASC 109

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: McKAY -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2011] WASC 109

CORAM: KENNETH MARTIN J

HEARD: 6 APRIL 2011

DELIVERED : 21 APRIL 2011

FILE NO/S: ARB 5 of 2011

MATTER :The Commercial Arbitration Act 1985 (WA)
An application for determination of the value of the applicant's land pursuant to the land being sold for less than its true value

BETWEEN: RODERICK DOUGLAS McKAY
KATHLEEN GLENYS McKAY
Applicants
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent

FILE NO/S :CIV 1574 of 2011

BETWEEN :WESTERN AUSTRALIAN PLANNING COMMISSION
Plaintiff
AND
RODERICK DOUGLAS McKAY
KATHLEEN GLENYS McKAY
Defendants

Catchwords:

Arbitration - Request for appointment - Discovery - Undertaking sought - Declaration - Statutory construction

Legislation:

Commercial Arbitration Act 1985 (WA)
Planning and Development Act 2005 (WA)

Result:

Appointment of Arbitrator deferred - Referral of questions to Court of Appeal

Category: B

Representation:

ARB 5 of 2011

Counsel:

Applicants: Mr P G McGowan & Mr T Houweling
Respondent: Mr R M Mitchell SC & Ms F B Seaward

Solicitors:

Applicants: Cornerstone Legal
Respondent: State Solicitor for Western Australia

CIV 1574 of 2011

Counsel:

Plaintiff: Mr R M Mitchell SC & Ms F B Seaward
Defendants: Mr P G McGowan & Mr T Houweling

Solicitors:

Plaintiff: State Solicitor for Western Australia
Defendants: Cornerstone Legal

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

Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54
Johnson v Perez (1988) 166 CLR 351
Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4
Re the Board of Valuers; Ex parte Bond Corporation Pty Ltd (1998) 101 LGERA 268
The Bwllfa & Merthyr Dare Stream Collieries Ltd v The Pontypridd Waterworks Co [1903] AC 426
WAPC v Navarac [2009] WASC 399

KENNETH MARTIN J:

Overview: Two originating summonses involving the same parties

In ARB 5 of 2011 the applicants, Mr and Mrs McKay, apply by originating summons for the appointment of an arbitrator 'to determine the amount of compensation for injurious affection to be paid by the defendant to the plaintiffs and to do all such things as are necessary and authorised by the Commercial Arbitration Act 1985 (WA) in making such determination'.
The appointment of an arbitrator is sought having regard to s 176(2) of the Planning and Development Act 2005 (WA), which provides:
Any question as to the amount and manner of payment (whether by instalments or otherwise) of the sum which is to be paid as compensation under this Division is to be determined by arbitration under and in accordance with the Commercial Arbitration Act 1985, unless the parties agree on some other method of determination.
Section 10 of the Commercial Arbitration Act provides that if there is a vacancy in the office of arbitrator ('whether or not an appointment has previously been made to that office') this court may, on the application of a party to an 'arbitration agreement', make an appointment to fill the vacancy. The link between the Planning and Development Act, s 176(2) and the power granted under the Commercial Arbitration Act to this Court to appoint an arbitrator is found in s 3(4) of the Commercial Arbitration Act, in terms:
Subject to this section, this Act shall apply to arbitrations provided for in any other Act as if -
(a)the other Act were an arbitration agreement;
(b)the arbitration were pursuant to an arbitration agreement; and
(c)the parties to the dispute which, by virtue of the other Act, is referred to arbitration were the parties to the arbitration agreement, …
That provision is expressly made the subject of a proviso stipulating that the 'other Act' may otherwise indicate.
The originating summons issued on behalf of Mr and Mrs McKay seeks the appointment of a legal practitioner, Mr Michael Hardy of Hardy Bowen Lawyers, to act as the parties' arbitrator.
The respondent does not take issue with the appropriateness of Mr Hardy as an arbitrator. Rather, the respondent opposes the application to appoint an arbitrator at this time on a number of grounds, including the reasons which have led the Western Australian Planning Commission (WAPC) to issue a separate originating summons as applicant in CIV 1574 of 2011, seeking declaratory relief concerning two, seemingly contentious, issues of statutory construction arising as regards sections within Pt 11 of the Planning and Development Act.

The land in question

It is important to identify specifically the area of land which is the subject of the McKays' claim for compensation by reason of asserted injurious affection.
There is no dispute that the subject matter of both originating processes (by ARB 5 of 2011 and CIV 1574 of 2011) is the land which the McKays have sold that abuts Pinjarra Road in North Yunderup. I shall refer to this land as 'Lot 301'.

The evidence relied upon

The McKays' application for appointment of an arbitrator under ARB 5 of 2011 is supported by an affidavit sworn by their solicitor, Mr Timothy Houweling, on 17 March 2011. Mr Houweling's affidavit (par 4) discloses that in 2005 the McKays entered into a contract for a sale of their land, being both Lots 300 and 301 Pinjarra Road.
Attachment TH1 to Mr Houweling's affidavit is a copy of a letter sent on behalf of the McKays to the WAPC on 5 December 2005. Paragraph 5 of Mr Houweling's affidavit indicates the letter was sent on a basis that it was 'required by s 183 of the Planning Act 2005'. The 5 December 2005 letter solely concerns Lot 301. In terms it provides:
RD and KG McKay
Sale of Lot 301 Pinjarra Road, Ravenswood/North Yunderup
We act for Mr RD and Mrs KG McKay, owners of Lot 301 on deposited plan 44563, Certificate of Title Volume 2582 Folio 8595.
We confirm that the land is subject to a contract of sale for which settlement is to occur on 27 March 2006. This includes the whole of the land in Lot 301, including that portion of the land as affected by the Peel Region Scheme.
Notice is hereby given to you pursuant to the Western Australian Planning Commission Act 1985 and in accordance with the case of Bond v Western Australian Planning Commission of the sale which is to occur on the date specified above.
Should you wish to discuss any matter arising please do not hesitate to write to us in respect of the land, however we trust that this serves as sufficient notice of the sale pursuant to the provisions of the Western Australian Planning Commission Act. It is our intention to produce this letter into evidence in the future in respect of the notification of the sale to the Western Australian Planning Commission.
It is uncontroversial that the letter's reference to the Bond decision is a reference to a decision of the Full Court of the Supreme Court of Western Australia: Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257, a decision of Ipp, Wallwork and Owen JJ which established that, for the purposes of what was a predecessor provision to s 177(3)(a)(i) of the Planning and Development Act 2005, that reference to land being 'sold' in such provisions was to be interpreted as meaning at the time the land was conveyed to a purchaser.
Annexure TH2 to Mr Houweling's affidavit contains the McKays' claim for injurious affection in respect of Lot 301, dispatched on their behalf by their solicitors to the Department of Planning and Infrastructure.
Under a section of the claim form headed 'State reasons for the claim that the property has been injuriously affected' there is seen inserted (p 8 of Mr Houweling's affidavit) the following:
Land including reserved land that is located along the Murray River, the Wilgie Creek and Pinjarra Road that, but for the Peel Region Scheme, sold for a lesser value as a result of the reservations pursuant to the Peel Region Scheme which has an impact on the development of that portion of the land reserved thus causing injurious affection to the landowners.
There follows a claim for compensation of $2.2 million expressed to be made up as 'the difference in value of that portion of Lot 301 without the reservation and the value of that portion of Lot 301 with the reservation pursuant to the Peel Region Scheme, such that the Scheme impacts the value of the land that is the subject of the reservation'.
On 6 October 2008, (annexure TH3 to Mr Houweling's affidavit) the WAPC acknowledged the claim for injurious affection over Lot 301 and advised that 'the applicable statutory process has now been initiated'.
On 18 September 2009, (annexure TH4 of Mr Houweling's affidavit) the WAPC advised the McKays' solicitor in terms:
On the basis that only Lot 301 has been conveyed, and that the claim for injurious compensation for injurious affection dated 29 September 2006 sought compensation only in respect of Lot 301, the Commission is of the view that any entitlement to injurious affection compensation pertains only to a demonstration that the sale price obtained by the McKays amounts to something less than $9,424,250.
On the understanding that the contract of sale to the purchasers of Lot 301 contemplates a potential sale price of $12.5 million together with a potential reconveyance of part of the land to the claimants, the Commission declines to offer any compensation in respect to Mr and Mrs McKay's claim.
On 7 December 2010, (annexure TH5 to Mr Houweling's affidavit) the solicitors gave notice that their clients intended to refer the matter to commercial arbitration pursuant to the provisions of the Commercial Arbitration Act, proposing that 'an arbitrator be appointed to determine the quantum of the claim'. A communication to like effect was also sent on 4 February 2011.
On 2 March 2011, (annexure TH7) the McKays' solicitors sent a letter to WAPC giving the WAPC seven days to consent to an order being made by the Supreme Court for the appointment of Mr Hardy. No consent has been forthcoming. In fact, on 9 March 2011 (annexure TH8) the State Solicitor's Office responded to the McKays' solicitors in these terms:
The Commission's view is that it is premature to appoint an arbitrator under s 176(2) of the Planning and Development Act 2005 (PD Act) on the basis that neither you nor your clients have provided any evidence that the contract of sale between Mr and Mrs McKay and Clough/Rapley entered into in late 2005 is yet complete. The contract contemplates a number of steps being taken that could yet have a bearing on the final purchase price. In particular, the final purchase price is dependent upon rezoning and subdivision approval being granted (see clauses 2.1; 2.2(a)(v) and (vi); 2.2(b)). These steps have not yet occurred and therefore the final purchase price cannot be quantified.
In accordance with s 177(3)(a) of the PD Act compensation is not payable until the arbitrator is satisfied that the owner of the land has sold the land at a lesser price than the owner might reasonably have expected to receive had there been no reservation. It will not be possible for the arbitrator to determine this question until the final purchase price is known.
Further, s 179(1) of the PD Act provides that the amount of compensation payable is not to exceed the difference between the value of the land as so affect [sic] by the existence of the reservation and the value of the land as not so affected. It will be difficult for the arbitrator to determine this question until the final purchase price is known, given the importance of the contract as a comparable sale.
Until such time as the contract is completed, it is not possible to ascertain whether or not compensation is payable for Lot 301. Therefore the Commission opposes the appointment of an arbitrator on the basis that it is premature.
On 10 March 2011, the McKays' solicitors (annexure TH9) joined issue with the State Solicitor about the appropriateness of presently appointing an arbitrator. Two fundamental points were made. First, it was said that 'value' was to be 'assessed as at the date of the sale and purchase for which there is a contingent amount contained within the contract'. The second point made was that a sale price for Lot 301 was able to be deduced from the contract.
With the parties remaining at issue over whether it was premature or not to appoint an arbitrator in respect of an assessment of the amount of compensation payable in respect of injurious affection to Lot 301, the McKays' solicitors issued an originating summons on 17 March 2011, seeking to have this Court make the appointment.
The McKays' originating summons seeking an arbitrator's appointment is not express as to the land in respect of which compensation for injurious affection is claimed. But materials appended to Mr Houweling's affidavit to which I have referred render it clear that the McKays' compensation claim, in respect of which the appointment of an arbitrator is sought, is only for the land which has been conveyed to date, namely, Lot 301.

The appointment controversy

The McKays' application to have Mr Hardy appointed as arbitrator in respect of the injurious affection compensation claim over Lot 301 is opposed by the WAPC. More precisely, it is opposed (as is discernible from the content of the correspondence to Mr Houweling's affidavit, to which I have referred) essentially on a basis of the considerations relating to asserted inappropriateness or prematurity of an appointment at this time.
The WAPC also filed or relied upon an affidavit of Mr Timothy Hillyard of 5 April 2011 which appends, in part, the sale contract pursuant to which both Lots 300 and 301 have been sold by the McKays, but of which, only Lot 301 has been conveyed to its purchaser so far.
A deal of the contention which has emerged under the present applications is traceable to the complicated contractual sale price terms, upon which the McKays in 2005, agreed to sell Lots 300 and 301 on Plan 44563 at Pinjarra Road in North Yunderup to Clough Property Yunderup Pty Ltd and Thomas Rapley Developments Pty Ltd (see the written agreement of 14 November 2005, subsequently varied as to its terms by further agreement of 22 May 2006). It appears that settlement of the sale of Lot 301 took place on 25 or 26 May 2006.
Paragraphs 11 through 14 of the McKays' written submissions explain that the realisation of a sale price in respect of both Lot 300 and Lot 301 is affected by the potential applicability of what are referred to as 'contingency payments':
11.The terms of the Contract involved the payment of monies both at known intervals ('Instalment Payments') and unknown intervals. The latter payments were contingent on rezoning and subdivision approval, and were only payable when and if those contingency events occurred ('Contingency Payments').
12.The details of the Contingency Payments are as follows:
(a)on rezoning approval: $6,800,000; and
(b)on approval of proposed plan of subdivision: $6,500/single residential lot yield.
13.The applicant has received the Instalment Payments, the details of such payments are as follows:
(a)14/01/2006 - $1,621,678.32;
(b)27/04/2006 - $4,903,534.97; and
(c)27/09/2007 - $1,436,750.15.
14.The applicant has not received any Contingency Payments.
The applicants' written submissions also explain:
17.On 12 June 2009 the Board of Valuers informed the applicants that the unaffected value of Lot 301 is $9,424,250 ('the BoV Valuation').
Whilst not entirely clear from the McKays' submissions, some component of the above instalments payments, or a component of the contingency payments (not yet received), may be attributable to the, as yet, unsettled acquisition of Lot 300, being acquired under the same purchase contract as for Lot 301, although price terms governing its acquisition differ.

Statutory provisions

A statutory panel, known as the 'Board of Valuers' (see s 182 of the Planning and Development Act) has determined a value unaffected by reservation for Lots 300 and 301 at the aggregate amount of $12,882,275 (excluding GST), which is apportioned by the Board:
(a)as to Lot 300 - $3,458,025; and
(b)as to Lot 301 - $9,424,250.
The WAPC has referred to the terms of s 177 in the Planning and Development Act, especially references to land being 'sold' (see s 177(1)(a) and s 177(3)(a) and (3)(a)(i)).
The WAPC accepts that compensation is payable for injurious affection where land is sold after being reserved and that, for the purposes of s 177 'sold' must mean 'conveyed' (so, in the case of Lot 301, that land was sold on 25 or 26 May 2006, but in the case of Lot 300, this has not or may not, have occurred). However, the WAPC submits that a compensation exercise for injurious affection is inherently tied to the sale price at which affected land has in fact been sold (i.e. 'conveyed'). WAPC submits that a compensation exercise is premature and should not proceed at this time as the full extent of the sale price to be received by the McKays for Lot 301 is going to be affected by as yet unresolved events or considerations, such as the future receipt by the McKays of contingency payments under the 2005 contractual arrangements which have not yet fully matured.
Therefore, WAPC submits that an arbitrator should not be appointed until what presently may be unresolved matters relevant to a realisation or identification of the full extent of the actual sale price for Lot 301 have crystallised.
For this issue, the WAPC emphasises what it identifies in s 177 as a significant conceptual distinction between the concept of 'value' and the very different concept of (sale) 'price'. It submits:
28.While the difference between affected and unaffected value marks the maximum amount of compensation which is payable, the actual price for which the land has sold will be relevant to determining the Claimant's actual loss (if any) and therefore the compensation which is payable. In that context there is no basis for reducing the value of contingency payments by an 'appropriate percentage', which may be appropriate in some valuation exercises.
(my emphasis in bold)
At the pragmatic day to day level, the WAPC also submits:
29.Under the terms of the Contract for Sale it may be that the amount payable for the land is now ascertainable. The WAPC seeks an order for discovery so that it can be informed of whether the amount payable is ascertainable. If it is then, subject to the issue as to the validity of the Board's valuation discussed below, the WAPC would be prepared to consent to the appointment of Mr Hardy as arbitrator.
30.The WAPC therefore seeks an order for discovery of the documents relating to each of the various contingencies which will enable a determination to be made as to whether the final purchase price for Lot 301 is ascertainable or not.

(my emphasis in bold)

On 29 March 2011, the McKays, before providing this limited discovery, requested the WAPC to provide a confidentiality undertaking in relation to the documents sought. The WAPC opposed giving a confidentiality undertaking, contending that the usual implied undertaking applicable in relation to discovered documents would sufficiently protect the claimants' interests. As to that usual implied undertaking, see Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 [96]. I agree with the WAPC's submission concerning an absence of any real need being shown for an elevated undertaking going beyond what is implied by reason of the discovery process itself, were an order for this requested discovery by WAPC to be made.
At the conceptual level there is a fundamental clash as between the McKays and the WAPC over whether it is presently possible in the context of the s 176(2) arbitration that is sought to ascertain a sale price in respect of Lot 301 for the purpose of s 177(3), or not. The McKays say that is an issue for the arbitrator to determine, once appointed. They submit that a selling price for Lot 301 can readily be determined by reference to an aggregation of instalment payments and contingency payments, 'reduced by an appropriate percentage to take into account the risk that rezoning and/or subdivision approval will not be granted'.

The McKays submit further at par 34 of their submissions, 'Not only can the price be determined, the contract has been the subject of a valuation for the purposes of capital gains tax to be determined', [and I would observe as well, presumably for the assessment of stamp duty at ad valorem rates upon the conveyance of Lot 301].

Deferment of application for appointment of arbitrator

The overall situation is complicated by the WAPC commencing its own proceedings, under its originating summons in CIV 1574 of 2011, seeking declaratory relief in respect of two contested statutory construction issues concerning a compensation exercise for Lot 301. I will explore the dimensions of the WAPC application for declaratory relief, presently.
As a matter being case managed in the CMC List, the request made by the WAPC for documents from the McKays by limited discovery, with a view to clarifying whether the actual sale price in respect of Lot 301 to be received by the McKays is capable, at this time, of being ascertained or not, presents to me to be a sensible proposal which should be implemented in the short term before any arbitrator is appointed. An early acquisition of such information by WAPC may prove to be of assistance, either towards an early resolution of a present impass over appointment of the arbitrator or, within an eventual arbitration process itself.
There has emerged out of submissions exchanged by each side, what looks to be a further legal issue about which an arbitrator might sensibly wish at the outset to have clarified by a court. This emerges as a result of the parties' divergent positions as regards the correct approach to be taken by the arbitrator appointed for the purposes of s 176(2), concerning the basis of the ascertainment of a sale price for the affected land (Lot 301) at the time it was conveyed.
Fully accepting that affected land is sold, for the purpose of s 177 of the Planning and Development Act, when it is conveyed to a purchaser (i.e. for Lot 301 either at 25 or 26 May 2006), there still seems to be a live question over whether or not subsequent evidence as to contingency payments actually received by a vendor after the settlement (under the contractual arrangements) can fall within the ambit of admissible evidence - which the arbitrator may receive and rely upon - in a s 176(2) exercise.
Subsequent event evidence will be received by a court, for instance, in personal injury damages assessments, notwithstanding damages are being assessed as at the date of the injury first being incurred, or in contract cases, at an earlier date of breach. See Johnson v Perez (1988) 166 CLR 351; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4; and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54. There is of course a time‑honoured observation by Lord Macnaghten in The Bwllfa & Merthyr Dare Stream Collieries Ltd v The Pontypridd Waterworks Co [1903] AC 426 as to courts preferring certainty over uncertainty. Lord Macnaghten in Bwllfa famously said (431), 'Why should he listen to conjecture on the matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?'.
Bearing in mind considerations about to be addressed in the context of WAPC's pursuit of declaratory relief, any disputed issue over the admissibility or use of subsequent evidence concerning the identification of the actual sale price for Lot 301 may be considered.
Overall, in my opinion, it is not yet appropriate at this time for the court to nominate an arbitrator to discharge the functions specified by s 176(2) of the Planning and Development Act.

The WAPC's originating summons seeking declaratory relief

As I have observed, not only does WAPC presently oppose any appointment of an arbitrator, it has also commenced its separate proceedings (CIV 1574 of 2011) seeking declaratory relief against the McKays upon two legal issues, concerning Lot 301, namely:
(a)the status of a valuation that was carried out by a Board of Valuers in respect of all of Lot 300 (and 301) on 8 June 2009, by reference to a dispute arising between the same parties, linked back to observations made by Miller J, in Re the Board of Valuers; Ex parte Bond Corporation Pty Ltd (1998) 101 LGERA 268 and its implications towards present circumstances; and
(b)a further issue concerning whether the unaffected value for all of Lot 301, now been determined by the Board of Valuers, is the exclusive s 179(1)(b) input component figure to be inserted in the subtraction exercise that is required by s 179(1) of the Planning and Development Act.
For the purposes of better understanding the parties' divergent positions over these two issues (based upon the exchange of written submissions which preceded the oral argument before me on Wednesday 6 April 2011, confirming a high level of dispute over these points), it is necessary for me to refer to provisions of the Planning and Development Act, then to the decision of Miller J in Re the Board of Valuers, the Full Court in Bond Corporation Pty Ltd v Western Australian Planning Commission, as well as to a more recent decision of EM Heenan J in WAPC v Navarac Pty Ltd [2009] WASC 399 in greater detail.
Before doing so however, I must observe that it is the respondent's position that the disputed points of law which are the subject matter of its claimed declarations, ought be referred to the Court of Appeal for determination in that forum, under s 43 of the Supreme Court Act 1935 (WA). WAPC's submission, as to that course, is:
37.Because the question raised by the application involves a question of construction of the PD Act in a manner which departs from the previous decision of a single judge of this court [i.e. Miller J], it is appropriate for the question to be referred to the Court of Appeal under s 43 of the Supreme Court Act. The existence of the decision in Re Board of Valuers does not provide a ground for denying the WAPC the opportunity of challenging the correctness of that decision.
38.The question sought to be referred to the Court of Appeal does not turn on any question of contested fact. It is uncontroversial that only part of Lots 300 and 301 were reserved and that the Board [of Valuers] determined the unaffected value of the whole of those lots. …
39.Contrary to the claimant's submission, the function of the Board's valuation is not merely advisory. Under s 183(2) of the PD Act the Board's valuation is 'final'. In Navarac at [47] ‑ [48] [referring to WAPC v Navarac Pty Ltd [2009] WASC 399] EM Heenan J recognised that the function of the Board's valuation was not merely advisory.
The McKays oppose the WAPC's application for declaratory relief upon these issues, let alone that the questions be referred to the Court of Appeal. Essentially, the stance of the McKays, once again, is that neither of the points raised can or should inhibit the requested immediate reference to arbitration under s 176(2) of the Commercial Arbitration Act. It is said, in effect, that an arbitrator has more than sufficient power under the Commercial Arbitration Act to seek guidance from this court where that is thought necessary, as regards questions of law: see s 39 of the Commercial Arbitration Act, which provides for the Supreme Court to determine a question of law on an application by a party, either with the consent of the arbitrator, or with the consent of all other parties. The Supreme Court's jurisdiction to entertain the application is qualified however, by the conjoint limiting criteria as seen in s 39(2).

Provisions within Pt 11 Div 2 of the Planning and Development Act 2005

I have already mentioned s 176(2) and to s 177 of the Planning and Development Act, in the context of the arguments raised about the ascertainment of the sale price for Lot 301. It is necessary, however, to set out s 177(3) which sets down satisfaction prerequisites for an arbitrator acting under s 176(2). Section 177(3) provides:
(3)Before compensation is payable under subsection (1) -
(a)when the land is sold, the person lawfully appointed under section 176 to determine the amount of the compensation is to be satisfied that -
(i)the owner of the land has sold the land at a lesser price than the owner might reasonably have expected to receive had there been no reservation of the land under the planning scheme; and
(ii)the owner before selling the land gave written notice to the responsible authority of the owner's intention to sell the land; and
(iii)the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land.
(my emphasis in bold)
The use in s 177(3) of the words 'sold' and 'selling' in s 176(3), as regards the noun 'land', is apparent. I refer also to s 173(1), carrying the express entitlement of a person whose land is injuriously affected by the making of, or an amendment to, a planning scheme to compensation, in respect of injurious affection (from the responsible authority).
Before mentioning s 179(1), it is more convenient if I refer, out of order, to s 182 and s 183, which are also found within Div 2 of Pt 11 of the Planning and Development Act. Section 182 establishes the Board of Valuers, to which earlier reference has been made. Section 183 deals with the work of that Board. It provides:
(1)The owner of land that is subjected to injurious affection due to, or arising out of, the land being reserved under a planning scheme for a public purpose who gives notice of intention to sell the land and claim compensation is to, unless the responsible authority waives the requirement, apply to the Board of Valuers in the prescribed manner for a valuation of the land as not so affected and the Board is to make the valuation.
(2)Subject to subsection (4), a valuation made by the Board under subsection (1) is to be communicated to the applicant and to the responsible authority and, for the purposes of this Division, a valuation so made is final.
(3)Upon receipt of a valuation made by the Board under this section, the responsible authority is to advise the owner of the subject land of the minimum price at which the land may be sold without affecting the amount of compensation (if any) payable to him or her under this Division.
(my emphasis in bold)
Having identified the ambit of the Board's assigned work under s 183(1) and the designated finality of that work, expressed under s 183(2), I can now revert to examine the content of s 179, which deals with the quantification of any compensation that is to be payable for injurious affection. Section 179 provides:
(1)Subject to this Division, the compensation payable for injurious affection due to or arising out of the land being reserved under a planning scheme, where no part of the land is purchased or acquired by the responsible authority, is not to exceed the difference between -
(a)the value of the land as so affected by the existence of such reservation; and
(b)the value of the land as not so affected.
(2)The values referred to in subsection (1)(a) and (b) are to be assessed as at the date on which -
(a)the land is sold as referred to in section 178(1)(a); or
(b)the application for approval of development on the land is refused; or
(c)the approval is granted subject to conditions that are unacceptable to the applicant.
The significant interrelationship as between s 183 and s 179, more particularly, s 179(1)(b), is now apparent.
The WAPC relies upon an affidavit of Leah Angela Carr sworn 4 April 2011, containing some 33 attachments. Page 144, found within attachment LAC19 to Ms Carr's affidavit, contains deposited plan 44563, showing Lots 300, 301, 302 and 303 by reference to (in red) a rectangular area of land designated as a road reserve comprising some 1.8501 hectares as well as (in green) areas the subject of reservation under the Peel Region Scheme over Lot 300 (3.0725 hectares) and Lot 301 (4.3420 hectares) (noting that Lot 301 is now referred to as Lot 544).

Mixed authority

In a 2009 decision, WAPC v Navarac Pty Ltd, EM Heenan J concluded that the provisions of s 183 of the Planning and Development Act were mandatory. His Honour there granted leave to appeal and upheld an appeal against an arbitrator's decision on a preliminary issue. In doing so, his Honour explained the provisions of Pt 11 Div 2 of the Planning and Development Act (see [37] ‑ [56]). His Honour observed at [39] (referring to s 179):
The consideration for that sale … will be regarded as prima facie evidence of the value of the land as affected by the existence of the reservation. The difference between that sum, if accepted by the arbitrator as the value of the land as so affected by the existence of the reservation and the value of the land as not so affected will, subject to some further considerations yet to be mentioned, by the mere process of subtraction, determine the amount of compensation payable to the respondent for the injurious affection. Obviously, this reveals that an important feature of the determination of that compensation will be the ascertainment of the value of the land as not so affected by the reservation as at the date of that sale.
(my emphasis in bold)
Reference in the last sentence above, in context, is to s 179(1)(b).
The issue of law now emerging is whether or not the s 179(1)(b) component figure is provided for and supplied as a matter of finality from the valuation that is performed by the Board of Valuers. At [46] and [47] of the Navarac reasons, EM Heenan J observed that the work of the Board of Valuers under s 183(1) had ramifications going beyond merely a valuation to enable the responsible authority to advise under s 183(3) the owner of land of a 'minimum price at which the land may be sold without affecting the amount of compensation'. His Honour explained, at [46] ‑ [47]:
The respondent was quite free, as I have already indicated, to follow an initiative which left it without the advice and potential protection that notification of a minimum price by the responsible authority under s 183(3) might otherwise have provided, but that is not the only purpose or effect which a determination of the unaffected value by a Board of Valuers in accordance with the request under s 183(1) would accomplish.
Without the application by the landowner to the Board of Valuers as contemplated by s 183(1) there would be no determination by the Board of the unaffected value of the land and no finality to the determination of that issue which, as already explained, is an important step in the calculation of the compensation for injurious affection, if any, which would be payable.
(my emphasis in bold)
Those observations looked to be significant, influencing his Honour's ultimate conclusion, at [47]:
It is because of the consequences of the failure to achieve a determination of the unaffected value by the Board of Valuers, and the absence of any finality on that issue, which the applicant submits is why compliance with s 183(1) should be regarded as mandatory.
The conclusion as to s 183(1) being mandatory, led to a grant of leave and the allowing of the appeal.
The submissions of the McKays to me indicate that they hold a different view as to the utility of the Board of Valuers' valuation - as regards a final determination of an unaffected value for Lot 301 - for the purpose of a required s 179(1) subtraction calculation. The McKays clearly do not accept the Board of Valuers' unaffected land value (once ascertained) as being final or, as the exclusive s 179(1)(b) input component in the subtraction exercise that is specified under s 179(1).
The McKays' views look to be derived from a concept of 'reserved land', which is tied to their interpretation of the 1998 reasons of Miller J in Re the Board of Valuers, concerning predecessor legislation, namely the Metropolitan Region Town Planning Scheme Act 1959 (WA).
By written submissions of 4 April 2011, it is submitted on behalf of the McKays:
50.The unaffected value as determined by the Board does not deal with the value of the reserved land as envisaged by s 179. Section 179 sets out the determination of the amount of injurious affection that is payable [citation of s 179 omitted].
51.The reference at s 179 of the PD Act above is a reference to land affected by the reservation this is entirely consistent with the unchallenged determination by his Honour Justice Miller in Ex parte Board of Valuers; Ex parte Bond Corporation Pty Ltd (1998) 101 LGERA 268 on an equivalent statutory provision.
52.Section 183 enables a valuation to be undertaken for the purposes of advice being given to the landowner. Section 183(3) sets out the purpose for which a valuation by the Board is to be completed [citation of s 183(3) omitted].
The written submission at par 52, concerning the limited function of s 183, looks to me at first glance, to be inconsistent with the observations in the Navarac decision at [46] and [47], to which I have referred. (Note: Miller J's decision does not appear to be referred to in the Navarac reasons.)
The McKays continue:
53.The method proposed by the respondents (deducting the affected sale price from the unaffected value as determined by the Board) would lead to the potential for unfair results when the aim is to determine the reduction in value as consequence of the land being reserved.
Further written submissions by the McKays in reply, at par 6(b) and (c) contend:
(b)The procedure set out in s 183 of the PDA, by which land affected by injurious affection is valued by the BOV, is merely and solely for the purpose of putting the vendor on notice of the minimum price assessed by the authority at which the land can be sold without affecting the amount of compensation payable; and
(c)The determination by the BOV may assist the arbitrator in answering the preconditions to an award found in s 177(3) of the PDA.
Before turning to the reasons for decision of Miller J given in Re the Board of Valuers, it ought to be clear by now that what has already emerged is a contentious issue of law, by reference to a clash of views over whether or not final and determinative input, as regards s 179(1)(b), is provided by the Board of Valuers valuation work under s 183(1). This dispute raises on any view, a fundamental clash over statutory interpretation.
On my preliminary assessment, the reasons most recently expressed by EM Heenan J in Navarac present as contrary to the McKays' submissions upon the issue. In the circumstances there is, in my view, a strong public interest on a point of statutory interpretation (that is plainly of wider and more general importance to injurious affection disputes at large), being authoritatively cleared up, with that clarification before any referral to an arbitrator under s 176(2). Moreover, where there looks to arise a divergence of views as between first instance decisions of justices in this Court upon a legal issue, there is obvious utility in the issue being finally put to rest by a binding decision from the Court of Appeal. That would be so even were the only dispute of law the s 179(1)(b) component issue.
It is necessary to closely examine the reasons of Miller J in Re the Board of Valuers, to assess the McKays' arguments over the concept of 'reserved land' and their allied contention that this 1998 decision, considering provisions of the now repealed Metropolitan Region Town Planning Scheme Act, carries the conclusion that the Board of Valuers can only (lawfully) value sub‑components of land that is sold (i.e. the reserved land - so termed), rather than valuing, as the Board did here, all of Lots 300 and 301 to ascertain an unaffected value of all land sold.

Particular passages relied upon by the McKays in the reasons for judgment of Miller J extend between (280) and (282) of the LGERA Report. At (281) his Honour said:
The scheme of the Act and Regulations support the view that it is the reserved land which is to be the subject of the Board's valuation, not the entire lot within which the reserved land sits. This is in accord with the well established distinction between compensation for compulsory acquisition of land and compensation to an owner of land where that land is subjected to injurious affection due to or arising out of the land being reserved for a public purpose under the Scheme.
On the facts underlying Re the Board of Valuers, it appears to me that there was a very large amount of Brigadoon land which was the subject matter of the decision. An area of 107.67 hectares has been reserved for parks and recreation, out of a total area of some 608.0604 hectares. An issue over 'lots' was also involved.
On the face of it, the terms of s 36C(1) of the former Metropolitan Region Town Planning Scheme Act which were considered by Miller J bear a heavy similarity to s 183(1) of the Planning and Development Act.
Miller J looks to have expressly rejected the submission put to him that the Board of Valuers, in conducting the Board's required valuation for the purposes of s 36C(1), performed a valuation over the unaffected value of the entirety of the land being sold, or the whole land in respect of which notice to sell had been given. This is where the notion of the Board only valuation the lesser component, referred to as 'reserved land', seems to emerge.
However, in Bond Corporation Pty Ltd v Western Australian Planning Commission [2000] WASCA 257, decided two years later, the Full Court of the Western Australian Supreme Court by obiter observation, looks to have assessed s 36C of the former Act to provide the final input figure in the compensation subtraction exercise and to require the Board of Valuers to value the unaffected land being sold. Ipp J, with whom Owen and Wallwork JJ agreed, there stated at [45]:
Section 36C contains a number of obscurities and both parties accepted that it was difficult to construe. Not least of these difficulties is the reference in section in s 36C(2) [compare here, s 183(2) of the Planning and Development Act 2005] to a valuation of the Board being final 'for the purposes of s 36'. The appellant submitted that 'for the purposes of s 36' is a reference to s 36(6) [compare here, s 179 of the Planning and Development Act] which provides:
'(6) (a) Subject to this section, the compensation payable for injurious affection due to or arising out of the land being reserved under the Scheme for a public purpose, where no part of the land is purchased or acquired by the Commission, shall not exceed the difference between:
(i) the value of the land as so affected by the existence of such reservation; and
(ii) the value of the land as not so affected.
…
It is indeed difficult to conceive of any other part of s 36 to which s 36C(2) could be referring when it provides that a valuation by the Board is final 'for the purposes of s 36'. Under s 36C(1) the Board is required to value the land 'as not so affected' by the reservation and s 36(6)(a)(ii) concerns 'the value of the land as not so affected'. This appears to be the link between the two sections. If this is correct, it follows that the Board is required to value the 'unaffected' land as at the date the land is 'sold' (as required by s 36(6)(b)).
(my emphasis in bold)
However, Ipp J also observed at [48], 'I do not think it necessary to decide on the true meaning of section 36C'.
The nature of the compensation exercise envisaged under s 173(1), s 177(3)(a)(i) and s 179(1)(a) of the Planning and Development Act of itself needs to be weighed in understanding why a statutory panel would not be directing its mandated s 183(1) valuation work towards ascertaining an unaffected value for all land being sold. Given the nature of the compensation exercise why should the Board of Valuers as a matter of principle be confined to ascertaining merely an unaffected value for a lesser (reserved) subcomponent of the land sold? The compensation being claimed here is for all of Lot 301, which is said to have been injuriously affected.
The 1998 decision in Re the Board of Valuers might fairly be read as sustaining the 'reserved land' role only for the Board of Valuers. The Full Court's observations in 2000 in Re the Board of Valuers are important, but nevertheless are self designated obiter.
In my view these issues of law raised by the WAPC's originating summons seeking declaratory relief manifestly require an early, definitive resolution. The points of law at issue will be of general importance to many compensation cases.
In the prevailing circumstances, it looks to me that it is more appropriate that the issues of statutory construction be clarified by a court, rather than be sent now to an arbitrator to resolve, unassisted. The legal issues raise complex issues of statutory construction, the ramifications of which are of wider importance. The points raised by the WAPC look to warrant a grant of leave, even by reference to the criteria under s 38(4)(b) of the Commercial Arbitration Act, which is applied by reference under s 39(2)(b) of that Act.
Since as well, there may be discerned differences as to matters of statutory interpretation, arising as between first instance decisions in this Court, the exceptional course of a reference of these issues of law to the Court of Appeal for higher level definitive determination also seems to be justified. Determination of the preliminary points merely by a single judge of the Supreme Court by referral under s 39 of the Commercial Arbitration Act may not finally quell these constructional controversies.
My view as to the appropriateness of presently referring the disputed points of law arising as regards Lot 301 for determination in the Court of Appeal at this time are also influenced by the fact that:
(a)There appears to be little disagreement between the parties as to the essential underlying facts, with the prospect of an agreed statement of facts being likely.
(b)Taking both ARB 5 of 2011 and CIV 1574 of 2011 together, there would appear to be at least three significant points of law which loom as problematic or contentious arising before any arbitrator in a compensation exercise performed for Lot 301 by reference to s 176(2) of the Planning and Development Act.
(c)Completion by settlement in respect of Lot 301 has occurred on 25 or 26 May 2006. The compensation issue over Lot 301 therefore has now been pending for some time. In the circumstances, an early determination from the Court of Appeal resolving the contentious legal issues does not in my view unduly delay matters. Overall, an authoritative decision might then actually facilitate either a consensual resolution, or at least the swifter resolution of the task by the arbitrator if required.
(d)At present, the s 176(2) arbitral compensation exercise arises only for Lot 301. However, if or when the remaining Lot 300 settles then, absent agreement, a further exercise in assessing injurious affection compensation looks likely to also arise. If clarifications upon these complex issues of statutory construction from the Court of Appeal can be achieved, within the framework of the present exercise which concerns only Lot 301, then that resulting clarification should facilitate a less contentious path concerning a Lot 300 compensation exercise in due course, if that is required.
(e)Both ARB 5 of 2011 and CIV 1574 of 2011 are matters managed within my CMC List, where principles of proportionality and flexibility apply, seeking to better promote speedier, just outcomes. Those principles, applied here, support the reference of the contentious points of law to the Court of Appeal for their earlier and authoritative determination before the arbitration exercise is begun under s 176(2).
In the circumstances, there should be a reference of all points of law sought as declaratory relief from the Court of Appeal before an arbitrator embarks upon an s 176(2) exercise as regards Lot 301.
I will hear the parties as to the precise terms of the questions to be referred to the Court of Appeal and as to required supporting materials.