Parramatta City Council v R&R Fazzolari Pty Ltd; Parramatta City Council v Mac's Pty Ltd
[2008] NSWCA 132
•11 June 2008
NEW SOUTH WALES COURT OF APPEAL
CITATION:
Parramatta City Council v R&R Fazzolari Pty Ltd; Parramatta City Council v Mac's Pty Ltd [2008] NSWCA 132
FILE NUMBER(S):
40726/07; 40727/07
HEARING DATE(S):
1 May 2008, 2 May 2008
JUDGMENT DATE:
11 June 2008
PARTIES:
Parramatta City Council
R&R Fazzolari Pty Ltd
Mac's Pty Ltd
The Minister Administering the Local Government Act 1993
JUDGMENT OF:
Hodgson JA Tobias JA Palmer J
LOWER COURT JURISDICTION:
Land & Environment Court
LOWER COURT FILE NUMBER(S):
L&E 40818/07; L&E 40810/07
LOWER COURT JUDICIAL OFFICER:
Biscoe J
LOWER COURT DATE OF DECISION:
27 September 2007
LOWER COURT MEDIUM NEUTRAL CITATION:
Mac's Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council [2007] NSWLEC 623
COUNSEL:
A: N Hutley SC / R Carruthers / C Ireland (for Parramatta City Council)
R: N J Williams SC / I Hemmings (for Fazzolari Pty Ltd)
1R: J Gleeson SC / M Seymour (for Mac's Pty Ltd)
2R: Submitting appearance (for the Minister)
SOLICITORS:
A: Blake Dawson, Sydney
R: Clayton Utz, Sydney (for Fazzolari Pty Ltd)
1R: Hunt & Hunt, Sydney (for Mac's Pty Ltd)
2R: Crown Solicitor, Sydney (for the Minister)
CATCHWORDS:
Local government – Statutory functions – Compulsory acquisition – Purpose of acquisition – Whether acquisition was for purpose of exercising statutory service function – Land adjoining or in vicinity of other land proposed to be compulsorily acquired – Public-private partnership for development – Whether council proposed to acquire land for purpose of resale – Meaning of resale – Distinction between purpose and motive – Dominant purpose – Implementation of Parramatta Civic Place Master Plan.
LEGISLATION CITED:
Lands Acquisition Act (NT) section 43
Land Acquisition (Just Terms Compensation) Act 1991 (NSW) sections 11, 19
Local Government Act 1919 (NSW) sections 321, 322
Local Government Act 1993 (NSW) sections 6, 7, 8, 21, 23, 24, 45, 186, 187, 188, 400B, 400E, 400I, 403, 405, 406 and 407
Local Government Amendment (Public-Private Partnerships) Act 2004 (NSW)
Roads Act 1993 (NSW) sections 41, 43
Suitor’s Fund Act 1951 (NSW)
Sydney Regional Environmental Plan No.28 – Parramatta clauses 10, 15 and 28
Sydney Regional Environmental Plan No.28 – Parramatta (Amendment No.6)
CATEGORY:
Principal judgment
CASES CITED:
AFA v Garendon Investments Pty Ltd (1995) 37 NSWLR 221
CC Auto Port Pty Ltd v Minister for Works [1965] HCA 55; (1965) 113 CLR 365
Chan v Dainford Ltd [1985] HCA 15; (1985) 155 CLR 533
Clunies Ross v The Commonwealth [1984] HCA 65; (1984) 155 CLR 193
Collins v Willoughby Municipal Council [1968] 1 NSWR 151; (1967) 14 LGRA 256
Da Rous v Burwood Municipal Council [1996] NSWLEC 52 (5 March 1996)
Griffiths v Minister for Lands, Planning & Environment [2008] HCA 20 (15 May 2008)
JR & EG Richards (NSW) Pty Ltd v Scone Shire Council & Anor [1995] NSWLEC 200 (24 November 1995)
Kelo v City of New London (2005) 545 US 469
Mac’s Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council; R&R Fazzolari Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council [2007] NSWLEC 623
Minister for Public Works and Local Government v Duggan [1951] HCA 29; (1951) 83 CLR 424
News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563
Prentice v Brisbane City Council [1966] Qd R 394; (1966) 13 LGRA 162
Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 56 ALJR 678; (1982) 41 ALR 467
Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87
Werribee Council v Kerr [1928] HCA 41; (1928) 42 CLR 1
Woollahra Municipal Council v Minister for the Environment (1991) 23 NSWLR 710
TEXTS CITED:
DECISION:
In proceedings Nos. CA 40726/07 and CA 40727/07:
(a) Appeals allowed.
(b) In each matter the declaration and orders (other than Order 4) made by Biscoe J on 28 September 2007 be set aside and in lieu thereof:
(i) the Class 4 Applications filed on behalf of Mac’s Pty Limited on 21 August 2007 and on behalf of R & R Fazzolari Pty Ltd on 22 August 2007 be dismissed.
(ii) the respondent in each application to pay the appellant’s costs of the application and of the appeal from the decision of Biscoe J with respect to that application but to have with respect to each appeal a certificate under the Suitor’s Fund Act 1951, if otherwise qualified.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40726/07
CA 40727/07
L&E 40818/07
L&E 40810/07HODGSON JA
TOBIAS JA
PALMER JWednesday 11 June 2008
PARRAMATTA CITY COUNCIL v R & R FAZZOLARI PTY LTD
PARRAMATTA CITY COUNCIL v MAC’S PTY LTD & ANOR
Judgment
HODGSON JA: I agree with the orders proposed by Tobias JA and, subject to what I say below, I agree substantially with his reasons.
Under s 186(1) of the Local Government Act 1993 (the LG Act), it is necessary to identify “the purpose” for which land is acquired. A similar expression was held in C C Auto Port Pty Ltd v Minister for Works (1965) 113 CLR 365 to be satisfied by a determination that something was “the initiating and the abiding purpose”. In my opinion the same idea is conveyed by the more familiar expression “dominant purpose”.
In identifying what is the dominant purpose, it is important to have in mind distinctions such as those referred to by Gleeson CJ in News Ltd v South Sydney District Rugby League Football Club (2003) 215 CLR 563 at [18], between purpose, effect and motive, and also between ends and means. But in my opinion, these are not always mutually exclusive categories with clear and sharp divisions; and just because something might be characterised as an effect or motive does not necessarily mean that it cannot also be a purpose.
In submitting that the purpose of acquiring the respondents’ land was not for one or more of the Council’s functions, Mr Gleeson SC for the respondents submitted that the function served by the Master Plan was a planning function, and that this function did not extend to the Council becoming a developer to carry out that plan. He further submitted that, insofar as a developer might promise the Council for reward to carry out a development which would serve functions of the Council, this could not make acquisition of land, for the purpose of transferring it to that developer to carry out a development largely comprising non-public commercial and residential buildings, acquisition for the purpose of functions of the Council.
It is true that the function served by the Master Plan was a planning function; but having regard to the substantial public purposes served by the Master Plan it was, in my opinion, within the functions of the Council to take steps to put the Master Plan (or a variation of it serving similar public purposes) into effect. In my opinion, in the circumstances set out by Tobias JA, this was the dominant purpose of the Council in acquiring the respondents’ land. Other purposes, motives, effects and means can fairly and reasonably be regarded as subsumed in and/or swamped by this dominant purpose.
This same approach also provides an answer to the question arising under s 188(1). In order to engage s 188(1), in my opinion, the purpose of resale must be the dominant purpose, or at least a substantial element of the dominant purpose or a substantial purpose which is independent of the dominant purpose that satisfies s 186(1). In the present case, re-sale is neither the dominant purpose nor a substantial element of it, nor is it a substantial purpose independent of what I consider to be the dominant purpose. As before, any purpose of re-sale is subsumed in and/or swamped by the dominant purpose of putting into effect the substance of the Master Plan.
Had I come to a different view on this matter, I may have considered the transaction to amount to a re-sale. However, I may then have found that s 188(2)(a) applies. It is not necessary to express a final view on these questions.
TOBIAS JA: On 15 December 2006 the Minister administering the Local Government Act 1993 (NSW) (the Minister), pursuant to s 187(2) of the Local Government Act 1993 (the LG Act), granted his approval to Parramatta City Council (the Council) giving a Proposed Acquisition Notice under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (the Just Terms Act) to each of R&R Fazzolari Pty Ltd (Fazzolari) and Mac’s Pty Ltd (Mac’s) (together the respondents) as the respective owners of certain land fronting Darcy Street, Parramatta (together the respondents’ land).
Pursuant to that approval on 1 June 2007 the Council issued to each of the respondents a Proposed Acquisition Notice in accordance with s 11 of the Just Terms Act. On 21 August 2007 in the case of Mac’s, and 22 August 2007 in the case of Fazzolari, Class 4 applications were filed in the Land and Environment Court on behalf of each respondent seeking declarations that the Council’s proposed compulsory acquisition of their respective properties pursuant to s 186(1) of the LG Act was unlawful, and seeking orders restraining the Minister from publishing a notice in the Gazette pursuant to s 19 of the Just Terms Act declaring the respondents’ land to have been acquired by compulsory process.
On 27 September 2007 Biscoe J made the declarations and orders sought by the respondents: Mac’s Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council; R&R Fazzolari Pty Ltd v Minister Administering Local Government Act 1993 and Parramatta City Council [2007] NSWLEC 623. It is from that decision that the Council appeals to this Court.
The relevant statutory provisions
It is convenient to set out the statutory context relevant to the issues debated on the appeal and against which the relevant facts are to be understood. Those provisions fall into two categories: the first comprises the provisions of the LG Act which empower a council to acquire land. The second comprises those provisions of the same Act which identify the “functions” of a council in the exercise of which it is empowered to acquire land.
Part 1 of Chapter 8 of the LG Act is entitled “Acquisition of land”. For present purposes, the relevant provisions of that Part are as follows:
“186 For what purposes may a council acquire land?
(1)A council may acquire land (including an interest in land) for the purpose of exercising any of its functions.
(2) Without limiting subsection (1), a council may acquire:
(a) …
(b)land which forms part of, or adjoins or lies in the vicinity of, other land proposed to be acquired under this Part.
(3) ...
187 How does a council acquire land?
(1)Land that a council is authorised to acquire under this Part may be acquired by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991.
(2)A council may not give a proposed acquisition notice under the Land Acquisition (Just Terms Compensation) Act 1991 without the approval of the Minister.
188 Restriction on compulsory acquisition of land for re-sale
(1)A council may not acquire land under this Part by compulsory process without the approval of the owner of the land if it is being acquired for the purpose of re-sale.
(2)However, the owner’s approval is not required if:
(a) the land forms part of, or adjoins or lies in the vicinity of, other land acquired at the same time under this Part for a purpose other than the purpose of re-sale, or
(b) ...(3) ...”
For the purpose of s 186(1) the word “function” is defined in the Dictionary to the LG Act as including “a power, authority and duty”.
Chapter 2 of the LG Act is entitled “What are the purposes of this Act?”. Section 7 sets out those purposes which, relevantly, include the following:
“(d)to give councils:
¦the ability to provide goods, services and facilities and to carry out activities, appropriate to the current and future needs of local communities and of the wider public;
¦…
¦a role in the management, improvement and development of the resources of their areas.”
Chapter 3 of the LG Act is entitled “What is a council’s charter?”. Section 8(1) provides that a council has, relevantly, the following charter:
“¦to properly manage, develop, protect, restore, enhance and conserve the environment of the area for which it is responsible, in a manner that is consistent with and promotes the principles of ecologically sustainable development;
¦to bear in mind that it is the custodian and trustee of public assets and to effectively account for and manage the assets for which it is responsible;
¦to raise funds for local purposes by the fair imposition of rates, charges and fees, by income earned from investments and, when appropriate, by borrowings and grants.”
Section 8(2) mandates that a council in the exercise of its functions must pursue its charter. The Introduction to Chapter 3 states that the Charter comprises a set of principles to guide a council in the carrying out of its functions.
Chapter 5 is entitled “What are a council’s functions?”. Section 21 provides that a council has the functions conferred or imposed on it by or under the LG Act. Section 23 provides that a council may do all such things as are supplemental or incidental to, or consequential on, the exercise of its functions.
The LG Act identifies six categories of council functions under that Act being Service, Regulatory, Ancillary, Revenue, Administrative and Enforcement functions.
In the present case the Court is primarily concerned with a council’s Service functions, which are set out in Chapter 6 of the LG Act. Part 1 of Chapter 6 is headed “General”. It contains s 24 which is in the following terms:
“24.Provision of goods, services and facilities and carrying out of activities
A council may provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community and of the wider public, subject to this Act, the regulations and any other law.”
In the present case the Council maintained that its proposed acquisition of the respondents’ land was for the purpose of exercising its functions under s 24 to “carry out activities, appropriate to the current and future needs within its local community and of the wider public”.
The Introduction to Chapter 6 is relevantly in the following terms:
“This chapter confers on councils their service or non-regulatory functions. Examples of these functions include the provision, management or operation of [amongst other things]:
¦ community services and facilities
¦ cultural, educational and information services and facilities
¦ public transport services and facilities
¦ land and property development
¦ housing.These functions are conferred in broad terms in Part 1 [which comprises only s 24].”
Section 6 of the LG Act provides, relevantly, that Introductions to Chapters are:
“… explanatory notes and do not form part of this Act. They are provided to assist understanding.”
It was not suggested by the respondents that the Introductions to Chapters were irrelevant to the determination of the true construction of the provisions so introduced including, in particular, the Introduction to Chapter 6 with reference to the construction of s 24.
The relevant factual background – a chronology
Mac’s is the owner of land known as No. 160 Church Street, Parramatta, located on the corner of Church and Darcy Streets (Mac’s’ land). Fazzolari is the owner of land known as Nos. 20-26 Darcy Street, Parramatta (Fazzolari’s land). For many years the Council has had under consideration the amalgamation and redevelopment of the land bounded by Smith, Darcy, Church and Macquarie Streets, Parramatta (the Civic Place site) and known as Civic Place. The site has an area of approximately 32,000 m² of which the Council owned a little over 50%. Parramatta Railway Station and Transport Interchange are located immediately to the south of the site on the other side of Darcy Street. Located on the site are the Council’s administrative offices, council chambers, the historic Parramatta Town Hall, a library and community meeting rooms.
The Civic Place development involves the conversion of the site of council-owned and private properties (including those of the respondents) into what the primary judge described (at [4]) as a “sophisticated $1.4 billion revitalisation of the Parramatta City Centre”. Its planning genesis was generally as follows.
On 20 August 1999 the Sydney Regional Environmental Plan No.28 – Parramatta (SREP28) was made, creating eight precincts within what was referred to as the “Parramatta Primary Centre” of which Precinct 1 was the City Centre. SREP28 was amended on 14 March 2003 by the Sydney Regional Environmental Plan No.28 – Parramatta (Amendment No.6). One of the aims of the amendment was:
“to provide for development in Civic Place to occur in accordance with the principles of the document entitled Civic Place Master Plan.”
Civic Place was defined in the Schedule 1 Dictionary to the SREP28 to mean:
“land within the Parramatta City Centre that is located on the northern side of the Parramatta Railway Station and bounded by Macquarie Street, Smith Street, Darcy Street and Church Street Mall.”
Clause 10(2) of SREP28 provided that consent must not be granted for development on land to which cl 10 applied unless the Council had taken into consideration the master plan for that land. Clause 10 applied to the land described in Part 1 of Schedule 2 to SREP28, which included as a master plan site that referred to as Civic Place. Within Civic Place was a “Special Area” referred to as “Civic Square” which was defined as the public space shown on the map marked “Parramatta City Centre – Special Areas Map – Civic Place, Design Framework Map” with pedestrian linkages to the adjoining street networks.
Clause 28 of SREP28 related to the development of land in or adjoining a Special Area within the City Centre Precinct. Clause 28(2)(i) relevantly required the Council to have regard to whether development on the Civic Place site:
“(i) is generally consistent with the master plan for Civic Place… and
(ii) provides a safe pedestrian orientated public square with an area of at least 6,000 square metres with an east-west axis… and
(iii) provides safe and accessible east-west at-grade and north-south through-site pedestrian links, and provides clear and easy at-grade access to the railway station, and
(iv) …
(v) provides north-south and east-west public view corridors to St Johns Church, the Town Hall, Lancer Barracks and Leigh Memorial Church, and
(vi) …
(vii) provides an at-grade east-west public access zone to the north of the building at the Smith and Darcy Street corner and the south of the Parramatta Town Hall, and
(viii) …
(ix) will ensure that less than 40% of the total floor area on the Civic Place site is given over to residential use, and
(x) will ensure that more than 40% of the total floor area on the Civic Place site is given over to commercial office space, and
(xi) …
(xii) …
(xiii) establishes a place that reflects the Primary Centre status of Parramatta and has an identity and heritage values that provide an appropriate gateway to the Central Business District, and
(xiv) will complement the functioning of the railway station and public transport interchange and minimises potential impacts on public transport access and patronage through the appropriate location of vehicular access and egress points… the identification and implementation of principles for the promotion of public transport access to future users of the site… and
(xv) …
(xvi) …
(xvii) comprises buildings of exceptional architectural merit… and
(xviii) provides an adequate distance of separation between the proposed towers at the south-eastern edge of the site so as to ensure that building mass is adequately broken up…
…”
Part 3 of SREP28 related to the City Centre Precinct and cl 15 sets out its aims which include the following:
“(a) to enhance the Parramatta City Centre as a pre-eminent commercial, retail, community services and cultural tourism centre in the Greater Metropolitan Region,
(b) to provide sufficient development capacity for the growth of Parramatta City Centre in its retail, residential and commercial functions,
(c) to enhance access to Parramatta, particularly by public transport…
(d) …
(e) to protect the long-term commercial development potential of Parramatta City Centre…”
On 26 November 2001 the Council resolved pursuant to cl 10(4) of SREP28 to appoint the Government Architect to undertake the preparation of a master plan for Civic Place. A draft Master Plan was duly prepared and publicly exhibited for 28 days commencing mid-October 2002. On 10 December 2002 the Council resolved to present the draft Master Plan to the Central Parramatta Planning Committee (CPPC) for adoption. On 14 May 2003 the CPPC resolved to adopt the Master Plan with effect from 1 June 2003.
In the meantime, pursuant to the provisions of Part 2 of Chapter 13 of the LG Act, on 26 June 2002 the Council adopted a management plan for the period 2002/03-2005/06 which identified the redevelopment of Civic Place as the largest individual development in Parramatta with a total investment of more than $500 million, the expected creation of some 7,000 jobs and as the gateway to the Parramatta Central Business District. It was one of the “Big Seven Major Capital Items” undertaken by the Council over the five year period 2001/02 to 2005/06.
Under the heading “Asset Management Strategy” in Part 2 of the management plan (which contained its strategic and operational components), it was stated:
“The construction of the Parramatta Rail Station and Transport Interchange, and provision of transitways, will bring further Government investment to Parramatta, and will give Council the opportunity to proceed with the Master Plan for the redevelopment of Civic Place. Private sector investment and employment should flow from these Government initiatives.”
The plan then stated that the focus of the Council’s Asset Management Strategy included the planning for the Civic Place redevelopment as one of the “Big Seven” major capital items.
Under the sub-heading “Civic Place Redevelopment” the following was stated:
“The REP [SREP28] commits Council and its partners to redevelop Civic Place in conjunction with the construction of the Parramatta Rail Station and Transport Interchange. It is likely that a multi-million dollar project will be undertaken over the next several years. The first step will be to prepare a Master Plan for which work commenced in 2001/02 with the appointment of a project manager, and will continue in 2002/03.”
I interpolate that in the foregoing context s 403 of the LG Act required a draft management plan to be prepared pursuant to Part 2 of Chapter 13 to state, relevantly, the principal activities that the council proposed to conduct including the capital works to be carried out during the period covered by the plan, as well as the activities of a business or commercial nature to be undertaken by the council. The redevelopment of Civic Place was, clearly, one of the activities so identified.
At all material times it was the intention of the Council to acquire land within the Civic Place site not already owned by it, including the respondents’ land. Such acquisitions were regarded as necessary in order to implement the Civic Place redevelopment, as contemplated by the Civic Place Master Plan. It was also contemplated that the Council would undertake the redevelopment in conjunction with a private sector partner.
The Master Plan was released to the public in June 2003. Under the heading “Overview” the following statements were made:
(a)“The purpose of the Master Plan is to provide the development framework for the civic centre of Parramatta that will guide the development and redevelopment of private and public land including public domain areas, public facilities and services”
(b)“Civic Place, when completed will become a major focus of civic public spaces in Parramatta”
(c)“Parramatta Rail Link is currently managing the delivery of the Parramatta Transport Interchange which integrates improvements to the rail station, new concourse and station box for the Chatswood/Parramatta Rail Line and the Transitway bus system. The Master Plan makes very significant improvements to the ease, amenity and safety of pedestrians accessing the Transport Interchange and as such its implementation will make a major contribution to the success and viability of that facility”
(d)“As envisaged Civic Place will include approximately 65,000 m² of commercial accommodation, more than 60,000 m² of residential development, 3,000 m² of entertainment and leisure, 5,000 m² of community facilities and 35,000 m² of retailing”
(e)“The Master Plan encourages land amalgamation and it is critical that the open space, pedestrian circulation, parking and access and the retail planning are integrated across the whole site”
(f)“The Master Plan utilises the historic axis between St Johns Church and Lancer Barracks as a major circulation route and to define the site layout. To the south of that line, backing on to Darcy Street and the rail station are the taller buildings, trapping the sun and creating a high quality northern face to the sequence of public ‘spaces’ ”
(g)“The Master Plan ensures that the design development of Civic Place will deliver a character that is local to Parramatta, focussed on public amenity and quality, is warm and responsive, inclusive and populist, active and safe. This is ensured through the definition of the elements of the public realm including streets and arcades, colonnades and squares” .
Under the heading “Preamble” the Master Plan also contained the following statements:
“Improved access and public transport to and from Parramatta City Centre will be needed to support employment growth. As a consequence, Parramatta is the focus of significant State Government investment into public transport with the new Parramatta Transport Interchange planned to open by the end of 2006. This project will involve upgrading the existing Parramatta Railway Station as part of the Parramatta and Chatswood Rail Link project and consolidating all bus operations into an integrated public transport interchange.
…
The new Public Transport Interchange will link City Rail services with the Western Sydney Rapid Bus Transitway network …
The redevelopment of the Parramatta Civic Place area and the new Public Transport Interchange will be a major catalyst in the economic prosperity and growth of the Parramatta City Centre.”
The Master Plan stated that its purpose was “to provide a development framework for the civic centre of Parramatta that will guide the development and redevelopment of private and public land including public domain areas and public facilities”. In particular it provided detail on the resolution of the following key issues:
“¦Implementing established regional and local planning objectives for the City centre;
¦Creation of a gateway identity befitting Parramatta’s role as a regional centre;
¦Facilitating an economically-feasible mix of land uses which respond to the site’s location at the centre of Parramatta;
¦Accommodating and strengthening the civic focus of the site;
¦Conservation and celebration of environmental, social and cultural heritage;
¦Implementing new development that is sustainable.”
It was further stated that the Master Plan:
“will contribute to the City’s overall economic growth robustness, fulfil the ceremonial and civic role, provide community facilities and services and establish best practice urban design, environmental management and government leadership.”
Under the heading “Built Environment”, the Master Plan referred to a survey of the existing built environment in the Central Business District and concluded that:
“the lack of a significant component of ‘A’ class accommodation in the narrow band of sectors [the government, financial and insurance sectors] in the Parramatta market were major disincentives to further investment and development.”
In the section headed “Master Plan vision”, it was stated that the Master Plan area must create a place which:
“¦Provides sufficient opportunity for the location of civic land uses and functions befitting Parramatta’s role as the metropolitan area’s second CBD.
¦Provides for employment opportunities commensurate [with] existing and proposed reasonable public transport services and which contribute to the jobs targets identified in strategic planning documents.
¦Has an urban structure and public domain that allows the safe and convenient movement of pedestrians between the Transport Interchange and other activities in the Parramatta City Centre.”
Under the heading “Master Plan objectives” it was stated, relevantly, that the Master Plan had the following objectives:
“¦Promote the significance of Civic Place in the context of Parramatta and Western Sydney and as the focus of the revitalisation of the Parramatta City Centre.
¦Provide guidance for the future redevelopment and management of the Civic Place site including the scale, form and types of development within a publicly accountable process.
¦Enable development to proceed efficiently by clarifying issues and identifying requirements for coordination and future consideration.”
Under the heading “Civic Place – a mix of uses” it was stated that Civic Place would provide approximately 4,770 jobs or approximately 20% of the total job creation target for the City Centre. That target required 65,000 m² of commercial office space, 60,000 m² of residential space and 35,000 m² of retail space. The mix of land uses designed to achieve the nominated outcomes for Civic Place would establish an inner city residential and working community together with active and vibrant social, cultural and street life. Residential land uses would be restricted in order to preserve Civic Place as an employment centre.
Under the heading “Subdivision and land amalgamation”, the following was stated:
“The Master Plan encourages land amalgamation to create minimum lot sizes of 1,200 square metres in order to achieve the best possible outcomes for the site and contribute to REP employment targets.”
The evidence established that the area of Mac’s’ land was approximately 260 m² and Fazzolari’s land between 631 m² and 648 m².
Under the heading “Design Principles”, the Master Plan stated that those principles were, inter alia, to provide:
“a well-balanced mix of uses that will promote a sense of community and support the communities Parramatta serves.”
Under the heading “Access”, the following was stated:
“Darcy Street will be closed to through traffic and serves as a drop off and pick up area for the railway station and as a servicing and car parking access to the Civic Place site.”
Under the heading “Parking”, it was stated that the possible number of car parking spaces generated by the Master Plan proposal was 2,787 of which 642 would be generated by commercial, cultural and community uses, 1,520 by the proposed retail uses and 625 by the proposed residential uses. However, in line with the Council’s policies to encourage public transport usage, the total number of vehicles accommodated on the Civic Place site would be limited to 2,500. Figure 7.11 of the Master Plan indicated four levels of underground or basement car parking, most of which was to extend over nearly the whole of the site.
Under the heading “Implementation and phasing” and the sub-heading “Development phasing”, the following was stated:
“This plan promotes development of the Civic Place site including the public domain in a single phase in order to reduce the impacts of construction on the Parramatta City centre and transport interchange. Development proposals must facilitate the early and timely delivery of the Master Plan vision and focus on the delivery of high quality public domain.”
Figure 7.5 illustrated the Public Domain Concept. Relevantly, it depicted pedestrian through links to the railway station and transport interchange and further depicted Darcy Street as being closed to traffic and used as open space with the entry to the underground car parking located at the intersection of Darcy and Smith Streets as confirmed by the Building Mass Diagram in Figure 7.16.
There is no doubt that at all material times the Council perceived the implementation of the Civic Place Master Plan as one which it would undertake or at least progress by seeking to acquire all land not otherwise owned by it for the purpose of amalgamating the whole site. Although the Council was able to access funds for the purpose of acquiring the properties it did not already own, it was understood that a development partner would be required to undertake the redevelopment itself.
The internal reports generated within the Council, and summarised by the primary judge, make it tolerably clear that the Civic Place redevelopment was regarded by the Council as a holistic project which would require the acquisition and amalgamation of all properties within the site before the project was taken to the market to ascertain its response to the financial structure of the project and the various funding alternatives.
To this end, on 24 November 2003 the Council resolved to seek the approval of the Minister for the compulsory acquisition of what were referred to in the documentary material as the “Darcy Street properties” which included the respondents’ land.
In his report of 24 November 2003 to the Council, the Manager, Property Services, stated:
“10.Council proposes to redevelop Civic Place in accordance with the provisions of the Civic Place Master Plan and SREP28.
11. The development will be for the following purposes:
•to assist the Parramatta City centre to reach its target of employment growth of 60,000 jobs by 2021, through the creation of 4,770 jobs at Civic Place;
• to increase utilisation of public transport;
• to provide open space;
•to provide revamped Council facilities including an administration building, library, senior citizens centre and toilets;
•to provide additional facilities to the public including a new childcare centre; and
•to provide commercial, retail and residential development and facilities.
12. …
13. …
14. …
15.It is vital to the overall Civic Place development that all properties in Darcy Street be acquired to ensure control of all properties which provide vital frontage to Darcy Street and form part of the development site for both commercial, retail and residential development.
Proposal to Compulsory Acquire (sic)
16.If it is not supported by other property acquisitions council's property at 30 Darcy Street will not provide the appropriate land area and configuration of an acceptable footprint for a commercial office building. This is the only council property to carry the maximum development potential under the REP and the Master Plan and failure to redevelop it would also preclude the extension of the main rail concourse into Civic Place.
17.Council will be unable to accommodate the 30,000m² pre-commit for the Department of Commerce. Without the additional properties neither 30 Darcy Street, 16 Darcy Street nor the Connection Arcade/Hotel can take the required footprint of 12,000 – 15,000m² for a commercially viable office. This would not only remove that area of development but the potential to construct an equal area of residential development (under the REP controls linking the two).
18.Further, it will deny the possibility of closing Darcy Street with the increase in site area and GFA and the Urban Design improvements that would flow from the inclusion of Darcy Street in the development.
19.It will erode the potential to link and integrate the retail component of the development from the rail concourse through to Church over three levels. This would very significantly reduce the financial and non-financial benefits of the development.
20.Taken together these implications put in question the financial viability of the Civic Place project.
21. …
27.In order to proceed to acquire ownership of the relevant properties necessary to deliver the Master Plan it is now considered paramount that council formally consider acquisition of the properties through the compulsory acquisition process as detailed in this report.” (Emphasis added)
In its letter dated 24 December 2003 to the Director-General, Department of Local Government, in which the Minister’s approval to the compulsory acquisition of the Darcy Street properties was sought, the Council noted that it was:
“now in the process of preparing appropriate commercial documentation to invite Expressions of Interest in March 2004 from the open market for a development partner to join with Council in undertaking the Civic Place redevelopment project.”
The Council’s letter continued under the heading “Purpose of the Acquisitions” in these terms:
“Whilst council already owns some 60% of the total Civic Place redevelopment site, council considers that it is vital to the overall Civic Place redevelopment project that eight properties in Church and Darcy Streets be acquired by council to ensure control of all properties which provide vital frontage to Darcy Street. The acquisition of these eight properties is necessary for:
▪the delivery of a number of the above elements of the project.
▪the closure of Darcy Street as core element of the Civic Place Master Plan, and
▪the integration of Civic Place with the NSW Government's major upgrade of Parramatta station and the new ($100M) of the Parramatta Bus Rail Interchange.
…
Council considers that the inclusion of these properties within the Expression of Interest offering to be conducted in March 2004 is vital for the proper and orderly redevelopment of the Civic Place site and that their exclusion from the offering will totally frustrate the Council's objectives in developing the Civic Place precinct under the Civic Place Master Plan and SREP28.” (Emphasis added)
On 16 March 2004 the Council resolved to seek expressions of interest with respect to the proposed development of Civic Place as contemplated by the Master Plan. Section 2.5 of the Expressions of Interest document stated as follows:
“Council aims to achieve, amongst other things, the following objectives in relation to the Project:
(a)position Parramatta as the centre for investment, recreation, education and employment in Western Sydney;
(b)create a gateway identity development in accordance with the Civic Place Master Plan;
(c)create high quality civic spaces and innovative living and work environments through exceptional design solutions, providing convenient public transport/vehicle/pedestrian access;
(d)comply with (or exceed) the aims of the regional and local planning provisions for the City centre;
(e)create an economically feasible mix of land uses which responds to the site's location and consumer and investor expectations;
(f)provide a catalyst for better urban design in the Parramatta area;
(g) maintain an on-going role in the Project;
(h) maximise council's return at the lowest possible risk;
(i)deliver new council and community facilities, strengthening the civic focus of the site;
(j)conserve and celebrate environmental, social and cultural heritage; and
(k)implement and encourage development which is environmentally sustainable and in accordance with council's Sustainable Development Guidelines.”
The document stated that Council intended to acquire the Darcy Street properties either by agreement or by compulsory process.
In response to a letter from the Department of Local Government dated 15 March 2004 requesting the Council to provide a statement as to how the public interest in acquiring the Darcy Street properties outweighed the owners’ private interests in retaining them, the Council responded by letter dated 22 April 2004 setting out the public need for the project, including the provision of what were referred to in the letter as “Council Facilities” and “Community Facilities”. In para 1.5 under the heading “Location of Council Facilities and Community Facilities”, the following was stated:
“While preliminary design work in relation to the Project has not yet commenced, the building configurations contained in the Master Plan mean that it is possible that the Council Facilities and the Community Facilities may not be constructed on, or contiguously with, the Land [the Darcy Street properties] being acquired. Nevertheless, the Civic Place development is a cohesive plan that needs to be developed under a single master plan strategy in order to create the key pedestrian links and amenity, and to ensure the commercial feasibility of the Project.
Council does not otherwise have funding to design and construct the Council Facilities or the Community Facilities.” (Emphasis added)
Under the heading “Divesting any interest in the land”, the letter stated:
“No decision has been made by council as to whether any part of the Land or the Civic Place site generally will be divested to the preferred proponent before or after the Project is completed. It is likely that the selected proponent will require that title to certain parts or the whole of council's land holding in the site be transferred or leased for the purposes of the Project. This outcome will not be determined until the RFP process has commenced and council enters into negotiations with proponents as to the nature and scope of the Project.
As noted above, the preferred proponent will be required, as part of the Project, to construct the council Facilities and the Community Facilities and access ways to the PRL transport interchange. It is council's present intention, subject to final negotiations with the preferred proponent, that title to the council Facilities and Community Facilities and access ways to the PRL transport interchange will either remain with or be vested in council.”
In light of the Council’s statement referred to in the preceding paragraph that it was “likely that the selected proponent will require that title to certain parts or the whole of the Council’s landholding in the site to be transferred or leased for the purposes of the Project”, by letter dated 11 May 2004 the Director-General of the Department of Local Government drew Council’s attention to s 188 of the LG Act and requested the Council to advise:
“whether the land Council seeks to compulsorily acquire will be the subject of sale, transfer or lease?”
That request was responded to by letter dated 7 June 2004 in which the Council stated:
“Council does not intend to sell the land once it is compulsorily acquired. Rather, the land parcels are a small part of a broader amalgamation by council of a site for the establishment of a new civic centre, community facilities and council functions, as part of an integrated commercial and civic development.
The future land tenure and leasehold issues will not be resolved until such time as council appoints a development partner and the future development configuration, spatial allocation of community/ council facilities and possible ownership structure are resolved. Council intends to retain ownership of those facilities and the public space, wherever they are located on the amalgamated site. As a result, some part of the lands the subject of this application may be reconfigured and included in titles held by others at the conclusion of the development.
…
The compulsory acquisition of the subject properties is integral with the success of the overall development and delivery of the Civic Place project and forms only a minor part of council's land holding when acquired.” (Emphasis added)
On 21 June 2004 the Council resolved to seek the Minister’s approval to compulsorily acquire Darcy Street as per the Master Plan in order to realise the Civic Place site’s full development potential. In his report dated 21 June 2004 to the Council, the Manager, Property Services stated that Darcy Street had the status of a public road and that to convert it to “operational land” [and so not subject to the constraints on “community land” under the LG Act] in order to deliver the Civic Place project it was necessary for the Council to compulsorily acquire it. The report further pointed out (albeit referring to the incorrect provisions of the Roads Act 1993 (NSW)), that upon its acquisition, Darcy Street would cease to be a public road (s 41) and would become “operational land” for the purposes of the LG Act pursuant to s 43.
On 24 November 2004 the appellant wrote to the Director-General of the Department of Local Government seeking approval to compulsorily acquire Darcy Street. The letter identified the purpose of doing so as being:
“…to enable Parramatta City Council to close Darcy Street and own the land free of interests for Civic Place development (sic)”.
The letter then went on to state the reasons for seeking to acquire the road by compulsory process including that the Master Plan for Civic Place required Darcy Street to be included as part of the development site in order to realise the full potential of the Civic Place development (see [44] above).
On 21 December 2004 the Local Government Amendment (Public-Private Partnerships) Act 2004 (NSW) received assent. That Act inserted a new Part 6 in Chapter 12 of the LG Act. Relevantly, it contemplated the entering into of a public-private partnership (PPP) being:
“an entity formed under an arrangement between a council and a private person for the purposes of:
(a)providing public infrastructure or facilities (being infrastructure or facilities in respect of which the council retains a beneficial interest under the arrangement), or
(b)delivering services in accordance with the arrangement,
or both …”
See s 400B(1).
By s 400E a council is enjoined from forming a PPP or carrying out any project under such a partnership except in accordance with Part 6. The structure of that Part in its application to a project with an estimated cost of more than $50 million such as the Civic Place project is that the Director-General issues guidelines requiring specified procedures and processes to be followed by a council in relation to the formation and the carrying out of projects under PPPs. The guidelines contain, amongst other things, provisions requiring feasibility and risk assessments as well as due diligence in the carrying out of such projects.
A council is required to provide the Director-General with an assessment of the project to be carried out under the partnership in accordance with the guidelines which may then be referred by the Minister to a Project Review Committee. Section 400I(1) enjoins a council from entering into a PPP to carry out a project or to proceed with the carrying out of the project under such a partnership unless, where required or directed by the Minister to refer the project to the Project Review Committee, the council has provided that Committee with an assessment of the project in accordance with the guidelines and the Committee has reviewed the project and has indicated its satisfaction that the requirements of the guidelines have been complied with.
Section 400I(3) then provides:
“If the Project Review Committee advises the council that the Committee is satisfied that the requirements of the PPP guidelines have been complied with in relation to the project, the council is entitled:
(a)to proceed with the formation of the public-private partnership (if it has not already been formed), or
(b)subject to this Division, to proceed with the carrying out of the project.”
I mention the provisions of Part 6 of Chapter 12 of the LG Act at this point for two reasons. First, because the Council proceeded in accordance with Part 6 to enter into a PPP with Grocon Pty Ltd (Grocon) and, second, because the Council contended that its functions for the purposes of s 186(1) of the LG Act included its power pursuant to s 400I(3)(b) to proceed with the carrying out of the project the subject of that PPP. This head of power was, so it was submitted, an independent “function” in the exercise of which the Council was empowered pursuant to s 186(1) to acquire the respondents’ land.
I return to the chronology. On 9 June 2005 the Council issued a Request for Tenders accompanied by an Information Memorandum setting out the background to the Master Plan, the Council’s role as initiator and facilitator of the project and its project objectives (as set out in the Expressions of Interest document which I have recorded at [54] above).
Grocon’s tender application dated 22 July 2005 contained what was referred to in the evidence as the “Grocon Proposal” the main elements of which were as follows:
"(a)A central core of open space running in an east west direct which was said to respect the fundamental east/west axis and heritage view corridor from the Civic Place Master Plan. These were shown in what was referred to as the Public Domain Plan as ‘Civic Place’, ‘terraces’, ‘meeting place’ and ‘market place’;
(b)A total area of public open space of approximately 13,000m²;
(c)A number of cross site links running generally in a north south direction which were to provide linkages to the Parramatta Public Transport Interchange and Macquarie Street. These were shown on the Public Domain Plan as Pound land, Leigh Place and Station Square. There were also publicly accessible linkages which were not named forming part of the Atria building (described below) and the subsurface retail concourses;
(d)The Atria building, which was to be a commercial tower. At ground level this included retail areas and a publicly accessible laneway or arcade which was to provide linkages between the central core and Station Square;
(e)The ‘Park Apartments’, which was to provide a residential building on the corner of Darcy and Church Streets and which included a publicly accessible pedestrian arcade;
(f)New Council chambers, Council offices, public library, community facilities and meeting rooms, a public art gallery and child care centre;
(g)A subsurface retail concourse, which was to provide an extension of the retail facilities in and publicly accessible routes to the Parramatta Railway Station and the Public Transport Interchange;
(h)A subsurface car park which was to underlie much of the site including the respondents’ land and which would be available for public use.”
Under the Grocon proposal Mac’s’ land was allocated as part of the residential building of 31 storeys to be known as “Park Apartments”. The application stated that the proposed Darcy Street retail arcade would:
“penetrate … the ground level [of the residential building] continuing the connectivity of this grand lobby and arcade through to Church Street.”
The proposal allocated the Fazzolari land to “The Atria”, a 40 storey commercial office tower. It should be stated at once that the respondents’ land only constituted a relatively small part of the site proposed for each of those buildings.
The respondents nevertheless fastened upon the foregoing to support their contention that their land was to be acquired by the Council for the erection thereon by Grocon of a residential and commercial development for profit and not for the purpose of exercising one of its functions within the meaning of s 186(1) of the LG Act. I shall return to this submission below.
On 29 August 2005 the Council declined to accept any of the tenders received for the Civic Place project but resolved to negotiate with Grocon. Those negotiations proceeded with respect to the contractual arrangements for the delivery by Grocon on behalf of the Council of the Civic Place project. On 30 November 2005 the Council’s General Manager recommended that it enter into a Development Agreement with Grocon (subject to the approval of the Department of Local Government Private-Public Partnership Review Committee) for the development of Civic Place. It was further recommended that the Council undertake all things necessary under the LG Act to implement the provisions of the Development Agreement.
The report noted that the Development Agreement contained an obligation on Grocon to construct facilities in the public domain to the value of $95 million including new council chambers, council offices, library, technology centre, art gallery and community rooms as well as a childcare centre, community facilities, public open space and public car parking. It further stated that “upon financial close” the Council would be able to retire $55 million worth of debt.
In the same report the General Manager stated as follows:
“There is no doubt that Civic Place will help to redefine Parramatta's role as Sydney's second CBD. A recently commissioned report from SGS identified that Civic Place will contribute up to 8,800 jobs to our local economy. Civic Place is a major gateway project and will create a new market in the commercial, cultural and retail offering of Parramatta.”
The General Manager’s report also set out two financial options for the Council’s consideration, namely: Option 1 – an exit strategy; and Option 2 – proceeding with Civic Place. The first would result in the Council being exposed to substantial costs and risks. The second involved the financial negotiations with Grocon which resulted in a final financial offering made by Grocon on 24 November 2005. Each version of Grocon’s financial offering had been analysed but, in essence, following further negotiations, the Council’s net cash flow over the duration of the project had improved by some $10 million. The document then set out the various financial incentives made by Grocon including a provision for revenue sharing and an arrangement to provide the Council with 93 dedicated car parking spaces as against the 25 previously offered.
It was also proposed that Grocon would pay the Council a very substantial upfront participation fee together with a share of revenue and would provide council facilities and public domain to the value of $95 million as well as an affordable housing cash contribution.
However, the report noted that the Council’s revenue share was not guaranteed either as a total amount or as to the timing of receipt of payments as each was dependant upon the market response to Grocon’s development proposals. The report continued:
“In order to be financially viable (and as the Council’s facilities sit above the retail and car parking levels of the project), Grocon is very likely to deliver a substantial portion of the development proposals at the same time as the delivery of council’s facilities. If this occurs, it will minimise the financial exposure of the Council and accord with council’s preferred financial model.”
The following key features of the project were also identified in a report dated 24 November 2005 attached to the General Manager’s report of 30 November 2005:
“(a)upon satisfaction of the conditions precedent referred to in Section 7.0 above, the Development Agreement will become unconditional and will bind both council and Grocon;
(b)at that point, Grocon will pay an initial payment to council, and council will constitute a trust over all of the project land with the exception of the land required to construct the future council facilities. This arrangement effectively transfers the land to Grocon at the start of the project;
(c)Grocon will assume an obligation to design and construct the new council facilities by 30 June 2012, subject to certain agreed extensions of time.
…”
Those “key features” which underpinned the respondents’ primary submissions were reflected in cl 3.2 of the draft Development Agreement which proposed a Trust Structure described by the Council’s solicitors as follows:
“(a)council will, upon receipt of the initial payment referred to above, transfer the equitable title in the Development Component to the Developer (that is an effective transfer of title to the Developer);
(b)council will, however, remain registered as the owner of the Development Component on the land titles register maintained by the NSW Land and Property Information;
(c)when the Development Component is completed and subdivided into each of the individual parcels containing the different staged office, retail, residential and car park elements of the Development Component, council will execute a transfer of the legal title in those parcels progressively to the Developer or its nominee;
(d)the Developer will indemnify council for all costs arising from the Land Trust, including any stamp duty, land tax, council or other rates, insurance costs or other costs;
(e) in order for the Developer to obtain bank finance for the Project, the Developer will need to mortgage the Development Component. This will require council to execute a mortgage in favour of the financier. The mortgage will be non-recourse to council and will include the Developer as a party.”
In February 2006 the Council made a submission to the Project Review Committee which, amongst other things, compared the original objectives of the Civic Place Master Plan to those of the Civic Place development as agreed between the Council and Grocon and which was to be the subject of the Development Agreement and referred to therein as the “Developer Master Plan”. The submission concluded that the current proposal met or exceeded all Master Plan objectives. It noted that a total of 15,595 m² of public space was to be provided as against a minimum of 6,500 m² required by the Civic Place Master Plan and that much consideration had been given to the urban design of those spaces to ensure that they were comfortable and inviting with a human scale and with strong linkages for pedestrian and vehicular transport access.
With respect to the Master Plan objective of creating an economically feasible mix of land uses, it was stated that the current proposal met that objective in that the mix had been established to position Civic Place as a commercial CBD while ensuring activation of spaces through appropriate provision of retail and residential spaces. In addition to the 15,595 m² of open public space, a total of 12,200 m² of council and community space was to be provided which, it was asserted, met the objective of the Master Plan.
The submission discussed a number of alternatives for progression of the project which it referred to as “the opportunity presented by the Civic Place site”. One of those alternatives was described as the “private sector developer”. Under that heading the following was stated:
“Under this option, council enters into a PDA with a private sector partner in order to fund, design and construct the Public Space, council and Community Facilities. The private sector partner in turn receives the rights to develop the remaining council-owned site areas in accordance with the Master Plan. This was the option chosen by council and it resolved on 11 May, 2005 that financial hurdles for the project are be [sic] defined as follows:
1)That the Debt Service Ratio (DSR) (net operative cash/debt repayment obligations) does not exceed 8%;
2)That $55m of existing council debt is to be extinguished over the life of Civic Place; and
3)That council would be prepared to consider a maximum debt threshold of up to $20m for Civic Place if required.
Preferably, council wishes to complete the Project with zero debt and new facilities and an opportunity for increased future income streams. As demonstrated elsewhere in this Submission, Grocon's negotiated bid meets council's financial hurdles.”
The submission also set out the Council’s Business Plan Objectives as follows:
“For the purposes of this Business Plan, the Council's objectives can be summarised as follows:
(a)To provide a strategically positioned new civic and mixed use environment for the Parramatta CBD by realising the Civic Place Master Plan;
(b)To optimise the financial return to council at the lowest possible risk;
(c)To utilise council's Civic Place land assets to achieve new accommodation and community spaces for the residents of the Parramatta area; and
(d)To encourage a substantial mixed use residential, commercial and retail development that is environmentally sustainable.”
Under the heading “Business Plan – Risks” the following statement appears:
“Grocon proposes that ownership transfer be initially affected [sic] by a declaration of trust, which will occur shortly after the date on which the Conditions Precedents are satisfied. The declaration of trust will transfer beneficial ownership of the Civic Place Development Land (with the exception of the land needed to accommodate the future council Related Works) to Grocon. The land needed to accommodate the future council Related Works will remain in council ownership. A default by Grocon would permit council to have recourse to the unconditional undertakings, but would not permit the re-conveyance of the land which is the subject of the trust declaration. It would permit council to use the proceeds of the undertakings to complete its development on the council Related Works land.”
The Conditions Precedent referred to included the compulsory acquisition by the Council of those Darcy Street properties not already acquired as well as Darcy Street itself.
On 29 June 2006 the Council received and considered a report from its General Manager intended as an update on negotiations with Grocon concerning the Civic Place project with a view to entering into the Development Agreement. The report considered many matters and, in particular, there was an exhaustive discussion of the Council’s financial options. Particular attention was given to minimising any financial risk to the Council in the event of the Development Agreement proceeding. Ultimately, the Council’s Civic Place Management Committee, having considered the various financial models based on “worst case”, “likely case” and “best case” scenarios, recommended that the Council enter into the Development Agreement, which it resolved to do on 29 June 2006.
There can be little doubt that it was in the Council’s and its ratepayers’ interests that the Civic Place project not only proceed but that it do so with minimal financial risk to the Council whilst maximising the value of the public assets proposed at completion. The fact that the Council would at the end of the project be left on the one hand with relatively little debt and on the other with an income stream could only be to the benefit of the community as constituted by its ratepayers.
On 13 December 2006 the Council sought approval from the Minister for the compulsory acquisition of that part of Church Street which abutted the Civic Place site. Section 9.1 of that application asked, “Does Council intend to sell the land once the land is acquired?” to which the Council responded, “in part”. It further explained:
“The purpose of the compulsory acquisition of part of Church Street is for the public purpose of providing open space land as part of the Civic Place Development...
Subject to the comments below in relation to a proposed vehicular access ramp, the surface of Church Street will be retained by Parramatta City Council and utilised as public open space. Council will ensure that, following completion of the works on Church Street associated with the Civic Place Development, public access to Church Street is available on a basis similar to that which exists prior to compulsory acquisition.
A substratum beneath Church Street which is contiguous to the Civic Place site and which is subject to a final design and agreement between the parties will be transferred to the developer Grocon (Civic Place) Pty Ltd at a later date for the purpose of construction of public car parking and one level of retail development. Subject to design considerations and the grant of all required approvals from relevant statutory authorities (including planning approval), a vehicular access ramp may be constructed on part of Church Street emerging from the vicinity of the substratum.
With the exception of any rights required to accommodate the access ramp, the surface of Church Street will not be transferred to the developer or into a trust for the benefit of the developer.
Ownership of the acquired land above and below this substratum will remain vested in Parramatta City Council and will be classified as Operational Land.”
On 15 December 2006 the Minister granted his approval pursuant to s 187(2) of the LG Act for the Council to issue proposed acquisition notices under the Just Terms Act with respect to a number of properties including those of the respondents. Thereafter correspondence took place between the respective legal representatives of the Council and the respondents. The respondents’ legal representatives asserted that the Council had no power to proceed with the acquisition of their clients’ land.
In the result, Mac’s challenged the proposed acquisition by instituting proceedings on 21 August 2007 with Fazzolari following suit on 22 August 2007.
The Development Agreement
I have already referred to aspects of the Development Agreement at [72] to [76] above. Upon satisfaction of the Conditions Precedent (relevantly, the acquisition of the Darcy Street properties including the respondents’ land), Grocon, in making its initial payment to the Council, was to execute a document which constituted a trust over all parts of the Civic Place site owned by the Council at that time. The effect of this was to transfer the equitable or beneficial title to the site to Grocon.
There were two main components to the works to be carried out by Grocon. The first was referred to as the “Council Project Works” which comprised the “Council Related Works” (which included new council offices etc) and the “Open Space Balance Works” which included the public domain areas. The second component was described as the “Developer Works” and comprised the balance of the project including residential and retail development, commercial offices, car parking and other components described in Grocon’s design proposal.
Clause 7 of the Development Agreement set out the parties’ “primary obligations”. Under cl 7.1(a) the Council granted to Grocon the right to “undertake the project” (defined as the “development of the Site”) including the “design, construction and commission of the Works” (a term itself defined as including the “Council Project Works” and the “Developer Works”).
Clause 7.1(b) obliged Grocon to finance, design, construct and commission the Works in accordance with the Agreement and to hand over to the Council on the date of practical completion the “Council Related Works” and the “Open Space Balance Works”.
Clause 7.2 obliged Grocon, at its own cost, to finance, design, construct and commission the “Developer Works” in accordance with, relevantly, the:
“Developers Design Proposal and requirements of clause 8.7 (use mix ratio)”.
Clause 7.3 then obliged Grocon, at its own cost, to finance, design, construct and commission the “Council Related Works” and the “Open Space Balance Works”.
Clause 7.4 contained an acknowledgement and agreement that Grocon would “develop a master plan” consistent with the “Developer’s Design Proposal”. It was submitted by the respondents that there were essential differences between that proposal and the Civic Place Master Plan which explained why the Development Agreement in cl 10.8 required the Council to use its best endeavours to have the Master Plan and, if necessary, SREP28 amended to accommodate the proposal.
I interpolate that there were differences between the Civic Place Master Plan and the “Developer’s Design Proposal” particularly depicted in the Master Plan with respect to the Darcy Street frontage. The building heights of the two commercial towers were increased due to a reduction in their building footprints so that they became three taller but slimmer towers resulting in an enhanced urban design outcome. Although the overall residential, commercial and retail floor space remained at approximately 160,000 m² the mix changed. Commercial space was increased from 65,000 m² to 102,535 m² whereas retail space was increased from 35,000 m² to 41,985 m². However, this was compensated by a reduction in residential floor space from 60,000 m² to 21,518 m².
This notwithstanding, the Council submitted that under the foregoing provisions of cl 7, on the one hand Grocon was contractually obligated to develop, and on the other the Council had a contractual right to have developed, the Civic Place site essentially in accordance with the Civic Place Master Plan.
In cl 9.12 of the Development Agreement Grocon acknowledged that the construction of any pedestrian links to Parramatta Railway Station formed part of the “Developer Works”.
Essentially, therefore, the Development Agreement proposed that:
(a)upon the acquisition by the Council of the Darcy Street properties, Darcy and Church Streets and satisfaction of the other conditions precedent (including the obtaining of development consent by Grocon with respect to the project), the whole of the land comprising the Civic Place site would be held in trust by the Council as the trustee for Grocon as beneficiary;
(b)Grocon at its own cost would design, finance and construct all elements of the project including those known as the “Council Related Works” and the “Open Space Works” which would, on their completion, be re-vested in the Council. Further, Grocon would at its own cost design, finance and construct the “Developer Works” including the commercial, residential, retail and car parking components. On completion these would vest in Grocon not only beneficially but legally;
(c)the Council would receive funds which, at the end of the day, would result in it receiving public assets to the value of some $95 million virtually free of debt;
(d)the project would proceed in one phase as was contemplated by the Civic Place Master Plan although Grocon would construct it in stages;
(e)the project would be implemented at minimal risk to the Council, all the risk being taken by Grocon.
There can also be little doubt as to the following. First, Grocon would need to obtain finance for the project and its financier would require it to be secured by a first registered mortgage over the whole of the site in circumstances where the beneficial and, ultimately, the legal title was or would be vested in Grocon. Second, Grocon anticipated that at the end of the project, all things being equal, it would achieve a substantial profit for its efforts of many millions of dollars. There is nothing surprising or unusual about this as Grocon is a commercial organisation that, understandably, was only prepared to undertake the project in conjunction with the Council and accept all the risks associated therewith if, at the end of the day, it turned out to be a profitable venture.
Third, from the Council’s perspective it would achieve the civic and public objectives of the Civic Place Master Plan including the wholesale redevelopment of the Civic Place site generally in accordance with that Master Plan, critical elements of which were the provision of commercial, residential, retail and car parking space.
Fourth, all elements of the project were integral to each other. It was, in terms of the now repealed Local Government Act 1919 (the 1919 Act), an extensive urban renewal project of the primary area of the Parramatta Central Business District, a regional centre second only to the Sydney CBD. Further, the area contained not only the current civic and associated public facilities but also adjoined the Parramatta Railway Station and Public Transport Interchange.
The decision of the primary judge
At [27] the primary judge stated the following issues for his determination:
“(a) Under s 186(1) of the LG Act, is the council proposing to acquire the applicants’ land for the purpose of exercising any of its functions or, under s 186(2)(b), does the applicants’ land adjoin or lie in the vicinity of other land proposed to be acquired under Part 1 of Chapter 8? If the answer is no, the applicants succeed. If the answer is yes, then:
(b) Under s 188(1) of the LG Act, is the council proposing to acquire the applicants’ land for the purpose of re-sale? If the answer is no, the council succeeds. If the answer is yes, then:
(c) Under s 188(2)(a) of the LG Act, do the applicants’ land form part of, or adjoin or lie in the vicinity of, other land acquired at the same time for a purpose other than the purpose of re-sale? If the answer is yes, the council succeeds. If the answer is no, the applicants succeed.”
At [225] he restated those issues in the following questions:
“(a)Is the decision of council to compulsorily acquire the applicants’ land for the purpose of exercising any of its functions under s 186(1) (The s 186(1) Question)?
(b)Is the decision of the council to compulsorily acquire the applicants’ land a decision to compulsorily acquire land which adjoins or lies in the vicinity of other land proposed to be compulsorily acquired under Part 1 of Chapter 8 of the LG Act within the meaning of s 186(2)(b) (The s 186(2)(b) Question)?
(c)Is the council seeking to compulsorily acquire the applicants’ land for the purpose of re-sale within the meaning of s 188(1) (The Section 188(1) Question)?
(d)If so, does the applicants’ land adjoin or lie in the vicinity of other land to be acquired at the same time under the LG Act for a purpose other than a purpose of re-sale, within the meaning of s 188(2)(a) The Section 188(2)(a) Question)?”
The primary judge’s determination of the s 186(1) Question
The Council submitted that his Honour had incorrectly framed the questions in terms of it compulsorily acquiring the respondents’ land as s 186(1) applied to the acquisition of land whether by agreement or by compulsory process. It contended that the power of acquisition affirmed by s 186(1) did not turn on the acquisition method and that its ambit was the same irrespective of whether it was proposed to acquire the relevant land by agreement or compulsory process.
Although this submission is correct, a fair reading of his Honour’s reasons does not, in my view, indicate that he placed reliance upon the fact that the Council was proposing to compulsorily acquire the respondents’ land as bearing upon the true construction of s 186(1). As the Council submitted, the s 186(1) Question identified by his Honour required a consideration of whether the proposed acquisition (irrespective of its means) was for the purpose of exercising any council function. That in turn raised two questions:
(a) what are the relevant functions of a council; and
(b) are the acquisitions for the purpose of exercising any such function?
In any event his Honour stated the s 186(1) Question accurately at [227] when he said:
“Is the decision of the council to compulsorily acquire the [respondents’] land for the purpose of exercising any of its functions under s 186(1)?”
The respondents submitted to his Honour that the compulsory acquisition of their land was not for the purpose of exercising a function of the Council but rather for the purpose of providing their land (or the benefit of their land) to a third party, Grocon, to enable that party to make a profit therefrom. On the other hand, the Council submitted that the purpose of the acquisition was to give effect to the Development Agreement and thereby achieve the objectives of the Civic Place Master Plan.
His Honour (at [229]) suggested that the choice posed was between the immediate objective and the middle distance objective of implementing the vision of the Master Plan. He continued:
“Choosing the middle distance object involves classifying it as the end and classifying the immediate object as the means to the end, the end being the real purpose. Choosing the immediate object as the purpose involves classifying the middle distance object as the motive or reason for the purpose.”
After setting out the provisions of ss 23 and 24 of the LG Act, the primary judge referred to passages from two judgments of Gleeson CJ in support of the view that in determining the purpose of the proposed acquisition of the respondents’ land, one should look at what is sought to be done with their land, being its transfer to Grocon, and not at the Council’s middle distance objective or motive being the implementation of the Civic Place Master Plan through the Development Agreement.
The first passage relied upon was that of Gleeson CJ in Woollahra Municipal Council v Minister for the Environment (1991) 23 NSWLR 710 at 714-715. More relevant, however, is the second passage from the judgment of the Chief Justice in News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563 at 573 [18] where he said:
“The distinction between purpose and effect is significant. In a case such as the present, it is the subjective purpose of News and ARL in including the fourteen team term, that is to say, the end they had in view, that is to be determined. Purpose is to be distinguished from motive. The purpose of conduct is the end sought to be accomplished by the conduct. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken. Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not at a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. …”
The primary judge (at [236]) then referred to the decision of Else-Mitchell J in Collins v Willoughby Municipal Council [1968] 1 NSWR 151; (1967) 14 LGRA 256 which involved a compulsory acquisition under the 1919 Act. In that case the plaintiff owned land in the Chatswood Shopping Centre, which in turn adjoined land owned by the Council. On each parcel of land was an old semi-detached cottage. The council made application to the Governor for his approval of the resumption of the plaintiff’s land “for the purpose of undertaking the improvement and embellishment of the area”, this being a reflection of the provisions of s 321(1)(a)(iv) of the 1919 Act which permitted a council to acquire by any mode authorised under that Act any land for the purpose, inter alia, of “undertaking the improvement and embellishment of the area”.
The council intended to invite tenders for a building lease of the whole site including its own and the plaintiff’s land for a term of 99 years. The lease would require the lessee to erect a multi-storey commercial building containing a component of free public car parking accommodation. The proposed resumption was approved and duly notified in the Gazette. The plaintiff sought a declaration that the purported resumption was void. One of the grounds of attack was that the council’s real purpose was not to improve or embellish the area but to turn the land owned by the plaintiff to profitable account by its sale or lease. Else-Mitchell J dismissed the suit.
After referring to cases such as Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87 and Minister for Public Works and Local Government v Duggan [1951] HCA 29; (1951) 83 CLR 424 which established that a council cannot resume land except under statutory authority and that it must exercise the power so conferred bona fide for the purpose for which it was conferred, Else-Mitchell J said (at 259):
“In view of the fact that the amendments made to the Local Government Act [1919] in 1951 include the sale or leasing of land as purposes for which land may be resumed, I think that a council can properly acquire land for the mixed purpose of improvement or embellishment and sale or leasing at a profit and it would therefore not seem to be material that some part only of the land acquired, and even an undefined part, is to be improved or embellished.”
His Honour concluded (at [148]) that the subject acquisition was:
“simply for the purpose of private economic gain which has some incidental or indirect advantages for others”
and was not truly for a purpose of the Northern Territory.
Keifel J adopted a similar approach but did not place emphasis in her reasons, as did Kirby J, on the fact that the acquisition purported to include the native title rights of the Aboriginal peoples represented by the appellants. Her Honour acknowledged (at [159]) that the respondent Minister posed the question on the appeal as: whether s 43 of the LAA enables the Minister to compulsorily acquire native title rights in un-alienated Crown land for the purpose of conferring rights and interests in the land on others. Her Honour continued:
“The statement does not suggested that the executive government has any use for, or need of, the land. The acquisition, and following extinguishment, of the interests in question is sought only so that the lands can be made available for the use of others.” (Emphasis added)
Her Honour then noted (at [162]) that issues concerning the exercise of a power of compulsory acquisition to the benefit of a private interest and not for a public purpose had arisen in Werribee Council v Kerr [1928] HCA 41; (1928) 42 CLR 1 at 33 where Higgins J observed that:
“The Legislature did not give to municipal councils power to interfere with the private title of A for the private benefit of B.”
Similarly in Prentice v Brisbane City Council [1966] Qd R 394; (1966) 13 LGRA 162, the council in that case was restrained from proceeding with an acquisition because its main purpose was to assist a developer, the Chief Justice stating (at 410) that this was so:
“notwithstanding that in a broad sense the interests of the city and its inhabitants were being served by the subdivision and the opening up of the lands.”
It should be noted that in Prentice the council had resolved to resume the plaintiff’s land in order to provide a roadway leading to a bridge over the Brisbane River proposed to be constructed by a development company to provide access to an area of land on the other side of the River to be developed by it as a residential and industrial subdivision for profit. In doing so, the council had acted in effect as the agent of the development company for its benefit. However, it is apparent from the Chief Justice’s judgment (at 405) that notwithstanding that the council was empowered to compulsorily acquire land where it was declared to be “required” by the council for the purpose of implementing its powers, nevertheless the exercise of that power was subject to the overriding condition that it must not abuse its powers or act otherwise than in good faith. Thompson v Randwick Corporation was referred to. In the present case the respondents did not pursue a claim based upon an abuse of power or the exercise of the s 186(1) power by the Council for an ulterior purpose.
Keifel J then referred (at [162]) to the decision of the High Court in Clunies-Ross v The Commonwealth [1984] HCA 65; (1984) 155 CLR 193 at 198 where Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ held that as a matter of language, a power to acquire land for a public purpose was prima facie limited to:
“an acquisition of land which is needed or which it is proposed to use, apply or preserve for the advancement or achievement of that purpose.”
Her Honour then dealt with the construction of s 43(1) of the LAA. At [180] she agreed with the conclusion of Martin CJ in the Northern Territory Court of Appeal that, in the sense referred to in Clunies-Ross, the power given by the section did not extend to the purpose of giving the land of one citizen to another “absent a purpose related to a need for, or a proposed use of, the land”. She continued (at [181]):
“It is abundantly clear that in the present case no use by the Minister or the Territory is proposed, even in the most passive sense. The land is to be acquired for the purpose of its use by interested third parties who are later to be granted freehold title in the property. The use of the power of grant under the Crown Lands Act (NT) is a means to effect that purpose. It is not the purpose itself. Absent a governmental purpose, as s 43(1) requires, the exercise of the power stands as no more than a clearing of native title interests in order to effect leases and grants of the land for private purposes.”
Finally, her Honour held (at [182]) that even if there could be seen to be some governmental purpose in providing land and promoting industry, it was no more than a consequential effect of the acquisition. Even if it answered the description of a purpose, it was remote “from that which clearly explains the acquisition”. As the only benefit identified was that to the proposed developer, the acquisition was not a valid exercise of the power given by s 43(1).
I have referred to the reasoning of Kirby J and Keifel J for the following reasons which, to a degree, overlap. First, it is apparent that their Honours considered that the reason why the acquisition was invalid was because the respondent Minister’s only purpose in effecting the resumption was, without more, to transfer the land to private parties for their personal benefit. In so doing, the Minister was acting as the agent for those parties. The transaction was what was referred to by the Supreme Court of the United States in Kelo as a pure form of a “private to private” transfer of land under legal compulsion.
Second, the acquisition was undertaken by the respondent Minister for a non-governmental purpose unconnected with any need of the Territory government to acquire the land for the advancement or achievement of any of its purposes. Third, the pre-acquisition dealings mandated a finding that the only purpose or object of the acquisition was to extinguish the private interests of the Aboriginal peoples so as to enhance the private interests of the Fogartys and others.
Fourth, no purpose of the respondent Minister informed or clearly explained the acquisition. Fifth, no government benefit of the acquisition was identified, the only benefit being that of the proposed private lessees.
In my opinion, the present case is factually, and legally, distinguishable from Griffiths. First, the Council’s purpose in seeking to acquire the respondents’ land was not confined to transferring it to Grocon solely for its benefit. Even if that was one of its purposes, it was not its primary or dominant purpose. The emphasised passages in the documents to which I have referred in the chronology of events bear this out. Second, the proposed acquisition was not wholly unconnected with any need of the Council to acquire the respondents’ land. On the contrary, the documentary evidence to which reference has been made establishes that that land was, together with other Darcy Street properties not otherwise owned by the Council, integral to the advancement and achievement of the Civic Place project.
Third, it was not the sole purpose or object of the Council to extinguish the interests of the respondents in their land so as to enhance the private interests of Grocon. On the contrary, it was to enhance the interests of the community of Parramatta and the wider public in rejuvenating and redeveloping a critical area within the Parramatta City Centre as an overall and integrated concept so as to provide public benefits in terms of public open spaces, enhancement of heritage items, provision and improvement of access to the Parramatta Railway Station and Public Transport Interchange, civic and community facilities and residential, commercial and retail accommodation and facilities.
Fourth, the implementation of the Civic Place project, being one for the success of which the Council had both a responsibility as well as a vested interest, clearly informed and explained the need for the acquisition of the respondents’ land.
Accordingly, even on the minority reasoning in Griffiths, the proposed acquisition of the respondents’ land was a valid exercise of power.
Finally, I refer to the primary judge’s finding (at [244]) that the respondents’ land was to be compulsorily acquired by the Council to provide it with new buildings for itself which Grocon was to construct, enabling it to retire substantial debt and to receive from Grocon a substantial payment with the ultimate result that its land and assets would be worth more because they would be located in a precinct of greater amenity than that which currently prevailed. For the reasons I have indicated, in my view this was not the Council’s purpose in acquiring the respondents’ land. It may have been its motive, but it was not its purpose.
In this context it is appropriate to refer to the example given by Gleeson CJ in News Ltd in the passage from the Chief Justice’s judgment, which I have recorded in [112] above. The tax avoidance example which his Honour there describes is analogous to the present case insofar as the Council contemplated that as a consequence of entering into the Development Agreement it would ultimately receive new buildings, be able to retire significant debt, receive a revenue stream and achieve significant amenity from which its civic and community assets would benefit.
I am prepared to accept that these outcomes may well have been what motivated the Council to agree with the financial structure for the implementation of the Civic Place project as negotiated between it and Grocon and which found expression in the Development Agreement. But in my opinion the Council’s purpose in acquiring the respondents’ land and, for that matter, all the Darcy Street properties, was at all times and remained the implementation of the Civic Place project as contemplated by the Master Plan.
For the foregoing reasons his Honour ought to have answered the s 186(1) Question, “Yes”.
The s 186(2)(b) question
In view of my answer to the s 186(1) Question, the s 186(2)(b) Question does not arise. However, the s 188(1) Question does arise so that it is convenient to deal with some aspects of the s 186(2)(b) Question when dealing with the s 188(1) Question, to which I now turn.
The s 188(1) Question
The issue posed by this question is whether the Council proposed to compulsorily acquire the respondents’ land “for the purpose of re-sale”. The primary judge (at [292]) answered the question in the affirmative. In so doing he held (at [290]) that a re-sale within the meaning of s 188(1) included a transfer of land for a consideration which included money. His answer to the question posed by him assumed that the Council’s purpose in acquiring the respondents’ land was that of re-sale.
The Council challenged his Honour’s finding on two bases. First, it submitted that the expression “the purpose of re-sale” where appearing in both in s 188(1) and s 188(2)(a) should be construed as a reference to the sole or dominant purpose of the Council in seeking to acquire the respondents’ land and not merely to a substantial purpose. Second, it submitted that the financial structure provided by the Development Agreement did not involve a “re-sale”.
The primary judge noted (at [281]) the Council’s submission that s 188(1) required the relevant land to be acquired for “the purpose of re-sale” and not merely acquired for “re-sale”. As his Honour had earlier held that the purpose of the proposed acquisition by the Council was to transfer the respondents’ land to Grocon for consideration, the requirement of s 188(1) that the land be acquired “for the purpose of re-sale” was satisfied. He also rejected the Council’s submission that the re-sale must be the sole, real or dominant purpose because s 188(1) does not speak of “a” purpose or even a substantial purpose but rather of “the” purpose of re-sale.
Consistently with his earlier reasoning with respect to the s 186(1) Question, “the” purpose of the acquisition of the respondents’ land was its transfer to Grocon for consideration. For the reasons I have given above, it was not.
The respondents nevertheless submitted that s 188(1) was satisfied if the purpose of re-sale was a substantial purpose of the Council in seeking to acquire their land by compulsory process even if it was not the sole, real or dominant purpose. They relied upon the line of authority exemplified by Thompson and Duggan to support that proposition. The Council responded by submitting that the area of discourse the subject of those authorities was irrelevant to the construction of the expression “the purpose” not only in s 188(1) and (2)(a) but also in s 186(1).
Thompson and Duggan were concerned with the issue of whether a statutory power had been exercised for the purpose for which it was conferred. That is not the question in the present case which is not concerned with identifying a vitiating ulterior purpose in the exercise of the relevant statutory power.
In Thompson the High Court held (at 105-106) that it was an abuse of the council’s power in that case if the relevant purpose was a substantial purpose in the sense that no attempt would have been made to resume the plaintiff’s land had it not been desired to achieve the unauthorised purpose. In the present case, his Honour did not directly answer that question; that is, he did not find that no attempt would have been made by the Council to acquire the respondents’ land by compulsory process if it had not been desired to re-sell the land to Grocon or such other entity with which it entered into a private-public partnership.
The answer to that question required a finding of fact which, in my view, the primary judge did not make. Certainly, he found that “the” purpose of the proposed acquisition of the respondents’ land was “to transfer it to Grocon for consideration” in accordance with the Development Agreement. But in my view that does not answer the critical question posed by the respondents’ submission that that purpose had to be a substantial one in the Thompson sense. The documentary history of this matter makes it clear in my view that the Council proposed and needed to proceed with the acquisition, if necessary by compulsory process, of the respondents’ land irrespective of whether it was ultimately transferred to Grocon or any other developer.
As the evidence reveals, the only land forming part of the Civic Place site which the Council found necessary to acquire by compulsory process was that of the respondents. All other land including the other Darcy Street properties had, apparently, been acquired by agreement. Given the integral nature of the respondents’ land to the overall Civic Place scheme, it does not follow that the Council would have made no attempt to so acquire the respondents’ land if it had been unable to transfer title to Grocon whether at the outset of the project or upon its completion.
In any event, in my opinion the Council’s submission is correct in that the concept of substantial purpose, where the issue is to identify a vitiating ulterior purpose in the exercise of a statutory power, involves an area of discourse which is irrelevant not only to the question of construction posed by s 188(1) but also to that posed by s 186(1). I see no reason otherwise than to adopt the test adumbrated by the High Court in C.C. Autoport Pty Ltd at 381, which requires the identification of “the initiating and abiding purpose” of the proposed acquisition. On the basis of that test, in my opinion the purpose of the proposed acquisition of the respondents’ land was not one of re-sale.
Accordingly, s 188(1) does not deny the Council the power to acquire the respondents’ land by compulsory process.
Furthermore, in my view no question of “re-sale” within the meaning of s 188(1) is involved in the present case. It is true that under the 1919 Act, s 321(3) provided that the power of acquisition could be exercised notwithstanding that the land so acquired might be for sale or re-sale without apparent restriction. The Minister in his Second Reading Speech, when dealing with Chapter 7 of the Local Government Bill which included s 188, stated:
“The chapter begins with setting out the purposes for which councils may acquire land. The provisions are generally a re-enactment of the Local Government Act 1919 in that councils may acquire land by agreement or compulsory process in accordance with the Land Acquisition (Just Terms) Compensation Act 1991. However, a major variation occurs in the creation of a limitation of compulsory acquisition by council for the purpose of re-sale. A council may not acquire land by compulsory process without the approval of the owner if it is being acquired for the purpose of re-sale as re-sale is not strictly a legitimate Local Government purpose.”
As I observed in [122], but for s 188(1) the fact that a council seeks to compulsorily acquire land for the purpose of re-sale would not be beyond power, at least where the acquisition for that purpose is in the exercise of any of its functions. As the Minister’s speech reveals, the enactment of s 188(1) was intended to only restrict the power of a council to compulsorily acquire land where it was to be acquired for sale or re-sale.
Although it is clear that the primary judge gave the expression “re-sale” a wide meaning in order, as he said at [289], to meet the mischief of a council compulsorily acquiring land for the purpose of re-sale which the legislature considered to be generally outside its functions, in my respectful view, the mischief to which the Minister was directing his attention in that part of his Second Reading Speech which I have set out in [190] above, was not intended to give the expression “re-sale” a meaning which extended beyond the situation where a council seeks to compulsorily acquire land solely for the purpose of re-selling it to a developer such as occurred in Griffiths or otherwise developing it itself and selling it for a profit. That is the sort of situation to which Else-Mitchell J was referring in Collins in the passage of his Honour’s judgment cited by the primary judge at [237], which I have recorded at [116] above.
However, the present is not such a case as his Honour (at [284]), citing this Court’s decision in AFA v Garendon Investments Pty Ltd (1995) 37 NSWLR 221 at 230, acknowledged. His Honour further acknowledged (at [285]) that the leading case on the meaning of “sale” was Chan v Dainford Ltd [1985] HCA 15; (1985) 155 CLR 533 at 537 where the High Court said that the primary meaning of “sale” is an exchange of property for money.
It is true that the word “sale” must take its meaning from the statutory context in which it appears and that although its normal meaning in a variety of statutory settings is an exchange of a property for money, that meaning may be extended expressly or by implication.
However, in my opinion there is nothing in s 188(1) which should be regarded as extending the ordinary meaning of the word “sale” either expressly or by necessary implication. In particular, there is nothing in the context of s 188(1) which would extend that expression to the complex financial arrangements the subject of the Development Agreement.
I would therefore reject the respondents’ submission that the Development Agreement proposed a “re-sale” of the respondents’ land within the meaning of s 188(1). For the foregoing reasons in my view his Honour ought to have answered the s 188(1) Question, “No”.
The s 186(2)(b) and s 188(2)(a) Questions
In view of my answers to the s 186(1) Question and the s 188(1) Question it is unnecessary to deal with the subsidiary questions. However, in declining to answer those questions, I should not be taken to be supporting either his Honour’s answers to those questions or his reasoning.
Although the primary judge held (at [250]) that s 186(2)(b) should be construed as limited to an acquisition by a council from a third party, a construction which he extended to s 188(2)(a), the respondents did not seek to support that construction which, in my view, is wrong.
Furthermore, I should not be taken as endorsing his Honour’s findings, supported by the respondents, that something more is required for the engagement of s 186(2)(b) and s 188(2)(a) beyond the fact that the land proposed to be acquired physically “forms part of, or adjoins or lies in the vicinity of” the relevant “other land”.
Conclusion
In my opinion the primary judge erred in answering what he referred to as the s 186(1) Question in the negative and the s 188(1) Question in the affirmative. Rather, he ought to have answered those questions “Yes” and “No” respectively. That is sufficient to dispose of the proceedings instituted by the respondents without the necessity of having to answer what his Honour referred to as the s 186(2)(b) Question and the s 188(2)(a) Question.
I would therefore propose the following orders:
In proceedings Nos. CA 40726/07 and CA 40727/07:
(a)Appeals allowed.
(b)In each matter the declaration and orders (other than Order 4) made by Biscoe J on 28 September 2007 be set aside and in lieu thereof:
(i)the Class 4 Applications filed on behalf of Mac’s Pty Limited on 21 August 2007 and on behalf of R & R Fazzolari Pty Ltd on 22 August 2007 be dismissed.
(ii)the respondent in each application to pay the appellant’s costs of the application and of the appeal from the decision of Biscoe J with respect to that application but to have with respect to each appeal a certificate under the Suitor’s Fund Act 1951, if otherwise qualified.
PALMER J: I agree with the orders proposed by Tobias JA and with his Honour’s reasons. I agree also with the additional reasons of Hodgson JA to the effect that the resale to Grocon of the respondents’ land was not the Council’s dominant purpose in acquiring the land and that such a finding renders s 188(1) Local Government Act inapplicable.
The only qualification which I have to the reasons of Tobias JA is as to his Honour’s comments on the s 186(2)(b) and s 188(2)(a) questions. I agree with his Honour that because of the answers given to the s 186(1) question and the s 188(1) question, it is unnecessary to decide the s 186(2)(b) and s 188(2)(a) questions. However, his Honour went on to say:
“Furthermore, I should not be taken as endorsing his Honour’s findings, supported by the respondents, that something more is required for the engagement of s 186(2)(b) and s 188(2)(a) beyond the fact that the land proposed to be acquired physically ‘forms part of, or adjoins or lies in the vicinity of’ the relevant ‘other land’.”
This observation suggests that his Honour may not agree with the construction placed on those sections by the trial judge. With respect, I would not wish to join in that observation. There are difficult questions of interpretation involved in determining whether s 186(2)(b) confers a power to acquire “adjoining land” which is independent of, and additional to, the power conferred by s 186(1). There is much to commend the trial judge’s view that the power conferred under s 186(2)(b) is incidental and ancillary to the power conferred by s 186(1).
However, I would prefer to leave a decision on the interpretation of s 186(2) and s 188(2)(a) to a case which raises the issues squarely on the facts.
**********
LAST UPDATED:
11 June 2008
5
10
9