Town of East Fremantle v Cornell

[2005] HCATrans 880

[2005] HCATrans 880

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P10 of 2005

B e t w e e n -

THE TOWN OF EAST FREMANTLE

Applicant

and

DENIS JAMES CORNELL (AS EXECUTOR OF THE ESTATES OF JACK SYDNEY CORNEL AND JESSIE VERONICA CORNELL (DEC))

Respondent

Application for special leave to appeal

GLEESON CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 26 OCTOBER 2005, AT 9.27 AM

Copyright in the High Court of Australia

MR C.L. ZELESTIS, QC:   May it please your Honours, with my learned friend, MR P.L. WITTKUHN, I appear for the applicant.  (instructed by McLeods)

MR M.J. McCUSKER, QC:   May it please the Court, with my learned friend, MR P.A. KYLE, I appear for the respondents.  (instructed by Kyle & Company)

GLEESON CJ:   Yes, Mr Zelestis.

MR ZELESTIS:   May it please your Honours, the special leave question in this matter concerns statutory provisions which confer rights of compensation for injurious affection from the making of town planning schemes.  The structure of the provisions is that section 11(1) of the relevant Act confers the right, the right is then qualified by an amendment introduced some years later in section 12(2a).  The qualification is a little complicated. 

The first step is that it has regard to items listed in clause 10 of the schedule, which include matters of heritage, preservation and the like, and the effect of it is that where restrictions are imposed for that purpose then compensation is only able to be obtained for injurious affection if the scheme, to quote the words, “permits development on the land for no purpose other than a public purpose”.  The primary question in the case, in our respectful submission, is whether those words are to be construed as requiring regard to be had to the true effect and scope of the scheme or ‑ ‑ ‑

GLEESON CJ:   Do those words mean anything different from “does not permit development of the land for any purpose other than a public purpose”?

MR ZELESTIS:   In our submission, no.  In our submission, it is a deeper question of whether what is being considered by Parliament is whether in substance at law the scheme allows or precludes a class of development or not.  In the Full Court, in our respectful submission, a construction was adopted which gave emphasis to form rather than substance because the scheme here took the form, as many schemes do, of prohibiting development unless one obtained special approval of the council.  It was the form of that prohibition in the scheme which was decisive in the view of the majority in the Full Court.

HAYNE J:  Is that form of drafting of planning restrictions common at the time (2a) went into the Act?

MR ZELESTIS:   The model text upon which the dissenting judge, Justice Jenkins, relied was not in existence when it went in and we do not seek to support her Honour’s result – we support the result but we do not seek to support the result by reference to her regard to what she considered to be the statutory scheme, being the model scheme text in some regulations passed some 11 years after the amendment was introduced.

GLEESON CJ:   Was there a material difference between the construction given to the provision by the majority in the Full Court and the primary judge?

MR ZELESTIS:   Yes.  In our respectful submission, this is an important point.  The primary judge did not explicitly address the question of construction.  He did it implicitly and in a way which, in our respectful submission, supports our conclusion.  He does so at page 59 of the papers in a passage really running on the whole of that page from paragraphs 241 to 245.  I say his Honour does not deal with it explicitly because his Honour does not pause to give construction to the words of the relevant provision, which is 12(2a)(b)(i), but reaches the conclusion in 245 at the foot of 59, line 42, that having regard to his view that “approval for a private development will only be granted in an exceptional case” then the scheme effectively does not permit here, it forbids.  But his Honour’s approach, in our respectful submission, was sound to this extent, that his Honour endeavoured to examine what, as a matter of legal substance, was available to be approved under the scheme. 

Now, I am bound to say that our argument to succeed involves two steps.  We, with respect, need to succeed in upsetting the Full Court’s construction of the statutory provision, 12(2a)(b)(i), but the second step is that we then need to persuade the Court that on the proper construction of the scheme some development for non-public purpose was permissible.  In our submission, that is a question of law, not a question of fact as the dissenting judge thought it was. 

There was evidence as to that from a planner which was, with respect, only illustrative because it was a question of law, but the illustrative evidence was that the policy of another body whose views were important on this, that is the Swan River Trust, was such as to permit matters such as a pergola, swimming pool, steps and a boat shed to be built on this land and so the question was whether, as a matter of construction of the scheme applying the scheme provisions and proper planning principles, such could have been approved by the local authority on this land. 

One needs to bear in mind that this is land on the cliff face of the river and above the cliff face.  It was found in effect that the highest and best use of the whole land was as a residence.  The affected portion of the land is the western portion which is really on the cliff face.  So the question is, if, for example, a residence was to be constructed on the eastern or upper or unaffected portion, whether there could be permitted under the scheme by the local authority some ancillary development such as the kind I have just mentioned on the protected area of the land.  So there are two questions, with respect, that our case effectively depends upon, not just one.

HAYNE J:   Now, as to the point of construction, where in your outline of argument do I find the asserted construction for which you contend?

MR ZELESTIS:   Now, I am not sure that it is directly asserted there.

HAYNE J:   I could not see it there, Mr Zelestis, and hence my question.  So what is the construction that you contend?

MR ZELESTIS:   The outline is drawn in terms, “Well, you are criticising the reasoning of the Full Court”.  It does not state positively.  The construction that we contend for is that the reference to “permits” is to be read as a reference to what is permissible according to the legal effect of the scheme, not the way in which the scheme is structured.  So that one has to consider whether, reading the scheme in its entirety, it is open to a local authority to approve development other than for a public purpose.  If it is open, then, in our submission, there is no compensation from the making of the scheme.  One must bear in mind that the starting point of this whole argument is section 11(1) which is framed in terms of compensation from the – or the injurious affection arising from the making of a planning scheme. 

The case is a little complicated because other provisions of the scheme postpone the time within which application is to be made until a period after there has been an application made for a consent of some kind and there has been a result that is unsatisfactory to the applicant.  But one must put that to one side because the gravamen of the claim for compensation is from injurious affection arising from the scheme itself.  So just pausing there, if one was looking at and applying section 11(1), one would be concerned with the substance of the legal effect of the scheme, not its structure.

HAYNE J:   What is the distinction you are thus drawing?  It is not evident to me.

MR ZELESTIS:   Can I take your Honours to paragraph 62 on page 113 in Justice Le Miere’s reasoning, the third sentence, line 37:

However, in my view, where a scheme prohibits a development but gives to the Council a dispensing power to permit the development it cannot properly be said that the Scheme permits the development.

What his Honour has done, in our respectful submission, is construe the section as if it was to be applied by reference to the structure or form of the scheme provision, the scheme provision being one which prohibits non‑public purpose development without special council approval.

GLEESON CJ:   Where do we find the dissenting judge’s construction?

MR ZELESTIS:   The dissenting judge’s construction is to be found firstly at page 125, paragraph 113.  In that paragraph she outlines the present applicant’s construction and then adopts it in paragraph 118 on page 127.  Her Honour reaches that result before going to the reasoning based upon the so‑called legislative scheme which includes the regulations and the model text but which we say we do not need to go to in order to support the result. 

Now, in our submission, this warrants the grant of special leave for several reasons.  Firstly, there is wide public interest in this.  Not only are there landowners who are affected whose land is the subject of restrictions imposed, particularly those along the river, but there is the interest of the ratepayers who, if this decision stands, are called upon to pay compensation in circumstances ‑ ‑ ‑

GLEESON CJ:   Can I just take you back to the substance of this qualification on the right to obtain compensation for injurious affection.

MR ZELESTIS:   Yes.

GLEESON CJ:   The injurious affection results from some decision of the council, does it?

MR ZELESTIS:   No, it results from the making of the scheme.  Could I take your Honours to the provision?  The legislative provisions are not set out in terms in any of the judgments, but we have given your Honours a book of materials.  If I can take your Honours to page 2 of that book where section 11(1) appears.

GLEESON CJ:   Yes.

MR ZELESTIS:   A very thin volume.  Perhaps I could hand up a spare copy.

GLEESON CJ:   Thank you.

MR ZELESTIS:   Can I direct your Honours’ attention to section 11(1).  One need not be troubled by the time limit, for reasons I do not take time to explain.

GLEESON CJ:   The entitlement to compensation is from the responsible authority, which is your client, is it?

MR ZELESTIS:   Yes, but it is from the making of a scheme.

GLEESON CJ:   Yes, and who makes the scheme?

MR ZELESTIS:   The local authority with the approval of the Minister.

GLEESON CJ:   That is why I asked you the question that I did.  It is the case, is it, that compensation is claimed from the authority that was responsible for the injurious affection?

MR ZELESTIS:   Yes.  I am sorry, I thought your Honour’s question related to whether a planning decision or an individual decision on an individual application was relevant.

GLEESON CJ:   The reason the entity liable to pay compensation is the Town of East Fremantle is that it was the decision of the Town of East Fremantle that resulted in the injurious affection.

MR ZELESTIS:   A decision in the sense of a decision to make a town planning scheme which then obtained the Minister’s approval.  It is not a decision made in the ordinary course of dealing with applications under the scheme.

GLEESON CJ:   I understand that.  Now, who has the dispensing power?  Who can, as it were, relieve the owner of the land from the consequences of the potential affection?

MR ZELESTIS:   The council.

GLEESON CJ:   Okay.  So the council created the injurious affection in the first place?

MR ZELESTIS:   Well, there is a question whether it was injurious affection relevantly ‑ ‑ ‑

GLEESON CJ:   The council created the town planning scheme?

MR ZELESTIS:   With the approval of the Minister, yes.

GLEESON CJ:   Yes, and it is the council who is liable to pay compensation if there has been injurious affection?

MR ZELESTIS:   Yes.

GLEESON CJ:   And it is the council that has some kind of dispensing power to permit some development other than for public purposes?

MR ZELESTIS:   Yes.

GLEESON CJ:   So it is all in the control of the council?

MR ZELESTIS:   Yes, that is the way the planning system works in this State and there are rights of appeal from council decisions now to a State administrative tribunal.

GLEESON CJ:   So when you say it is the ratepayers who bear the cost of this and it is the owner who bears the consequence of the injurious affection, central to the practical operation of the entire scheme is the decision‑making of the council?

MR ZELESTIS:   It is central, your Honour, but the point that I was trying to make is that one needs to accept that and understand that section 11(1) is framed in terms of injurious affection by the making of a scheme.  Applying section 11(1) requires one to have regard not to the form or structure only of a scheme but to its substance.

GLEESON CJ:   I understand that.  It is just that you raised a question that sounded like a question of merit and I wanted to understand that a little more fully.

MR ZELESTIS:   I am sorry, your Honour, I am trying to put the significance of it in context, that there are citizens who have private interests and there are citizens who have interests as ratepayers.

GLEESON CJ:   So council says to the citizens who have private interest, to the landowners, “You are not entitled to compensation because we have the capacity, if we choose to exercise it, to relieve you of the injurious affection”?

MR ZELESTIS:   In a sense, in substance, yes, but the council has not ‑ ‑ ‑

GLEESON CJ:   “And whether we will relieve you or not is up to us”?

MR ZELESTIS:   Well, yes, but it is not as if it is an idiosyncratic discretion able to be exercised capriciously.  It is a discretion controlled by the instrument which has the force of law and which is amenable to review.  But, as I say, one does not get down to that question of individual decision‑making because the starting point, as I have been labouring, is that section 11(1) itself, the fundamental right that it confers, requires regard to be had to the substance of the scheme, and our submission is that nothing changes when one moves to the qualification introduced by section 12. 

Can I just take your Honours to the provision which is in the same booklet.  The central provision appears at page 12 of the scheme and there is a policy statement made with reference to places of heritage value and then there is the prohibition in clause 1 on page 12.  Now, what is not set out in the booklet, unfortunately, is the terms of clause 2.3.10 of the scheme which are summarised in Justice Le Miere’s reasons at page 102, paragraph 18.

GLEESON CJ:   Am I right in thinking that what is required is what is called the special approval of the council?

MR ZELESTIS:   Yes.

GLEESON CJ:   What does that word “special” connote?

MR ZELESTIS:   It connotes that some ‑ ‑ ‑

GLEESON CJ:   I know what it connotes in the context of leave.

MR ZELESTIS:   Yes, it was perhaps not so difficult here, your Honour, but it was held below to require some exceptional case to be made.  Relevant to that is clause 2.3.10 which appears, as I say, at page 102, paragraph 18 of Justice Le Miere’s reasons.  Can I invite your Honours to read the third sentence of paragraph 18 on page 102.

GLEESON CJ:   Yes.  Can I come back to this word “special”.  Is there some kind of provision where we can find its content?

MR ZELESTIS:   No, there is no particular provision which explains its meaning but, as was held below, it does require something unusual or different or exceptional, however one characterises it, some other case to be made out, because evidently the policy here is essentially one to protect the landscape but not, in our submission, to exclude all forms of development.  If the intention was to exclude all forms of development other than for a public purpose, then one would have expected that to have been said in terms, and it is not said in terms.

GLEESON CJ:   So you say this scheme permits development for non‑public purposes because of the capacity of the council in special or unusual cases to give approval?

MR ZELESTIS:   Yes, in our submission, and illustrations were given of what could be done as an adjunct to a residence in circumstances where the highest and best use of the land the subject of the affectation by the scheme was as an adjunct to a residence built higher up on the unaffected land.  Those are our submissions.

GLEESON CJ:   Thank you, Mr Zelestis. Yes, Mr McCusker.

MR McCUSKER:   If it please the Court.  The starting point, of course, is section 12(2a)(b) – and that is at page 4 of the bundle of materials – which provides that “land shall not be deemed to be injuriously affected”.  Although it is put in negative terms, the land of course is affected by the reservation or the imposition of this scheme on it.  Going on:

unless the scheme

(i)       permits development on that land for no purpose other than a public purpose;

Now, going to the relevant provisions of the scheme itself which appear at page 12 – you have been taken to that by my learned friend – clause 1 says:

A person shall not without the special approval of the Council . . . carry out any development including –

(a)      the erection . . . of any building –

The respondents were seeking to build a dwelling on this land which was its highest and best use.  Special approval is provided for in clause 5.2 at page 14.  Clause 5.2.1 states that:

The Council shall in the case of an application for permission to carry on a use marked AP . . . give notice of the application –

So notice has to be given.  Then there follows in clause 5.2 a provision in 5.2.4 that the council, after the notices have been given and 21 days has expired, shall consider it, and 5.2.5:

A resolution to grant special approval must be passed by an absolute majority of the Council.

GLEESON CJ:   What does that mean?  Is that distinct from a majority present and voting, or something?

MR McCUSKER:   That is right.  It is an absolute majority.  There is the further point to be made that in this case it was what triggered the application for compensation was that an application for approval for the development was made.  The rejection appears at page 23 of the application book.

GLEESON CJ:   Well, the argument against you is that your land was not injuriously affected because they could have approved it.

MR McCUSKER:   Well, that is the argument and we say, and we have put in our outline of submissions, it cannot be said that in terms of section 12 of the Town Planning and Development Act the scheme permits development when the scheme prohibits development but does make provision for the possibility of development via special approval.  That is not permission, in our submission.  That is a prohibition subject to the possibility, and it is a fairly slim one, as was demonstrated here, of getting some form of development approved. 

It is akin, as we put it in our submissions, your Honours, to a case where a council – and it often happens here, it does happen – issues regulations prohibiting the lighting of open fires during the summer period because of the bushfire risk but does provide that a special permit may be issued upon application.  Is that permission?  The answer is clearly no.  It is prohibition.

GLEESON CJ:   Thank you, Mr McCusker.  Mr Zelestis, anything you want to add?

MR ZELESTIS:   No, your Honours.

GLEESON CJ:   We think that there are insufficient prospects of success of an appeal to warrant a grant of special leave in this case.  The application is dismissed with costs.

AT 9.49 AM THE MATTER WAS CONCLUDED