Melbourne Water Corporation & Yarra Valley Water Corporation v Caligiuri
[2020] VSCA 16
•13 February 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2019 0072
BETWEEN
| MELBOURNE WATER CORPORATION (ABN 81945386953) | First Applicant |
| YARRA VALLEY WATER CORPORATION (ABN 93066902501) | Second Applicant |
| and | |
| ANTHONY CALIGIURI & ORS (according to the Schedule) | Respondents |
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| JUDGES: | WHELAN, NIALL AND EMERTON JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 29 January 2019 |
| DATE OF JUDGMENT: | 13 February 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 16 |
| JUDGMENT APPEALED FROM: | [2019] VSC 365 (Garde J) |
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JUDICIAL REVIEW – Procedural fairness – Compulsory acquisition of land by water corporations for purpose of providing water infrastructure – Land not reserved for a public purpose – Certification that reservation ‘unnecessary, undesirable or contrary to the public interest’ – Applicants had interest in acquired land under contract of sale with registered proprietor – Applicants not given an opportunity to be heard – Applicants sought orders invalidating steps taken by water authorities to acquire land compulsorily – Judge declared Notice of Acquisition (‘NOA’) to be invalid – Whether publication of NOA conditioned by obligation to accord procedural fairness – Publication of NOA not so conditioned – Land Acquisition and Compensation Act 1986 (Vic) ss 4, 5, 6, 7, 8, 12, 18, 19, 20, 22, 30, 31, 51; Planning and Environment Act 1987 (Vic) ss 19, 20, 21, 22, 23, 24; Water Act 1989 (Vic) s 130; Annetts v McCann (1990) 170 CLR 596, Kioa v West (1985) 159 CLR 550, SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152, applied.
CIVIL PROCEDURE – Application to make orders allowing appeal by consent – Court has duty to be satisfied of appellable error – Appeal allowed – Telstra Corporation Limited v Minister for Broadband, Communications and Digital Economy (2008) 166 FCR 64, applied.
CIVIL PROCEDURE – Whether registered proprietor of land a necessary party to the proceeding – Registered proprietor entitled to apply for compensation – Declaration that NOA invalid affected right to claim compensation – Only became aware of proceeding after the trial had concluded – Rights affected by the proceeding from the outset – News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410, applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr S. Goubran with Ms E.L. Murphy | Allens |
| For the Third and Fourth Respondents | Mr C.J. Delany QC with Mr R. Chaile | Victorian Government Solicitors Office |
| For Mr Gregory Heffernan | Dr M.D. Rush QC with Ms L. Hannon | Rennick & Gaynor |
WHELAN JA
NIALL JA
EMERTON JA:
Introduction
In this proceeding, the Court is asked to make orders by consent allowing an appeal from a decision of a judge in the Trial Division concerning compliance with the requirements for the compulsory acquisition of land in the Land Acquisition and Compensation Act 1986 (‘LAC Act’).
Gregory James Heffernan is the registered proprietor of approximately 107.8 hectares of land located at 170 and 194 Donovans Lane, Beverage[1] (the ‘land’). On 5 February 2018, he entered into Heads of Agreement with the first respondent, Anthony Caligiuri, for the sale of the land. On 22 August 2018, Messrs Caligiuri and Heffernan executed a contract of sale for the land. The contract of sale is a terms contract that provides for settlement to take place on or before 6 February 2022. Mr Heffernan remains the registered proprietor of the land.
[1]Described in certificates of title Volume 9072 Folios 040 and 041.
At the time Messrs Caligiuri and Heffernan entered into the heads of agreement, it was anticipated that some of the land might be compulsorily acquired and the contractual arrangements between them were that Mr Heffernan would be entitled to apply for and obtain any compensation for loss of that part of the land.
On 26 October 2018, Mr Caligiuri nominated the second respondent, JII Investments Pty Ltd, as the purchaser of the land (we shall refer to Mr Caliguiri and JII Investments collectively as the ‘Caligiuri Parties’). The land is rural land on the outskirts of Melbourne which the Caligiuri Parties propose to develop as a 900 to 1200 lot residential subdivision.
On 26 November 2018, Melbourne Water Corporation and Yarra Valley Water Corporation (collectively, the ‘Water Authorities’), served on Mr Caligiuri pursuant to s 6 of the LAC Act a notice of intention to acquire a small portion of the land for the purpose of providing water infrastructure (tanks and pipes) to service the region (the ‘NOITA’). We shall refer to the portion of the land to be compulsorily acquired as ‘the subject land’.
At no stage was the subject land reserved for a public purpose in the Mitchell Planning Scheme. Instead, the Governor in Council, on the recommendation of the Attorney General as the Minister of the Crown administering the LAC Act, certified that reservation was ‘unnecessary, undesirable or contrary to the public interest’, as provided for by s 5(3) of the LAC Act.[2] This removed the need for the Water Authorities to go through the lengthy process of notification, consultation and review mandated by the Planning and Environment Act 1987 (‘PE Act’) for the amendment of planning schemes.
[2]The certification was published in the Government Gazette on 1 November 2018.
By amended originating motion dated 17 January 2019,[3] the Caligiuri Parties brought a proceeding in the Trial Division seeking a raft of orders and declarations pertaining to the compulsory acquisition of the subject land, including declarations that the steps taken by the Attorney General, the Governor in Council and the Water Authorities under ss 5 and 6 of the LAC Act as part of the process of compulsorily acquiring the subject land were invalid and of no effect because of a failure to accord procedural fairness to the Caligiuri Parties.
[3]The amendment having been filed on 27 February 2019.
Mr Heffernan was not made a party to the proceeding, even though under the contractual arrangements with Mr Caligiuri, he was entitled to apply for and obtain compensation for the compulsory acquisition of the subject land.
On 20 February 2019, the Water Authorities published a notice of acquisition for the subject land (the ‘NOA’) in the Government Gazette in accordance with s 19 of the LAC Act. The publication of the NOA had the effect of vesting the subject land in the Water Authorities freed from all other interests, including the interests of the Caligiuri Parties.
On 19 June 2019, the judge gave judgment in the proceeding, declaring the NOA to be invalid and of no effect.[4] The judge held that there was a duty to afford the Caligiuri Parties an opportunity to be heard before their interest in the subject land was divested by publication of the NOA and that the Water Authorities failed to afford them that opportunity.[5]
[4]Caligiuri & Anor v Attorney General (on behalf of the State of Victoria) & Ors (No 2) [2019] VSC 365, [208] (‘Reasons’).
[5]Reasons [207].
The judge held that the power in s 19 of the LAC Act to effect the transfer of land by publication of a notice of acquisition is conditioned by procedural fairness, which required the Water Authorities to give the Caligiuri Parties the opportunity to be heard. However, the judge held that the steps taken under ss 5 and 6 of the LAC Act leading to the publication of the NOA were not so conditioned. Those steps were, relevantly:
(a) the making of the recommendation by the Minister to the Governor in Council (as a precursor to the exercise of the power contained in s 5(3) of the LAC Act) that the subject land was land for which reservation was ‘unnecessary, undesirable or contrary to the public interest’ (‘Recommendation’);
(b) the certification by the Governor in Council under s 5(3) of the LAC Act that the subject land was land for which reservation was ‘unnecessary, undesirable or contrary to the public interest’ (‘Certification’), the effect of which was to bypass the requirement to reserve the land for a public purpose in s 5(1) of the LAC Act; and
(c) the service of the NOITA by the Water Authorities under s 6 of the LAC Act.
By application for leave to appeal,[6] the Caligiuri Parties challenged the judge’s holdings in relation to the Recommendation, the Certification and the NOITA, on the grounds that the powers in ss 5(3) and 6 of the LAC Act were conditioned by an obligation to accord procedural fairness to persons with an interest in the land. However, on or about 15 January 2020 the parties agreed that the Caligiuri Parties would discontinue their application for leave to appeal and on 29 January 2020, the Court made orders by consent dismissing the application.
[6]Application number S APCI 2019 0071.
By this application for leave to appeal, the Water Authorities seek to overturn the judge’s holdings and order in relation to the NOA, arguing, among other things, that the power in s 19 of the LAC Act to take land by publishing a notice of acquisition is not conditioned by an obligation to accord procedural fairness and, even if it were, there was no failure to accord procedural fairness to the Caligiuri Parties in all of the circumstances. The Water Authorities contend that the judge erred in relation to the content of any such duty and, further, that they themselves were denied procedural fairness by the judge because it was neither pleaded nor argued by the Caligiuri Parties that s 19 required them to be given an opportunity to be heard.
The Caliguiri Parties do not now dispute that the judge erred in the ways identified by the Water Authorities in their application for leave to appeal. The Attorney General supports the Water Authorities’ application, except in respect of the ground that the Water Authorities were denied procedural fairness by the judge.
The parties (including the Attorney General) have reached a consent position regarding the disposition of the Water Authorities’ appeal. They agree that orders should be made granting leave to appeal, allowing the appeal, setting aside the declaration of invalidity of the NOA and dismissing the proceeding at first instance. The Court has received a signed minute of consent orders to that effect and a joint memorandum[7] from the parties explaining why the appeal should be allowed on the grounds raised and the orders below set aside.
[7]Reflecting what is required in the Judicial Review and Appeals List by Practice Note SC CL 9 of 2018.
The parties submit that the judge erred:
(d) in finding that the right to be heard conditioned the exercise of the s 19 power (ground 2 of the Water Authorities’ application) (hereafter referred to as the ‘s 19 ground’);
(e) in making the declaration of invalidity of the NOA without affording the Water Authorities procedural fairness (ground 1 of the Water Authorities’ application);
(f) in finding that there was procedural unfairness in all of the circumstances (assuming s 19 is conditioned by a right to be heard) (ground 3 of the Water Authorities’ application); and
(g) in relation to the content of the duty (assuming s 19 is conditioned by a right to be heard) (ground 4 of the Water Authorities’ application).
As discussed, the registered proprietor of the subject land, Mr Heffernan, was not a party to the proceeding below. However, he has filed an affidavit[8] and a draft written case in the application. Mr Heffernan seeks to be joined as a party to the application for leave to appeal and, if leave is granted, the appeal. He has deposed that he was not told the proceeding below had been issued and only became aware of it, indirectly, after the trial had concluded. He submits that having regard to the effect of the orders sought, and made, on his rights and interests, he should have been joined as a party to the proceeding below or, at least, informed about it when it was issued. He submits that by reason of the failure by the Caligiuri Parties to join him as a party to the proceeding below, the order made by the judge declaring the NOA to be invalid and of no effect should be set aside.
[8]Dated 22 August 2019.
The Court convened to hear oral submissions from the Water Authorities and the Attorney General in support of the submissions in the joint memorandum. The Caligiuri Parties did not appear. Mr Heffernan appeared to make his application to be joined to the application/appeal (as a party or as an intervener), to submit that the orders below should be set aside as a result of the failure to join him as a necessary party to the proceeding and to support the submissions made by the Water Authorities and the Attorney General as to why the judge erred in declaring the NOA to be invalid.
The Court must consider whether to allow the appeal by consent. It has not had the benefit of hearing from a contradictor. Allowing an appeal in these circumstances is not an exercise in ‘rubber stamping’. In Telstra Corporation Limited v Minister for Broadband, Communications and Digital Economy,[9] the Full Federal Court stated that, as a condition of the exercise of its power to make orders by consent allowing an appeal, it had a duty to be satisfied that there was an ‘appellable error’.[10] Although there has been debate about whether ‘arguable’ appellable error might suffice,[11] the matter before us was argued on the basis that the more stringent test applies and this is the standard that we propose to adopt.
[9](2008) 166 FCR 64 (‘Telstra’).
[10]Ibid [51].
[11]See eg. Commonwealth Bank of Australia v Walker (2012) 289 ALR 674; [2012] FCAFC 68, where Perram J referred to the statement in Telstra that a Full Court was under a ‘duty to be satisfied, as a condition of the exercise of its power to allow an appeal by consent, that there was an appealable error’, but said that that statement needed to be understood in the context of the Court’s later statement which appeared to proceed on the basis that demonstration of an ‘arguable appealable error’ was all that was required. In Smits v Lillas & Loel Lawyers Pty Ltd [2016] FCAFC 143 at [10], the Full Federal Court confirmed that it had on numerous occasions held that it was not appropriate to allow an appeal from a judge of the Court by consent, unless ‘arguable error’ was demonstrated on the part of the primary judge.
The Court only needs to be satisfied that one of the grounds is made out to make the orders allowing the appeal. Given the absence of any contradictor, the Court would be unwise to stray into what was previously controversial, but is no longer, any more than is necessary to dispose of the application/appeal. The Attorney General submitted that the Court should allow the appeal on the s 19 ground (ground 2 of the Water Authorities’ application), as the judge’s decision on this point of statutory interpretation affects the exercise of the compulsory acquisition powers generally.
We accept the submission that the s 19 ground requires resolution. For the reasons that follow, we are satisfied that the s 19 ground is made out. Accordingly, we have not considered the merits of the other proposed grounds of appeal.
We are also well satisfied that Mr Heffernan was a necessary party to the proceeding at first instance and that he is entitled to have set aside the order made in his absence declaring the NOA to be invalid.
Statutory Framework
Section 130(1) of the Water Act 1989 (‘Water Act’) provides that an ‘Authority’ may purchase or compulsorily acquire any land which is or may be required by the Authority for or in connection with, or as incidental to, the performance of its functions or the achievement of its objects. Section 130(2) provides that the LAC Act applies and for that purpose the Water Act is a ‘special Act’ and the acquiring Authority is an ‘Authority’ under the LAC Act.
An ‘Authority’ is defined in the Water Act to include a water corporation. Both the Water Authorities are water corporations. Accordingly, they are empowered under the Water Act to compulsorily acquire land for or in connection with or as incidental to the performance of their functions and the achievement of their objects, and when they do so, they are ‘Authorities’ for the purposes of the LAC Act.
In this case, the Water Authorities sought to compulsorily acquire the subject land for the purpose of providing water to the northern and western suburbs of greater Melbourne by carrying out the Yan Yean to Bald Hill Pipeline Project, which included the placement of tanks and pipelines on the subject land.
Section 4 of the LAC Act provides that an Authority which is empowered under a special Act (here, the Water Act) to acquire an interest in land by compulsory process must not acquire that interest by compulsory process or by agreement except in accordance with Part 2 of the LAC Act.
Having made the decision to acquire the subject land using the power conferred by the Water Act, in order to lawfully carry out the acquisition, the Water Authorities were required to follow the process set out in Part 2 of the LAC Act: first, by causing the subject land to be reserved under a planning instrument for a public purpose or, alternatively, by obtaining certification by the Governor in Council that reservation was unnecessary, undesirable or contrary to the public interest; secondly, by serving upon each person with an interest in the subject land a notice of intention to acquire in the form prescribed; and, thirdly, by publishing in the Government Gazette a notice of acquisition. Thereafter, compensation is to be assessed and paid in accordance with Parts 3 and 4 of the LAC Act.
The first step to be taken in the acquisition process prescribed by the LAC Act is found in s 5, which provides a pathway requiring the reservation of the land for a public purpose and alternative pathways involving exemption from that requirement.
Section 5(1) requires the land to be reserved in the planning scheme, which involves a planning scheme amendment under the PE Act. As the parties submitted, the PE Act provides a number of opportunities in the process leading to the adoption and approval of a planning scheme amendment for persons to make submissions about the proposed amendment.[12] In particular, s 21(1) of the PE Act provides that ‘any person’ may make a submission to the planning authority about a planning scheme amendment of which notice has been given under s 19.[13] Section 22 requires the planning authority to consider all submissions made on or before the date set out in the notice. Section 23(1) provides that after considering a submission which requests a change to the amendment, the planning authority must either change the amendment in the manner requested, refer the submission to a planning panel[14] or abandon the amendment. Where a panel is appointed, it must consider all submissions referred to it and give a reasonable opportunity to be heard to, relevantly, any person who has made a submission referred to it.[15] The requirement for the reservation of land thus imports a raft of public participation opportunities and contemplates a lengthy process of consultation with, in particular, affected landowners.
[12]Notice of a proposed amendment must be given to owners and certain occupiers of land who may be materially affected by the amendment: 19(1B). The amendment must be made available for inspection during office hours for any person to inspect: s 18. If the number of owners or occupiers affected by a planning scheme amendment makes it impractical to notify them all individually about the amendment, the planning authority is not required to give notice individually but must give a public notice of the proposed amendment and invite submissions: ss 19(1A) and (1B). However, where the amendment provides for the reservation of land for a public purpose, there is no exception to the requirement to notify the owner of affected land. Section 19(5) provides that the failure of a planning authority to give notice does not prevent the adoption or approval of the amendment. However pursuant to s 19(6), this provision does not apply to a failure to notify an owner of land about the preparation of an amendment which provides for the reservation of that land for a public purpose.
[13]Pursuant to s 21(2), every submission must be made available for any person to inspect until two months after the amendment comes into operation or lapses.
[14]Appointed under Part 8 of the Planning and Environment Act 1987 (‘PE Act’).
[15]PE Act s 24.
However, s 5(3) of the LAC Act allows the planning scheme amendment processes in the PE Act to be bypassed, on the recommendation of the Minister, by way of certification by the Governor in Council that reservation is not required. Certification under s 5(3) removes the right to be heard, at least at this stage of the compulsory acquisition process.
Section 6 of the LAC Act marks the beginning of the next stage of the process by requiring the service of a notice of intention to acquire in the following terms:
Subject to section 7, if the Authority intends to acquire an interest in land for the purposes of the special Act, the Authority must serve upon each person who has an interest in the land, or is empowered by this Act to sell and convey or grant and release or lease such an interest, or such of those persons as, after diligent inquiry, become known to the Authority, a notice of intention to acquire the first-mentioned interest.
The requirement for a notice of intention to acquire in s 6 does not apply in the various circumstances described in s 7, including where the Minister certifies that to require the service of a notice of intention to acquire would be ‘unnecessary, undesirable or contrary to the public interest’.[16]
[16]LAC Act s 7(1)(c).
The contents of the notice of intention to acquire are described in s 8 of the LAC Act. Section 8(1) provides:
(1)A notice of intention to acquire an interest in land must—
(a)be in the prescribed form; and
(b)contain title particulars and a description (including, if appropriate, a sketch) sufficient to identify the interest to be acquired and the location of the land; and
(c)give details of the purpose for which the interest is to be acquired; and
(d)specify the reasons why the land is thought to be suitable for that purpose; and
(e) state whether or not—
(i)the land is reserved for a public purpose under a planning instrument; or
(ii)any interest proposed to be acquired is an interest in land which has been prescribed under section 5(2) or which is land in a class of land prescribed under section 5(2); or
(iii)the land has been certified by the Governor in Council under section 5(3); and
(f)if appropriate, state the approximate date upon which the Authority wishes to take possession of the land; and
(g)request the person interested in the land to advise the Authority of—
(i)any other persons who, to the knowledge of that person, may have an interest in the land described in the notice; and
(ii)any unexpired planning permit or building permit existing in respect of the land which has not been acted upon either wholly or in part and of which that person is aware; and
(iii)any sales, transactions, licences or approvals relating to the land or any interest in the land which that person was proposing to make or obtain immediately prior to the date of service of the notice of intention to acquire or which any other person was so proposing to make or obtain and of which the first-mentioned person is aware; and
(iv)any other information which that person may have which would be relevant to the assessment of compensation in respect of the acquisition of interests in the land.
It will be observed that the form of the notice of intention to acquire requires, first, that the Authority provide certain information (details of the land to be acquired, the reason for the acquisition, how the requirements of s 5 have been satisfied and, if known, the approximate timing for the acquisition) and, secondly, for the Authority to request certain information from the recipient of the notice (details of other persons who may have an interest in the land, details of permits, dealings and proposals for or affecting the use and development of the land, and ‘other information’ relevant to the assessment of compensation).
Section 8(2) provides that a notice of intention to acquire must be accompanied by a statement in the prescribed form setting out the principal rights and obligations under the LAC Act of persons interested in the land proposed to be acquired.[17]
[17]Pursuant to r 10 of the Land Acquisition and Compensation Regulations 2010, the proscribed form of the notice is set out in Form 4 of Schedule 2 of those regulations.
Section 12 sets out the effect of a notice of intention to acquire as follows:
(1)If a notice of intention to acquire has been served upon a person under section 6, that person must not, while the notice is in force, without the consent of the Authority—
(a)enter into any sale, transaction or arrangement, or obtain or grant any licence or approval with respect to the land; or
(b)make any improvements of a durable nature to the land.
(2)Upon receipt of any document relating to any dealings with an interest in land in respect of which a notice of intention to acquire has been served, the Registrar of Titles must notify the Authority of this fact.
(3)Nothing in this section prevents—
(a)any person from discharging the land from any mortgage affecting the land; or
(b)a mortgagee from exercising a power of foreclosure or sale in respect of the land.
The notice of intention to acquire therefore imposes significant restrictions on the sale, use or development of the land earmarked for acquisition. The severity of these restrictions is reflected in s 16, which limits the time the notice has effect: if the Authority has not acquired an interest in land at the expiration of six months after service of the notice, the notice lapses (in the absence of an agreement between the Authority and the owner of the interest to extend the period).
Section 18 provides an alternative means for the Authority to acquire the land. It allows the Authority at any time after the service of a notice of intention to acquire (and, if relevant, before the notice has lapsed or been withdrawn) and before the publication of the notice of acquisition, to acquire the interest ‘by agreement’.[18] Going forward, the acquisition ceases to be a compulsory acquisition under the LAC Act, the persons interested in the land having been afforded the protection of the requirements in ss 5 and 6 of the LAC Act.
[18]LAC Act s 21(1).
If the land is not to be acquired by agreement under s 18, s 19 then provides that the acquiring authority may acquire the interest in the land by causing to be published in the Government Gazette a notice declaring the interest to be acquired. The legal effect of the publication of the declaration is to vest in the Authority the interest in land described in the notice ‘without transfer or conveyance freed and discharged from all trusts, restrictions, dedications, reservations, obligations, mortgages, encumbrances, contracts, licences, charges and rates of any kind’.[19]
[19]LAC Act s 24.
Section 20 provides that the interest shall not be acquired pursuant to s 19 any sooner than two months after the service of the notice of intention to acquire. In other words, there must be a period of at least two months between the service of the notice of intention to acquire and the publication of the notice of acquisition. Whether this is intended to give interested persons the opportunity to make submissions about whether the land should be acquired or whether it is intended to give the Authority time to collect the information referred to in s 8(1)(g) of the LAC Act is one of the issues in the appeal, the judge having found that the two month period (in combination with other factors) evinced a legislative intention to give interested parties the right to be heard before the actual taking of the land by the publication of the notice of acquisition.
Section 22 requires service of the notice of acquisition on interested persons[20] within 14 days from the date of acquisition. There is no requirement for prior notification.
[20]The persons required to be served are more precisely identified in s 22(c) and (d) of the LAC Act.
Section 30 of the LAC Act provides that every person who immediately before the publication of a notice of acquisition had an interest in land that was divested or diminished by the acquisition ‘has a claim for compensation’. Part 3 of the LAC Act then sets out — again as a series of consecutive steps — the process for making and accepting offers, claims and counter offers in reaching agreement as to the amount of compensation to be paid.
Relevantly, s 31 provides that within 14 days from the date of acquisition, the Authority must make an initial offer in writing to each person who is entitled to make a claim for compensation of which it is aware.[21] The initial offer must be one which, based on the ‘information’ available to the Authority, it has assessed as a fair and reasonable estimate of the compensation payable to the claimant.[22]
[21]LAC Act s 31(1).
[22]LAC Act s 31(3).
The reference to the available ‘information’ must, in our view, include the information provided by the recipient of the notice of intention to acquire referred to in s 8(1)(g), which, having regard to the sequence and timing of the steps referred to above, will be information relevant to the assessment of the fair and reasonable compensation payable to the person whose interest in the acquired land is to be divested or diminished.
Section 31(8) provides that to the extent that an amount of compensation in the initial offer (or any part thereof) is not disputed, it is binding on the Authority unless the Authority can demonstrate that the information contained in the offer and relied on by it in making the offer was incorrect. Section 51 provides for an advance of compensation to be made by the Authority in the amount of the offer within a month, whether or not the final amount of compensation payable has been settled. It is therefore intended that a person whose interest in land is divested or diminished by compulsory acquisition be put in funds within a relatively short time after publication of the notice of acquisition.
Was the NOA attended by a requirement for procedural fairness?
Reasons
The judge held the steps anterior to the publication of the NOA did not attract a requirement for procedural fairness, but that it was ‘complementary’ to the scheme in the LAC Act that a person with an interest in land to be acquired be given the opportunity to be heard by the acquiring authority before the interest is taken or diminished. As a result, so the judge held, following the service of the NOITA and before the publication of the NOA, the Water Authorities were bound to give the Caligiuri Parties an opportunity to be heard. The content of that requirement was described by the judge as follows:
In my view, procedural fairness at least required the authorities to afford the [Caligiuri Parties] the opportunity of providing written submissions and other material including expert material as to the effect of the acquisition on them and their proposed subdivision of the property. Just as importantly, it required the decision makers within the authorities or their delegates to give serious consideration to what was submitted by the [Caligiuri Parties] and to act fairly in making a decision as to whether and how the acquisition should proceed. A submission from the [Caligiuri Parties] may have assisted the authorities concerning the area and location of land to be acquired, the siting of the proposed water infrastructure, the height, screening and visibility of the tanks, the location of the easements and access, protection of the property during construction and water supply connection issues.[23]
[23]Reasons [160].
In substance, the judge held that the LAC Act required the Water Authorities, prior to the publication of the NOA (but not prior to the Recommendation, the Certification or the NOITA) to hear from the Caligiuri Parties by receiving and considering written submissions, expert and other material as to the effect of the acquisition on them and their subdivision proposal. However, submissions as to the ‘effect of the acquisition’ would not be limited to whether or not the land should be acquired, but would also address such matters as the siting of the proposed water infrastructure, the height, screening and visibility of the tanks and the location of the easements and access.
We observe that these matters go well beyond whether the land should be acquired and that none relate directly to the assessment of compensation.
His Honour gave the following reasons for construing s 19 of the LAC Act as conferring such an entitlement:
(a)It is consonant with the main objectives of the LAC Act as set out in the second reading speech, and would promote those objects especially objects 3, 4 and 5.
(b)There is no clear positive legislative intent to exclude a right to be heard as part of procedural fairness prior to a decision by an acquiring authority to serve a notice of acquisition under s 19 of the LAC Act.
(c)It is logical and fair that a person with an interest in the land who has received a notice of intention to acquire should have the opportunity to respond to the acquiring authority concerning the acquisition of the land, and for the authority [to] be required to afford procedural fairness to a person whose interest in land is to be taken or diminished. This will avoid practical injustice.
(d)Through s 8 of the LAC Act, Parliament has directed that when a notice of intention to acquire is served, the person interested in the land must receive a notice in the prescribed form containing specified information concerning the proposed acquisition. The information provided assists an interested person to make a submission to the acquiring authority. The right to a hearing is a natural concomitant of the giving of a notice of intention to acquire.
(e)It is just and convenient for the interested person to be given notice of a hearing at this time. The authority can conveniently advise of the opportunity to be heard, and the manner of hearing at the same time as the notice of intention to acquire is served.
(f)Under the statutory timeframe, there is sufficient time for procedural fairness to be rendered by an acquiring authority.
(g)Parliament imposed protective time limits on the service of a notice to acquire respectful of the position of the person whose interest in land was to be taken or diminished by the compulsory process. Under s 20 of the LAC Act, an interest in land must not be acquired less than two months after the service of the notice of intention to acquire. Although the time can be abridged under s 106(1) of the LAC Act, in the absence of agreement between the authority and the affected person, this can only be done by the Governor in Council. Parliament imposed a three month notice period after the date of acquisition and not less than seven days’ notice before an authority can enter into possession if all or part of the subject land is used by a person as a principal place of residence or business of that person. It would be consistent with these provisions for procedural fairness to apply before a notice of acquisition is served.
(h)By this stage of the acquisition process, the class of persons to whom procedural fairness is to be rendered by the acquiring authority has been clearly defined by the inquiry made by the authority at the time when the notice of intention to acquire was served.
(i)Section 19 does not contain any statutory test that must be satisfied. There is no reference to the public interest. The decision to be made by the authority is whether to compulsorily acquire the land.
(j)A notice of compulsory acquisition profoundly affects the rights of persons interested in the land including their rights to own, possess, use and develop the land. There is no more serious consequence for a landowner than to be deprived of one’s land rights.
(k)The taking or diminution of a person’s interest in land is compulsory and without any redress except compensation in money. There is no sign in the LAC Act that Parliament intended compulsion to extend to the denial of procedural fairness at the stage of acquisition.[24]
[24]Ibid [153(a)–(k)] (citations omitted).
The judge concluded that as a result, a person with an interest in land could not and should not be deprived of that interest without the opportunity to be heard by the acquiring authority prior to the publication of the notice of acquisition.[25] According to the judge, the fact that a planning permit was required to use and develop the water infrastructure was not a sufficient remedy or opportunity to be heard because it did not provide the opportunity to object to the acquisition of the land itself. Moreover, while reservation and certification are protective of persons with an interest in land and facilitate future planning in the public good, they are not reasons why procedural fairness on acquisition should not be afforded and do not operate to restrict what procedural fairness would otherwise require.[26]
[25]Ibid [154].
[26]Ibid [156].
Submissions
In the joint memorandum the parties submit that:
(h) the judge overlooked that a right to be heard already exists as a function of an anterior step in the acquisition process under s 5(1) of the LAC Act;
(i) having found that a right to be heard does not condition the exercise of the certification power contained in s 5(3) of the LAC Act (the alternative to the acquisition process being commenced under s 5(1)), the judge erred in treating each step in the acquisition as a divisible statutory process and, in so doing, overlooked the effect of the anterior certification; and
(j) the judge erred in focusing solely upon the purported disadvantage of a person being deprived of his or her interest in land without an opportunity to be heard and in failing to have due regard to the fact that any disadvantage is ameliorated by the payment of compensation.
The parties submit that critical to the legislative architecture in the LAC Act is that a right to be heard exists as a function of an anterior step in the acquisition process, namely pursuant to the requirement to reserve the land in s 5(1). This incorporates the provisions in the PE Act which provide for amendments to planning schemes referred to above. According to the parties, it is unlikely that Parliament intended that there be ‘multiple rights’ to be heard in the compulsory acquisition process.
In this case, so it is submitted, the Governor in Council certified under s 5(3) of the LAC Act that the reservation of the land was unnecessary, undesirable or contrary to the public interest, which is an alternative way to commence the acquisition of an interest in land. While the judge correctly held that the requirements of procedural fairness were impliedly excluded by s 5(3) of the LAC Act because it is a dispensing power to grant an exemption from the process that would otherwise apply under the PE Act, the judge wrongly confined the exclusion of the requirements of procedural fairness to the exercise of power under s 5(3) and failed to properly consider and give effect to the implied exclusion of procedural fairness for the acquisition process as a whole.
According to the parties, the process of compulsory acquisition under the LAC Act is a single process, which in this case commenced with the Certification under s 5(3). The exclusion of a right to be heard by the Certification necessarily excluded any further right to be heard at any subsequent step in the process.
The parties therefore submit that the purpose and effect of s 5(3) is not simply to exclude the requirements of procedural fairness for the exercise of power under that provision but, more generally, to exclude the rights of public participation in the PE Act to the acquisition as a whole. They submit that the judge failed to consider the effect of certification under s 5(3) in considering whether procedural fairness was owed prior to the service of the notice of intention to acquire under s 6 or the publication of the notice of acquisition under s 19 of the LAC Act.
The parties submit that these subsequent steps are machinery or procedural provisions that are engaged only after a decision to acquire an interest in land for a public purpose has been made. The very first step in the acquisition process is the only step to which any right to be heard about the acquisition of land for a public purpose might apply. Section 5(1) provides for such a right, while s 5(3) necessarily excludes any such right. In making this submission, the parties rely on cases considering the exclusion of the requirements of procedural fairness under s 20(4) of the PE Act, which extend the exclusion not only to the exercise of power under that provision but to the process of approving and adopting a planning scheme amendment as a whole.[27]
[27]See eg. Grollo Australia Pty Ltd v Minister for Planning and Urban Growth and Development [1993] 1 VR 627.
The parties further submit that the judge erred in focusing upon the disadvantage suffered by a person who is deprived of an interest in land or whose interest in land is diminished by the compulsory acquisition because the judge failed to consider the statutory entitlement to compensation for land compulsorily acquired. The LAC Act facilitates the deprivation in accordance with the statutory procedure provided within it but ameliorates or replaces the divested interest in land with a statutory entitlement to compensation. Here a fundamental purpose of the statutory scheme is to deprive a person of his or her interest in land by compulsory process, provided that just compensation is paid.
Analysis
It is uncontroversial that the publication of the NOA destroyed or defeated the Caligiuri Parties’ interest in the subject land. In Annetts v McCann,[28] the High Court said of administrative action that defeats rights or interests:
It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person’s rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment.[29]
[28](1990) 170 CLR 596.
[29]Ibid 598 (citations omitted) (Mason CJ, Deane and McHugh JJ).
As the final phrase indicates, however, to ascertain what is actually required, it is necessary to pay close attention to the governing statute.[30] In Kioa v West,[31] Brennan J said:
To ascertain what must be done to comply with the principles of natural justice in a particular case, the starting point is the statute creating the power. By construing the statute, one ascertains not only whether the power is conditioned on observance of the principles of natural justice but also whether there are any special procedural steps which, being prescribed by statute, extend or restrict what the principles of natural justice would otherwise require. [32]
[30]SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152, 160 [26], 162 [33] (Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ).
[31](1985) 159 CLR 550.
[32]Ibid 614.
In this case, the LAC Act contains a number of procedural steps, the order and timing of which signal a legislative intention that there be no right to be heard before the Authority publishes the notice of acquisition. The Authority’s obligation to hear from affected parties is confined by the express legislative provisions contained or incorporated in Part 2 of the LAC Act. Specifically, there is no obligation on the Authority to provide any notice of its decision to acquire the land beyond the notice of intention to acquire.
The power to acquire land for public purposes is vested in persons or bodies who are authorised by legislation other than the LAC Act to acquire land compulsorily. The LAC Act contains the procedures for the compulsory acquisition of land and provides for the assessment and payment of compensation for the loss or diminishment of interests in land.[33] Part 2 of the LAC Act is predominantly procedural. It sets out how those authorised persons or bodies are to go about securing land identified as needed for public purposes by means of compulsory acquisition. The procedural steps in Part 2—the reservation of the land under a planning instrument, the service on interested persons of a notice of intention to acquire the land and the publication of the notice of acquisition to effect the transfer of the land—are to be viewed as part of an integrated process culminating in the land vesting in the Authority.
[33]LAC Act s 1.
We therefore accept the submission made in the joint memorandum that the procedural steps in Part 2 of the LAC Act are to be viewed as part of a single process. That process includes a requirement to afford procedural fairness at the first step, that is, as a function of the requirement to reserve the land for a public purpose, which brings into play the provisions in the PE Act for amendments to planning schemes (referred to above).
As the judge recognised in the Reasons, the requirement for the reservation of land was included in the LAC Act when it was enacted in 1986 to protect the interests of persons whose interest in land would be affected by public acquisition.[34] The report to government upon which the requirement was based[35] recorded that the reservation process provided the landowner with an opportunity to contest the decision to acquire the land and brought into play compensation provisions under the then applicable planning legislation giving a landowner relief before the land was ultimately acquired.[36]
[34]Reasons [103]-[104] .
[35]Stuart Morris, Land Acquisition and Compensation: Proposal for New Land Acquisition and Compensation Legislation — Report to the Minister for Planning (Report, January 1983) (‘Morris Report’).
[36]See PE Act pt 5.
We accept the parties’ submission that it is unlikely that Parliament intended that there be ‘multiple rights’ to be heard in the acquisition process in Part 2, particularly where the rights arising from the need to reserve land under the relevant planning scheme are so comprehensive.
The finding that the procedural steps are part of a single process that includes a single but comprehensive right to be heard at the outset (that may nonetheless be removed by certification) is supported by the fact that the vesting of the land in the Authority is preceded by a suite of impositions that may significantly affect the rights of persons with an interest in the land. The reservation of land for a public purpose creates what is referred to as ‘planning blight’. It inhibits the use and development of the land. In recognition of this, Part 5 of the PE Act provides for compensation to be paid where the owner or occupier of land suffers loss as a result of the land being reserved for a public purpose. The service of a notice of intention to acquire also has dramatic consequences for a land-owner: it is recorded on the title to the land in the Register maintained by the Registrar of Titles[37] and prevents the person receiving the notice without the consent of the acquiring authority from entering into any sale, transaction or arrangement, or obtaining any licence or approval with respect to the land, as well as prohibiting them from making any durable improvements to the land.[38]
[37]LAC Act s 10(2).
[38]LAC Act s 12(1).
Viewed in this context, and having regard to the fact that the decision to compulsorily acquire the land is made in the exercise of a power in the ‘special Act’, s 19 is a machinery provision. It contains the mechanism to effect the transfer of the land to the Authority. Section 19 does not impliedly re-open the question as to whether the acquisition should take place: the decision to take the land in return for the payment of compensation has been made in the exercise of power under the special Act and is being implemented in a series of steps under the LAC Act. It is unsurprising, then, that s 19 contains no statutory test that must be satisfied and no reference to the ‘public interest’.
This analysis is no different if s 5(3) applies to exclude the rights of public participation contained in the PE Act. The exclusion is a function of a recommendation made by the Minister to the Governor in Council that reservation of the land is unnecessary, undesirable or contrary to the public interest. It would be an odd result if, for example, the urgent need for infrastructure made the reservation of the land ‘contrary to the public interest’ because the consultation process in the PE Act would take too long, yet a relatively complex consultation process of the kind envisaged by the judge had to take place before the final step could be taken to vest the land in the Authority. This is so, notwithstanding that the content of the right identified by the judge is more limited than the public participation rights in the PE Act and it is a right only accorded to a limited number of people (those who have an interest in the land that will be divested or diminished by the acquisition).
In addition, an ‘interest’ in relation to land is broadly defined in the LAC Act to mean ‘a legal or equitable estate or interest in the land’ or ‘an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land’.[39] As in this case, there may be a number of persons with an interest in land that is the subject of a single notice of acquisition. Each will receive a notice of intention to acquire and many (or all) may be affected by the restrictions on the use and development of the land that accompany the service of a notice of intention to acquire. Yet, assuming the judge’s construction is correct, only some of them may wish to be heard prior to the publication of the notice of acquisition, resulting in delays affecting all interested persons, who are kept out of the compensation to which they are or will be entitled, but subject to the restrictions imposed by the notice of intention to acquire.
[39]LAC Act s 3 (definition of ‘interest’).
The present case illustrates the unfairness of this construction. Mr Heffernan has an entitlement to be compensated for the market value of the subject land as at the date of acquisition. This compensation is likely to be a significant component of the total compensation payable by the Authority. It is to be expected that Mr Heffernan will have arranged his affairs on the basis that, following the service of the NOITA and the publication of the NOA, the making of the initial offer and the payment of compensation (or an advance of compensation) will proceed apace. The interposition of a right to be heard between the service of the NOITA and the publication of the NOA threatens the timely payment of compensation.
It is not the case, in our view, that a right to be heard prior to the publication of the notice of acquisition is necessary to avoid ‘practical injustice’. To the contrary, the putative right to be heard may itself inflict practical injustice.
There is, further, an issue as to what matters, if any, remain relevant for the Authority to consider when it comes to serve a notice of acquisition and what an interested person can usefully say about the acquisition at this stage of the process. By the time the notice of intention to acquire has been served, the land will either have been reserved (affording an opportunity to affected parties to be heard) or certified under s 5(3). The Authority is not obliged to reconsider whether the land should be available for compulsory acquisition, that question having already been resolved. There remains only the issues of timing and compensation, which are matters addressed by the statutory scheme.
The form of the notice of intention to acquire is significant in this regard. Apart from requiring the precise identification of the land to be acquired, s 8(1) stipulates that the notice must give details of the purpose for which the interest in land is to be acquired and specify the reasons why the land is thought to be suitable for that purpose.[40] The notice of intention must also request its recipient to advise the authority of any other persons who to the knowledge of the recipient may have an interest in the land,[41] and as to the existence of any unexpired planning or building permits that have not been acted upon, as well as sales, transactions, licences or approvals that the person (or any other person of which the first person is aware) was proposing to make or obtain.[42] The final category of information that must be requested is ‘any other information’ the person may have which would be ‘relevant to the assessment of compensation in respect of the acquisition of interests in the land’.[43]
[40]LAC Act sub-ss 8(1)(c) and (d).
[41]LAC Act s 8(1)(g)(i).
[42]LAC Act sub-ss8(1)(g)(ii) and (iii).
[43]LAC Act s 8(1)(g)(iv).
In our view, the requirement for the notice of intention to contain the matters referred to in ss 8(1)(c), (d) and (e) is to enable the recipient (a person with an interest in the land) to be satisfied that the proposed acquisition is lawful. The request required by s 8(1)(g) is to enable the Authority to obtain information relevant to who is to be compensated and by how much. The reference in s 8(1)(g)(iv) to ‘any other information … which would be relevant to the assessment of compensation’ makes it clear that the information to be requested by the Authority is information relevant to the assessment of compensation, not to whether or not the land should be compulsorily acquired. The decision to acquire the land has been made — the notice of intention to acquire being the public expression of that intention — and the remaining question in respect of each person with an interest in the land is as to the amount of compensation payable. The right to claim compensation arises immediately upon the publication of the notice of acquisition. The initial offer must then be made quickly, within 14 days from the date of acquisition. Hence the need to elicit information relevant to the assessment of compensation prior to the publication of the notice of acquisition.
The construction adopted by the judge effectively reads into s 8(1) a further requirement for the notice of intention, namely, a requirement to inform the recipient of his or her rights to make submissions and adduce evidence about the merits of the acquisition itself. In light of the fact that s 8(1) otherwise expressly refers to the recipient providing information relating to compensation, if the judge were correct, it would be expected that s 8(1) would require the notice of intention to acquire to inform the recipient of the right to make submissions and adduce evidence as to whether the acquisition should proceed. It does not.
The prescribed form for the statement setting out the principal rights and obligations of persons interested in land proposed to be acquired[44] follows the statute. It says nothing about the recipient having the right to make submissions and adduce expert and other evidence bearing on whether the acquisition should take place at all.
[44]LAC Act s 8(2).
The judge stated that his preferred construction met the purposes of the LAC Act identified in the second reading speech,[45] including:
To establish a system of land acquisition that is equitable to all landowners and which does not impose such burdens on Government so as to prevent proper planning and public sector activity;
To ensure certainty in the practices of land acquisition; and
To encourage a cooperative rather than a confrontational relationship between Government and landowner.[46]
[45]Victoria, Parliamentary Debates, Legislative Assembly, 8 May 1986, 2013-2014 (Frank Wilkes, Minister for Housing); Victoria, Parliamentary Debates, Legislative Council, 11 November 1986, 882 (Jim Kennan, Minister for Planning and Environment).
[46]Reasons [153(a)].
We consider that these purposes are also met by the construction that we favour, which reduces, above all, uncertainty as to whether the acquisition will proceed and as to its timing.
Furthermore, we consider the fact emphasised by the judge that the notice of acquisition cannot be published less than two months after the service of the notice of intention does not signal that the legislature intended that interested persons be given an opportunity to be heard between those two steps. That two month period of time gives recipients of the notice of intention time to gather the information requested. It also gives them time to consider whether to proceed by way of agreement rather than compulsory acquisition. Moreover, there is no requirement to give any notice of the timing of the publication of the notice of acquisition. Indeed, s 22 of the LAC Act contemplates that service of the notice of acquisition on interested persons will take place after its publication, that is, after the acquisition has taken place. This underscores the character of s 19 as a machinery provision.
In the result, we have concluded that the LAC Act does not require an opportunity to be heard to be given before the publication of the notice of acquisition. In our view, the scheme of Part 2 of the LAC Act evinces a clear legislative intent to exclude a right to be heard prior to the publication of a notice of acquisition under s 19 of the LAC Act.
Mr Heffernan’s position
Mr Heffernan deposes that had he been a party to the proceeding brought by the Caligiuri Parties, he would have opposed the orders sought, adduced evidence and made submissions in support of his position. He submits that his absence deprived the judge of the opportunity to hear and consider his evidence and submissions and his opposition to the orders that were sought. Instead, orders were made which were adverse to his rights and interests without him being given an opportunity to be heard. In these circumstances, Mr Heffernan submits, paragraph 1 of the orders made by the judge on 19 June 2019 should be set aside.
The judge, in determining whether to grant the declaratory relief sought by the Caligiuri Parties, considered the position of Mr Heffernan and acknowledged that if the NOA was set aside, Mr Heffernan’s claims for compensation would be affected.[47] The judge referred to correspondence between Mr Heffernan’s solicitors and the solicitors for the Caligiuri Parties and the Water Authorities, and to meetings between Mr Caligiuri and Mr Heffernan.[48] He found that Mr Heffernan and his legal advisers were aware of the proceeding from the outset[49] and that Mr Heffernan chose not to intervene[50] or provide any evidence as to his position to the Court.[51]
[47]Ibid [198].
[48]Ibid [200]-[201].
[49]Ibid [202].
[50]Reasons [203].
[51]Ibid.
According to Mr Heffernan, in light of his true position, the judge’s decision was attended by error in that he proceeded on a mistaken view of the facts.
We consider that there is much force in Mr Heffernan’s submissions. In particular, we agree that the orders sought by the Caligiuri Parties and the order ultimately made by the judge declaring the NOA to be invalid directly affected his statutory rights to negotiate with and obtain compensation and other amounts from the Water Authorities in connection with the acquisition of the subject land.
In News Limited v Australian Rugby Football League Limited,[52] the Full Federal Court stated:
An order which directly affects a third person’s rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside.[53]
[52](1996) 64 FCR 410.
[53]Ibid 524 (Lockhart, von Doussa and Sackville JJ).
This plainly applies in the present situation. Mr Heffernan was a necessary party to the proceeding at first instance. We so find, even though the Caligiuri Parties’ challenge was to the validity of the Recommendation, the Certification and the NOITA, but not directly to the NOA. The challenges to the anterior steps would, if successful, have called into question the validity of the NOA. Mr Heffernan’s rights were affected by the proceeding from the outset.
The failure to join Mr Heffernan provides a further reason why this Court should make the orders sought by the consent of the parties and allow the appeal.
SCHEDULE OF PARTIES
MELBOURNE WATER CORPORATION (ABN 81 945 386 953)
First Applicant
YARRA VALLEY WATER CORPORATION (ABN 93 066 902 501)
Second Applicant
ANTHONY CALIGIURI
First Respondent
J.I.I INVESTMENTS PTY LTD (ACN 624 255 812)
Second Respondent
ATTORNEY GENERAL (ON BEHALF OF THE STATE OF VICTORIA)
Third Respondent
ATTORNEY GENERAL
Fourth Respondent
6
5
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