New Generation Enterprises Pty Ltd v Western Australian Planning Commission - [2007] WASCA 89

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: NEW GENERATION ENTERPRISES PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2007] WASCA 89

CORAM: STEYTLER P
PULLIN JA
MILLER AJA

HEARD: 2 FEBRUARY 2007

DELIVERED : 2 MAY 2007

FILE NO/S: CACV 64 of 2005

BETWEEN: NEW GENERATION ENTERPRISES PTY LTD
Appellant
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent

ON APPEAL FROM:
Jurisdiction              :  COMMERCIAL ARBITRATION
Coram  :ARBITRATOR LIGGINS
File No  :ARB 12 of 2005

Catchwords:

Town planning - Reservation and acquisition of land - Land injuriously affected by scheme - Land purchased by responsible authority - Value of land required to be assessed after land was purchased - Arbitration to determine value - Whether Pointe Gourde principle applied - Whether Arbitrator failed to act on uncontradicted expert evidence

Arbitration - Commercial Arbitration Act 1985 (WA) - Whether leave to appeal should be granted - Award - Whether letters in evidence formed part of award - Whether manifest error of law on face of award - Whether determination of question of law may add or may be likely to add substantially to certainty of commercial law

Legislation:

Commercial Arbitration Act 1985 (WA), s 38

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr M J McCusker QC & Mr T Houweling
Respondent: Mr R M Mitchell

Solicitors:

Appellant: Cornerstone Legal
Respondent: State Solicitor

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

Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Garling v Association to Resource Co‑operative Housing Co-op Ltd [2001] NSWCA 377
Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd (1968) 118 CLR 58
Housing Commission of New South Wales v San Sebastion Pty Ltd (1978) 140 CLR 196
Lamac Developments Pty Ltd v Devaugh Pty Ltd (2002) 27 WAR 287
Masawa Australasia Pty Ltd v J Corp Pty Ltd [2000] WASC 5
Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273
Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565
Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203
R v District Court; Ex parte White (1966) 116 CLR 644
Rhodes Corporation v Dacakis [1995] 2 VR 508
RP Robson Constructions v D & M Williams (1989) 6 BCL 219
The Crown v Murphy (1990) 64 ALJR 593
Tor Line A/B v Alltrans Group of Canada [1982] 1 Lloyd's Rep 617
Ukrainian Association of Western Australia in Perth (Inc) v Squire Constructions Pty Ltd [2004] WASC 4
Waterford v Commonwealth (1987) 163 CLR 54

STEYTLER P: I have had the advantage of reading the judgment of Pullin JA. I agree with him that the application for leave to appeal should be refused.

Section 38(5) of the Commercial Arbitration Act and manifest errors of law

Section 38(5) of the Commercial Arbitration Act 1985 (WA) ("CA Act") provides that leave to appeal can only be granted under s 38(4)(b) of that Act if the court considers that:
"(a)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and
(b)there is ‑
(i)a manifest error of law on the face of the award; or
(ii)strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law."
The determination of questions concerning what are said to be errors of law on the part of the arbitrator in this case will not add, or be likely to add, substantially to the certainty of commercial law, for the reasons given by Pullin JA. Consequently, leave can only be granted if there is a manifest error on the face of the award (it is not in dispute that, to the extent that the appeal raises questions of law, s 38(5)(a) of the CA Act has been satisfied).
There is no error of law in making what is only a wrong finding of fact (Waterford v Commonwealth (1987) 163 CLR 54 at 77 per Brennan J), even if the reasoning whereby the court reached its conclusion was demonstrably unsound (R v District Court; Ex parte White (1966) 116 CLR 644 at 654 per Menzies J; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156 per Glass JA, Samuels JA concurring). If there is some basis for an inference, in the sense that the inference is reasonably open, there will be no error of law: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356 per Mason CJ, Brennan J agreeing; Rhodes Corporation v Dacakis [1995] 2 VR 508 at 520.
Where there is an error of law, it will be "manifest" when there are "powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law": Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203 at 226 per Sheller JA, Meagher JA agreeing; Lamac Developments Pty Ltd v Devaugh Pty Ltd (2002) 27 WAR 287 at 318 ‑ 319.
In considering whether there is a manifest error of law, the court, when dealing with the decision of an arbitrator who is not legally trained, should be cautious not to read the reasons with an over critical eye: Tor Line A/B v Alltrans Group of Canada [1982] 1 Lloyd's Rep 617 at 625 per Bingham J; Masawa Australasia Pty Ltd v J Corp Pty Ltd [2000] WASC 5 at [5] per Parker J. The reason why parties often choose to appoint an arbitrator who is not legally trained rather than embark upon court proceedings is because the advantage arising out of the training and expertise which that person has in respect of the subject matter of the arbitration (whether as a valuer, architect, engineer or anything else), coupled with the advantage of avoiding the greater technicality, delay and cost associated with court proceedings, outweighs the disadvantage brought about by the fact that the arbitrator is unlikely to express himself or herself with the precision (so far as legal issues are concerned) that might be expected of a judge, or even of a legally trained arbitrator. If the courts are too exacting in their expectations of the language used by lay arbitrators in making their awards, the benefits of the freedom of choice offered by the CA Act might to some extent be rendered illusory.
These considerations are significant, given that "the clear policy of the … [CA Act] is to achieve speedy economic and informal relief to parties to arbitration agreements … [with] curial [involvement] … [being] kept to a minimum": Lamac at 315 [110] per Mathews AJ, with whom Malcolm CJ, Anderson and Steytler JJ were in agreement; Masawa at [5], [7].

The issue before the arbitrator

In this case the arbitrator was called upon to value land which had been reserved for Regional Open Space under the Peel Region Scheme ("Scheme"). The appellant had lodged a claim for compensation for injurious affection as a result of the reservation and the respondent had elected to acquire the land under s 31(2) of the Western Australian Planning Commission Act 1985 (WA) ("WAPC Act"). The appellant and the respondent were unable to agree on the purchase price to be paid for the land. They consequently entered into an arbitration agreement on 24 December 2004. Clause 5(b) of that agreement provides that, in making his determination, the arbitrator was required to assess the value of the land as at 2 December 2003 "without regard to any increase or decrease if any in value attributable wholly or in part to the Scheme and having regard to any written law in place or that would have reasonably been in place if not for the Scheme … ".
The principal matter in dispute was whether the land should be valued on the basis that it could be subdivided into 14 Special Rural lots. The appellant said that it should. The respondent said that it should not. The arbitrator found in favour of the respondent on this issue and concluded that the land should be valued as a rural lifestyle property.

Grounds of appeal

There are two grounds of appeal. These read as follows:
"(1)The Arbitrator erred in law by:
(a)failing to construe the Arbitration Agreement pursuant to which he was appointed as embodying the principle in Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands (1947) AC 565;
(b)failing to apply that principle and in particular failing to 'identify the entirety of the process which led to the reservation,' (of the subject land) 'and then to exclude the effect of that process in the valuation exercise' (as required by the decision in Mt Lawley Pty Ltd v Western Australian Planning Commission [2004] WAFCA [sic] 149, para [66]);
(c)thereby erred by giving 'critical' weight to correspondence from the Minister for the Environment and the Minister of Planning without determining whether, or to what extent, that correspondence formed a part of the process leading to the reservation; and
(d)further erred by drawing a conclusion as to the likely attitude of a hypothetical purchaser, having regard to the refusal of planning approval since 1981, without in any way assessing or determining whether or to what extent any such refusal formed a part of the process which led to the reservation or was explicable by reference to that process'.
(2)The Arbitrator, being called to determine the highest and best [use] of land, being Part Lot 193 on Certificate of Title Volume 1582 Folio 751 ('the land'), for the purposes of determining the value of that Land erred in law in:
(a)misinforming himself of the test to be applied in determining the subdivision potential of the Land; and
(b)failing to take into account the uncontradicted evidence of the environmental scientist for the Appellant, Mr Wells, that the Land:
1.had wrongly been categorised as a wetland in the report by Hill entitled 'Wetlands of the Swan Coastal Plain'; and
2.was from an environmental perspective the same as neighbouring land, Lot 194, which had been subdivided."

Ground (1)

As to ground 1(a), for the reasons given by Pullin JA it is by no means manifest that the arbitrator failed to construe the arbitration agreement as embodying the principle in Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565 or, more accurately, the statutory embodiment of that principle found in s 32 of the WAPC Act (now s 188(1)(b) of the Planning and Development Act 2005 (WA)). Rather, it seems to me to be plain that he did construe the agreement in that way. He said so, albeit he used the language of cl 5(b) of the arbitration agreement (by which the parties embodied the principle) rather than that of the statute. Section 32 of the WAPC Act provides that the value of the land is to be "determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the regional planning scheme". The arbitrator said, on page 20 of his award, that he was obligated "to assess the value of the land … without regard to any increase or decrease … in the value attributable wholly or in part to the reservation of the land for Regional Open Space under the … [WAPC Act]". Moreover, on page 21 of his award he posed for himself the question "what a prudent purchaser would consider the value of the subject lot to be" at the relevant date "assuming the reservation for Regional Open Space did not exist" (see also page 22 of the award).
As to the balance of ground 1, I am not at all persuaded that it is manifest that the arbitrator failed to apply the principle in any of the respects contended for. Rather, for the reasons given by Pullin JA, it seems to me that he did apply it. I wish to add only a few comments in respect of grounds 1(c) and (d).
As to ground 1(c), there is a preliminary question, dealt with by Pullin JA, whether the terms of the memoranda written by the Minister for the Environment on 20 November 2000 and by the Minister for Planning on 9 February 2001 ("ministerial correspondence") were incorporated into the award. It is unnecessary for me to resolve that question (which is one of intention, to be determined from the terms of the award: Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd (1968) 118 CLR 58 at 63 per Barwick CJ, with whom McTiernan J agreed, at 76 per Windeyer J) and I would prefer not to do so. That is because, even if it be assumed that the ministerial correspondence was incorporated into the award, I am (like Pullin JA) not persuaded that ground 1(c) discloses any manifest error of law on the face of the award.
As will be apparent from ground 1(c), the appellant contends that the arbitrator erred by giving critical weight to the ministerial correspondence without determining whether, or to what extent, that correspondence formed a part of the process leading to the reservation of the land.
It seems to me, firstly, that the correspondence did not form a part of that process. It concerned a proposed rezoning amendment to Shire of Murray Town Planning Scheme No 4 ("TPS4") and reflected the process that was required to be adopted in respect of that amendment by s 48A(1)(c) and s 48A(2)(b) of the Environmental Protection Act 1986 (WA) ("EP Act"). The amendment of TPS4 and the process adopted in respect of it pursuant to s 48A of the EP Act were not part of the process of reservation of the land under the Peel Region Scheme. Nor, as counsel for the respondent pointed out, is there anything in the award, or in the evidence that was placed before the arbitrator, to suggest that the proposal to reserve the land was developed in the course of proposing or considering the amendment of TPS4 or that the decision of the Ministers was explicable by reference to that process (a question of fact).
While it is true, as Pullin JA has said, that the ministerial correspondence refers to the proposed reservation under the Peel Region Scheme, that did not make it a manifest error of law for the arbitrator to regard that correspondence as significant because it highlighted the environmental importance of the land: page 21 of the award. The significance of the reservation, for the Ministers, lay only in the fact that, in common with other factors mentioned in their correspondence, it recognised what they saw, in any event, as the environmental value of the land. It was that value which influenced their decision under s 48A(2)(b) of the EP Act in respect of the proposed amendment to TPS4. The arbitrator, in turn, regarded the ministerial correspondence as significant because it recognised the environmental importance of the land and was consequently critical, as he saw it, to the issue of planning considerations. As the court pointed out in Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 at 311 [180], the Pointe Gourde principle, or its statutory equivalent, requires that the "Scheme" be ignored (including all that led up to it) and not that the condition of the land to which the Scheme was a response should be ignored: see also The Crown v Murphy (1990) 64 ALJR 593 at 595. I should add that, if the arbitrator misunderstood the ministerial correspondence (as counsel for the appellant contended at one point in his submissions), this was an error of fact and not of law.
As to ground 1(d), it seems to me to be at least implicit in the arbitrator's reasons that the refusals of the Planning Commission referred to and relied upon by him (page 21 of the award) were found by him not to have been a part of, or a product of or explicable by reference to, the reservation of the land. He expressly distinguished between the Scheme, which he was required to disregard, and the rezoning proposals (unrelated to the Scheme) that had been lodged in respect of the land since 1981, which, he said, could not be overlooked or disregarded (page 21 of the award). There is nothing on the face of the award which establishes that he erred in law in adopting that approach.
As to ground 2(a), it is not at all manifest that the arbitrator misinformed himself of the test to be applied in determining the subdivisional potential of the land. He was required, in that respect, to ask himself how a purchaser would view the subdivisional potential of the land in the light of all of the available information: Mount Lawley at 311 ‑ 312 [185]. He did so, in effect, on page 21 of his award, where he

said that the question is "what a prudent purchaser would consider the value of the subject lot to be as at the 2nd December 2003, assuming the reservation for Regional Open Space did not exist and the land was zoned 'Rural' with an opportunity to obtain approval for a subdivision". He answered that question on page 22 of his reasons.

As to ground 2(b), it is plain from what has been said by Pullin JA that there was evidence, referred to and relied upon by the arbitrator, which left it open to him to arrive at the conclusions, and draw the inferences, reached by him. In these circumstances, even if there was a failure to have sufficient regard to the evidence referred to, being that of an environmental scientist, Mr Wells (and the arbitrator did have regard to his evidence but rejected it, having preferred the evidence of two other expert witnesses, Mr Dawson and Mr Fitzgerald: see pages 7, 19 and 22 of the award), this would not disclose any reviewable error of law: Azzopardi at 155 ‑ 156 per Glass JA, Samuels JA agreeing; Garling v Association to Resource Co‑operative Housing Co-op Ltd [2001] NSWCA 377 at [17] ‑ [19] per Heydon JA.
It follows that, like Pullin JA, I am not persuaded that there is any manifest error of law on the face of the award. I would refuse the application for leave to appeal.
PULLIN JA: This is an application pursuant to s 38 of the Commercial Arbitration Act 1985 (WA) for leave to appeal against the award of Arbitrator Liggins, in which he determined that the value of land purchased by the respondent from the appellant was $335,000 as at 2 December 2003.

The land

The land is a portion of Cockburn Sound Location 16 and being part of Lot 193 on Plan 2087 (sheet 5) and being the whole of the land contained in Certificate of Title Vol 1582 Folio 751. It comprises just under 38 hectares. It is adjacent to a lake, which is one of a chain of lakes associated with the Serpentine and Murray River which drain into the Indian Ocean just south of Mandurah. Lot 193 is on the east side of the lake system and to the east of Mandurah. It is located within the Shire of Murray ("Shire"). The land is nearly all covered with remnant vegetation.

The events leading up to the award

The parties filed an agreed chronology of events. The chronology and the Arbitrator's award revealed the following information.

The land was purchased by the appellant in 1981. The appellant made many unsuccessful efforts, starting in 1981 and extending over most of the next decade, to develop the land and to have it rezoned to permit that development. The Arbitrator said that in 1983 there was an "early recognition of the environment significance in the vicinity of" the subject land. In 1987 the Environmental Protection Authority ("EPA") expressed opposition to development of the site. In 1989 the Shire's Town Planning Scheme No 4 ("TPS4") became law. The subject land was zoned "rural" in TPS4. On 6 April 1989, the Shire advised the appellant that it would not support a proposal to rezone the land from "rural" to "special rural". In 1996 a report was published by A L Hill, C A Semeniuk, V Semeniuk and A Del Marco, and entitled "Wetlands of the Swan Coastal Plain" which identified the whole of the subject land as conservation category wetland ("CCW"). The authors had been retained to prepare the report in the late 1980s. The Court was informed by counsel for the respondent during the hearing that the report was "adopted into policy" by the EPA in 1996. The classification of the land as CCW was adopted by the Water and Rivers Commission in a position statement concerning wetlands dated 6 June 2001. This read in part:
"Wetlands not only include lakes with open water but areas of seasonally, intermittently or permanently waterlogged soil. Approximately 25% of the Swan Coastal Plain between Moore River and Mandurah is classified as wetland. Though extensive in area, not all wetlands retain significant ecological values due to the concentration of urban and agricultural development in the region. Most wetlands have been either cleared, filled or developed over, leaving only 20% of all the wetlands that were present on the Swan coastal plain prior to European settlement. Of these, an estimated 15% of the wetland area has retained high ecological values. These are conservation category wetlands.
The Commission's position is that conservation category wetlands are accorded the highest priority for protection and conservation."

Another portion of the position statement read:
"The Commission acknowledges that the database, while the most accurate store of wetland spatial information available, cannot be 100% accurate because of the inherent difficulties involved in monitoring all wetlands for changes over time. Therefore, the Commission allows wetlands to be reassessed if an evaluation category is in genuine dispute. A Commission endorsed assessment protocol is available and must be followed by proponents reassessing wetland management categories."
In 1996 the first step was taken towards the promulgation of the Peel Region Scheme which will be referred to below. This step was the release for public comment of the Inner Peel Region Structure Plan. By 1997 the final Structure Plan showed the subject land as land reserved for "open space - conservation and State highways and roads".
In 1999 the appellant decided to take steps to try and have the land rezoned from rural to "special use/public recreation and conservation reserve/private recreation/special residential". In conjunction with this application, Mr Wells, an environmental planner, prepared an environmental assessment and expressed the opinion that the classification of the land as CCW was incorrect. No step was taken under the Water and Rivers Commission protocol to reclassify the land from its CCW classification. The appellant's Scheme for rezoning was presented to the Shire and the Shire then proposed the rezoning as an amendment (No 140) to TPS4. The process of amendment required the Scheme to be submitted to the Minister for Planning for approval. The process also involved submission of the Scheme to the EPA which was obliged to assess the proposed Scheme and if it considered that the Scheme was incapable of being made "environmentally acceptable" the EPA was required to inform the Minister of this. On 20 November 2000, the Minister for the Environment wrote in the following terms to the Minister for Planning concerning the proposed amendment 140 to TPS4:
"I have recently been advised by the Environmental Protection Authority (EPA) that the above Scheme Amendment is, in the view of the EPA, incapable of being made environmentally acceptable (Section 48A(1)(c) of the Environmental Protection Act (EP Act).
The main environmental factors associated with this proposed amendment are:
•Clearing of significant vegetation proposed for inclusion in regional open space.
The remnant vegetation on Lot 193 is considered to be locally and regionally significant because it supports an area of native vegetation that is representative of the structure and floristics of the natural vegetation of the Peel Region (Mattiske Consulting Pty Ltd, 1999).
The remnant vegetation on Lot 193 is also significant because it abuts a C Class Nature Reserve and is one of a relatively few areas of remnant vegetation greater than 20 hectares (Mattiske Consulting Pty Ltd, 1999).
Lot 193 is proposed to be reserved for Regional Open Space in the Peel Region Scheme to conserve its environmental values.
•Impacts on wetlands.
All of Lot 193 and the adjacent Road Lake are categorised as Conservation category wetlands (Semeniuk, 2000). The proposed amendment would result in significant impacts on the values of the wetland on Lot 193.
I concur with the EPA's decision that the Amendment is incapable of being made environmentally acceptable and in accordance with section 48(2)(c), seek your agreement that a statement cannot be delivered and published under Section 48F(2) of EP Act."
On 9 February 2001 the Minister for Planning replied to the Minister for the Environment in the following terms:
"SHIRE OF MURRAY: TOWN PLANNING SCHEME NO. 4 - AMENDMENT NO. 140
Thank you for your memorandum of 20 November 2000 regarding the proposed rezoning of Part Lot 193 Fiegerts Road, Barragup.
Part Lot 193 was included in the Inner Peel Structure Plan as Open Space and Conservation in recognition of its environmental value. Subsequently, it was included in the Peel Region Scheme as Regional Open Space to protect these values.
I therefore concur with the Environmental Protection Authority's recommendation that the proposal is incapable of being made environmentally acceptable and agree that a statement should not be delivered and published under Section 48F(2) of the Environmental Protection Act.
GRAHAM KIERATH MLA
MINISTER FOR PLANNING"
As a result, the Minister for Planning refused to consent to amendment No 140 to TPS4 and TPS4 was not therefore amended as the appellants had proposed.
On 20 March 2003, the Peel Region Scheme gained force of law when it was published in the "Government Gazette". The Peel Region Scheme was made under the Western Australian Planning Commission Act 1985 ("WAPC Act"). Section 18(1)(ba) of the WAPC Act provides that if matters of State or regional importance so require, then the respondent may prepare a town planning scheme necessary for the effective planning and coordination of land use and land development for any part of the State outside of the metropolitan region. Section 18(1a) provides that if the respondent resolved to prepare a regional planning scheme, it did so as if it were a local government acting under s 7(1) of the Town Planning and Development Act 1928 (WA); but that instead of ensuring compliance with the procedures set out in that Act, it was to ensure that there was compliance with certain procedures which are set out in the Metropolitan Region Town Planning Scheme Act 1959 (WA) as if the regional planning scheme were an amendment to the Metropolitan Region Scheme.
Section 31(1) of the WAPC Act provides that a regional planning scheme may provide that when compensation for injurious affection caused by the Scheme is claimed, the respondent may at its option, elect to acquire the land so affected instead of paying compensation. Section 32(1) of the WAPC Act provides that when the respondent elects to acquire land as provided in s 31, then if the respondent and the owner of the land are unable to agree as to the price to be paid for the land by the respondent, the price at which the land may be acquired by the respondent, shall be the value of the land as determined in accordance with s 32(2). Section 32(2) provides that the value of the land shall be the value of the land on the date the Commission elected to acquire the land under that subsection and that the value should be determined:
"(a)by arbitration in accordance with the Commercial Arbitration Act 1985; or
(b)…
(c)…
and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the regional planning scheme."
The appellant claimed compensation for injurious affection by reason of the effect of the Peel Region Scheme. The respondent elected to acquire the land and the appellant and the respondent agreed that the value should be determined by arbitration in accordance with the Commercial Arbitration Act 1985. The date of acquisition and the date of valuation was agreed as being 2 December 2003.
On 24 December 2004, the parties entered into an arbitration agreement. It was agreed by that agreement that the Arbitrator in making his determination, should be "restricted to the range between the lower value of the [appellant's] provided valuation/s exclusive of GST upon exchange and the higher value of the [respondent's] provided valuation/s exclusive of GST upon exchange". The agreement also provided that the arbitrator in making his determination should:
"Assess the value of the said land as at 2 December 2003 without regard to any increase or decrease if any in value attributable wholly or in part to the scheme and having regard to any written law in place or that would have reasonably been in place if not for the Scheme ..."
The agreement defined "the Scheme" as "the reservation of the land for Regional Open Space under the [WAPC Act]". The parties accept that this is a reference to the reservation of the land under the Peel Region Scheme. The parties also accept that the Scheme includes the steps which led up to reservation of the land under the Peel Region Scheme. These steps included the release of the Inner Peel Region Structure Plan in 1996 and the 1997 Structure Plan.
Mr Liggins was appointed as Arbitrator and the hearing before him was conducted in 2004 and 2005. The Arbitrator heard evidence and received documentary evidence from various planners and valuers and heard submissions on behalf of the appellant and the respondent. The appellant called valuation evidence revealing at its highest a valuation of $1,490,000 exclusive of GST. This was based on a hypothetical subdivision of the land into numerous lots. The respondent called valuation evidence, the lowest being $303,000 exclusive of GST, based on the assumption that the land could not be subdivided.

The award

The Arbitrator's award determined that the value of the land and therefore the purchase price as at 2 December 2003 was $335,000. The award was delivered on 21 April 2005 and published on 22 April 2005. The award contains a section headed "Award" which occupies 17 pages. This section of the award recites the agreement and its contents, records the names of the lay advocates and experts who gave evidence, sets out in summary form the submissions of the parties, contains a summary of what was said by the various expert valuers, planners, engineers and environmental planners called by the parties and concludes with the determination. The award also contained a section headed "Reasons". There is no dispute that this section formed part of the award.
Before turning to the grounds of appeal and the considerations which arise as a result of those grounds it is necessary to refer to some of the details in the award and set out some passages from it. The Arbitrator noted that in determining value, he should be restricted to the range of values indicated in the agreement and that in determining the value of the land, he should have "no regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme" which he said "refers to the reservation of the land for regional open space under the West Australian Planning Commission Act 1985". The Arbitrator, in his summary of Mr Ken Dawson's evidence (an environmental planner called by the respondent), noted that Mr Dawson said that:
"In early 1983 there was an early recognition of environmental significance in the vicinity of Lot 193 Fiegerts Road and in 1991 when an application was made to subdivide into 2 lots, which was well before any reservation of the land, the Commission deferred the decision pending clarification of several issues, including access of Fiegerts Road and information received from the Department of Agriculture, Environmental Protection Authority, Water Authority and the Health Department.
The vendor was advised to liaise with those bodies as there was reluctance to support the subdivision and development approval is unlikely to be granted. In effect a detailed Environment Impact Assessment to any proposal with a detailed Land Capability Assessment would be required."
The Arbitrator also summarised the evidence of Mr Dawson about the proposed Amendment 140 to the TPS4 and in that summary recorded the witness as saying:
"The subject land [was] … 'incapable of being made environmentally acceptable under Section 48A(1)(c) under the Environmental Protection Act 1986. Accordingly on the 19th February 2001 the Minister for Planning declined to agree to allow the proposed amendment to be delivered and published under Section 48F(2) of the Environmental Protection Act 1986."
The appellant made some point about the fact that the Arbitrator said that the "subject land" was incapable of being made environmentally acceptable when the Minister had said in his letter that "the Scheme" was incapable of being made so. However, this passage does not reveal error by the Arbitrator because he was merely recording what the witness said.
In recording the respondent's advocate's closing submissions, the Arbitrator noted the submission that he should not "ignore or set aside environmental condition of the land thereby providing the vendors with the status they have never been able to achieve in over 22 years." The Arbitrator also recorded the submissions on behalf of the appellant's advocate that:
"The purpose of the reservation has to be disregarded (Pointe Gourde principle) therefore in determining the value of the land you take off the reservation which is the purpose but you cannot disregard the physical features and restraints of the land. In the Mount Lawley appeal to the Supreme Court the Judges stated in determining the correct approach to valuation in that case; 'Pointe Gourde or statutory form Section 36 2b of the scheme act does not permit this task to be avoided because it is the scheme that is to be ignored (including all that lead [sic] to it) not the condition of the land to which the scheme was a response' …"
In his reasons he said:
"I am obligated under the Arbitration Agreement to assess the value of the land as at the 2nd December 2003 without regard to any increase or decrease, if any, in the value attributable wholly or in part to the reservation of the land for Regional Open Space under the West Australian Planning Commission Act 1985."
The Arbitrator then said in his reasons (page 20 ‑ 21 of the award):
"Mr McMahon is of the clear opinion that the value of the land as at the 2nd December 2003 is to be assessed without regard to any increase or decrease, if any, in value attributable wholly or in part to the scheme and in that respect only the reservation for Regional Open Space is to be disregarded for the purpose of the valuation.
Any other ordinates, planning considerations, limitations or potentials to land use (indeed the environmental condition of this land) would remain in place for the purpose of valuing the land on the basis of it's highest and best use as at the relevant date.
Lifting the reservation does not include lifting the environmental conditions on the land, which increased over some 20 years to the point that the land has been categorised at the highest conservation level possible.
It is not possible to contemplate what the circumstances may have been had;
•The land or part of the eastern portion been cleared prior to restrictions,
•A less intensive Amendment 140 proposal, for example 2ha lots as per Gordon Smiths plan, been lodged instead of the multiple use preference.
•The Vendor taken action to object to the whole of the Lot 193 being designated CCW and lodged a submission in line with the Environmental Protection Authority protocol.
Therefore the question is what a prudent purchaser would consider the value of the subject lot to be as at the 2nd December 2003, assuming the reservation for Regional Open Space did not exist and the land was zoned 'Rural' with an opportunity to obtain approval for a subdivision similar to Lot 194.
In my opinion he or she would make the necessary enquiries about the property and with knowledge of previous applications and refusals negotiate control of the property by way of a Conditional Offer or Option to Purchase seeking sufficient time to complete enquiries with emphasis on the chances of rezoning and subdivision similar to Lot 94 [sic 194] and the likely costs of complying with EPA protocol to secure such approval.
Costs would be significant and in preparing a Hypothetical Subdivision Analysis Development Costs would increase as would the Profit and Risk factor thereby reducing the en globo or residual land value.
In absence of any Costs for professional consultants to prepare a Submission in accordance with Government protocol it was not possible to explore this 'middle ground' between the Vendors and Purchasers valuations.
It would also be reasonable to assume a prudent purchaser would compare the sale of Lot 53 Fiegerts Road for $22,757 per hectare with approvals to subdivide and adopt that sale as a benchmark value for Lot 193.
A critical factor to the issue of planning considerations brought about by the Government Departments is correspondence from the Minister of the Environment (Mrs. Cheryl Edwardes) in letter of the 2nd November 2000 and the Minister of Planning (Mr Graham Kierath) in letter of the 9th February 2001, making it quite clear the land is incapable of being made environmentally acceptable.
From the evidence presented I consider the correct interpretation of the Arbitration Agreement is 'the Scheme' refers to the reservation of the land for Regional Open Space whereas, the proposals to rezone that occurred with this property since 1981, all resulting in refusals to consider any alternative zoning, are events that cannot be overlooked or disregarded.
I am unable to accept the CCW designation was placed on the land incorrectly or invalidly to protect the wetland and associated vegetation, as the protocol in seeking the re‑evaluation of the designation was not pursued.
I prefer to adopt the evidence of Mr Dawson and Mr Fitzgerald in particular their clear opinions that even if the Scheme was lifted and disregarded, the events that have occurred with the subject property since 1981 would not attract a developer purchaser prepared to seek rezoning to Special Rural and a subdivision of 14 lots to follow.
I concur with Mr Fitzgerald's evidence that if the reserve for Regional Open Space did not exist, it does not make environmental issues go away, they still exist and the evidence was they could not all be accommodated.
Therefore my conclusion is the zoning of the land for valuation purposes is 'Rural' as it has effectively remained since the land was purchased.
Therefore 'prudent' purchasers would be limited to those seeking a lifestyle property accepting the fact 'Rural' zoning would remain as is with the western wetland portion of the lot ceded to Regional Open Space.
Given these circumstances I have accepted Mr Richmond's valuation and evidence that the value of the land with 'Rural' zoning is $6500 per hectare for 37.4758 hectares plus $90,000 for the 4000m2 home site amounting to $335,000."

The grounds of appeal

The appellant's proposed grounds of appeal read:
"(1)The Arbitrator erred in law by:
(a)failing to construe the Arbitration Agreement pursuant to which he was appointed as embodying the principle in Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands (1947) AC 565;
(b)failing to apply that principle and in particular failing to 'identify the entirety of the process which led to the reservation,' (of the subject land) 'and then to exclude the effect of that process in the valuation exercise' (as required by the decision in Mt Lawley Pty Ltd v Western Australian Planning Commission [2004] WAFCA [sic] 149, para [66];
(c)thereby erred by giving 'critical' weight to correspondence from the Minister for the Environment and the Minister of Planning without determining whether, or to what extent, that correspondence formed a part of the process leading to the reservation; and
(d)further erred by drawing a conclusion as to the likely attitude of a hypothetical purchaser, having regard to the refusal of planning approval since 1981, without in any way assessing or determining whether or to what extent any such refusal formed a part of the process which led to the reservation or was explicable by reference to that process'.
(2)The Arbitrator, being called to determine the highest and best [sic use] of land, being Part Lot 193 on Certificate of Title Volume 1582 Folio 751 ('the land'), for the purposes of determining the value of that Land erred in law in:
(a)misinforming himself of the test to be applied in determining the subdivision potential of the Land; and
(b)failing to take into account the uncontradicted evidence of the environmental scientist for the Appellant, Mr Wells, that the Land:
1.had wrongly been categorised as a wetland in the report by Hill entitled 'Wetlands of the Swan Coastal Plain'; and
2.was from an environmental perspective the same as neighbouring land, Lot 194, which had been subdivided."

Section 38 of the Commercial Arbitration Act

Section 38 reads:
"(1)…
(2)Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award;
(3)…
(4)An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement -
(a)…
(b)subject to section 40, with the leave of the Supreme Court.
(5)The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that -
(a)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and
(b)there is -
(i)a manifest error of law on the face of the award; or
(ii)strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law."
Section 38 is concerned with finality in arbitration proceedings and is designed to limit the intervention of courts in arbitration. The philosophy of the section is that the election of parties is to have their disputes resolved by arbitration: and this should be respected in the sense that awards should not be scrutinised with an overcritical eye and the courts should exercise restraint in seising themselves of legal questions: Masawa Australasia Pty Ltd v J Corp Pty Ltd [2000] WASC 5. Section 38(5) was amended in 1997 to strengthen the restriction against the grant of leave to appeal (Ukrainian Association of Western Australia in Perth (Inc) v Squire Constructions Pty Ltd [2004] WASC 4).
Before this Court may exercise its discretion to grant leave to appeal, it must be shown that:
(a)there is a question of law involved; [This is in issue on this appeal]
(b)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement. [There is no issue that the determination could substantially affect the rights of the appellant];
(c)there is an error of law which must be a manifest error of law on the face of the award. [This is in issue on this appeal]
Alternatively, if an error of law is alleged and it is not a manifest error of law on the face of the award, then there must be "strong evidence" that the error of law was made and it must be shown that the determination of the question may "add, or may be likely to add, substantially to the certainty of commercial law". [This is in issue on this appeal]

Whether the determination of any question may add, or be likely to add, substantially to the certainty of commercial law

I will begin by dealing with the last point. The appellant submits that if there is an error of law, and if it is not manifest on the face of the award, then there was strong evidence that an error of law had been made and the determination of the question may add to, or may be likely to add substantially to, the certainty of commercial law. This submission is advanced only in relation to ground 1. The questions raised on ground 1 involve well settled principles of law which are to be applied to the facts. These principles are to be applied as required by the agreement. The construction of the agreement is not in contest between the parties. The principles of law concern the "Pointe Gourde principle" (Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565) which is discussed below. The appellant concedes that the principles and the case law explaining it are well settled, but contends that the application of the principles to the facts of this case will add, or may be likely to add, substantially to the certainty of commercial law. That submission must be rejected. The application of settled principle to the facts of this case is a matter which will concern only these parties. Any issue which might be determined would not add to, and is not likely to add to, the certainty of commercial law.
As a result, if the appellant is to be granted leave, it will have to show that the alleged errors of law are manifest on the face of the award.

Meaning of manifest error on the face of the award

An error which is "manifest" is one which is "evident and obvious rather than merely arguable": Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275 and the Ukrainian case (supra) at [8]. For an error to be an error "on the face of the award", the error is not to be discovered by looking behind the back of the award. See Ukrainian case at [8].

Whether the two letters of the Ministers form part of the award

Before the passing of the Commercial Arbitration Act, an Arbitrator was not under any obligation in law to give his reasons for what he had decided. If he gave reasons which formed part of the award, the award was open to be set aside for error of law upon its face. When determining whether a statement of the Arbitrator's reasons was intended to be incorporated in the award, the presumption was against incorporation. See RP Robson Constructions v D & M Williams (1989) 6 BCL 219 at 221 per Giles J. However, the Commercial Arbitration Act changed this by providing in s 29(1)(c) that the Arbitrator must include in the award a statement of the reasons for making the award. In assessing whether there is a manifest error on the face of the award, the court may examine not only the award, but documents which are incorporated into it. A number of factors will govern the decision about whether or not a document has been incorporated. One factor is that the act now requires a statement of reasons. It is therefore likely that a document, when referred to in the reasons, should be regarded as incorporated into the award if the statement of reasons cannot be understood without the document being read. Robson's case (supra) (at 222); Ukrainian case (supra) at [25].
In this case, the appellant criticises that part of the reasons in the award which reads:
"A critical factor to the issue of planning considerations brought about by the Government Departments is correspondence from the Minister of the Environment (Mrs Cheryl Edwardes) in letter of 2nd November 2000 and the Minister of Planning (Mr Graham Kierath) in letter of 9th February 2001, making it quite clear the land is incapable of being made environmentally acceptable."
The appellant submits that the two letters should be treated as forming part of the award. The respondent submits that they should not. In my opinion, it is not possible to understand the reasons without referring to the content of those letters and they should be regarded as part of the award for the purpose of determining whether or not there is a manifest error on the face of the award.

Proposed ground 1 - Pointe Gourde

The Arbitrator correctly stated what the agreement provided for. It reflected what is said in s 32 of the WAPC Act, namely that the value "shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Regional Planning Scheme." The case law explains that regard must be paid not only to the Scheme itself, but also to the steps leading to the Scheme: see Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 [62] to [70] and that may include circumstances where a restrictive decision has been made by some other authority, but influenced by consultation with the resuming authority: The Crown v Murphy (1990) 64 ALJR 593 at 595.
The appellant submits that once the two letters are examined, the statement by the Arbitrator that he gave "critical" weight to the correspondence was a failure to recognise that these letters "formed a part of the process leading to the reservation" and that their effect should have been disregarded and that to give them critical weight was to err in law. The appellant submitted in its written submissions that:
(a)the letter from the Minister for the Environment "stands only for the proposition that the particular amendment then under consideration was not acceptable, and said nothing about the capacity of some other, perhaps less intensive proposal to be environmentally acceptable".
(b) "More significantly for the purposes of the question of law identified, it is clear that the reservation which formed part of the Scheme was an important consideration in the decision to refuse approval and [that] the Arbitrator … failed to make any assessment of the extent to which that aspect of the matter should be excluded from his consideration."
(c)"Even more significant in this respect is the letter from the Minister for Planning … in which it is clear that the only reason for his rejection of the proposed amendment was the fact that the land was initially included in the Inner Peel Structure Plan as Open Space and Conservation and was subsequently included as Regional Open Space in the Peel Region Scheme".
The appellant also submitted that insofar as the Arbitrator concluded that a hypothetical purchaser would have entirely discounted any prospect that approval might be obtained to the subdivision of the land, the Arbitrator had "impermissibly taken into account events which plainly formed part of, or were explicable by reference to, the process of reservation." The appellant submits that these errors are manifest errors of law appearing on the face of the award.
These submissions cannot be sustained. In Mount Lawley Pty Ltd v Western Australian Planning Commission at [66], when speaking about the application of the Pointe Gourde principle the Court said:
"[T]he reserved land is to be valued without regard to any increase or decrease in its value which is attributable wholly or in part to the reservation. However, as the High Court held in Queensland v Murphy, the reservation cannot be isolated from the circumstances in which it was created."
The High Court held in The Crown v Murphy at 496:
"A characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute."
When these characteristics or attributes are "ineluctable" (Mount Lawley [154]) characteristics or attributes existing prior to the commencement of the Scheme then they must be taken into account in the valuation process. The fact that land has a high conservation value does not mean per se that it cannot be subdivided and developed. It has to be recognised that on many occasions, conservation of flora and fauna is ignored by authorities in favour of development. What was in issue in the proceedings before the Arbitrator was whether, in the circumstances of this case and in view of the history of this land, the conservation values of this land which were recognised long before any proposal to resume the land as regional open space were likely to lead a hypothetical purchaser to the view that the authorities would refuse to approve the subdivision and development of the land. If a hypothetical purchaser would have concluded that refusal was likely, then the assumptions on which the appellant's valuers expressed their opinion about value, could not be sustained.
In my opinion, the Arbitrator, when referring to the two Ministerial letters, and when he said that it was "quite clear the land is incapable of being made environmentally acceptable" was expressing a conclusion about the "ineluctable" attributes of the land based on the history of the land since 1981 and before the first steps were taken to reserve the land under the Peel Region Scheme. The Arbitrator says as much in the paragraph in his reasons which followed the criticised portion of his reasons. This paragraph referred to the fact that proposals to rezone that had occurred since 1981 "all resulting in refusals to consider any alternative zoning", were events which he considered could not be overlooked or disregarded.
The reservation of the land as Regional Open Space in the Peel Region Scheme (and steps leading to it) were merely a response to the view that there were important environmental values associated with this land which had been expressed by Hill et al in the paper they published, recognised by the Water and Rivers Commission when they adopted the CCW classification and recognised by the EPA before amendment 140 or the Peel Region Scheme were first proposed. The Arbitrator concluded that the growing resistance which had been shown by the authorities to attempts to develop or rezone this land meant that even if the Scheme (ie the reservation of the land for Regional Open Space in the Peel Scheme and the steps leading to it) were not taken into account, a hypothetical purchaser would not have been prepared to pay the higher price which would have been warranted had there been no such view and no such resistance.
It is true that both Ministers referred in their letters to the proposed Scheme, but as is clear from the Ministers' letters, the environmental factors leading to the reservation were important factors leading to the EPA's view that the proposal to amend TPS4 was not environmentally acceptable. The letter of the Minister for the Environment made it plain that the remnant vegetation on the land was considered to be locally and regionally significant, that the land supported an area of native vegetation which was representative of the structure and floristics of the natural vegetation of the Peel region, that it abutted a C‑class nature reserve, that the land contained one of few areas of this type of remnant vegetation greater than 20 hectares in size and that the proposed amendment would result in significant impacts on the value of wetland on Lot 193. The Minister for Planning expressly stated that the Peel Region Scheme was amended to include the land as Regional Open Space to protect the environmental values referred to. These environmental values were the prior ineluctable qualities which led to the resistance from the authorities which the appellant had met in its effort to rezone and develop the land before the reservation of the land as Regional Open Space was proposed. It is also true that the agreement between the Ministers about a statement under s 48F(2) of the EPA Act related only to amendment No 40 to TPS4, but this does not in any way diminish the importance placed by both Ministers on the environmental values of the land which led to the reservation of the land as Regional Open Space in the Peel Scheme. This situation is similar to the "other circumstances" example given in Housing Commission of New South Wales v San Sebastion Pty Ltd (1978) 140 CLR 196 at 207 referred to in Mount Lawley (supra) at [152].
The Arbitrator did not fail to construe the arbitration agreement as embodying the principle in Pointe Gourde as the appellant contends in ground 1(a). On the contrary, the Arbitrator expressly recognised the fact that the principle was embodied in the arbitration agreement and he bore it in mind when making his determination. The contention in ground 1(b) that the Arbitrator failed to identify the entirety of the process which led to the reservation is not borne out by the Arbitrator's reasons. He did identify the process which led to the reservation and excluded the effect of that process, but properly took into account the prior ineluctable factors which led to the reservation. The contention in ground 1(c) that the Arbitrator failed to determine the extent to which the Ministerial letters formed a part of the Scheme must fail. The Arbitrator determined that they did not form part of the Scheme. In effect he recognised that the letters recognised the ineluctable qualities of the land which preceded the Scheme. That is why the letters were given "critical" weight. Ground 1(d) fails for the same reasons. A hypothetical purchaser would have reached the same conclusion as the Arbitrator.
In my opinion the appellant has not established that the Arbitrator made any error of law on the face of the award. As a result, leave to appeal in relation to ground 1 should be refused.

Ground 2

Ground 2 alleges a failure to take into account allegedly uncontradicted evidence of Mr Wells, an environmental scientist who was called by the appellant. His evidence was to the effect that in his opinion the land had been wrongly categorised as CCW in the report by Hill et al. His opinion was that from the environmental perspective the subject land was the same as neighbouring land Lot 194 which the owners had been permitted to subdivide.
It is true that Mr Wells, years before the arbitration and at the arbitration hearing, expressed the opinion that the subject land had been wrongly categorised as CCW in the report by Hill et al and that consequently it should not have been categorised as CCW in the Water and Rivers Commission position statement. It is also true that no other witness expressed a contrary opinion. However, as mentioned above, no steps had been taken under the protocol to reclassify the land.
The Arbitrator in his summary of the evidence, recorded the fact that two other witnesses, Mr Dawson and Mr Fitzgerald, gave evidence referring to the Water and Rivers Commission protocol. Their evidence was that before any reclassification could occur, various departments would require "certain evidence and documentation and then they would make a judgment as to whether the claims are correct or incorrect". The Arbitrator referred to the evidence of Messrs Dawson and Fitzgerald that "until such time as a re evaluation [sic] is conducted by the appropriate process … the classification remains [CCW]".
The Arbitrator also referred to the fact that if the Department of Environment were to respond to Mr Wells' claims, Mr Dawson "imagined they would want to see a broader range of expertise than soil expertise in dealing with any indication that the mapping is incorrect, apart from the other environmental issues." The Arbitrator then referred to the absence of any evidence about the cost of professional consultants to prepare a submission in accordance with the protocol and that as a result it was not possible to "contemplate what the circumstances may have been had … the vendor taken action to object to the whole of the Lot 193 being designated CCW and lodged a submission in line with the … protocol."
In the light of all of that evidence, the Arbitrator had to decide what a hypothetical purchaser would consider was the likely outcome of a subdivisional application in relation to the land. The Arbitrator decided that a prudent purchaser would be one "limited to those seeking a lifestyle property accepting the fact 'rural' zoning would remain as is with the western wetland portion of the lot ceded to Regional Open Space." The Arbitrator made an assessment of Mr Wells' evidence and the evidence of Mr Dawson and Mr Fitzgerald in reaching his conclusion. The appellant's contention that Mr Wells' evidence was uncontradicted evidence was correct only in the sense that Mr Wells was the only witness to offer an opinion that the CCW classification of the land was wrong; but that was

not the end of the matter. The question then was whether a hypothetical purchaser might or might not conclude that it could achieve a reclassification of the land under the protocol. The Arbitrator considered all the evidence and considered that it was not possible to decide what might have happened if an application had been made under the protocol. He decided it was not possible to decide this because of lack of evidence from the appellant. No error of law is revealed.

The appellant also pointed to the evidence that the neighbouring land Lot 194 was comparable to the subject land and that it had been subdivided. However, that was only one piece of evidence presented to the Arbitrator. No error of law is revealed just because this afforded some evidence which might have suggested that a purchaser would gain approval to subdivide the subject land. There was an abundance of evidence to the contrary. In any event it is apparent from the aerial photographs referred to on the appeal, that Lot 194 is not comparable with the subject land. Lot 194 appears to have been substantially cleared so that only some areas of remnant vegetation remained.

Ground 2 also contends that the Arbitrator erred in "misinforming himself of the test to be applied in determining the subdivisional potential of the land". The appellant contends that the question is not whether in the past the protocol was pursued, but whether a hypothetical purchaser could have pursued the protocol to alleviate the wetland designation. The Arbitrator was quite aware that this was his task. He expressly concluded what the attitude of a "developer/purchaser" would have been and the fact that a "prudent" purchaser would be limited to one seeking a lifestyle property. He did not therefore err by concentrating on the history of the land rather than asking himself what the hypothetical purchaser would have considered about the land and the price that he would have been prepared to pay for it. In my opinion no error of law is revealed. Leave to appeal in relation to ground 2 should be refused.

Conclusion

The appellant's application for leave to appeal in relation to both grounds should be refused.
MILLER AJA: I have had the opportunity of reading in draft the reasons for decision of Pullin JA. I agree with those reasons and agree that the appeal should be dismissed. I have nothing to add.