R&R Fazzolari Pty Limited v Parramatta City Council

[2008] HCATrans 367

[2008] HCATrans 367

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S384 of 2008

B e t w e e n -

R & R FAZZOLARI PTY LIMITED

Appellant

and

PARRAMATTA CITY COUNCIL

Respondent

Office of the Registry
  Sydney  No S385 of 2008

B e t w e e n -

MAC’S PTY LIMITED

Appellant

and

PARRAMATTA CITY COUNCIL

First Respondent

MINISTER ADMINISTERING THE LOCAL GOVERNMENT ACT 1993

Second Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 5 NOVEMBER 2008, AT 2.52 PM

Copyright in the High Court of Australia

__________________

MR B.W. WALKER, SC:   May it please the Court , I appear with my learned friend, MR I.J. HEMMINGS, for the appellants  in each of the cases.  (instructed by Hunt & Hunt Lawyers)

MR A. ROBERTSON, SC:   May it please the Court , I appear with my learned friends, MR R.J. CARRUTHERS and MR C.R. IRELAND, for the Parramatta City Council, which is the respondent in the first matter and the first respondent in the second matter.  (instructed by Blake Dawson Lawyers)

FRENCH CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, there is a summons for leave to amend the notice of appeal.  We understand that it is by consent, but we seek leave to amend in the forms that your Honours will find in the so‑called core documents joint appeal book at page 342 for the Fazzolari case and page 377 for the Mac’s case.

FRENCH CJ:   Is that opposed?

MR ROBERTSON:   No, your Honour.

FRENCH CJ:   You have leave to amend accordingly.

MR WALKER:   May it please your Honours.  Your Honours, may I start by taking you to the documents which are important not merely because they are those things which constitute the project so as to attract the statutory characterisation which is at the heart of this case but also because they are the provisions, which I hope I will be able to go to only once, important for the second leg of the case, that which is particularly important for our friend’s notice of contention.  Not that it is unimportant for our argument.  That is the question, whether the project or transaction documents render as a matter of statutory characterisation of the provisions in question an eventual proposed step, that which attracts the label “resale”.

Could I start first of all by showing you a map, although the map in itself will not affect any question of statutory characterisation.  In volume 2 of the evidentiary documents joint appeal book at page 369 your Honours will find a fold‑out map colour coded so as to be pink for our client Mac’s and yellow for our client Fazzolari.  Your Honours will see that the Mac’s land is effectively on the corner of Church Street and Darcy Street, and you will see that there are other parcels of land, apart from the very large parcel of what I will call council land, in the middle of that block Church, Darcy, Smith and Macquarie Streets.

The Church Street shaded area and the Darcy Street shaded area are, more or less, those public roads already owned by the Council proposed compulsorily to be acquired by the Council in the manner that your Honours have seen described in the judgments and in the exchanged written submissions. 

Could I now take your Honours to the development agreement?  Your Honours will notice some terms which I hope have been explained in the written submissions.  I am starting in volume 1 of the evidentiary documents joint appeal book at page 32 with the so‑called Parramatta Civic Place Development Agreement.  This is the document which is conditional, contingent and executory in nature pursuant to which the so‑called proposed acquisition notices, the PANs, were issued.  It is the document, so we submit, pursuant to which title to my clients’ land is intended to be obtained so that it may beneficially and, as we will submit, in effect legally be transferred in turn in large measure to the developer. 

I draw to your attention on page 32 the parties, the date, 21 July 2006.  As to the recitals, on page 33H your Honours will notice the reference to the Local Government Project Review Committee.  That is a body which, as the Local Government Act provisions to which I will come makes clear, is composed of the most senior bureaucrats in relevant departments of State in New South Wales or their nominees, the Director‑General of the Cabinet Office, the Director‑General of the Premier’s Department, the Director‑General of the two departments which are responsible for, in effect, planning. Section 400I of the Local Government Act is a provision to which I will be returning.  Your Honours will have seen reference in the written submissions to the so‑called PPP, which is the public‑private partnership notion which underlies the way in which the Council has been able to enter into this major engagement with a private developer. 

Could I then take your Honours directly to page 37.  I am taking them through in sequence.  These are, of course, definitions.  “Darcy and Church Street Properties” is a defined term towards the top of that page.  Item (a) is our client, Mac’s.  You will see that it is referred to as “Hungry Jacks”.  That is reference to the commercial tenants in occupation.  Items (e) and (f) are our client, Fazzolari. 

GUMMOW J:   Which one is Mac’s?

MR WALKER:   Mac’s is (a).  It is not given a street address.  It is called Hungry Jacks, which is the commercial tenant.

GUMMOW J:   Thank you.

MR WALKER:   Could I jump your Honours through now to 47, about line 40.  You will see there a definition of and a subcategorising of what is called the “Site”.  It has “Council Provided Land”, “Trust Land”, to which I will be returning, “GCP” – G stands for Grollo Land – and various other possibilities.  Could I then take your Honours to the foot of page 49, about line 50.  You will see:

Trust means the trust created by the execution of the Trust Declaration.

Trust Declaration means the document which is exhibit Z–

to which I will be taking you –

Trust Land means the land identified as the Trust land forming part of the Site as identified in as such in exhibit F and otherwise agreed in accordance with clause 1.9 –

If I could jump, your Honours, through to page 175 to complete that reference.  You will see “Exhibit F” there referred to, “Site and Site Access Schedule”.  If you go to page 176 you will see a reference to the “Trust Land” as “Attachment 4”, and then to page 203, which is “Attachment 5 – Trust Land”.

GUMMOW J:   It is actually “Attachment 5”, is it not?

MR WALKER:   Did I say four, your Honour?

GUMMOW J:   You said four.

MR WALKER:   I am so sorry, I meant five, “Attachment 5 – Trust Land”, which you will find at page 203, “Attachment 5 – Trust Land”.  You will see in table 1 the fourth of those items is the “Darcy Street Properties” with the parenthetical note “as acquired by Compulsory Acquisition”.  The address 160 Church Street is Mac’s.  You will recall it is on the corner of Church and Darcy.  The addresses 20 to 22 Darcy Street, Parramatta are the Fazzolari lots.

Could I take your Honours back with those definitions to page 54.  One will see at the foot of that page about line 45 in clause 1.12 the “exhibit Z (Trust Declaration)”.  One sees that there is some flexibility in relation to that, continued at the top of page 55, by a so‑called obligation to negotiate.  The form in question may be found starting at page 249.  At page 250 you see that it is a two‑party “Deed of Trust” “Grocon (Civic Place)”, the developer, is the beneficiary, the council is the trustee.

At page 253 one sees the recitals, particularly recital B, about the beneficiary, that is the developer agreeing “to procure the development of the Trust Land”.  At page 254 there is the “Declaration of trust”, 2.1.  I will come to the subject of clause 6.1(h) in a moment.  The difference, the bifurcated difference, one sees in clause 3, will not matter for present purposes, we submit, but I draw it to your Honours’ attention, there are different outcomes depending upon if the project proceeds or the project ceases.  Your Honours see in 4.1 provision in blank made for what are called development trusts.  Page 255, 4.3:

If the Trustee acquires:

(a)      the Darcy and Church Street Properties –

and that includes my clients’ land –

the Trustee must do all that is required to procure that it forms part of the Trust assets, and forms part of the –

and then you see these so‑called project components from 4.1 –

as nominated by the Beneficiary –

the first and perhaps not the most important of the Grocon controls as nominated by the beneficiary –

and the Trustee will hold such property on trust for the Beneficiary –

Over to page 256, clause 6, “Trustee’s obligations”:

Subject to the provisions of the Development Agreement –

which is then worked in in a number of different ways as well to which I will come –

the Trustee agrees with the Beneficiary –

Then (a) there is a restraint on alienation –

(b)      will exercise its powers –

including in relation to alienation –

in any manner the Beneficiary or any Authorised Officer from time to time requests in writing and not otherwise –

complete control, we submit, subject only to matters to which I am about to come –

(d)will grant any Security Interest over the Trust land (as contemplated by the Development Agreement) –

and they can be summarised as the ordinary developer’s securities for development finance, as again –

may be requested in writing by the Beneficiary –

et cetera –

(e)      will do any other act or thing as may be requested in writing by the Beneficiary or any Authorised Officer from time to time, to give effect to the matters contemplated by the Development Agreement including –

I fear that is a typographical error, your Honours –

including [signing] all forms, applications and documents.

Clause 6.2, one sees there is one of the controls that makes this part of the overall project, the PPP, to which I will be coming, with its statutory approval:

The Trustee may refrain from taking any action or doing any thing if the taking of the action or the doing of the thing will contravene any law –

that is supererogatory surely, but going on –

or will give rise to a breach of the Development Agreement –

et cetera.  Clause 7 is then in the most general terms of powers but your Honours will see that it takes away most of what it grants by its opening words:

Subject to the limitations imposed under clause 6 –

subject only that the trustee can behave as an absolute owner, but it simply cannot, of course.  Then perhaps curiously phrased but with an effect both legal and commercial that we will be submitting is unmistakable, once comes to clause 8 on page 257 “Removal of Trustee”:

The Beneficiary may remove the Trustee under this deed and appoint a New Trustee –

One sees in one of the situations in which that can occur is described in paragraph (b) as being:

in accordance with clause 19.1 of the Development Agreement –

I will be taking your Honours to it.  The cross‑reference is to 134 and following.  One sees as well in (c) that the situations include an entitlement in Grocon, including:

the Development Agreement to remove the Trustee and appoint –

Those are the only provisions of the form of declaration of trust declaration to which we want to take your Honours in‑chief.  May we then go back, please, to page 56.  This is in the development agreement.  At the top of page 56 in clause 1.15, paragraph (a) one sees the importance of the confirmation of what I will call title, that is:

the Council is able at law to satisfy the condition precedent referred to in clause 2.1(a) –

to which I am about to come.  So that importance having been set up, one then comes to that 2.1(a):

the rights and obligations of the parties under this Contract do not become binding until –

so a condition precedent in that well‑known sense –

(a)the acquisition in the name the Council of the freehold of the Darcy and Church Street Properties –

that is the category which includes our clients’ land.  There are provisions on which I need not dwell in 2.2 concerning failure to satisfy that or waiver.  Could I then take your Honours through to page 67 just after line 20, clause 5.3.  The same topic is returned to by way of a promise:

(a)      Subject to paragraph (d) and paragraph (f), the Council must use its best endeavours to satisfy the Condition Precedent referred to in clause 2.1(a) by the Sunset Date.

(b)      Upon acquisition by the Council of the Darcy Church Street Properties, each GCP and the Council must do anything (including execute any document) . . . become part of the Trust Land.

Trust land is that which will be held pursuant to that trust declaration.  Over the page, page 68.  Clause 6.1 is headed in a way – I do not think it is a term of art, your Honours, but it is called “Trust activation”:

On the Close Date, the Council and GCP must simultaneously undertake the following –

and there you have the execution of the trust declaration which we know is the occasion upon which the so‑called trust comes into effect.  Bearing in mind that a trust is a set of obligations over property, then it would no doubt require the first to be the property and then the trust is imposed by the declaration.  That is no doubt the way in which it is locked in by the condition precedent, to which I have already referred.  So upon acquisition the obligations become binding so as to achieve the trust being imposed on the Council with respect to our clients’ land.

Page 74, under the heading “Primary Obligations” and 7.1 “General”, one sees the right to carry out the project being granted by Council to developer and one sees that that must involve, at the developer’s cost, the finance, design, construction and commission of the works with promises concerning suitability for purposes and the purposes, as your Honours appreciate, include public purposes, of public open space and public buildings for use by the public and the Council.  That is what is referred to.  I will not go to the detail of the definitions, but the defined terms capture the idea with the so‑called “Council Related Works and Open Space Balance Works” that you see in 7.1(b)(iii)(A) and (B).

Could I take your Honours then through to page 133.  One sees, in clause 18 – I will simply note them at the moment, they will be caught up later – the “Creation of separate stratum parcels for” what are called the “Council Related Works” and the “Open Space Balance Works”.  That is all under the heading, accurate, of “Subdivision”.  Page 135 and following, in 19.1A, under the heading “Transfer of title”:

As soon as reasonably practicable after the steps referred to in clause 19.1(a) are completed –

and they involve, in effect, the Council becoming the proprietor of the subdivided Council and urban space lands –

GCP must deliver to the Council a Change of Trustee Document consequent upon the change of trustee in the deed of retirement and replacement of trustee –

that is the one that is driven at the behest of the beneficiary –

together with any necessary Transfer Document and the Council must promptly execute those documents and deliver them to GCP.

Whereby GCP has chosen its new trustee.  At the foot of page 136, at the top of page 137, complementary no doubt to that regime, one sees in 19.4 the keeping of the Council as trustee up until what is called the “Transfer Date for the Council Related Works” and an embargo upon the beneficiary requiring a new trustee correlatively in 19.4(b).  To use the language of the parties, by which I mean the Council and the developer, this is a structure, using that word colloquially as lawyers do to describe the way in which transactions may be structured, where there are choices about how to do things.  This trust structure, as it is called, was the subject, as it had to be, of approvals at the statutory level under the Local Government Act as a PPP.  As your Honours have seen, it was the approval of it as a PPP which bestowed upon Council a function as defined, namely, the power of authority to carry out, to proceed with, the project.

So, in our submission, to be weighed against the proposition in submission by the Council now that these are complex and elaborate transactions which subliminally, it is put, defy characterisation so as to meet the statutory character or resale, for example, it is appropriate to go to the way in which this was presented both to the councillors at the stage of a decision whether to adopt by resolution, as the statute required, this project and then the way in which the Council presented the project for statutory approval by the statutory committee.

Can I take your Honours first to the way things were put in November 2005 during what is in fact the fairly late stages of the development of the proposal between the developer and the Council.  In the evidentiary book, volume 2, the documents on Blake Dawson Waldron letterhead starting at page 618 are aptly described as an outline of key development agreement provisions.  The appeal book notes that this was tabled by the general manager, which used to be called the town clerk, at Council meeting.

At page 620 the “Trust Structure” as the heading has it, is described.  The nature of the trust structure in clause 3.1 of this explanatory document refers to the making of an initial payment and the execution of a document constituting a trust.  Under 3.2 in answer to the question no doubt to be raised by a concerned councillor, what is the effect of the land trust?  The following description ‑ and I refer to all of (a) to (e), but dwell particularly on the following aspects ‑ under (a) there is the transfer of “equitable title”, as it is called.  No doubt that is notwithstanding its providence.  This is not a technical legal description.

The transfer of equitable title; that is parenthetically an effective transfer of title to the developer commercially quite so.  (b) notes what might be called the bear legal title “remain registered as the owner”.  (c) “when the Development Component is completed”, in other words when the developer has made good with the massive improvement of the Council land, including the supply of the money to be paid progressively and the money’s worth to be handed over progressively.  After you have then got subdivision:

into individual parcels containing the different staged office, retail, residential and car park elements –

then:

Council will execute a transfer of the legal title in those parcels progressively to the Developer or its nominee;

Your Honours may or may not recognise, but we submit that you should now see that as being a correct commercial understanding of the combination of the declaration of trust, the control on alienation by the beneficiary and the regulated mandatory direction by the beneficiary to the trustee for the so‑called removal of the trustee and the appointment of a new one.

GUMMOW J:   How does (e) on 3.2?  “This will require Council to ‑ ‑ ‑

MR WALKER:   “In favour of the financier”.  I am not sure how many of the letters have been obscured in your Honour’s copy.  It reads as follows, I think:

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.

So the legal owner will not be undertaking any financial obligations to the lender.  The lender will look in the ordinary way only to the developer.  Your Honours will recall in the trust declaration the provisions which oblige the trustee to do everything necessary to execute whatever is necessary in order to provide security as is contemplated in the explanation given to councillors at that point.

I now take your Honours through to a later iteration of the same kind of document, although I am bound to point out that it does not at this time appear on letterhead, but the word processor traces make its providence very obvious.

It starts at page 681 and this was part of the papers which was before the Council in support of the recommendation by officers to the councillors following which they resolved to enter into this project.  At page 684 commences the corresponding part of the document, “Land and Trust Structure” and we would be so bold as to submit that what follows, your Honours would appreciate, is an explanation to people who may not be lawyers of what is really happening, what is being done by the sophisticated legal structure chosen.

The “Nature of the trust structure” is similar to what has been explained at the previous meeting to which I have taken your Honours.  At the top of 685 at 3.2 the same inquiry:

What is the effect of the Land Trust?

(a)Council will transfer the equitable title of the site to GCP (that is an effective transfer of title to GCP);

(b)Council will, however, remain registered . . . 

(c)when the Council Related Works and the Open Space works are completed, legal title to those parcels will be progressively transferred to Council;

(d)when the Development Component –

and that is what I might call the private as opposed public part of this partnership –

is completed and subdivided . . . Council will execute a transfer of the legal title in those parcels progressively to the Developer or its nominee or will be changed as trustee of the trustee (so as to effect that transfer); –

And, with respect, that is the concise, accurate and intelligent explanation ‑ ‑ ‑

HEYDON J:   Presumably it is “trustee of the trust”?

MR WALKER:   “as trustee of the trust”, yes, that is a typographical error.

FRENCH CJ:   This is all directing us to purpose, is it?

MR WALKER:   Yes, and the characterisation, your Honour.  Your Honours, against that background of the transaction, then, the question arises as to how one fits all of that within the statutory scheme which regulates and will continue to regulate the power of compulsory acquisition in this case.  Your Honours may have gathered that there were at first instance and also in the Court of Appeal issues which are no longer live.

It is useful if I state an important concession which reflects arguments no longer put and that is that by reason of the PPP approval process having been accomplished there was, as we have made clear in our written submissions, no doubt about the existence of a power of compulsory acquisition and there is also no doubt about the existence of a power of resale both because they depend upon the PPP, as approved, and also because as approved the PPP explicitly contemplated each of them to occur.

KIEFEL J:   Just so that I can be clear about it, does your concession mean that the PPP approval is a source of power?

MR WALKER:   Yes.  May I show your Honour how?

KIEFEL J:   Yes, thank you.

MR WALKER:   Before I come to the law on that may I take your Honours to the fact in terms of the application.  This is the last of the documents which shows the appreciation by counsel of the effect of what it was doing.  Could I take your Honours in volume 2 of the evidentiary documents to the document, the exhibit note of which is at 777, where you will find what follows described as the:

Application to the Department of Local Government . . . seeking Ministerial approval for the compulsory acquisition –

Now, that is because “compulsory acquisition”, as provision to which I will come make clear, itself requires ministerial approval.  There is a check list of information that starts on 778 and you will see between lines 40 and 45 there is a reference to:

why any resale proposal is ancillary to the purpose of the acquisition.

and on page 779, the third item:

(If acquisition is for re‑sale) Indication of any intervening council activity, such as prior subdivision approval by the council.

If I could take your Honours now to page 782.  This is the first appearance of something which is repeated several times which we have sought to capture in our references in written submissions to the factual plan for relevant parts of the land.  At about line 10:

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.

Your Honours have seen the method by which that is to be accomplished.  Continuing:

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 –

We have drawn that to attention in our written submissions.  In the next paragraph:

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.

Language which, in our submission, sensibly suggests that a complete commercial and business equivalence is understood between those two possibilities.

FRENCH CJ:   Mr Walker, just so I understand the larger context of this very briefly, there was a Sydney Regional Environmental Plan which seems to have been some form of statutory instrument.

MR WALKER:   That is delegated legislation under the Environmental Planning and Assessment Act.

FRENCH CJ:   Yes; okay.  And then that made provision for Civic Place as a master plan site?

MR WALKER:   Yes.

FRENCH CJ:   And then there was the master plan adopted by Council and that gets a tick, I think, from Planning New South Wales or someone?

MR WALKER:   Yes.

FRENCH CJ:   And then this development agreement purports to be made pursuant to the master plan?

MR WALKER:   Yes.

FRENCH CJ:   And subject to the PPP approval you are going to take us to?

MR WALKER:   Yes, and the last step is of some importance.  There is no doubt that it occurred in this case; that it went to the committee; the committee signed it off and there is nothing we need to draw to your attention about that.  It is the fact of it having occurred, and I will be returning to answer Justice Kiefel’s question about power.

That passage I have just read at the top of page 782, could I remind your Honours, that is under the rubric “Purpose of the Acquisition”, which you will find on page 781 at about line 10.  At page 785, item 9 is “Re-sale”, just above line 30.

Does council intend to sell the land once the land is acquired?

“In part” is the answer, and in our submission, there is no reason now to hold that those who advised on this rather important approach, statutory in nature, by Council to the Minister, was in any way mistaken.  That is exactly what they intended to do.  And hence there are so‑called “intervening activities”, page 786, item 9.2.

Any intervening activities by council (such as subdivisions)?

Yes.

Your Honours have seen that.  This is, in effect, acquisition, consolidation and re‑subdivision to reflect the different deployment of land now between private and public, but cutting my clients out.

HEYDON J:   Where is attachment I, which is referred to in line 13 at page 786?

MR WALKER:   On page 798 at one of the places where you find repeated the passage I noted at the top page 782, the paragraph commencing “A substratum beneath Church Street”; and then you see a reference to procuring “the subdivision of the above components from the balance of the Church Street site following the completion of construction”. That is the attachment I, as we understand it.  If I could now take your Honours to the relevant provisions of the Local Government Act.

HAYNE J:   What is the date of the print that we need to work off, Mr Walker?

MR WALKER:   I am sorry to hesitate, but No 7, I think for all purposes.

HAYNE J:   I am glad you did hesitate; you thought about it.

MR WALKER:   This is one of those statutes with some uncommenced amendments, none of which I think will deflect your Honours.  Your Honours, it is the difference between electric and paper.  It is No 7 paper.  If only it was only ever paper but, as your Honours know, there are now electric versions and I confess it is the electric version, electronic version, which is the source of the extracts we have put, as the rules require, in our written submissions.  There is no difference, on my check, between those two sources.  We have referred to an abortive attempt to amend in a way I am not going to elaborate and address, but there are no other amendments.

The important thing about the provisions of the Local Government Act in question is, in our submission, to be seen from the subject matter that Chapter 12, Part 6, announces that it is dealing with.  I do not need to dwell on the definitions but in section 400B, for example, of the Local Government Act 1993, a public‑private partnership is described as ‑ ‑ ‑

GUMMOW J:   What section?

MR WALKER:   Section 400B(1).  It is:

a reference to 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 has an interest, lability or responsibility under the arrangement), or

(b)delivering services in accordance with the arrangement,

or both –

And then there is a reference to the possibility of exclusion by regulation.

Your Honours will immediately see, as one would have guessed from the word “private” in that sloganesque title, that the private person is not doing this for their health and that they will be getting some benefit and, like most benefits, there are going to be risks involved as to how they are going to be obtained.  “Risk” is explicitly referred to in a number of provisions.  Before I come to them could I note in the definitions that you see “an arrangement” is a very broad concept.  It includes ‑ ‑ ‑

GUMMOW J:   My copy says “arrangement includes a contract or understanding (whether or not involving the formation” ‑ ‑ ‑

MR WALKER:   “of an entity)”.

GUMMOW J:   It is “of an entity”, is it?

MR WALKER:   It could be the promotion of a corporation, presumably.

GUMMOW J:   The words “of an entity” do not appear.

MR WALKER:   I am so sorry, your Honour.

GUMMOW J:   Anyhow, go on, Mr Walker.

MR WALKER:   At page 211, I hope, of the print  ‑ ‑ ‑

HEYDON J:   I have 211;  it is in my copy.  I think Justice Gummow has an electronic printout.

GUMMOW J:   Just go on, Mr Walker.

MR WALKER:   “Entity” in fact is then defined to mean:

partnership, trust, corporation, joint venture, syndicate or other body (whether or not incorporated).

There are all‑important PPP guidelines which I hope are of no interest to the Court.  We have not found anything material in them that affects any of the arguments one way or the other, but they are very important in the scheme.  One sees “private persons” defined in a way to exclude what might be called political and governmental ‑ ‑ ‑

GUMMOW J:   What we can get out of all of this is that the phrase “public‑private partnership” is a political slogan of some sort.  These people, these entities, do not become partners.  I would be surprised if they did.

MR WALKER:   Your Honour, they may, one sees, under the first item in the definition of “entity”, but your Honours may or may not have heard another sloganesque expression, also not coincidentally in the area of public infrastructure works, so‑called “partnering contracts” which one could cynically say is the process by which you sign up to be paid a particular price to deliver a number of trains and then you keep turning up for more money when difficulties arise.  That is called “partnering”, instead of “litigation” but, with respect, Justice Gummow is correct.  “Partnership” is not to be taken literally, except where it first appears in the definition of “entity”.

GUMMOW J:   The question then is later on does resale have to be taken literally either.

MR WALKER:   Yes, your Honour, and that is where I am ‑ ‑ ‑

GUMMOW J:   That is where you are going.

MR WALKER:   That is where I am headed.

GUMMOW J:   Yes.

MR WALKER:   In our submission, all of this bespeaks a now you see it, now you do not use of technical terms of art, but imbued with the notion of applying private capital and risk taking to the provision of public so‑called infrastructure, which is what the Parramatta Civic Place project is all about.  The private developer will end up with a lot of land with offices, retail and residential developments which it can exploit as it sees fit, by sale or lease presumably.

The public, taxpayers and citizens and residents, will obtain amenity and facilities owned on their behalf by the local council and operated whether it be as library, council chambers, transport interchanges and the like, public car parking. In our submission, when one understands that that is the particular function of council which is being proposed to be carried out in this case, the purpose of the resale is something which, in our submission, will require a look from the point of view of the purpose of these provisions and the purpose of the protection evidently to be supplied by section 188, to which I will be coming, when one comes to the expression “resale”.

One sees under 400C the importance of the director‑general’s guidelines.  As I say, none of them is relevant to the argument so far as we see them in this case.  Under 400E there must not be entry into a PPP except in accordance with the statutory requirements, and the guidelines are yet again emphasised as mandatory.  Under 400F there is a statutory description required by a council, an assessment so‑called, to the director‑general, and one will see that risk is at the heart of that governmental assessment upon which power to proceed will depend, 400F(3)(b), not the only place risk is referred to but an important one.

Sections 400G and H are other means by which there is central government control of these projects.  Then 400I is critical.  So if one way or the other it gets to the so‑called Project Review Committee for review, then that is a step that must be satisfactorily carried out before anything else can happen.  One sees that there is responsibility under subsection (2) for fulfilling requirements of the guidelines.  Then under subsection (3), which is my answer to Justice Kiefel’s question:

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 enter into the public-private partnership (if it has not already entered into it), or

(b)subject to this Division, to proceed with the carrying out of the project.

It is that power or authority or entitlement to proceed with the carrying out of the project which is within the meaning of the Local Government Act a function of council.  That concludes what we wanted to show your Honours about the PPP requirements.

Could I now come to the critical provisions which regulate the compulsory acquisition. They, in our submission, usefully commence with section 186 and under subsection (1) there are two matters I draw to attention. The first, which may or may not be significant in answering an argument from our friends, your Honours will see the parenthetical definition, as it were, of land to include “an interest in land”. So:

A council may acquire land –

in that sense –

for the purpose of exercising any of its functions.

One thing that we would urge on your Honours from that language, it being a conceded fact contrary to our position in the courts below, that the power to acquire land did become available to the Council because there was a function upon the Project Review Committee signifying that satisfaction with the PPP guidelines had been complied with.  One thing that we would draw to your Honours’ attention is this.  It would be a misreading of subsection (1) to read the power to acquire land as itself a function.

The language and the intellectual construct by which a power is given so long as it satisfies a requirement, namely, that it would be for the purpose of exercising any of its functions, denies the possibility of a circular or self‑justifying power to acquire land simply by saying, well, a power to acquire land is itself an authority, function is defined to include authority therefore you can acquire land because you can for the purpose of acquiring land.  That would be absurd and circular.  It would not represent a parliamentary control on the acquisition of land by a council.  It would be a mockery.

That is a reading of this part of the text which, in our submission, is in accordance with the same manner of reading that supports the main argument which your Honours have read in our written submission.

GUMMOW J:   I am not sure I really follow the written submission all that clearly.  Looking at the judgment of Justice Biscoe at 133 he answered four questions.  I am not quite sure where you stand on those four questions?  I am about the third and fourth I think, but not about the first and second at page 133.

MR WALKER:   Could I say in answer to each of those, in short form, to reflect the position that we seek to put in this Court.  The answer to question (a) found in the green book 133 is, yes.

HEYDON J:   That is agreed?  That is not in controversy?

MR WALKER:   Not in controversy.

GUMMOW J:   The primary judge answered, no.

MR WALKER:  We were responsible for that, but we do not persist. Let me make it as categorical as possible. The decision of Council “to compulsorily acquire the applicants’ land” – and that means the issue of the PANs – the proposed acquisition notices – was for the purpose of exercising a function within the meaning of section 186(1) of the Local Government Act.  The function I have identified is proceeding to carry out the Pacific Place Project – an approved PPP.  Question (b) ‑ ‑ ‑

HEYDON J:   It does not matter in view of the answer to (a), does it?

MR WALKER:   I think that is right.  I think the answer is, yes, and it does not matter.  The answer to question (c) is highly controversial?  We submit yes, the respondents submit, no.  The answer to question (d) is also highly controversial.  The final bottom line answer is, no, we say.  Our opponents say, yes.

GUMMOW J:   That is (d)?

MR WALKER:   (d), but the components that make up that final bottom line answer is as follows.  Yes:

the applicants’ land does adjoin or lie in the vicinity of other land to be acquired at the same time –

but, no, properly understood, the purpose for which that other land is being acquired at the same time does not fall to be described as “other than a purpose of re‑sale”.  It was being acquired as well for a purpose of resale as for other purposes as well as being, we submit, on a purposive reading of these provisions, as well as a literal understanding of the text, quite the opposite of “other than”.  I hope that makes it clear the difference between how things were once and how they are now.

Your Honours, could I then resume to my attempted reading in supplement of our written submissions on the point of sections 186 and 188 of the Local Government Act. Before leaving section 186, could I draw to attention the provisions of subsection (3). This is not a primary matter in our argument, but you will have seen a reference, particularly in our written submissions, to noting that “community land vested in a council”, if acquired by a council, is not thereby discharged from those things which may be summarised as making it community land, as opposed to so‑called operational land. That is not of great significance to our main argument but it may be of significance to what is unkindly called against us our new tactical point, to which I will be coming.

Section 188 is the next important provision and it falls into two distinct but obviously related parts. Under subsection (1), the language very plainly is of entrenchment upon or exception from the power which, equally plainly, section 186(1) gave. It is a special case. The first thing to notice is that it applies only to “compulsory process” and that is obvious because what is being protected is that right, perquisite or prerogative of ownership which is the power or right to say, no, I will not let you have my land except upon terms that I am happy with. Obviously, under section 186(1), the power to acquire by offering a sufficiently high price or other attractive terms is unaffected by the argument we wish to make. The argument we wish to make protects what, we submit, is at the very heart of ownership.

So it is a restriction on compulsory acquisition and it is a restriction which restores the owner’s power of control of alienation through the phrase “without the approval of the owner of the land”.  It is a slightly odd expression.  Approval is like a statutory personage, giving it approval, such as the Minister to a PPP ‑ to an acquisition.  But what it means is a matter of English and understanding the subject matter, namely, the ownership of land and acquisition of land.  It clearly means that you are going to have to obtain what would ordinarily result in contractual consensus ad diem.

And the special case, which is first special because it is a compulsory process, is made acutely special and is the point of our argument by the following phrase, “if it is being acquired for the purpose of re‑sale.” and your Honours have seen rehearsed the arguments. Let me note some of the textual matters immediately. One question would arise; does the definite article “the purpose of re‑sale” do anything, such as, as we put in our written submissions, raising a search for something which is unique or sole or singular, which is one possible meaning of the definite article as opposed to the expression “some”, “any” or “a”. And for the reasons that we have put in writing and which I will elaborate briefly, a purposive as well as literal understanding of section 188 would certainly reject that possibility.

Before I come to elaborate the way in which they all should be read, could I conclude by reference to section 188(2), the provisions which are being read. There is then a proviso, if you like, an exception upon the exception:

However, the owner’s approval is not required.

That, after all, is the gist of the restriction in subsection (1), the need for the owner’s approval – if (a) or (b).  We need not worry about (b).  We step forward, but (a) is the one at the heart of the notice of contention and (a) is the one which was not decided in the manner that we have pointed out in our written submissions by the Court of Appeal, notwithstanding it was an issue in the Court of Appeal.

Under paragraph (a) – as I hope I have given in my short form answers to the questions posed by Justice Biscoe to which in response to Justice Gummow we have given our response – your Honours will have seen that of course we concede that our clients’ lands adjoined or lie in the vicinity of other land – and there is quite a deal of it but it suffices simply to name the two streets – acquired at the same time – and it is quite plain from the description by the Council to the Minister of what was being proposed and actually what was proposed, that that is the enterprise on foot to acquire them at the same time – and then come three important words which I will be returning to for the so‑called new technical argument under this part, and then the phrase that our written submissions in‑chief focuses on, “for a purpose other than the purpose of re‑sale”.

Just to recap, your Honours will have seen then the word “purpose” appearing relevantly three times in the provisions under examination. In section 186(1) “for the purpose of exercising any of its functions”. In subsection 188(1) “if it is being acquired for the purpose of re‑sale”. In paragraph 188(2)(a) “for a purpose other than the purpose of re‑sale”. The language read literally and superficially, not least because of the use of the definite article and the singular form of the noun “purpose”, might have given rise, if only in theory, to the implication that an acquisition can have, will have, does have, may have only one only purpose and that it is simply a matter of characterising and if you characterise it for one purpose, there can be no other purpose.

In our submission, there are a number of reasons to reject that but one may start with common sense, that land may be acquired for a number of purposes even if you describe the purposes at the same level of generality concerning a council’s discharge of its functions but if, as one can and often does, one describes purposes by resorting to different levels of generality to describe the same conduct or event, then of course there can be more than one purpose.  The purpose of resale also serves a purpose of community enhancement of amenity, also serves the purpose of stemming the outflow of ratepayers funds by enlisting the profit motivated assistance of the developer, for example.

They are all purposes, all motivations, which are simultaneously true. In short, the search phrase, sole, unique or exclusive singular purpose, even if it may superficially have been raised as a possibility by the language, would be rejected on an ordinary reading of these words, but, in our submission, there is an even more substantial reason why read contextually in this statute and understanding the critical threshold matters in section 186(1) the Court would reject the notion that there could ever be a purpose of resale which, even without being sole or unique, could even be dominant or the characterising or the most obvious or the most substantial purpose.

That goes back to that which is critical to the understanding of any compulsory acquisition in New South Wales or any of the States of this country, namely, that the acquisition is going to require parliamentary fiat, that there must be a statute which entitles the Executive to take the private property.  Here it is 186(1) for what I will call the usual case.  I am going to come back to the special case of the Council acquiring its own land which is the paragraph 188(2)(a) point later, but for the general proposition, the power applying for the acquisition of our clients’ land, not the Council’s land, it is clear that one looks to subsection 186(1).

It is equally clear there that for evident purposes of the control and appropriate authorisation of these public bodies’ councils that the power is co‑extensive with the exercise of a council function.  On the facts of this case it is equally plain that the function is carrying out the project and it is clear factually, as we have demonstrated both in writing and in my address so far, that carrying out that project involves acquiring land compulsorily, if necessary – your Honours saw that rubric in the explanation to government, that description – and also transferring the title to the land, to adopt and adapt the language of the Council in speaking to central government, to get approval, transferring title to much of that land, the development component your Honours will recall, to Grocon.

Now, we have seen it done by this method of a declaration of trust under which the trustee must give up the legal title when required to do so by the beneficiary in order to give it to the beneficiary’s nominee, which could, of course, be any company captive in the Grocon group, so long as it was not the beneficiary itself.  What one will not find either in any of the statutory provisions discussed in the reasons below or in the written argument against us in this Court is any reference to a statutory provision which creates either in general or bestows in particular in this case any function – and I stress the word “function” – on the Council which is itself resale of land – and I stress “resale of land”, not sale of land. 

We would submit that sale of land is not itself a function, that that is a power to carry out a function, but we do not have to argue that point.  Resale as a function is in itself curious, politically, extremely unusual to imagine defined and there are no statutory provisions suggesting it.  We raised the challenge in our written submissions, show us a function which is resale and there is no response.  With respect, understandably because resale is – to borrow the language used by our friends and also by Justice Tobias – it is a means to an end.  It is not an end in itself, as you would expect.  Particularly when your Honours consider the prefix “re” in the expression resale, it becomes even more striking and obvious that there cannot be a function of resale. 

The prefix “re” obviously posits an original purchase. The first sale is to the putative vendor on the resale, so the putative vendor on the resale was originally a purchaser, so that is sale one and then it is resold. There is no absurdity here of somebody selling the same thing twice. What that ordinary English resale means is you are selling something which you have bought. Now, bearing in mind the context in which resale is introduced into the statutory protections, namely, section 188(1), we know that it is not really sale in the consensual sense, but one posits it as sale number one, where sale number two is the resale. We know that because it is confined to acquisition by compulsory process, that which is as it were a deemed purchase, but is in truth the antithesis of purchase. Forcing somebody to agree to sell is not good English. It is perfectly possible, of course, that Parliament can achieve that result by the provisions in connection with compulsory acquisition of land.

So we know that the resale is upon sale number one, which is by compulsory process. Then one asks, what is the purpose of the protection evidently intended of owners’ interests – not of any other interests – in the public interest, that is, the public interest of recognising the importance of private ownership, by section 188(1)? Now, it is at that point that, in our submission, consideration of so‑called trust structure, with which I started when I took your Honours to the transaction documents and the Council’s explanations of them to central government, becomes quite important.

If we are correct in respectfully suggesting that your Honours would characterise the mischief aimed at by 188(1) as the spectacle to be avoided of owners being deprived of their land compensation X dollars and watching the public entity profit, so to speak, by selling it or exploiting it for two X dollars or two X dollars worth, if that be the mischief, that is, land being taken not to be held by the public authority for public good, but to be sold on, exploited by being turned into money or money’s worth for the public good, then, in our submission, it is clear that devices – I do not use that word slightingly, but it is the same metaphorical use as the word “structure” – devices or constructions built up by legal ingenuity to include this transfer – their term – by dint of the declaration of trust with the removal and nomination by the beneficiary of a new trustee upon performance of the construction obligations ‑ ‑ ‑

FRENCH CJ:   The restriction on compulsory acquisition here would go wider than the circumstances which in its absence would have been described as improper purposes?

MR WALKER:   Quite so, and your Honours will not have seen any reference to “improper purpose” in our argument, either in writing or in my address.  They are controversies of former times and with different statutes.  There is no improper purpose to the contrary with respect for there to be resale intended quite explicitly under a PPP ‑ a Parramatta Civic Place Project ‑ by which land is to be gathered together, consolidated, re‑subdivided, divvied up between the private developer and the public authority, all no doubt in the public interest, as a PPP must be, but using that which we are told would not otherwise be available, namely, money to be supplied by private enterprise rather than by taxpayers.

Now, there is no hint of impropriety in the use of “compulsory process” in 188(1), but – if I may call it – the power as by Parliament being divided, there is a general power thus to proceed 186(1) but you must obtain the cooperation of an owner, 188(1).  Now, you would never construe these provisions from the point of view, which one could be forgiven for reading between the lines of the arguments against us, that it is a bad thing relevant to a reading of the statute that one owner might hold out against urban rejuvenation.

That cannot be resorted to as an argument because Parliament plainly contemplated that something called the approval of the owner of the land would be required in certain cases.  Now, the next inquiry is would that be a reason, namely, social disapproval of one hold‑out owner, or even more emotive language, one owner holding the public to ransom by asking for money in excess of market value, is that a reason to read acquired for the purpose of resale by a meaning for the word “re‑sale” easily at the stroke of a word processor, circumvented by what in this case is manifested as the trust structure.

HAYNE J:   But the spectre of the hold‑out owner injects into the argument, or rather divorces the argument, from first identifying under 186(1) the power to acquire more generally.

MR WALKER:   Yes.

HAYNE J:   If you have power to acquire the land, or if Council has power to acquire the land, so be it.  The next question ‑ ‑ ‑

MR WALKER:   Can you do it compulsorily?

HAYNE J:   Well, the next question is presented by 188(1), when can you not do it compulsorily?

MR WALKER:   Because as I have tried to point out, 186(1) bestows a power which need not be exercised compulsorily, and as your Honours appreciate the cognate legislation that we call the Just Terms Act and our friends call the Compulsory Act the Land Acquisition Act, is explicitly encouraging of agreement rather than compulsion.

HAYNE J:   Does your argument about the phrase “for the purpose of re‑sale” where it appears in 188(1) include an element which points to the word “re‑sale” as taking its meaning by reference to the earlier transaction of compulsory acquisition, assuming it to be a sale, this is described as a resale and that informs the content that is then to be given to resale as a rather larger and more general identification of commercial outcome?

MR WALKER:   Quite so. The commercial outcome that may be accomplished by consensus under section 186(1) may only be accomplished by consensus by reason of 188(1) if there is at the end of it a purpose of resale. So 186(1) contemplates either consensus or compulsion. Section 188(1) says, but no compulsion if. The use of the word “resale”, for the reasons Justice Hayne has raised for my consideration, does show that a substantive or commercial effect approach ought to be taken to the notion of resale. One, we know that, as the prefix “re” shows, the implied first sale is not a sale at all. It has the commercial effect, however, if achieved, of transferring in return for money someone’s land. That is why it is called a sale.

HAYNE J:   But this approach to the construction of the relevant provisions suggests, does it not, that your challenge to identify as a function of resale is an interesting forensic flourish obscuring the necessarily separated inquiries presented by 186(1) and 188(1), because 188(1) is simply a separate inquiry.

MR WALKER:   They are different inquiries, your Honour.  I hope it goes more than a flourish, for this reason.  As I hope your Honours have gathered from our written submissions, we deploy that point, show me, that is, we wager you cannot show us a statutory function of Council of resale against the reasoning which, we submit, quite wrongly, was taken up by reference to the CC Auto Case in this Court, reasoning which has as its conclusion the notion that it is not the purpose of resale within the meaning of subsection 188(1) if it is not – and then there is a series of epithets – dominant, et cetera.  We will come back to that by way of elaborating our criticism of that reasoning later.

The reason why we were at pains to say that there is no function which is resale, there are functions which involve the power of resale, just as there are functions that involve the power of acquisition and functions which involve the power of borrowing and spending, but there is none which is itself resale.  The reason we do that, because if we are right in that proposition, then the notion of looking for an acquisition for the purpose of resale is a will‑o’‑the‑wisp.  It is impossible.  You could not have an acquisition for something which is not a function, which means that it could never be dominant, which means by definition it is only ever going to be – and then we come up with our epithets – subservient or ancillary, are those which serve their purpose.

HAYNE J:   Those arguments – if I describe them as semantic I do so not pejoratively – are arguments which turn upon attributing a meaning to the word “function”, which has to grapple with this inclusive expression tucked away in the schedule and you end up, I suspect but do not know, tangled in the toils of the words that are thus employed.

MR WALKER:   Well, we hope they are not hidden in their arguments, your Honour. We put them to the fore because we do have to grapple with it. I hope this is not a limp way of starting our answer to that, but we note for what it is worth, that that is a definition that has the word “includes” but that is not going to take us very far, we accept that. That is the contextual reading of the provisions that I attempted with section 186(1) is the way by which we resist the proposition that every power of Council becomes a function for the purposes of understanding section 186(1). One reason we do that is because of the absurd circularity, bearing in mind what we now unequivocally concede to be a power of council, namely, resale.

Now, another power of council is acquisition. One cannot sensibly read either, in our submission, acquisition or resale into section 186(1) without it becoming a mockery in the sense that it appears to impose a limitation but does not, and 188(1) would appear to give power or keep power with an owner but does not. It is for those reasons, in our submission, that understood in a particular fashion, true a semantic argument, trying to untangle the substantive content of the words being used in context, requires functions in 186(1) not to include the very power in question, that would be absurd, and because of 188(1) equally not to include resale.

It would be ridiculous if there was a general power in 186 to acquire for the purpose of reselling, but under 188 could not be done compulsorily if it was for the purpose of reselling unless one were to read the purpose of resale in a particularly tortured fashion.

GUMMOW J:   Now, Mr Walker, at first instance you secured injunctions.

MR WALKER:   Yes.

GUMMOW J:   It appears at pages 163 and 168, as well as declaration.  The Court of Appeal at 275 set aside those orders.  What is the present situation?

MR WALKER:   The present situation is, as the chronology demonstrates on page 17 of our written submission, in light of the law that we have drawn to attention in paragraph 16 on page 4 of our written submission, namely, the PANs have expired.  The Council has declared its intention subject to this Court’s judgment to reissue an identical set of PANs so as to effect an acquisition.  The PANs having expired means, of course, there is nothing to adjunct.  If we were to win, there would be absolutely no need for any injunction.  It is unimaginable that the Council would issue new PANs.

GUMMOW J:   Well, what would the declaration be?  Would that simply restore the primary judge’s declaration?

MR WALKER:   Yes, it is simply the primary judge’s declaration, your Honour.

GUMMOW J:   That is all we would have to do?

MR WALKER:   That is all you would have to do.  That would declare historically that state of affairs which, having survived an appeal by this Court correcting the Court of Appeal, would secure the position, whether by estoppel or precedent will not matter against future PANs in the same case.  At least that is the position that we take as we are confident, for good reason, that the Council needs no more restraint than that.  So it is the restoration of the declaratory relief.  It is not the restoration of injunctive relief, though that does not matter; that is, in effect, it is part of its own force because nothing further can be done upon those original PANs.  Your Honour, is that a convenient time?

FRENCH CJ:   How much longer will you be, Mr Walker?

MR WALKER:   My guess is something less than half an hour.

FRENCH CJ:   Thank you, Mr Walker.  The Court will adjourn until 10.00 am tomorrow.

AT 4.14 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 6 NOVEMBER 2008