Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority

[2007] HCATrans 257

[2007] HCATrans 257

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S38 of 2007

No S44 of 2007

B e t w e e n -

WALKER CORPORATION PTY LIMITED

Applicant

and

SYDNEY HARBOUR FORESHORE AUTHORITY

Respondent

Applications for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 25 MAY 2007, AT 10.04 AM

Copyright in the High Court of Australia

MR D.F.JACKSON, QC:   If the Court pleases, I appear with my learned friends, MR J.J. WEBSTER, SC and MR I.J. HEMMINGS, for the applicant in each matter.  (instructed by Minter Ellison)

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR A.E. GALASSO, SC, for the respondent in each matter.  (instructed by Deacons)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honour, there are two applications for leave.  One is consequential on the other.  May I come to it just at the end of what I wanted to say.  The principal matter is found in volume 1 of the two application books, and, your Honours, the central issues concern section 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act, which your Honours will find in the materials which should be behind tab 6.  I should say the provisions of section 56(1)(a) are in terms similar to those used in the compulsory acquisition statutes of a very significant number of Australian jurisdictions, including the Commonwealth.  We have referred to them, your Honours, at page 186 of the application book, volume 1, paragraph 34, and they are set out in the footnotes there.

Your Honours, if I could go to the structure of the Act for just a moment, your Honours will see section 54(1) which says that:

The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

That is not a provision which is freestanding.  It is given some meaning by section 55, and if your Honours go to section 55, it lists the matters to be taken into account.  They include paragraph (a) “the market value of the land on the date of its acquisition”.  Then, your Honours, in relation to that concept, market value, one goes to section 56, and your Honours will see that section 56(1), in its opening words, speaks in relatively familiar terms in the area, but concludes - and I am looking at the second line on page 24 - by saying:

disregarding (for the purpose of determining the amount that would have been paid):

(a)any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired -

Now, your Honours will see that the case involves three principal issues.  The first is that it was held that the conduct of the Leichhardt Council in preserving the industrial or industrial-type zoning on the land could not give rise to a decrease in value falling within the terms of section 56(1)(a), that is, caused by the proposal to carry out the public purpose.

GLEESON CJ:   What was that conduct?

MR JACKSON:   I am sorry, your Honour.  The conduct of the council in preserving ‑ ‑ ‑

GLEESON CJ:   You mean not doing anything?

MR JACKSON:   Well, I mean a little more than that, your Honour.  I mean two things, really.  One was, in actively seeking to have that zoning retained and not changed at times when it might have been changed to residential‑type zoning, on the one hand ‑ ‑ ‑

GLEESON CJ:   I just want to be clear - changed by whom?   Who were the actors in this?

MR JACKSON:   Well, the changing of the zoning, your Honour, would be an activity, in the end, of the Governor‑in‑Council of the State.  I will come in a little more detail, if I may, in just a moment, your Honours, to one thing, but the point I was seeking to make was this, it was preserving and lobbying to - sorry, your Honour, Justice Callinan was going ‑ ‑ ‑

CALLINAN J:   I may be anticipating what you were going to say, Mr Jackson.  I do not quite understand it fully.  The contention is, or your proposition is, that it is kept in an industrial zoning because that is going to have a much lower value than residential zoning, and ultimately a public authority is going to be able to get it for less?

MR JACKSON:   Yes, well, your Honour ‑ ‑ ‑

CALLINAN J:   Because it is really - if I can just go ‑ ‑ ‑

MR JACKSON:   No, I am sorry, your Honour, it not quite that.

CALLINAN J:   Not quite that?  All right, you tell me, sorry, Mr Jackson.

MR JACKSON:   Your Honour, it is not so much a question of value, but of preserving the land so that it can become open space.

CALLINAN J:   Would it not inevitably be, though, also, that the public authority - whichever one it is - would get it for less as industrial land? 

MR JACKSON:   That would be a consequence, yes.

CALLINAN J:   Is that right?

MR JACKSON:   That is a consequence, yes.

CALLINAN J:   I suppose the theory being, however, that you might get more if you can demonstrate - a very difficult thing to demonstrate, often - that it was ripe for residential, and it should have been rezoned for residential, and that would have taken time and money.

MR JACKSON:   Well, there were findings of fact to that effect, your Honour, because it was one of a number of promontories that were all treated similarly except for this one.  They all had become residential.  This one had not.  Your Honours, the central finding in the first place, so far as the Court of Appeal was concerned, was that the conduct of the council could not give rise to a decrease in value because the council was not the resuming authority - it was later an instrument of the State that became it - on the one hand, and because the ultimate resuming authority, which was, if I can call it shortly, the State, had been opposed to the proposal for part of the time that it was the proposal.

Your Honours will see that referred to - if I could just give the three references in volume 1 – at page 169, paragraph 63, and your Honours will see that it said:

Those findings do not demonstrate that the inaction of the council in failing to rezone the land for residential purposes were part of the carrying out of the proposal . . . nor did the decision of the Council . . . His Honour asked himself the wrong questions and failed to answer the questions set out at [19] ‑ ‑ ‑

GLEESON CJ:   That is why I asked you the question I did about what was the conduct.  That refers to the inaction of the council in failing to rezone.  Is that the conduct?

MR JACKSON:   Well, your Honour, the conduct is a little more than that.  One can see it set out, if I may say so, at page 38, and in paragraphs 110 through to 114 – and in particular paragraph 110:

The council, as the initiating zoning authority, has consistently refused any entreaty by the State Government -

et cetera.  Your Honours will see, then, paragraph 111:

If the council had not taken the stance it did, the land would have been zoned residential by the making of DLEP 81 ‑ ‑ ‑

CALLINAN J:   Well, that is a critical finding for you, is it not?

MR JACKSON:   Of course, your Honour, yes.  Your Honours will then see what the primary judge said at paragraph 112 through to paragraph 113, and then the opening words of paragraph 114.

GLEESON CJ:   Now, that expression, “taken the stance it did” - is taking the stance the conduct?  It is just that you have to bring it within paragraph (a) of section 56.

MR JACKSON:   Quite, your Honour, yes.

GLEESON CJ:   Within the words, “the carrying out of, or the proposal to carry out”.

MR JACKSON:   Yes, your Honour.  One really says, disregarding, relevantly, a decrease in the value of the land caused by the proposal to carry out the public purpose.  Now, your Honour, the proposal, in our submission, was a proposal which was initiated, at least, relevantly, by the council.  It was a proposal that the land should be open space.  It came ultimately into fruition by the acquisition by the State of the land for open space.  The point of difference on this issue, in our submission, is that the Court of Appeal erred in taking the view that the proposal had to be a proposal by the State, and that the conduct of the council, of the nature of which reference is made in those paragraphs, could not, itself, form part of the proposal.

CALLINAN J:   Mr Jackson, could I just ask you this question, because it varies in many places, as you know?  What was the role of the council in zoning generally?  Did it have a role, and what did it have - or was it entirely done by a state planning authority?

MR JACKSON:   Well, your Honour, if I could say this, there is not a provision allowing someone - giving someone a statutory right to apply for rezoning and providing for the way of doing it.  What there is, however, is that there is an ability on the part of a council, which is the normal thing, to initiate rezoning, and the rezoning is carried out by the Governor-in-Council through the Minister ‑ ‑ ‑

CALLINAN J:   Who actually prepares a plan?  Is there a regional plan which would cover this council?

MR JACKSON:   Your Honour, there are various plans, various types of plans.  Your Honours will see a reference to LEP 2000, which is a plan that was - in December 2000 - which was the work of, in legal terms, the Governor‑in‑Council, the State Government, but on the other hand, it was something where there had been consultation between ‑ ‑ ‑

CALLINAN J:   I understand that, but is there any provision in relevant legislation that actually gives a council some role in any rezoning process?

MR JACKSON:   The answer is:  to a degree, yes, your Honour.  There is a reference to it in ‑ ‑ ‑

CALLINAN J:   I am sorry, I just need to understand it, Mr Jackson.

MR JACKSON:   Yes, I take your Honour’s point.  Your Honour, the point I was going to say – there is a reference with - one can see that in the Court of Appeal second judgment, where you will see paragraph 32 at page 152.  Now, your Honour, it is put a little shortly there:

However, it did not rezone the land open space, no doubt because it could then have been required to acquire it and lacked the funds to do so ‑ ‑ ‑

CALLINAN J:   So it is called there the primary zoning authority, the council?

MR JACKSON:   Yes.

CALLINAN J:   What is the basis for calling it that, some statutory obligation or rights?

MR JACKSON:   It is a matter, I think, your Honour, partly of the - two things, your Honour.  As a practical matter, in the first place, it is the councils that tend to initiate things, but there are provisions saying that if there is a rezoning of the nature referred to in that provision, then - and, I think, at the instance of the council - I just do not have the provision in front of me - that the council has to make the payments there referred to.

CALLINAN J:   All right.  So obviously it has a very strong interest in what happens.  That is self-evident.  You do not have to do it now - perhaps Mr Webster may know the provision.  Do we have that provision, Mr Webster?

MR JACKSON:   Yes, your Honour.  I do not think it is before your Honours.  Sections 54 to 69 of the Environment Protection Assessment Act provide for the making of an LEP, as it were.  It is initiated and prepared by the council but, of course, under those provisions, made in the end by the Governor-in-Council.

CALLINAN J:   Thank you.

MR JACKSON:   The point I was going to make, if one goes, I think, to paragraph 19 at page 147, the Court of Appeal on the second occasion, your Honours will see, identified a number of issues and, in particular, the issue that is referred to as issue (1) at the bottom of page 147 and the top of page 148 involves the assumption, which the court held as correct, that you had to have the same, in effect, authority.  Your Honours will see that referred to in paragraph 63, to which I had earlier referred.

Now, that is an issue on which different views have been expressed and on legislation which is in the same terms.  Your Honours will see in Victoria, Rees v Minister for Planning, which is behind tab 4 of the bundle of materials, at page 171, Justice Gobbo, first of all, in relation to the general law, about halfway down the page said: 

Sometimes it will not be clear whether or not the detrimental acts are part of the scheme of acquisition.  It is not necessary that only the eventual acquiring authority is involved for the scheme may be set in train by a planning authority that is different from the eventual resuming authority.

Your Honours will see the next sentence.  Then he went on to say, the last paragraph on the page:

Thus far I have been considering the matter as a matter of principle –

and then he set out the statutory provision.  Your Honours will see section 43(1)(a) in the same terms as those here.  Then at the top of the next page, the third line:

It is in my opinion clear from the statute that the effect on value that is to be ignored is that which arises from the carrying out of the purpose or the proposal to carry out the relevant purpose.  It is not described in terms of the acquiring authority.

May I pause to say, your Honours, acquiring authority is referred to in the next subsection of the provision, but not in this one:

The proposal may in fact be initiated by a different authority.  The key element is the purpose for which the land is acquired.

Your Honours, also in this Court in Housing Commission v San Sebastian, which is behind tab 2, there was a different provision involved there.  Your Honours will see it referred to at the first page of the case, in the first few lines of the headnote, but then there are some observations about it at page 213 by Justice Jacobs, a third of the way down the page.  Your Honours will see the part commencing:

Section 124 refers to the establishment of public works.  These words are in my opinion wide enough to cover the whole subject matter of the establishment of the particular public work - proposal or requirement by the relevant authority, intention of the planning authority by such a zoning to induce the establishment of the public work, even urging by outside bodies that the public work should be established.

Now, your Honours, there were, in this case, strong factual findings by the primary judge.  I have taken your Honours to his first judgment.  In his second judgment at page 119, paragraph 13, your Honours will see that he referred there to his earlier judgment and to the history he had set out again:

show a unity of purpose between what was proposed by the council over the period of the previous 12 years and the ultimate compulsory acquisition . . . The public purpose at all times was to create a significant area of public open space as a harbourside park.

Your Honours will see the remainder of that paragraph.  In paragraph 15 on page 120 you will see that he said that:

The documents show a continuous, consistent and vigorous opposition to the development of the land -

et cetera.

CALLINAN J:   What often happens, Mr Jackson, as you would know, is once there is any public canvassing of a proposal to use land - well before the proposal comes to fruition there is a blighting of the value of the land anyway.  Nobody wants to touch it.  Indeed, it can spread throughout the whole area.  In other words, a proposal - one has to ascertain when that really begins, and it can have a very pervasive effect right from the beginning, and a continuing effect.

MR JACKSON:   Well, your Honour is correct, and, your Honour, may I say two things about that.  The first is that what your Honour has said demonstrates, with respect, that the issue, unless the terms of section 56(1)(a) are prevented, is fundamentally one of fact.  This is a case where there was no appeal on fact to the Court of Appeal.  The second thing is this.  We referred to an aspect of that in our written submissions at page 185, paragraphs 27 and 28.  There is a typing mistake, I think, in the fourth line of 27.  It should be “initiated”.

CALLINAN J:   You have a finding, too – have you not - that there was no proper planning purpose for maintaining any industrial zoning?

MR JACKSON:   Yes.  Your Honours, our submission is that the approach taken by the Court of Appeal in each case involved an error of law, and there were findings of fact otherwise in our favour.  Your Honours, may I deal briefly with the two other aspects of the matter.  The second point was that the land was rezoned from waterfront industrial with a small part being residential to industrial by LEP 2000 on 22 December 2000.  That was done by the State Government.  There was a finding that that was part of the process – I have taken your Honours to those references already - but also a finding by the primary judge that the value, as at that time - the prospect of rezoning to residential in a manner such as that had been earlier contemplated - was about 100 per cent.  Of course, in doing that, there had to be taken into account the fact that any planning would involve some area being given up for public purposes.

The third point, your Honours, is this, that the Court of Appeal appears to have regarded it as erroneous for the judge to assess what the zoning of the land would have been were it not for the proposal for open space.  Your Honours will see that at page 99, paragraph 81.  Could we just say that in relation to that aspect, the correct approach is, in our submission, what we have set out in our written submissions at page 185, paragraphs 29 and 30.  What section 56(1)(a) requires is that there be quantified - identified and quantified - the increase or decrease in value which has to be disregarded.  We would say it is a perfectly appropriate way to go about that to identify what would have been the position absent the proposal.

CALLINAN J:   Did the judge value it, however, on the basis that it should have been 100 per cent of residential value?

MR JACKSON:   No, not at all.  Your Honour, what he did was to say, if I can just put it shortly ‑ ‑ ‑

CALLINAN J:   Conventional exercise took something off for contingencies and time and value - cost of money over time.

MR JACKSON:   Yes, and there was a significant disagreement about what “residential” really meant in practical terms, and he resolved a disagreement, not entirely in our favour, about how much you could have built, how much of the land ‑ ‑ ‑

CALLINAN J:   I understand that debate, but was there any deduction simply for delay and perhaps a miniscule chance that it would not have been rezoned?  Some deduction for contingencies.

MR JACKSON:   Well, your Honour, there was.  The way in which he put it was to say he would take that into account in determining the number of buildings that could be there, to put it shortly.

GLEESON CJ:   Thank you, Mr Jackson.

MR JACKSON:   Your Honours, may I say one word about the second application and what it is?

GLEESON CJ:   Yes.

MR JACKSON:   Thank you.  Your Honours, the second application is for the reasons that appear in volume 2 at page 567.  The orders made by the first Court of Appeal appear at paragraph 3 of page 567.  The case was remitted to the Land and Environment Court to be dealt with according to law.  That happened.  We had applied for special leave to the Court in the interim, but Justice Kirby made a ruling that our application be struck out, and that any point we wanted to raise could be raised on this application.  Your Honours will see that referred to at page 203.  The difficulty, however, is that would leave one order, one relevant order of the first Court of Appeal alive, that being the order which is referred to in paragraph 3.

GLEESON CJ:   Is it common ground that these two applications stand or fall together?

MR JACKSON:   So far as we are concerned, your Honour, yes.  It just relates to the costs of the first appeal.

GLEESON CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, during the relevant period there were two relevant ways by which the zoning of land could be effected and changed.  One was initiated, including, I should say, by a directed initiation, by local government.  That produces a local environmental plan.  The other is initiated by central government.  That is the regional environmental plan.  They all ended with the executive formality of a Minister making the plan.  They both included discretions concerning whether to make or not.  They both included processes for amendments.  They both included elaborate and thorough-going procedures for advertisement exhibition considering ‑ ‑ ‑

CALLINAN J:   A council could have put in motion, then, a proposal to rezone to residential?

MR WALKER:   Yes.  Apart from the special case of a government‑directed process for a draft LEP, the council has not merely the initiating, but the shaping role concerning the form of an LEP.

CALLINAN J:   Did the evidence show here for how long the use of this land had been controversial?

MR WALKER:   No, but by plain ‑ I think it would be a fully found fact that the controversy did not spring into being with the December 1992 mayoral minute.

CALLINAN J:   I could almost take judicial notice of the fact that land like this in Sydney, which was no longer suitable for industrial purposes, would be extremely valuable and would be prized in ‑ ‑ ‑

MR WALKER:   Once you are not allowed to use the harbour as a sewer for your industrial processes, then residential development became much more valuable than industrial, yes, your Honour.

CALLINAN J:   One could also take judicial notice of the fact that there would be many, many opponents of any use except for some kind of open space.

MR WALKER:   There was what might be called “ginger groups” of considerable hotness, your Honour, yes.

CALLINAN J:   It is certainly not known, in my experience, Mr Walker, for, I regret to say, public authorities to keep land in zonings which are no longer suitable or appropriate, with a view to acquiring them for much less.

MR WALKER:   Quite, but can I, from the fully found facts - this was an appeal on law only – give your Honours this summary which puts in context the inquiry that Justice Callinan has just raised and shows that it has nothing to do with this case whatever.  Indeed, my learned friend, frankly, acknowledged that in his earlier answer to your Honour.  The position was, as we have set it out in our written submissions, that during the first part of the relevant period, which extends for about a decade, during the first part of it, the local community included people who wished this land to be open space, that is, public park, near their own residences, and therefore opposed residential subdivision.  There were also, no doubt, other people, but much less active and hardly present in the evidence or the fully found facts.

CALLINAN J:   These were the Nimbys?

MR WALKER:   One might say that.  They actually wanted more backyard, I think, your Honour.  But the point was that the local council, as a political matter, took the position that this industrial space was to be kept, as my learned friend fairly put it, available, that means in a physical and economic sense, for a possible future use as public space, perhaps with a little bit of residential, perhaps with a little bit of continuing maritime industrial, but principally open space.  That was their ambition.  They could achieve that by statutory means – rezoning – so as to make it just that.  If they did that, the statute would require them, upon request, to buy it.  They did not want to do that because they did not have the money or they did not want to raise the money and they failed in their political attempts, found in the judgments, to obtain money from central government at State or Commonwealth level.

What they did, and it is explicit in the facts, was, “Well, we can’t get it, but what we’re going to do is to prevent what would no doubt be the once and for all physical improvement of this land by residential subdivision if we can”, so that it may become, in the fullness of time in the political cycle, which would involve a revolution in central government sentiment, still there to be paid for when somebody was prepared to pay for this public space.  If one was looking only at the local government, there is no question that in Pointe Gourde terms there is the beginning of the approach that Justice Callinan has asked us about.

However, the difficulty was that the then central government, the other zoning authority, and it is to be identified for all purposes for exactly as my learned friend put, from San Sebastian, there is no point made about the legal identity of my current client – it may be treated for all purposes as central government for the purpose of attributing proposals - what happened was central government had an entirely opposite view.  It wanted it zoned residential and not merely wanted it zoned residential, upon failing by methods of persuasion and compulsion to get the council to do it, the council went, by statutory means – administrator was put in, the administrator did what the central government wanted, zoned it residential.  Local groups sued, and the Court of Appeal in New South Wales invalidated the central government rezoning 1992.  The central government was not put off, tried again.  After all, judicial review, not a merits matter in the Court of Appeal, and again zoned residential.  In 1995 the Court of Appeal overturned that. 

Now, during that period up to the second Court of Appeal decision, we have this, the body who eventually – that is, the government, who eventually made the proposal for a public purpose for which the land was acquired, was acting diametrically opposite to any such public purpose ever being possible.  It wanted a residential subdivision, no doubt with a modicum of open space in the ordinary way of residential subdivisions, but not the open space that the council wanted and not the harbourside purposes for which my client eventually resumed.  It has some importance for the statutory notion of “the” proposal and “the” public purpose to observe that it is not simply public open space for which this land was eventually acquired, it is for the purposes of my client, the Authority, whose purposes undoubtedly include, and whose plans undoubtedly involve for this land, use as public open space, but they are not restricted in that fashion, harbourside uses.

So up to 1995 what would the market be saying?  They would say local ginger groups, represented from time to time while it was in office by the local council, want this to be open space, but central government, which has the whip hand, wants it to be residential, and has twice rezoned it so.  One of the important matters that my learned friend has not touched upon is the way in which the Court of Appeal dealt with the critical operation of section 56.  It requires not inaction by a council in failing to rezone in a manner they were obdurately opposed to rezoning, not setting that aside, but what you have to ignore, disregard under section 56, is an increase or decrease in the value of the land caused by the critical matter.

Well, if one were to suppose, contrary to the fact, that it was a proposal to carry out “the” public purpose for which it was acquired, which can be tracked back to the mayoral minute of December 1992 which was a call to arms against central government, if you could suppose that, as shown in the application book at page 159, paragraph 43, the trial judge never assessed the effect in the market of that matter, and it would have been interesting evidence.  How would the market react to the fact that the Minister and the government and the Department wanted it to be up-zoned and indeed up-zoned it but the local council did not want it.

Furthermore, this was not simply a matter of putting rezoning in train, there had been a development application lodged and consent granted.  The second appeal in 1995 invalidated zoning and consent.

CALLINAN J:   Why did the Court of Appeal set it aside in 1995, just in a nutshell?

MR WALKER:   I should remember this, your Honour, but I think it was a failure to take into account a relevant consideration, but I could be wrong.  It was a judicial – more on this orthodox judicial review ground, your Honour, that is, it did not preclude a third go.  Now, your Honours, it is against that background, the found facts at trial simply deny the notion found at page 119, paragraph 13, to which my learned friend took you, that there was a unity of purpose in the sense that local government and central government were hand in hand for that period of 12 years, and his Honour did not mean that.  What his Honour meant was the council had an ambition, and as it happens, a statutory power to carry out the ambition if they proposed to do so, but they refused to do so for financial reasons, that is, political reasons.  Central government had an ambition diametrically opposed to the council’s ambition and sought to carry it out to the point of twice rezoning and once in fact granting a consent to a residential subdivision proposal.

CALLINAN J:   Mr Walker, according to what formula would the matter now be determined?

MR WALKER:   Its market value – well, section 55 and section 56.

CALLINAN J:   I understand that, but from the Court of Appeal’s judgment.

MR WALKER:   The third trial is presently slated to proceed on the basis of ‑ ‑ ‑

CALLINAN J:   Very shortly, how is the assessment to be made on the third trial?

MR WALKER:   It will be on the basis of the ‑ ‑ ‑

CALLINAN J:   As a practical matter, what will the judge be asked to do?  How will he be asked to assess it, as a result of the decision of the Court of Appeal?

MR WALKER:   Yes, quite, there is an industrial zoning, together with such prospect as the valuers and planning experts assess of that zoning having been improved from the owners’ point of view, which at the relevant date, which is likely to be February 2002, which was the Premier’s press release.  Now, probably, I would predict, there would be next to no prospect in the eyes of the market of the industrial zoning having been improved as at February 2002, but that is going to be a matter for evidence.  Now, that is in accordance with the orthodox approach that to value the land as you find it, together with its current zoning, but taking into account the potential for something more lucrative, factoring in what your Honour asked my learned friend about, namely the contingency producing normally a discount of course ‑ ‑ ‑

CALLINAN J:   Yes, and disregarding any blighting effect.

MR WALKER:   Yes.  Now, can I say something about blight.  There is no law, I think, in any jurisdiction in Australia – and we do not know of any internationally – where compensation is payable to people who continue to hold their land, the value of which is blighted by the fact that their neighbours are agitating for it to be turned into a dump or the like.  So blight, as such, is not a phenomenon which has ever attracted compensation, certainly not in this State.

CALLINAN J:   I think there are authorities that say it is to be taken into account – not itself, but ‑ ‑ ‑

MR WALKER:   May I just repeat more clearly what I have said.  The simple market phenomenon of having land which is subject to market rumour about what might be called blight, causing a blight effect, that simple experience does not entitle one to go to government with your hand out.

CALLINAN J:   No, but if it is acquired ‑ ‑ ‑

MR WALKER:   At the point of resumption totally different issues arise and the Pointe Gourde principle manifest in this State in section 56 is designed to ensure that measure of fairness or justice which is here given textual form by disregarding change in value ‑ ‑ ‑

CALLINAN J:   It is an imperfect formula because it does not really take account of uses that might correspond with some of the public purpose uses, and some uses are not exclusively public purpose.

MR WALKER:   It is a matter of law that nothing is perfect, your Honour, yes.  But what the text says is there has to be a change “caused by the carrying out of . . . the public purpose” - that does not apply in this case because it is a much earlier stage that the case was about – “or the proposal to carry out”.  As, with respect, the Chief Justice commenced the hearing today asking questions about, that requires careful attention to what is said to be the proposal to carry out, first question; second, what is said to be the increase or decrease in value of land caused by it.

Now, in this case, as we stress, and as is noted in the Court of Appeal, there are no findings of fact concerning the effect on value caused by this clash, head-on clash between local government and central government for the first part of this decade, none at all.  His Honour jumps over all of that and simply says, “Well, let’s pretend that the local council had in fact up-zoned to residential”, and, “PS,” he says, “I say that’s 100 per cent calling in aid” ironically, and we submit perversely, “the actual history of the central government’s accomplishments in seeking to rezone it residential”.  So he calls in aid conduct which is antithetical to both a proposal for public open space and for using it as public open space, to say, “Well, it’s 100 per cent likely that there would have been residential up-zoning”. 

In our submission, your Honours, that is quite contrary to the way in which the words of section 56 operate for precisely the reasons that the Court of Appeal has identified, and may I take your Honours in particular to the application book page 157.  In paragraph 39, conclusions are drawn from the facts fully found by the trial judge, namely that in a general sense the council’s “individuals, organisations and trusts”, that is, the ginger groups, residents, all of whom were actively involved, that “could undoubtedly be seen as ‘a proposal’ for the use of the land”, a proposal.  But of course, just as you do not get blight compensation under this Act, you have to look at the point of acquisition and look back from it and ask yourself what was the public purpose for which it was acquired, and the proposal for carrying out that public purpose, not, for example, blight caused by suggestions of some other purpose.

CALLINAN J:   Is it not possible to say that to some extent at least – and I will put it neutrally at the moment – the council’s preference prevailed?  Council wanted open space, did it not?

MR WALKER:   It did not prevail in the sense that until they succeeded twice in the Court of Appeal they had lost utterly.

CALLINAN J:   But I mean in terms of use of the land and zoning.

MR WALKER:   No subdivision work was carried out physically, no.

CALLINAN J:   In fact they got, the council got what it preferred, which was a form of open space, as you say, not a complete ‑ ‑ ‑

MR WALKER:   Eventually.  Eventually the State, your Honour, decided on it.

CALLINAN J:   So the council, in that respect, could one not say that the council had a proposal and that that might be regard as a proposal within section 56?

MR WALKER:   No.

CALLINAN J:   Why not?

MR WALKER:   Because you have to work backwards.  The whole compensation right comes only after an acquisition, because of an acquisition, and the language is “any increase or decrease . . . caused by . . . the proposal” – the proposal, not one of the constellation of suggestions of more or less similar kind, or indeed perhaps slightly different kind, but the proposal.

CALLINAN J:   You just put a different name on it.  From what you have said to us, harbour purposes can embrace pretty well anything.

MR WALKER:   Your Honour, I do not put that to the forefront of my argument.  I draw it to attention because it is correct.

CALLINAN J:   No, but it is a reality though, is it not?  It is everything but residential almost?

MR WALKER:   Yes, there is no doubt about that, your Honour.  Residential is not part of harbour use with my Authority client.  But it is the proposal to carry out the public purpose for which it was acquired.  So you look at the acquisition.  You look at the public purpose.  You find the proposal to acquire for that public purpose, and what the Court of Appeal says is, paragraph 39, about line 50:

at a time when the State was unequivocally opposed to the idea, it is not possible, as a matter of law, to characterise this lobbying effort –

that is the council, who after all could but would not –

to characterise this lobbying effort as part of “the proposal to carry out the public purpose” for which the land was acquired. 

This would be to inflict upon government a right – I should say an obligation, correlative right in owners of land, to be compensated for something for which the government was never responsible.  Section 56 quite clearly is intended to sheet home to government the obligation to compensate for effects on value for which it is responsible.

CALLINAN J:   The government is ultimately the resuming authority.  Is that right?

MR WALKER:  Government, not council.

CALLINAN J:   The government would, as a practical matter, have had to pay, had the council’s 1992 ‑ ‑ ‑

MR WALKER:   No, no.  The council would have to pay.

CALLINAN J:   No, but the council could not do it and would not do it because the government did not give the council the money.  Is that right?

MR WALKER:   Council could pay for it by whatever means was lawful.  They put their hand out to the Commonwealth Government.  They put their hand out to the State Government.  They did not look to their own resources.

CALLINAN J:   You would not want to be caught between these two, would you?

MR WALKER:   Well, they might have to answer to other residents not so enthusiastic on paying that much money for a local park, your Honour.

CALLINAN J:   It seems to me to be, I must say, in a sense unjust.  I am not talking about the mechanics of the actual valuation.

MR WALKER:   Your Honour has seen the figures.

CALLINAN J:   Unjust that the council really got pretty close to what it always wanted and now it is going to get it at a much bigger discount than it would have got it had the land been used for the purpose for which it was entirely suitable, and indeed on one view, best suited - on one view.

MR WALKER:   Not getting it for a discount, your Honour.

CALLINAN J:   Well, they are going to pay a lot less for it as industrial land with potential than had it been zoned residential, or that there was a great prospect of it being zoned residential.

MR WALKER:   It never was zoned residential effectively.

CALLINAN J:   No, I know that, but I said prospect.

MR WALKER:   Yes, the prospect is not denied.

CALLINAN J:   But it is going ‑ ‑ ‑

MR WALKER:   The prospect is going to be valued.

CALLINAN J:   On the account of the facts you have given us, any non‑anxious purchaser in the marketplace or any prudent purchaser in the marketplace is going to say, “This land is – you wouldn’t want to touch it.  It’s poison.  It’s the subject of a huge fight between State Government and a council with all the residents also putting their claws in”.

MR WALKER:   I think when your Honour says “all the residents” that may be ‑ ‑ ‑

CALLINAN J:   Well, a number of residents.

MR WALKER:   ‑ ‑ ‑ rewarding squeaky wheels.

CALLINAN J:   It produces a very, very unfair result to landowners often.  If it is a public purpose and this is done in the public interest, the public ought to pay.

MR WALKER:   Your Honours, I see the red light, but when your Honour says “unfair” has your Honour in mind the figures in this case?

CALLINAN J:   No, no.

MR WALKER:   They wanted 80.  They got 60.

CALLINAN J:   I know, they got a lot of ‑ ‑ ‑

MR WALKER:   They had paid 16, and we say 12.

CALLINAN J:   That is exactly why I said I am not talking about the mechanics of the actual valuation done here in the court, the lower court.

MR WALKER:   If government was responsible in the blighting that destroyed this $16 million bargain of theirs, then so should 56 operate to remove that unfairness, but we were not responsible.

CALLINAN J:   There might be something in between, Mr Walker, that is all I am saying.

MR WALKER:   There might be, your Honour, but in our submission that is a matter for valuation evidence.  The principle which is important in this case is that you cannot attribute as a proposal, as the proposal to acquire the land, that which is diametrically opposite to what the acquiring authority intended at the relevant time to be doing.

GLEESON CJ:   Thank you, Mr Walker.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, firstly may we say this.  If the council’s conduct is part of the proposal then the decrease in value brought about by that conduct has to be disregarded.  It turns then on the question whether, as a matter of law, it can be part of the proposal, which is an important question.  The second thing, your Honours, is this.   So far as the purpose of the resumption is concerned, your Honours will see, if I could just go to our submissions in reply at page 193, volume 1, that there was actually a finding as to the purpose of the resumption and that finding can be seen at – may I ask your Honours to keep a finger as it were at that page for a moment because I will come back to it.  That finding can be seen at page 119, paragraph 13 where it’s said, about line 25:

The public purpose at all times was to create a significant area of public open space as a harbourside park.

Your Honours, if I could go back to page 193, in paragraph 1, halfway – the last four or five lines of that, the suggestion that by a form of literal drift has come back into the argument that it was for the purpose of the Authority more generally was not pursued in the Court of Appeal deliberately.  Your Honours will see that referred to there and the reference given.

Your Honours, could we also direct your Honours’ attention to the findings that one sees at page 122, paragraph 22, where the judge found:

it was not seriously contemplated by any authority, state or local government, or the owner of the subject land that the use of the site for the purpose of industry other than perhaps a small historical use would be maintained or established.  In other words, there was no logical planning purpose supporting an industrial zoning of the land.

Your Honours will also see, if I could go back to page 38, paragraph 111, there was a finding that:

If the council had not taken the stance it did, the land would have been zoned residential by the making of DLEP 81 –

et cetera, which would have been years before, and in terms of time, your Honours will see, if I could go to the preceding page, page 36, paragraph 106, the first sentence sets out the case, that the initial step was February 1992.  Your Honours will then see paragraph 111, to which I referred a moment ago.  You will see the opening words of paragraph 112 deal with the position from 1992 onwards, and the reinforcement in 2000, to which I will come in a moment.  Your Honours will then see, paragraph 113, the finding that the scheme:

was initiated by the council and pursued by it consistently –

for years.  Then paragraph 114, again, the finding in the first three lines.  Your Honours, may I say the reference to LEP 2000 is important because whatever may have been the difference of views between the council and the State Government, they became bride and groom in the making of DLEP 2000 and so unless there was some diminution in value, and there was a finding the other way, in the period between those two periods, then one looks to see what the situation was at the worst for us, as at 2000, and the findings were all our way.

GLEESON CJ:   Thank you, Mr Jackson.  In this matter there will be a grant of special leave to appeal.

AT 10.55 AM THE MATTER WAS CONCLUDED