Council of the Shire of Noosa v TM Burke Estates Pty Ltd B13/2001 [2002] HCATrans 323 (26 June 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane Nos B13 of 2001 and B8 of 2002

B e t w e e n -

COUNCIL OF THE SHIRE OF NOOSA

Applicant

and

TM BURKE ESTATES PTY LTD

Respondent

Applications for special leave to appeal

GLEESON CJ

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON WEDNESDAY, 26 JUNE 2002, AT 10.22 AM

Copyright in the High Court of Australia

MR W. SOFRONOFF, QC: May it please the Court, I appear with my learned friend, MR D.G. CLOTHIER, in each matter for the applicant. (instructed by Wakefield Sykes)

MR D.R GORE, QC: May it please the Court, I appear with my learned friend, MR M.E. RACKEMANN, for the respondent in each matter. (instructed by O'Shea Corser & Wadley)

GLEESON CJ: Mr Sofronoff, is it convenient to deal with these two matters together?

MR SOFRONOFF: It is, your Honour. Could I take your Honours, for a few minutes, to the history of the matter to explain why there are two matters and how the point arises. The applicant Council was the respondent to an appeal in the Planning and Environment Court in which the respondent, TM Burke Estates, was claiming compensation under the Local Government (Planning & Environment) Act, section 3.5.

In the course of that proceeding, the applicant Council applied for a determination of a preliminary question of law about whether a particular exclusion to compensation was applicable, and your Honours will see the question that was first mooted appears in volume 1 - I call it volume 1, your Honours, it is matter B13 of 2001. The second matter is in 2002 and I will call that volume 2. In volume 1, your Honours, at page 4 of the record your Honours will see that the question that was first formulated on behalf of the Council appears at the foot of the page.

Could I ask your Honours to note the terms of that because it becomes material later to see what happened to that particular provision, but that paragraph, although perhaps not drafted as well as it could have been, was intended to raise a question whether section 3.5(4)(d) of the Act excluded compensation or not.

If your Honours turn over the page, some time later, it was thought that two other questions should be raised, and they were incorporated in subparagraph (b) which your Honours see at the top of page 5. That paragraph raises the question whether subparagraph (c) and (g) of the exemption provisions apply. It was thought - for reasons which will appear - that the first question that was raised was not one that the Council could succeed on, and so the judge, Judge Shanahan, in the Planning and Environment Court, was not asked to rule upon that question but he ruled upon (c) and (g) and he ruled in favour of the Council. Your Honours will see at the foot of page 5, or just above the foot of page 5, his Honour's conclusion is expressed there.

The respondent then appealed against that decision, and your Honours will see the notice of appeal set out at the foot of page 5. It is limited to the question whether the determination is a "preliminary question of law" of the applicability of (c) and (g) was correct. Over the page your Honours will see the orders that were sought by the respondent. The order that was sought was:

that the determination of the preliminary question of law be that the payment of compensation . . . is not excluded by s.3.5(4)(c) or s.3.5(4)(g).

Now, the appeal came on for hearing, and if your Honours go to volume 2, the reasons of the Court of Appeal in that appeal, appear there. If your Honours go to page 24 of that, it is not necessary to dwell on why they determined against the Council on (c) and (g). It is only material to see that they did. At page 24, line 30, after analysing the statute, their Honours concluded:

that neither paragraph (c) nor paragraph (g) applies in the present case. This then disposes of the second of the questions asked . . . The first of those questions -

and then their Honours set it out. Now, your Honours will appreciate that that question was not agitated before Judge Shanahan. He did not rule upon it, and it was not for that reason the subject of any appeal, and it was the subject of any notice of appeal.

What their Honours did then was to go on then to consider that question and misconstrue it as raising the question what was the measure of valuation that should be applied. Your Honours will see first below the quote their Honours say:

Unless paragraphs (c) and (g) applies, as these are the only preclusion provisions relied on, the appellant is entitled to compensation -

I pause there. Their Honours appear to have construed the proceeding as though it were a demurrer. It was not a demurrer. It was a selection of distinct questions of law - ultimately two - for discrete determination. Their Honours then go on to consider the first question, and your Honours can see three lines from the foot:

The only relevance, in determining that value, of the fact that the appellant had no legal right -

et cetera. But their Honours appear to have construed the question as though it invited them to consider what was the measure of compensation, and their Honours go on to conclude that, over the page at page 25. The order of the Court appears at page 26.

McHUGH J: Now, at that time, there was no application for special leave to appeal against that?

MR SOFRONOFF: No, there was not, because the case proceeded - the measure of compensation was not controversial, and nobody suggested that the Council was not entitled to resist compensation on other bases. One basis was whether or not the respondent even had an interest in the land. So the proceeding continued. Our side then brought proceedings in the Supreme Court to determine the question whether the respondent had an interest in the land. That came before a judge. It went to the Court of Appeal. The Court of Appeal determined that against us and held that that should be determined in the Planning and Environment Court. Nobody suggested that the whole question of liability had been determined against us.

Then, by reason of a decision, at first instance, in the Planning and Environment Court, it emerged that subclause (d) might be a good point. The respondent wrote to us and said, "We want you to confirm that you are not raising that." We dallied for a few months while the proceedings in the Supreme Court were being conducted, and then, finally, the respondent applied to Judge Skoien for an order that we were precluded from raising subparagraph (d). His Honour determined that in our favour.

If your Honours would go to that, please, at volume 1, page 12. At the foot of the page, after having been referred to the obvious cases, Henderson, Hoystead and Anshun, his Honour, at paragraph 31, held:

In my opinion while that principle applies when the substantive claim is litigated, it does not apply when a preliminary point is litigated. I was not referred to any authority to suggest the contrary. Preliminary points, by their very nature, leave aside all other points for later adjudication.

And, of course, in our submission, "a preliminary point", of its nature, is one of a number of points but not for the court for determination.

GLEESON CJ: Could I take you back to page 26 of volume 2. In paragraph 2 of the order, it says:

Preliminary questions answered as follows.

Now, the point that you wanted to raise, and that it was held at first instance it was open to you still, is contrary to the answer given to question 1, is not it?

MR SOFRONOFF: Only if one construes question 1 as a determination of ultimate liability that we are liable to pay compensation, but until our proceeding before the Court of Appeal in the most recent appeal nobody suggested that, and it is not suggested now, although there appear to be inconsistent statements by the respondent in each application. If it is correct that the question of liability had been concluded against us, on a proceeding by way demurrer, for example, then, of course, it could be said that we would not have a leg to stand on.

What was put before Judge Shanahan, what went to the Court of Appeal, was merely a preliminary question of law. It did not involve any consideration of subparagraph (d) and the Court of Appeal's determination, in the first paragraph of the order that your Honour is looking at, was misunderstood by their Honours as their Honours acknowledged in the decision that I want to come to now.

GLEESON CJ: But in relation to B8 of 2002, you need an extension of time?

MR SOFRONOFF: Yes, we do. Could I say, your Honours, that if the Court is against us, and there is nothing in our point concerning estoppel, and we are estopped, then there would be no purpose in re-enlivening the earlier of the two.

GLEESON CJ: What if the Court were in your favour in relation to B13 of 2001?

MR SOFRONOFF: Then extension of time ought to be granted and leave ought to be granted in the other one as well.

GLEESON CJ: Why?

MR SOFRONOFF: So that the record can be corrected, because there is a suggestion in the respondent's case that notwithstanding, as the Court of Appeal acknowledged, the order was made by mistake, that it is to be construed as though it is a declaration that compensation is payable rather than that it is a determination as to the principle of valuation. We are concerned about that. If we are wrong in our construction, it is not an obstacle, but it is raised against us, and if that construction is correct, it is an order that was made by mistake and it ought to be corrected. In our submission, that is a grant of leave that would be appropriate to be made because the due administration of justice requires it in the context of the other application.

Could I take your Honours to the decision of the Court of Appeal in the second appeal which was the appeal from Judge Skoien's determination that there was no estoppel. Their Honours will find that in volume 1 at page 32 - relevantly at page 32, and perhaps your Honours should go first to page 31. At page 31 your Honours will see a recorded exchange in the first appeal between counsel for my client, Mr Lyons, and the presiding judge, and we were asked whether we were relying on subclause (d) or not, and counsel replied:

Our position is that the claim which was made was made in respect of subdivision, not use, and on that basis we've brought the preliminary point -

Could I pause there. The claim that was made was based upon the inability to subdivide. There is a long line of authority for the proposition that subdivision is not use. Subclause (d) of the Act, the exemption, relates to use. Consequently, the preliminary point that was taken was that if it is subdivision that is being restricted, clauses (c) and (g) are ample to exclude the claim.

Now, the other point (d), therefore, was not a point that the court, at first instance, or the Court of Appeal was invited to determine as a preliminary question of law. Their Honours, however, if your Honours go to page 32, at the top of the page, paragraph 24, in the second line, said:

Plainly, the court interpreted the proceedings as seeking a determination whether compensation was or was not payable. Either it was right or it was wrong in that conclusion, but there does not seem to be any doubt as to the true intention of the court.

Then if your Honours go down to paragraph 26, the first sentence:

In short, we interpret the conduct by the parties of this litigation as leaving open for determination the question whether compensation was precluded on any basis. The onus was on the Council to make good the application of any such exclusionary provision.

If your Honours then go to paragraph 27, at the foot of the page - - -

McHUGH J: Well, before you leave that, that is the critical issue in this case for a special leave point, is not it, that the majority characterised the litigation at the earlier stage as leaving open for determination the question whether compensation was precluded on any basis?

MR SOFRONOFF: Yes, and their Honours did so on the footing not that the parties had invited the court to make a determination in the nature of a demurrer, but notwithstanding that the parties had invited the court to determine two discrete questions of law, whether (c) and (g) applied.

What the court determined was that notwithstanding the parties putting forward on application a request that the court determine two discrete questions of law, the court might interpret the proceeding as one which called for the whole matter to be determined.

McHUGH J: Yes, but the problem from your point of view on a special leave application is it simply means that this case turns on the application of principle and as to how the majority characterised the earlier proceedings. There is no special leave point in it, is there?

MR SOFRONOFF: Well, your Honour, in our submission, there is, because what their Honours decided was that notwithstanding the character of an application to determine preliminary questions of law - if your Honours go to page - - -

McHUGH J: I appreciate that normally if you determine preliminary questions of law that is what you determine and nothing else in the case, but it is always open to parties if they want to, to depart from that, and that is apparently the view the majority took. Now, you might be right in submitting that they were wrong, but what is special about it, so special to invite the grant of special leave?

MR SOFRONOFF: Well, your Honour, if you go to page 35, in considering whether the principle in Anshun applies, in paragraph 35 in the second half, their Honours say:

It seems to me to be a clear case of a defence that was so relevant to the subject matter of the preliminary point that it would have been unreasonable not to bring it forward.

Now, that of course - - -

McHUGH J: Immediately before that their Honours said:

Our primary view is that all available defences under s.3.5(4) were litigated.

MR SOFRONOFF: Well, your Honour, if that were correct - - -

McHUGH J: "Counsel, for reasons . . . refrained from supporting a defence based on subparagraph (d)."

MR SOFRONOFF: Your Honour, if that were correct, then if one goes to the reasons of Justice Pincus at page 41, at the top of the page, the respondent would not have made that submission:

It has been argued on behalf of T M Burke, not that the Council is absolutely precluded from resisting liability for compensation, but merely that it cannot resist the claim on a particular basis."

McHUGH J: I know, but if I were sitting in the Court of Appeal I think I would have agreed with Justice Pincus, but it is another question altogether as to whether there is a special leave point in it.

MR SOFRONOFF: Your Honour, if you go to paragraph 27 then, their Honours say this, when they look at order 1 which they were not invited to rule upon - which the first court was not invited to rule upon - their Honours say:

Leaving aside for the moment the question whether the court erred in acting on that basis, there is one respect in which the court's order would clearly seem to have exceeded the issues which were presented to it . . . This was the determination in subparagraph (i) of the order of the principles upon which the compensation was payable. Counsel were unable to refer to any document or oral submission which sought such a determination. However we did not understand Mr Doyle, for the Council, to raise any question about that particular point, which seems to depend upon the application of s.3.5(8)(a) -

that is the principal evaluation provision.

McHUGH J: Remind me, Mr Sofronoff, you never went back to the original Court of Appeal and asked them to redetermine it, did you?

MR SOFRONOFF: We did, in this second appeal.

McHUGH J: Yes, but not back to the same - - -

MR SOFRONOFF: No, because until then, nobody had suggested that that order completely precluded any compensation being payable and then were met with this decision in which - if your Honours look at page 33, the paragraph at the top of the page, the last sentence:

However, taking a wider view, we consider that the question of entitlement was litigated by the parties.

GLEESON CJ: So, it certainly had been suggested that that order precluded you from relying on paragraph (d)?

MR SOFRONOFF: Yes, in that appeal it was, yes.

McHUGH J: That was as long ago as January 1999, was not it, or February 1999, your opponents made it plain that after the judgment in Spark's Case they thought you were bound by the earlier judgment?

MR SOFRONOFF: Your Honour, that is correct, but there was nothing in the earlier judgment, when read correctly - or indeed, read in any way -that deals with (d) or suggests that (d) was a matter that was argued. It is the way the Court of Appeal later construed it, but it was justifiable for the counsel to take the view that all other matters were open, and the only matters upon which there was an issue estoppel, were the two matters that were actually decided by Judge Shanahan and then later on appeal, by the Court of Appeal.

So what has happened here, in our submission, is that, at best for us, there is an important question as to whether the Anshun principle applies, when a party selects matters for preliminary determination, and - - -

McHUGH J: But you may never get to that point.

MR SOFRONOFF: Your Honour, at worst for us, there has been a mistake in two successive decisions. In the first one, because that question was determined when it should not have been, and in the second one, because their Honours mistakenly determined that the first application was in the nature of a demurrer, and the quantum, as your Honours know from the record, is very substantial for a Council, the small size of the Noosa Shire Council.

GLEESON CJ: Why do you say the question about paragraph (d) should not have been determined? It was raised by the Council and then the Council said, "We don't press this point but we press two other points". Why should not the court have determined it to get it out of the way?

MR SOFRONOFF: Because it was not argued. That, we could - - -

GLEESON CJ: The reason it was not argued was because the counsel did not want to argue it. Why should not the court have pinned the Council to that position?

MR SOFRONOFF: Your Honour, that would merely raise an exercise of discretion as to whether a party's defence could be amended to raise a ground that had been - in a pleading case, withdrawn from a pleading earlier and that would raise questions of prejudice and matters like that. That is not the basis upon which we have been precluded here. We have been precluded absolutely as a matter of law.

Now, in our submission, at worst, this is a case where the interests of the administration of justice required correction, because there have been successive mistakes, one of which was acknowledged in paragraph 27 that I referred your Honours to.

GLEESON CJ: Thank you, Mr Sofronoff. Yes, Mr Gore.

MR GORE: Your Honours, there are just three areas we would like to cover. The first is that an estoppel clearly arose out of the 1997 Court of Appeal decision. There was no doubt that the question whether para (c) or para (g) applied or denied compensation had been finally determined.

The question in the later proceedings was whether the estoppel extended to paragraph (d) as well. The majority correctly recognised, in our submission, that the logical first step was to decide what it was that the first court had determined. The majority studied the history of the litigation and decided that the issue determined was whether any of the exclusory provisions in section 3.5 all applied. That is in a number of paragraphs, principally paragraphs 16, 19, 24, 26, 27 and 35.

The determination of that question does not raise any special leave question and the applicant does not appear to contend otherwise. As far as the history of the litigation is concerned, the applicant did not, in the oral submissions, refer your Honours to the full exchanges that occurred before the Court of Appeal in the first matter at page 31 of volume 1 in paragraphs 21 to 23. For example, we would like to emphasise that at line 10, counsel for Burke in that appeal did say that the issue was as to the scope of operation of section 3.5(4). He did not limit himself to paras (c) and (g), and the exchanges that are referred to in the balance of paragraph 21 and in paragraphs 22 and 23 do ground the decision of the majority that the issue for determination, in those earlier proceedings, was whether any of the exclusory provisions applied.

The second point that we would like to deal with relates to application No B8 of 2002, and we would submit that in relation to that matter, the Court should have regard to what the position would have been if the applicant had acted within time, and there are a number of options that were available to the applicant. First, if it had first applied to this Court back in 1997 there is, in our submission, a basis for saying that this Court would have refused special leave, at the least on the ground that the applicant ought first to have applied to the Court of Appeal. So that is the second option to consider. As to that one, if the applicant had applied to the originally constituted Court of Appeal, if that court had rejected that application to reopen the order, as it were, on grounds similar to those given by the majority in the second matter, B13 of 2001, where there was an application made to a differently constituted court, to reopen the proceedings, one would respectfully submit would not regard the prospects of special leave to this Court back in 1997 as being promising.

The applicant, in our submission, should not be given any advantage by reason of its delay. It seeks to suggest that the law in relation to section 3.5 is somewhat in a state of confusion, but as far as these parties are concerned, the majority has held that the position is clear that compensation is not denied on any basis arising out of section 3.5(4), and the applicant should not be regarded as being in any different position from any other local government which may have settled compensation proceedings or have them determined against them on the pre-Stark state of the law.

Finally, it is our submission, this is very much a case involving only the private rights of litigants in respect of a Queensland statute, which has since been repealed. The case does not present an opportunity for this Court to determine any question of public importance. They are our submissions.

GLEESON CJ: Thank you. Mr Sofronoff, can I just get one thing clear. I think you may have already made this clear, but your position is that if you fail in the application in matter B13 of 2001 you do not press the application in B8 of 2002?

MR SOFRONOFF: If we succeed in application two, which is dependent upon the first application, yes. If I could take your Honours briefly to the reasons of Justice Pincus in the first book at page 41. The point which we say arises that justifies a grant of special leave appears in the second sentence at paragraph 59. It is not a point of construction of the repealed statute. The question is whether a decision of the court, made in an interlocutory matter, not a demurrer, in which a point was never argued and the court never expressly determined the matter, raises an estoppel of the Anshun kind.

Could I ask your Honours to look at the decision in Kettering v Noosa Shire Council in the book. This was a decision that determined that subclause (d) in another dispute applied in similar circumstances to that applicable here. At page 9 of the reasons, paragraph 23, Justice Davies, who was a member of the first Court of Appeal, said in the second sentence that in the second appeal:

The Court held, by a majority, that, the right to compensation having been finally determined in T M Burke there was an estoppel . . . However the majority judges in -

of whom Justice Davies was a member -

However the majority judges -

in the subsequent case -

appear to have misunderstood the effect of the earlier decision in T M Burke. It may be this misunderstanding which caused their Honours to express some doubt about the correctness of the interpretation reached in that case and to suggest that it also might produce troublesome consequences - - -

GLEESON CJ: But that, as I understand it, goes to what might be called the merits of the arguments about 3.5(4), does not it?

MR SOFRONOFF: It does, your Honour, but if you look at footnote 8, he appears to be making an observation that cuts a little deeper because he refers to the reasons of Justice Pincus in dissent where his Honour said:

this Court, understandably, came away from the 1997 hearing with the impression that the only points of resistance to the claim in the first case, present or prospective, were under pars (c) and (g).

Now, what is agitated against us now, as a consequence of these cases and what has happened in them, is that our learned friends in the second application say, "All that is left in the compensation proceedings is a determination of the lease issue - whether they have an interest in the land -and the amount of compensation, that is to say, liability to compensation is still an issue."

McHUGH J: But it is footnote 8 in Justice Davies' judgment in Kettering that is really your point, is not it?

MR SOFRONOFF: I am sorry, I did not hear what you said?

McHUGH J: Footnote 8 in Kettering where his Honour says:

Their Honours appear to have assumed, wrongly in my opinion, that this Court had . . . considered and rejected the application.

MR SOFRONOFF: Yes. In our respectful submission there has been a succession of errors in these two decisions. One because of order 1 in the first decision, and the second one because of the construction placed by a different court on the first decision.

GLEESON CJ: I would not have assumed, for my part, that the Court of Appeal had considered and rejected the application of 3.5(4)(d). I would have, uninstructed or uninformed, have inferred that what they did was decide that having regard to the way the litigation before them had been conducted, they would bind your client to the attitude it took in relation to the application of paragraph (d).

MR SOFRONOFF: Your Honour, that itself, in our submission, is an important point worthy of consideration by this Court. Whether in raising three points (a), (b) and (c), saying at the hearing that one does not wish to press (a), having (b) and (c) determined, (a) then is the subject of an estoppel. That has never been determined.

GLEESON CJ: Well, a possible point of view is that what the court should have done is then made an order that bound you to the attitude you took in relation to paragraph (d)?

MR SOFRONOFF: No such order was made, and the result now, your Honour, is that with the succession of two decisions, we are left with a submission by our learned friends, on the one hand, that all that is left in the compensation proceedings is a determination of the lease issues, namely, liability, and in the other one, a decision in 2001 that the applicant was entitled to defeat the respondent's compensation claim in reliance upon (d), would necessarily conflict with the decision of the Court of Appeal that compensation was payable. So the result, in our submission, is that only this Court can correct that position.

GLEESON CJ: In matter No B13 of 2001, the decision of the Court of Appeal turned on the application of well-established general principles to the particular facts and circumstances of the case and, in particular, to the way in which certain proceedings had been litigated in the Queensland courts and on the view that the Queensland courts took of that matter. For that reason, and because we are not persuaded that the interests of justice require a grant of special leave, the application for special leave to appeal is refused.

In relation to matter B8 of 2002, it is accepted on behalf of the applicant that if the application in B13 of 2001 failed, the application in B8 of 2002 which, in any event, requires a substantial extent of time, should also fail.

In both of these matters, special leave to appeal is refused and, in each case, the applicant must pay the costs of the respondent.

We will adjourn for a short time to reconstitute.

AT 10.55 AM THE MATTERS WERE CONCLUDED