Western Australian Planning Commission v. Southregal Pty Ltd & Anor; Western Australian Planning Commission v. Leith [2016] HCATrans 262 (9 November 2016)

Last Updated: 9 November 2016

[2016] HCATrans 262

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P47 of 2016

B e t w e e n -

WESTERN AUSTRALIAN PLANNING COMMISSION

Appellant

and

SOUTHREGAL PTY LTD

First Respondent

DAVID STEPHEN WEE

Second Respondent

Office of the Registry
Perth No P48 of 2016

B e t w e e n -

WESTERN AUSTRALIAN PLANNING COMMISSION

Appellant

and

TREVOR NEIL LEITH

Respondent

KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 9 NOVEMBER 2016, AT 10.17 AM

Copyright in the High Court of Australia

____________________

MR K.M. PETTIT, SC: If it please your Honours, I appear for the Planning Commission in both matters, with MR T.C. RUSSELL. (instructed by State Solicitor (WA))

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR P. McQUEEN, for the respondent in each appeal. (instructed by Lavan Legal)

KIEFEL J: Yes, Mr Pettit.

MR PETTIT: This is a matter of statutory interpretation in particular of provisions sections 173 and 177 of the Planning and Development Act (WA). The core of the issue, your Honours, is whether a purchaser of land already reserved can be eligible to make a claim for compensation pursuant to sections 173(1) as read with, in particular, section 177. The contest – the field of contest, your Honours, lies in – before I go on to the facts, the field of contest in this matter lies in four propositions of principles of statutory interpretation, all deriving – all stated, I should say, in Project Blue Sky at paragraphs 70 and 71.

Those four propositions are these. First, that the Act must be construed on a prima facie basis that its provisions are intended to give effect to harmonious goals, that is the first proposition. The second proposition is that where conflict appears to arise from the language of the provisions, that conflict must be alleviated by such adjustments as will best give effect to the purpose and language of the provisions.

The third proposition is that in doing so the court may need to determine which is the leading provision and which are the subordinate provisions and accordingly which gives way to which. The fourth proposition is that a court in construing each of these provisions must strive to give effect and meaning to every word in the provision. We say that that battleground sets the contest entirely and that all that we have to say, and I dare say all that our friends have to say, is in particularisation of one or more of those propositions.

Now, turning to the facts, the facts are before your Honours in the appeal book but they are both uncontentious and they are non-determinate because this is entirely a matter of statutory interpretation. However, we do draw attention to the illustrative nature of the facts, in particular the facts of the first matter, Southregal. The first point that those facts illustrate is that on the respondents’ case a purchaser may claim, in this case 51.6, but nothing turns on the real numbers; nothing turns on that number because that might not be the compensation that is actually due. But the claim may be made for $51.6 million in respect only of the reserved part of the land, which land, Southregal and we purchased for something less than 2.61 million because that 2.61 million was for the entirety of the landholding and the reserved land was only about one-tenth of that area, all the time knowing it was reserved.

KIEFEL J: Does this assist in the process of construction?

MR PETTIT: Only as illustrative, your Honour, because there is some contention to the effect that the justice – or the fairness – of the outcome is to be promoted by our friend’s construction. The point I am making, your Honour, is that the facts of this case, we say, quite plainly show that in the majority of cases that will not be the case.

The other point to make, the other illustrative effect, is that this case shows – both matters show – that there is no link between the value to the owner of the lost development opportunity and the compensation due or claimed. In both cases – in all cases – the amount of compensation is set by the process under section 179 which has no reference to the value of a proposed, but refused, development. Turning to our argument - - -

KEANE J: Is that last sentence consistent with the view taken of the earlier analogue of this Act in the Bond Case by the Full Court in 2000?

MR PETTIT: The answer to that, your Honour, really depends on the precise language used. In our respectful submission, there is something to be said for the proposition that the loss becomes real, or concrete, in the sense that something is to be done – as sold or developed – and cannot be for the appropriate price. But, once one extends that discourse into saying that the extent of the loss becomes apparent or the extent of the loss crystallises then we say, with all respect to others who have said something to the contrary, it strays from correct.

KEANE J: So are you saying anything about the process of reasoning of the Full Court in the Bond Case?

MR PETTIT: No, your Honour. There is no doubt, as Justice Beech found, the primary justice at first instance in this case, that the primary purpose of the deferral of compensation was to avoid the State being swamped with claims at the instant of the – in that case the Metropolitan Region Scheme came into effect in 1963 and, in our case, the Peel Region Scheme in 2003. That is the purpose of the deferral. An “after the event” justification of that deferral has also been articulated in Parliament and by their Honours in Bond.

That “after the event” justification is along the lines that the deferral of compensation until either first sale, when the loss is felt, or the refused development application when something proposed to be done in good faith cannot be, as I say, is an “after the event” justification looked at from the perspective of the landowner. I do not think, your Honours, that anything said in the Bond Case by Justice Ipp and the other justices contradicts what I have just said.

However, I stress that what his Honour the Chief Justice below said I am contradicting, with respect, because his Honour below said that the extent and the nature of the loss does not become apparent until a failed development application. With great respect, we say that is not correct. The extent of the loss has nothing to do with a failed development application. These facts do illustrate this. The facts of Southregal were that the applicant then, for a development application, was seeking to erect an eight by 10 metre shed on the reserve part of the land, worth $15,000 and the loss of that development application is said to give rise to $51.6 million. There is no connection. Those facts illustrate, with great respect, that what his Honour said below is wrong.

Turning to our argument, we say that section 173 is the only provision that accords eligibility for compensation and it invokes one of the principles I articulated earlier that it takes a leading role to which other sections defer. Section 173(1) is expressly subject to other provisions which limit and defer the compensation and the eligibility but they do not extend, we say, eligibility.

In support of that, we would make several propositions. The first is that weight must be given to the natural meaning of section 173(1) and that meaning confines eligibility to those persons who owned the land at the date, at the event of the making or amendment of the scheme. The same natural meaning applies to subsequent provisions which rely on section 173, they being section 174(1), section 175, 177(2)(c) and (d) and I have added section 181(1)(b) and 186, they are more peripheral.

Following those paragraphs 70 and 71 of Project Blue Sky, we say that section 173 has a controlling status as to eligibility. It is the only provision that is expressed to be dealing with eligibility. That also follows, we say, from the headings of the division, the headings of the sections and the order of the sections and ambiguity, as I say, defers to that status. I should add, not only is that proposition set out as a general proposition of statutory interpretation in Project Blue Sky but it is the proposition upon which their Honours Gummow and Hayne in Temwood relied for this particular matter.

Next we say that, for the purposes of the application of those paragraphs of Project Blue Sky, the objects of Division 2 of the Planning and Development Act we readily confess are not express but we say they are clearly implicit. Notice the two objects of Division 2 of most moment are that compensation is for loss and not for a windfall gain and for that we rely on the headings again and the use itself of the word “compensation” which word, we say, implies that there is some loss for which compensation is due.

We point also to the safeguards in section 173(3) to remind your Honours that subsection and the paragraphs of that subsection spell out some safeguards in the case firstly of a person who owns land when it was reserved and intends to sell it. Those safeguards are intended to ensure that the owner does not sell for a price less than the affected value. In the case of development applications, there are provisions that ensure that the deciding tribunal is to be persuaded that the application for development is made in good faith.

Your Honours will have seen below, at first instance and on appeal, reliance has been placed on the principle that a liberal interpretation of statutory provisions is to be preferred. We say about that – this is relying on Kettering particularly – that we do not dispute the principle, of course, but the principle ought not be applied in a case like this where the question is not the extent of the benefits to be accorded to a defined class but where the question is what is the class in the first place, and more particularly, where the sought extension of that class takes it to a category of persons who have suffered no relevant loss.

By that I mean they suffered no loss at all if they paid the affected price of the reserved land, of if they did pay a price greater than that affected price – affected value – then they did so through lack of diligence, lack of inquiry and/or mistake of law.

NETTLE J: Why does that matter? Why does it matter if they paid too high a price through mistake or negligence or anything else? They have still suffered a loss and it was inflicted upon them by the reservation.

MR PETTIT: Well, with respect, we say no. That loss was not inflicted upon them by the reservation. The reservation was made in the hands of the previous owner. The infliction of loss, if any, on the purchaser is through that purchaser’s own neglect.

NETTLE J: It is because the land is worth less than it otherwise would be without the reservation.

MR PETTIT: Yes, at the time when the purchaser purchased it. There are certificates, your Honour, under both schemes – the Metropolitan Region Scheme and the appeal scheme – which spell out that parts of the land are reserved. It is on the public record. In this particular matter, for example, although it is not in the materials, it is not disputed that the reservation has to be a scheme amendment such as this, or making a scheme such as this has to be advertised and go through a significant period. That was also in this case in the matter of the Peel Region Scheme preceded by nearly a decade of planning that resulted in public documents.

NETTLE J: So, as you point out, the compensation is not the amount that they overpay by reason of their negligence, it is the amount by which the value of the land has depressed the consequence of the reservation.

MR PETTIT: Absolutely, your Honour, with respect that is the proposition we rely upon. If the intent were to somehow compensate a purchaser, one would expect the legislation to spell out in a manner similar to section 177(3), spell out the mechanism for assessing that loss.

NETTLE J: Is not the intent just to compensate for the depression in the value of land the result of the State taking unto itself what is in the reservation?

MR PETTIT: Yes, but it is the person that is at issue, the person entitled to that compensation. The only person who suffers that loss as a consequence of something done by, in this case, the State – I should hasten to add, your Honour, that it is not always the State, it is sometimes local governments but – or responsible authority – but it is the act for which compensation is due is the act of imposing the planning restriction and that was not done to a purchaser ever.

NETTLE J: Thank you.

MR PETTIT: The second implicit object, we say, is – well, we have just dealt with it in exchanges but it is the loss to be compensated must be a loss caused by the imposition of reserve and not by the purchaser’s lack of diligence. We say that the respondents’ interpretation, the interpretations adopted below are inconsistent with those objects. That interpretation accords compensation to a purchaser, we say, who must either have paid the affected price and incurred no loss or paid more than the affected price through lack of diligence or error of law.

Your Honours might note that Justice Beech, but not the Court of Appeal, raised a matter which our friends have picked up in the last couple of paragraphs of their submissions. The point against us is this – said against us is this – that there is, at least – the matter arises this way. We say that a purchaser should not be entitled – the statute should be interpreted so as not to provide compensation to a purchaser if that purchaser never suffered relevant loss.

In answer to that it was said by Justice Beech, and picked up by our friends, that there is at least one case in which a purchaser may suffer loss through no fault of his own. That case is that a purchaser may have contracted to purchase in a binding fashion and have duly and diligently inquired about the status of land only to have found before settlement that the land is reserved – has become reserved.

There are many things to say about that argument. The first is that, as a matter of practice, could hardly ever occur unless the settlement period is very lengthy. But one thing all these changes in planning schemes advertise is for a lengthy period with public submissions. Secondly, they are always preceded by planning reports and those can extend two or three years, in this case, 1996 – so that is eight years previously. Third, there is nothing unusual about a purchaser buying land or anything only to find that after contract, and before purchase, something has happened – changes in insurance law, changes in planning law.

I should stress that even changes in planning law – compensation is restricted by section 174 to three only kinds of alteration of a planning scheme and for all intents and purposes, really only one – which is reservation – there are a myriad of other planning changes that could occur prior to the settlement of contracted land. For example, streets may change from two-way to one-way, limiting access. Environmental regulations could come in to play. None of those is compensable under any law. One takes the land as one finds it at the time it is conveyed.

The last thing to say about that example put against us is that one case, one instance in which it is possible – theoretically possible but highly unlikely that a purchaser would, without fault of his own, purchase land already reserved, cannot carry the day for our friends because the great majority of cases are as this one is, where it is perfectly clear that the reservation was made and promulgated before the settlement.

It occurs to me as I speak, your Honours, that I might not - and our friends have not either - made clear to your Honours that case law in Western Australia has dealt with the question of first sale and it has been accepted since 1999/2000 that “sale” where used in section 177 means “conveyance”. The case is Bond – I will find it, your Honours. The presiding judge was Justice Ipp and one of the contentions was precisely whether the sale was at the date the contract was executed or at settlement and their Honours found unanimously that the settlement date – yes, I am reminded that this case was mentioned by Justice Beech but for a different point. It is at Justice Beech’s – this is at first instance. The case is Bond Corp Pty Ltd v Western Australian Planning Commission [2000] WASCA 257 at paragraphs 32 to 34 and 37. Justice Beech cited that case for a different proposition. It is at page 138 of the appeal book.

Next in our submissions in support, your Honours, we ask the Court to focus on the expression in section 177(2) which is “is payable only once under subsection (1)”. We say that that phrase means becomes able to be paid once only under subsection (1). We say that the reason for that is that the expression, particularly the word “payable”, takes its meaning from the context and the context in subsection (1) is that there is a deferral, sometimes a very lengthy deferral, of any entitlement to compensation.

We know from the Temwood Case all four justices who looked at this have decided, and it has remained the law since Temwood, that there is no entitlement at all, not even inchoate entitlement, until one of the events occurs which is in section 177(1). So “payable” is not payable until – that expression means it cannot be paid, but it also means it cannot be claimed. No legitimate claim, no valid claim can ally until one of those events.

KIEFEL J: Your reference that you have just made to “payable once only” – I take it from what you said just before that reading section 177(1) and (2) together it is your submission that there can only be one event of the kind referred to in subsection (1)?

MR PETTIT: Yes.

KIEFEL J: Does that mean in this case that since the land was sold the entitlement to compensation has come and gone, even though there is no claim for compensation?

MR PETTIT: Yes.

KIEFEL J: Is that the effect of what Justices Gummow and Hayne said in Temwood?

MR PETTIT: Yes, your Honour.

KEANE J: So there was an entitlement for which a claim could not have been made?

MR PETTIT: No, your Honour. The entitlement lay with the person whose land was reserved. If, for some reason, that person failed or declined to make the claim within the statutory limitation period under section 178 and if that period is not extended by the WAPC’s consent then, yes, that entitlement is gone. In no sense we say does it remedy whatever injustice is seen to have befallen the original purchaser by the lapse of the limitation period. That is not cured by extending the eligibility to his successor.

KIEFEL J: But, if that is so, that is an end of the case, is it not?

MR PETTIT: Yes, your Honour, as we have been saying for some time.

BELL J: The competing view that Justice Beech took was to say – this is at appeal book 138, paragraph 53 - that the purpose of the provisions could be advanced by each of the competing constructions. And in that regard his Honour had in mind the importance of the fact that compensation is payable only once if there is a loss occasioned in consequence of the reservation and compensation is payable only once why is there some suggested frustration of the objects of the Act in allowing it in a circumstance such as this where, for whatever reason, the person who owned the land at the time of the reservation did not make a claim and the subsequent purchaser is adversely affected when coming to make the application?

MR PETTIT: Your Honour, can I, with respect, suggest that it is not a proper basis to start this discourse by focusing on injurious affection caused to a person? The statute is clear in section 173 that the injurious affection is to the land and the only loss that is compensable is the loss to a person caused by injurious affection, not to him, but to the land. That injurious affection happened before the purchaser..... The answer to Justice Beech is that – in fact, it is all the answers we are giving today. It is that there is nothing in the Act – sorry, I should say it is contrary to the implicit intent of the Act, implicit object of the Act to compensate somebody who has suffered no relevant loss.

Worse, it would be entirely inconsistent with any such notion to – I am repeating in effect the exchange between his Honour Justice Nettle and myself – but it is worse here because the amount of the compensation as assessed under section 179 has nothing to do with the loss that such a person might have incurred. He gets the full value of the decline in value of the land, or full difference between the value of the land with and the value of the land without. That could be – and these facts illustrate it – millions more than his loss. So it is the absence of any such specific assessment tailored to the dissert of a purchaser that also compels, we say, the Court to accept our interpretation. I hope that has addressed your Honour’s - - -

KEANE J: Mr Pettit, in relation to 173, any person whose land is injuriously affected, “land” is defined in section 4 to include any interest in land. One would have to read “land” as meaning interest in land, would one not, because we are talking about injurious affection by planning schemes? We are not talking about physical destruction. We are talking about an adverse effect upon an interest in land, are we not?

MR PETTIT: On the value of an interest in land, yes, your Honour.

KEANE J: Yes, on the value of an interest in land. So we are looking at the interest of a person in land.

MR PETTIT: Yes.

KEANE J: Is that not the sense in which Justice Callinan was speaking in Temwood?

MR PETTIT: It was, your Honour, but it still does not address the question. The question is whose interest and at what time?

KEANE J: Well, quite, and I understand there is a question that has arisen in these proceedings but which has been hived off as to whether the purchasers in the Southregal Case, the claimants in the Southregal Case, had a sufficient interest as purchasers under their contract.

MR PETTIT: That is correct, your Honour, but I hasten to add that that matter was withdrawn from the Court of Appeal – let me go back a moment. In the Court of Appeal in the preparatory period, the court itself wrote to the parties and raised this matter. The parties by consent jointly wrote back after conferring, jointly wrote back to the court urging that the matter be taken out of the proceedings. It was not a matter of contention between the parties, and that is the way the Court of Appeal proceeded.

I notice – and it might be the reason your Honour has raised this with me – that some papers were reintroduced into the documents for this Court that alerted your Honours to that issue. But it is not an issue before this Court. It was not before the Court of Appeal and that is by consent of the parties. Apropos that particular – no, I will not pursue it any further, your Honour.

NETTLE J: Mr Pettit, just before you go on. Did I understand you to answer Justice Bell’s question by, in effect, saying that because of – or within the meaning of section 173, a purchaser is not a person whose land is injuriously affected by reservation?

MR PETTIT: That is right.

NETTLE J: Why is that so? Why is the purchaser’s land not injuriously affected by the reservation? I mean, it is there. It is depressing the value ex hypothesi. Why is his land not being injuriously affected by the reservation?

MR PETTIT: Your Honour, can I take you back to the words themselves?

NETTLE J: Certainly.

MR PETTIT: Subsection (1) provides that:

any person whose land is injuriously affected by the making or amendment of a planning scheme –

It is section 174 that does the work of confining planning scheme amendments and making various things, one of which is land – sorry, is the reservation of land.

NETTLE J: I will pose the question in terms of the statute. Why is the purchaser’s interest in the land not injuriously affected by the making of the reservation? But for the making of the reservation, it would not be injuriously affected, would it?

MR PETTIT: Because the words “by the making or amendment of” – sorry, the words, “making or amendment of” must be given meaning and effect. If the overall intent of subsection (1) is to accord compensation to anybody whose lands happen to be in the state of being reserved, then the words I have just quoted are not only inutile, superfluous, in contravention of Project Blue Sky, but also positively misleading.

KIEFEL J: You import a temporal element, do you not, by the words “the making or amendment of” to suggest that the person has to be holding the land at the time that that occurs - - -

MR PETTIT: Yes, your Honour.

KIEFEL J: - - - for their land to be injuriously affected. So the emphasis on your submissions is on whose land the making or amendment is entitled.

MR PETTIT: Yes. I am grateful, with respect. I overlooked, in answer to your Honour, also the word “whose”. It is the person “whose” land is injuriously affected. “Injuriously affected” is an event. It is the event of depressing the land value. The words “injurious affection” mean depress the value. That only happened once. The purchaser does not suffer an injurious effect. He has land that has in the past been injuriously affected but it is not injuriously affected in his hands. That, as your Honour Justice Kiefel points out, depends on both the words “whose land” – “whose” – and by the words “the making or amendment”.

KEANE J: That is making what could be said to be rather neutral language the words “any person whose land is injuriously affected by the making”, that is making it – that is making those what might be thought to be neutral provisions carry a lot of freight, given particularly that 173(3) actually expressly refers to a case of owners of the land during the time the planning scheme is being prepared. Section 173(3) is quite explicit about ownership before the scheme comes into force.

Section 173(1) seems to be distinctly more neutral, some might say ambiguous, about the question of ownership at the time – ownership up to and including the time the scheme comes into force. Where you have the express language of 173(3), one might have expected that if your view as to the temporal operation of 173(1) were right, more explicit language along the lines of that which appears in subsection (3) might have been used.

MR PETTIT: With respect, no, your Honour. Subsection (3) takes its meaning from subsection (2). Subsection (2) denies to a landowner – if I could call it the original landowner – denies to the original landowner an entitlement to compensation for improvements made to his land. In other words, if we reach the point where an amendment or the making of a planning scheme is in prospect, and that is picked up by the words “the date of the approval of a planning scheme or amendment”, that is anterior to the actual operation of a scheme.

So, if after that event, which is before the reservation, the landowner of not yet but imminently to be reserved land makes improvements to the land, then those improvements will not be compensable for the obvious reason that the landowner had noticed that this was coming and cannot expect compensation for something he does in full knowledge of the impending reservation. However, subsection (3) is a safety valve, so to speak, and it allows the planning authority – in this case the WAPC – to come to an agreement with such a landowner to allow such development on condition - - -

KEANE J: To put what I was putting to you a bit more shortly, you need to read, do you not, or you say we should read 173(1) as if it read: “Subject to this Part, the owner of land whose land is injuriously affected by the making or amendment”. You say that is how it should be read?

MR PETTIT: Yes, your Honour, I am relying on the word “whose”.

KEANE J: Yes, whereas what I am putting to you is 173(3) expressly refers to in language – expressly uses language of ownership and timing up to the coming into force of the planning scheme. You say that the difference in language is of no significance.

MR PETTIT: Your Honour, we say with respect there is no difference between, on the one hand, “a person whose land” and, on the other, the “owner”. As your Honour has pointed out, in both cases “land” includes interest. A person whose land and the owner of the land - - -

KEANE J: That is not necessarily so given that a person may have an interest in land under a specifically enforceable contract.

MR PETTIT: That is an interest in land, your Honour, which is owned.

NETTLE J: But owner’s conveyance, is it not, did you not tell us that before?

MR PETTIT: Yes.

NETTLE J: So, a person who is a purchaser under an uncompleted contract of sale of land would be an owner or not?

MR PETTIT: Under the definition it would be an owner of an interest in land, yes.

KEANE J: So, the sale by that person – so, for example, here it is Southregal, the relevant sale would be the sale by Southregal, not to Southregal.

MR PETTIT: I am terribly sorry, your Honour, could you - - -

KEANE J: Your argument is that the possibility of compensation has gone because the only person who had an entitlement was the vendor to Southregal and Mr Wee.

MR PETTIT: Yes.

KEANE J: If you accept that the purchaser under that contract, Southregal and Mr Wee, own their interest, then so far as a claim for compensation by them is concerned, the relevant sale would be a sale by them, not the sale to them by the vendor.

MR PETTIT: I am not sure that that point has ever arisen, your Honour, and I am not sure that I can answer it on my feet, but doing the best I can - - -

KEANE J: Come back to it later if you like.

MR PETTIT: Yes, I will, thank you, your Honour. But if I can take up the other point to do with section 173(3), with respect, your Honour, we would claim that in support of our case because there is no parallel provision that could be applicable to a purchaser of already reserved land. That purchaser – what subsection (3) contemplates is dealing only with entitlement to the person who owns the land at the date it is reserved and the reason subsection (3) is framed in terms of the owner immediately preceding that date is in anticipation of that person being the only one who can claim, the only one who could conceivably claim or the improvements mentioned in subsection (2). There is nothing equivalent to that for a purchaser. If I could still reserve the liberty, your Honour, to revisit this issue later.

KEANE J: Surely.

MR PETTIT: But I could make this submission, your Honour, that section 173(1) is “Subject to this Part” and section 177 on any interpretation limits compensation to the person who owned land at the date it was reserved or the person who owned land at the date of a failed development application, neither of which could conceivably include an owner prior to reservation under a contract for sale.

KEANE J: Well, in this case it is the - - -

MR PETTIT: Unless that person - - -

KEANE J: It is the purchasers who then apply for development approval and their case is that they, having applied for development approval, the event contemplated by 177 – an event contemplated by 177 has happened.

MR PETTIT: Yes.

KEANE J: I hear what you say, but in saying what you say, you are acknowledging that the words “Subject to this Part” in 173 are not necessarily controlling of what follows. They are not necessarily controlling 177. Section 177 sheds light on what 173 means.

MR PETTIT: I should add, your Honour, that the specific circumstances your Honour mentions which is, if I have got it right, that a person who is not yet the holder of the fee simple in land at the time it is reserved but who holds an interest under a contract which is specifically enforceable, whether that person falls into section 173 and also if that person comes on to be the owner of land then he, we say, has no compensation. But your Honour’s point is restricted to the case where that owner sells – that owner of a contract sells his interest in the contract.

KEANE J: Yes.

MR PETTIT: If I correctly understand your Honour, that is the limit of the possible flaw in our argument.

KEANE J: Because your argument is that the relevant sale for the purposes of fixing compensation has occurred. It occurred when the vendors sold to Southregal and Mr Wee, or entered the agreement to sell.

MR PETTIT: Yes. That circumstance is not - - -

KEANE J: Or completed the agreement, I am sorry, completed, because you are accepting the Bond view of what “sale” means.

MR PETTIT: Yes. That possible complication to interpretation of the Act – and there are many, your Honour, there are many anomalies in this division - - -

KEANE J: There are, I accept that.

MR PETTIT: If that is an anomaly, it does not affect our propositions because it does fall within section 173(1). If one accepts - - -

KEANE J: Well, it is just that it might suggest that the language in 173(1) - “any person whose land is injuriously affected” - has a broader scope than the person who is the owner of the land at the date the scheme comes into effect.

MR PETTIT: Not really, your Honour. Both are an owner of land whose land is injuriously affected; so, with respect, no.

NETTLE J: Section 8 contemplates only one owner, that is why it refers to “the owner”, rather than to “an owner”.

MR PETTIT: Yes.

NETTLE J: Which rather suggests that it is the legal owner, does it not, rather than the owner of an equitable interest.

MR PETTIT: It does, your Honour, and, with respect, that would be – I should have thought it myself – that is the way it must be interpreted because otherwise, as your Honour points out, there could be competing and multiple claims by an owner. So, with respect, I would adopt that submission as our own.

NETTLE J: I am not sure it overcomes the difficulty to which Justice Keane refers about 173 being informed by 177. It just, perhaps, clears up one aspect of what otherwise would be unclear in 177(2).

MR PETTIT: On the view your Honour has just expressed, which I have gratefully adopted, I think there is no need to refer to 177 in order to limit - - -

NETTLE J: Except that it says, “subject to what follows”.

MR PETTIT: Yes. But, there is nothing in 177 – on your Honour’s interpretation – that needs to be relied upon in order to support my case. I only referred to that before it had been suggested and I gratefully accept the word “the” refers to the legal owner.

KIEFEL J: Is it your argument that but for the 1986 amendment bringing in section 177(2)(b) that your construction would follow without – could not really be attacked? I seem to think you just acknowledge that there is more ambiguity than that.

MR PETTIT: The history of this matter is – when it was first raised in Temwood – the Court raised it in Temwood – Justice McHugh took the view that prior to 1986 he would have – had this case arisen prior to 1986 his Honour would have found in our favour.

KIEFEL J: Quite so. That is the large anomaly that has been introduced.

MR PETTIT: The alleged anomaly that has been introduced in 1986 was an amendment to a machinery provision.

KIEFEL J: Yes, I saw that at the end of your outline, so I am taking you out of your sequence.

MR PETTIT: The allegation is that that anomaly single-handedly – let me try to be perfectly clear about what that anomaly is. It is not as our friends paint it. The anomaly is simply that subsections (a) and (b) of section 177(2) refer to different dates – the owner at a different date. One refers to the owner at date of reservation. The other refers to the date at the development application. Now, that is unfortunate drafting, there is no doubt about it, because it raises this whole issue. But, the way to understand it, we say, is that the primary intention was to ensure that compensation was not payable twice, that is, once to the owner and once to another person.

That dilemma arose because section 177(1) allows an applicant, who may not be the owner, to apply for development approval and also accords to that applicant the ability to decide whether any conditions attached to a planning approval are acceptable or not. This is common in Western Australia and I dare say in Australia that an applicant might be a prospective purchaser or it might be a planner on behalf of a prospective purchaser who is, in a sense, testing the waters. The point of subsection (2)(b) is, nevertheless, to ensure that the person compensated is not the applicant and possibly the would-be purchaser but the owner – the owner at the date of the development application. If anything, it is just a side wind that that drafting has raised the present dilemma.

KIEFEL J: But you must treat 2(b) as surplusage then or as inconsistent in a way with the construction of 173?

MR PETTIT: No, your Honour, we say that it has effect, that by focusing on the person who was the owner at the date of the development application it accommodates the possibility that the original owner is deceased and the interest in the land is passed to that person’s heirs.

KIEFEL J: There is no hint of that really, though, in the drafting, is there?

MR PETTIT: No.

KIEFEL J: This is an attempt to find a use for it, which is not apparent from the terms of the statute itself.

MR PETTIT: We concede that point, your Honour.

KIEFEL J: Does this mean that you are taking up what Justices Gummow and Hayne said in Temwood or you are not, because, as I understood it, their reasoning in this respect was not followed, was not taken up, in argument before the Court of Appeal?

MR PETTIT: By us?

KIEFEL J: Yes.

MR PETTIT: Yes, it was, your Honour. No, we do follow Justices Gummow and Hayne. Our point, your Honour, is that while one cannot – we have not found a subjective intention in the parliamentary debates or in the second reading speeches or in the clause notes, objectively, that is an effect of subsection (2)(b) and because there is an objective effect it cannot be said to be mere surplusage. It cannot be said that those words are in terms of Project Blue Sky without meaning or effect. They do have meaning and effect.

That does not preclude, that does not take away all anomaly, but it sets the anomaly in context and the anomaly is simply that section 177(2)(a) refers to the owner at one date and 2(b) refers, we say, to the same owner at a different date. But, your Honours, we urge the Court to look at the enormous consequences that our friends and the courts below have built on that anomaly.

By virtue of that anomaly, introduced in a piecemeal fashion to a machinery provision it is now said to dramatically alter the meaning of section 173(1) such as to accord a brand new category of persons entitled to compensation and, worse, for the reasons I have already articulated, that category includes – sorry, comprises persons who have suffered no loss. That is an enormous superstructure, built on a miniscule pedestal.

KIEFEL J: You have referred to (2)(b) as identifying two different dates. Could the purpose of subsection (2) of section 177 be simply to identify and limit who the payment is to be made to? Could that be its principal purpose? So that it is not – whatever the compensation is, it is not to be paid to someone who is not the owner of the land.

MR PETTIT: Absolutely, your Honour. That is our central point. That is why I stress that the anomaly is not, as our friends paint it, that it refers to two different people. That is not the anomaly. The anomaly refers to that same owner at two different dates. But the reason for that is plain, we say, and it is that subsection (2)(b) is dealing with subsection (1)(b) too. It is dealing with development applications and those development applications may be made by an applicant.

So it might be natural. We urge on the Court that it is natural, although confusing, for the draftsman to have said, well, in that case, it is still the owner of the land but it is the owner who authorised the development application – that is, the owner at the date the development application was made. So it should be read as the same owner but having in mind the owner who was – who authorised – held the land who authorised the development application.

NETTLE J: If that was so, it would be in the form like subsection (2) of 181, would it not, where it is plain that it is the same owner but the two different times are allowed for?

MR PETTIT: That is the anomaly, your Honour. But can I press this upon the Court, that yes, we concede that better language could have been used to explain the purpose, the object of the provision for which we contend. But look at it the other way, your Honour. If the object of this amendment – 1986 – were to accord compensation to an entirely different category of persons, those who had purchased, then the language is singularly inept to effect that purpose.

Much better language could be used and, indeed, if that were the object, there would be other consequential changes. There would be consequential changes to section 173(1), there would be changes to the limitation periods, there would be changes to ensure that this new category of persons was not given more compensation than he has deserved. So we resist strongly the suggestion that it falls against us that better language could be used in expressing subsection (2)(b). Our charge against that is vastly better language could be used if our friend’s interpretation were intended.

BELL J: Just looking at the interpretation that Justice Callinan favoured in Temwood at paragraph 169, his Honour observed that in some instances at the time of the first sale there may be “little or no loss” in consequence of the reservation and he went on to say:

Loss, if any, or the true and full loss, may only crystallise and be sustained by a purchaser seeking to develop the land, who is then able to see and assess the precise and full adverse effect of the Scheme.

Do I understand your answer to that is simply the prudent purchaser understands what the reservation is and is in a position to assess the true value of the land at the date he or she enters into the contract?

MR PETTIT: That is so, your Honour.

BELL J: That is it.

MR PETTIT: That is it. But I might add about this paragraph from Justice Callinan, with respect, your Honours should bear in mind that what his Honour is here talking about is if his Honour’s interpretation is accepted then certain consequences follow but this is not from Justice Callinan an argument about what is the interpretation. It is an argument about what will happen if his Honour is correct.

His Honour points out that if it is correct that a purchaser is entitled, then the original owner will augment the sale price. He will ask more for it knowing that the purchaser will be entitled to compensation if he does not pass muster on development application. But that does not affect – that is not an argument about how to interpret it in the first place.

BELL J: But when one looks at the concept of compensation, if it were the fact that one could not properly value the loss occasioned by the reservation, it might be that that would provide a reason for favouring the interpretation that Justice Callinan adopted.

MR PETTIT: I spend most of my life, your Honour, working out compensation assessments and from personal experience I can assure you that there is nothing agreed or settled about how these matters work.

KIEFEL J: But you are going to say valuers can value anything.

MR PETTIT: We have had valuations ranging over $40 or $50 million in difference, your Honours. But to be serious, we say it is crystal clear that the assessment of compensation under section 179 – perhaps I should take your Honour to it, it provides that compensation payable for injurious affection:

is not to exceed the difference between –

(a) the value of the land as so affected by the existence of such reservation; and

(b) the value of the land as not so affected.

That is an entirely objective measure.

KEANE J: But, Mr Pettit, if the philosophy of the Act is that any depression in the value of the land can be determined and is to be determined by reference to the effect upon the interest in the land when the scheme comes into force, what is the purpose served by 179(2)(b) and (c) which plainly contemplate that the valuation exercise is to be performed at the date on which the application – or as at the date on which the application for approval of development is refused or the approval is granted on unacceptable conditions? If the Act is working on the basis that once the scheme comes into effect valuers can work out the depressive effect of the scheme, why would one have those provisions?

MR PETTIT: The value of land will fluctuate depending on what day it is valued; certainly on what year it is valued. So any valuation exercise, statutory or otherwise, must elect a date on which it is to be valued. So that is the imperative. It may well be – it was a legislative option to pay that compensation which reflected the difference in value between “affected” and “non-affected” at the date of reservation. That was an option.

One can see – I cannot point your Honour to anything in the second reading speeches or elsewhere but I say with great respect it is perfectly obvious that in the case where land might lie reserved with compensation not claimed for decades – for decades – it is plainly better to assess compensation – assess valuations at a date proximate to their determination, otherwise one is faced with compensation deriving from an assessment made, in this case in 2003, plus interest over the ensuing 13 years.

KIEFEL J: Well, quite so. According to the extrinsic materials and legislative history, was there not a concern? The concern was that there should not be a right or entitlement actually arising at the time of reservation, but rather that any entitlement to compensation be deferred, and it has been deferred to those dates when the loss becomes certain.

MR PETTIT: Yes. So that is another answer, with respect to your Honour Justice Keane, that there is no entitlement, and we know that from Temwood. There is no entitlement whatsoever until the first sale or development application. So it would not be logical to go back decades earlier to find the difference in value back then. There is a, with respect, helpful articulation of the reasons for deferral and the financial considerations set out by his Honour Justice Beech at pages 140 and 141 of the appeal book, paragraphs 61 through to 63.

So, returning to my oral outline, paragraph 10, your Honours, we say that because of the context in which the expression “payable” arises in section 177(1), it must mean, we say it does mean, both becomes able to be paid and becomes able to be claimed, and that is the meaning that is picked up in subsection (2). Subsection (2) provides it is “payable only once”. Your Honours, it simply does not say “is paid once”. That is covered, of course, but it is not limited to that. It only becomes payable, enters the state of being able to be claimed and paid, and it enters that state once.

Not only does that accord with the meaning of the word “payable” – the contents in subsection (1) and its adoption in subsection (2) – it also is the only meaning that does justice to the limitation periods. Because if, as on our friend’s case, “payable once only” just means it can be paid once but that it can be claimable multiple times, then the limitation period in 178, which is six months after the failed development application, counts for nothing because it is then claimable again on another development application, and so on.

There is a case that is precisely in point which your Honours might have noticed was very briefly dealt with and set aside for another day by Chief Justice Martin. It is a case called Nicoletti in which exactly this thing was upheld against us – I did not appear but it was against us – by his Honour Justice McKechnie who did indeed find that multiple development applications can be made and it can become claimable time after time.

We say that case is wrong but the Court of Appeal declined to address it, leaving it for another day. We say it is wrong because it does not abide the words “payable once only”. What we have said about “payable” is also alluded to – I will not put it as highly as expressly adopted – but alluded to in Temwood by their Honours Justices Gummow and Hayne at paragraph 108.

The next matter we draw in support is that – it has already been mentioned – but it is that all the words should be given effect, and this is Project Blue Sky at paragraph 71. It is said against us that our interpretation breaches that edict because sections 177(1) and (2) refer to different – it is said, different classes of persons. I have already answered that. However, the respondents’ case, we say, section 173, does contain redundant and positively misleading words.

This particular submission of ours might not have been so clearly or forcefully articulated earlier but I want to make sure I do not make that mistake again, your Honours, because as Justice Keane a moment ago asked me, it is not out of the question that the words “affected by . . . the making or amendment of a planning scheme” are non-temporal. We say they plainly are. But, not only does the alternate – our friend’s interpretation – make the words “making or amendment of” redundant, they certainly make it redundant, this could easily be written “is injuriously affected by a planning scheme” and that would carry our friend’s case.

So, the words I have quoted are redundant. Not only are they in subsection 173(1), they are also repeated several times throughout this statute, notably in section 174(1). I read:

land is injuriously affected by reason of the making or amendment of a planning scheme –

If our friend’s interpretation were correct, that should read “is injuriously affected by a planning scheme”. But worse, not only are the words redundant, they are positively misleading if our friend’s case were to be accepted because those are the words that introduce the doubt. If it is simply said by a planning scheme or by the existence or the state of a planning scheme, then we would accede to our friend’s submission. But these words not only are redundant, as I say, they are positively misleading. That cannot be explained away as a matter of definition.

Your Honours will recall that our friends say against us on this score that it is simply a definitional term and they point to section 174 as a definition focusing in particular on the words “if, and only if”. But what is said in section 174(1) cannot be definitional for two reasons. First, it is a different expression. The expression in section 174 is:

land is injuriously affected by reason of the making or amendment –

The words “by reason” are not in section 171. So it is not a straight definition of what is in 171. It addresses and explains and limits but it does not define that expression. Secondly, it cannot be a definition – sorry. Second, it cannot be an answer to us that this definitional aspect is an answer to the redundant words because the redundant and misleading words are already in section 173(1). So the question – the rhetorical question I ask in return is why would section 173(1) in the first place use those redundant and misleading words?

NETTLE J: Well, I wonder if it is to indicate that consistently with the principle that compensation is payable only once, it is nonetheless payable once in respect of a making, and subsequently in respect of each and every amendment.

MR PETTIT: Because that is specifically dealt with, your Honour, and I am grateful for your Honour raising it. If I could ask your Honour to turn to section 177(2). This is the provision which has as its core ensuring that compensation is payable only once.

NETTLE J: Exactly, the two fit together, and that is why making an amendment is used in 173(1). It fits together with the scheme that there is one right to compensation arising out of the making of a scheme and a further right arising out of each amendment.

MR PETTIT: Yes, but I was taking your Honour to (c) and (d) of subsection (2) – section 177(2)(c) and (d). So it is payable once only but it is payable again if there is another amendment.

NETTLE J: Yes. That is why 173(1) is drafted as it is with the words “making or amendment”. It contemplates at the outset that there is a right for compensation for a making and a further right for compensation for an amendment. If you took those words out, you just said once – if it were just planning scheme, as you have suggested would be the alternative, it would suggest that there is only one right of compensation in relation to the planning scheme. It would be inconsistent with the drafting of 177(2)(c) and (d).

MR PETTIT: No, your Honour, with respect. The focus of section 173(1) is upon injurious affection caused by something.

NETTLE J: Yes.

MR PETTIT: It could be caused by the making of a scheme or it could be caused by the amendment of the scheme. Whatever is the injurious affection only happens once. It might happen on the making, it might happen on the amendment. There is not two. It is not contemplating that the same injurious affection occurs twice.

NETTLE J: No.

MR PETTIT: It is contemplating that further injurious affection might be caused by a later amendment – that is, an increase in the size of the reserve or - - -

NETTLE J: Mr Pettit, I think we are on the same page to that point. There is one right for a making and a further right for each amendment, hence the use of the words “making or amendment” in section 173(1).

MR PETTIT: With respect, in strictness, I would prefer to say there is one entitlement and it is to injurious affection caused to land whether by amendment or by making of a scheme. There are not two entitlements and section 173(1) does not give separate entitlements, it is one entitlement upon the event of land being injuriously affected.

NETTLE J: But, I mean, if a scheme came into force in 1980 there would arise a right to compensation.

MR PETTIT: No, there would not. There would arise a right to compensation only when the land is sold or - - -

NETTLE J: Granted, all of that. Then, if the scheme was subsequently amended in 2010, there would be another right to compensation, subject to the temporal limitations, and so on, but they are not.

MR PETTIT: No, there is only the one entitlement and it occurs at the moment the land is sold or a development application - - -

NETTLE J: Whether it is by sale or the result of an application, the planning permit being rejected, there arises a right to compensation when the scheme is first put into effect.

MR PETTIT: No, your Honour, that is the unanimous effect of Temwood. There is no right whatsoever upon the imposition of a reserve.

NETTLE J: So, there arises a right in respect of the coming into effect of the scheme.

MR PETTIT: No, your Honour, there is no entitlement whatsoever until one of the events in section - - -

NETTLE J: I am with you. Upon a sale or rejection of development application, there will arise a right to compensation in respect of the coming into force of the planning scheme.

MR PETTIT: Earlier, yes.

NETTLE J: Then, subsequently, if the scheme is further amended and there is another sale or rejection of development application, there will arise a further right to compensation.

MR PETTIT: There will arise another right to compensation if subsequent to compensation being paid, there is another amendment under which the reserve in this case is increased, yes, your Honour.

NETTLE J: I put it to you that that sentence rather leans back and gives colour and meaning to making or amendment in 173(1). There is a right in respect of making and there is a right in respect of amendments.

MR PETTIT: Your Honour, nothing is in issue about that. The words that we rely upon are the words “whose land” and, secondly, “injuriously affected by” and in section 174(1) “by reason of”.

NETTLE J: I am sorry, I had understood the submission was that upon the respondents’ interpretation the words “making or amendment” would be otiose. Is that not good?

MR PETTIT: Yes, your Honour, because even on what your Honour is putting to us, our friend’s case simply depends upon there being in existence a reserve. In paragraph 12, we point to the parliamentary speeches. We say, it has been said against us below that the parliamentary speeches, the second reading speeches, are equivocal. We resist that. We say that they lean in our favour. I will not take your Honour through all of them. We have given the references. All but one of those second reading speeches and debates refer to the need – sorry, to the intent to confine compensation to the person whose land it was at the date of the amendment or making.

There is one only reference to the contrary and, as we have said in our written submissions, that was said in one House and in the other House shortly thereafter a member asked a question of a Minister about that, observing how it did not appear to accord with the member’s understanding of the Bill and the Minister replied to the effect that the intent of the Bill is to allow compensation only to the owner of the land at the date of reservation and to no other.

The second point that we make about this is that, during the course of the passage in 1986, of the amendment which added what is now subsection (2)(b) of section 177, both Ministers – that is, one in each House – made the observation that the amendments then proposed, including that one, did not constitute major change and that should be read in light of what had been said by second reading speeches earlier and, on any view, we say the respondents’ view is that, nevertheless, a major change was effected.

KIEFEL J: Where is the reference to “no major change” in the second reading speech?

MR PETTIT: It is in the appeal book at 298, right column, at about 36 and repeated in the House at appeal book 299, right column again, at about point 36.

KIEFEL J: Thank you.

MR PETTIT: I am terribly sorry, your Honour, I have given you the wrong column. The pages are correct; the columns are wrong. It is page 298 of the appeal book, left column, at about line 36 and in the House, at page 299, left column, again at about point 35. It is set out in paragraph 57 of our primary submission.

In our paragraph 13 – I would be repeating myself – is reference to the view Justice McHugh adopted. That view, which the respondents rely upon we take it, that addition of what was to become section 177(2)(b) altered the meaning of the primary provision. It is said against us there are two reasons for that, otherwise section 177(2)(a) and (b) refer twice and unnecessarily to the same person. Hence, our friends say, it must be read as meaning different people and I have answered that.

Secondly, they say it needs words to be read in - the words “the first to occur” and our answer to both those points are as follows. There is no repetition because, as I have said, the object of 177(2)(b) is to point to the same owner but upon a different occasion – that is, a development application. That has the effect, if not the subjective intention of Parliament, to accommodate testamentary and intestate successors.

There is no need for words to be read in on our interpretation and that is because, as we said before, “payable” takes the meaning becomes able to be claimed and able to be paid and if it only is payable in that sense once, then it has to be necessarily implicit that it happens on the first to occur of the events set out in section 177(1)(a) and (b).

GAGELER J: I know you say you are not reading words in but in essence your whole case comes down to needing to read 177(1) as requiring – as limiting payment to the first to occur of (a) or (b), does it not?

MR PETTIT: Yes, but primarily, your Honour, primarily limiting it so that there is no entitlement to a purchaser because there is no doubt that paragraph (a) of section 177(1) refers to “the land is first sold”. So the entitlement – it becomes payable when land is first sold and in particular that compensation cannot be payable – in a sense cannot be claimed or paid after that first event.

But I quibble a little, your Honour, with respect, at the proposition that our whole case turns upon that proposition because we still say that all of the four propositions that I extracted from Project Blue Sky are brought to bear and in particular the interpretation this Court, we say with respect, should strive for an interpretation of these provisions which is consistent with the object of the Act and the object is to confine compensation to those who deserve it.

Now, our friends have, I might add by way of respectful criticism, our friends have chastised us on the grounds that that object is not explicit. We confess it is not. It is implicit in the word “compensation” in the regime but nowhere have our friends spelled out what could be the object. What plausible object of the Parliament could have been in mind and advanced by allowing compensation to persons who suffer no loss, and who by knowing or ought to know that they are buying reserved land injuriously affected already.

KIEFEL J: Mr Pettit, could I ask you, section 179(2), was that inserted at the same time as 177(2), the amendment to 177(2) in 1986?

MR PETTIT: I would have to check, your Honour. I do not think so but I will have Mr Russell check and get back to you.

KIEFEL J: Am I right in assuming that your argument is, in effect, that if the legislature can be taken by 173 and read with 174 to intend that the person who is the owner at the time of reservation to have the future entitlement to compensation, then when that time comes around by one of three events – sale, refusal of development application or limitation of development application by condition under 177 – then, as a matter of fact, that person will be the owner of the land at the date of sale – sorry, when they sell they will have been the owner of the land at the date of reservation and they will be the owner of the land at the date of application, so at least there is no inconsistency.

MR PETTIT: That is right, your Honour, with respect.

KIEFEL J: I am just trying to see if one possible explanation for 177(2) in the dates is that it is meant to line up with the date for assessment of compensation under 179(2).

MR PETTIT: It is, yes, your Honour.

KIEFEL J: That is why I am looking to see the timing of it – whether the insertion of 177(2)(b) - - -

MR PETTIT: Yes, it is the triumvirate, if you like - the second set of triggers is development application - - -

KIEFEL J: Was that the only point to the dates then?

MR PETTIT: No. We say there is no point to the dates. The date is right, your Honour. It is simply a slightly inept manner of aligning. In the first place, development application - - -

KIEFEL J: Yes, I see, they do not line up because 177(2)(a) should be at date of sale rather than date of reservation really. To line up properly, the problem is probably in 177(2)(a). It should be at date of sale. We could redraft this any which way.

MR PETTIT: Yes, your Honour. But the history of it shows very plainly – and we have given the amendments at our paragraph 16. They are appeal book 209, 241, 283 and 295. They are the successive amendment - and all fiddling with – I should not say that expression – all trying to adjust this, what has become subsection (2) of 177 in order to prevent double payment, we say that this Court should find that the aim has been to match the triggers, if I can call them that, in section 177(1) to the person at the trigger to the valuation that comes in at the trigger.

KIEFEL J: So if one reads 177(2) as indicating to whom the payment is to be made – the machinery provision, as you say – if the point of the date referred to in that subsection is to mirror the date at which that payment which is made to the person is to be assessed, would you not simply read date of reservation in (2)(a) as a mistake for date of sale? Is there any warrant for doing that by reference to the date of assessment?

MR PETTIT: The point your Honour makes, with respect, is a very good point. I do not think anybody has raised it before.

KIEFEL J: I am always grateful for compliments.

MR PETTIT: I do not think anybody has raised it before, but another way of looking at this is - - -

KIEFEL J: But we have to try and find some way, according to Project Blue Sky, of working out what the point about the dates is.

MR PETTIT: The answer to that, your Honour, lies in the history. The original provision was as in subsection (2)(a) – 177(2)(a). Subsequently, amendments were made to add development applications and then to add unacceptable conditions to development applications. At that time – after those times provisions were slowly introduced, piecemeal introduced that have culminated in (b). But the effect of (a) – 177(2)(a) – has never changed. It ought to have occurred to somebody that at some point (2)(a) should be aligned with - - -

KIEFEL J: But, on your argument it is not necessary to refer to the requirement that they be an owner at the date of reservation because that is already established by 173(1).

MR PETTIT: Yes.

KIEFEL J: So what are we really looking at in 177(2)(a)? Are we looking at what should be a reference to date of sale?

MR PETTIT: Yes. Your Honour, this is why we have repeatedly stressed that the only anomaly is the different dates in subsection (2)(a) and (b). It is not an anomaly of referring to a different person. It is an anomaly of different dates. The explanation for the different dates, however one crafts it, whether subsection (2)(b) should have been framed differently or subsection (2)(a) should have been framed differently or they both should have been framed too differently, that is the only anomaly. As I said at the outset, to build the superstructure of an entirely new class of claimants on that minor anomaly is disproportionate and out of the objects of the Act.

In a sense, your Honours, this case can be decided by - well, not in a sense, I return to Project Blue Sky, the opening proposition, the Court is to strive for or to assume that there is one harmonious object of the Act and to strive for that adjustment of the provisions within it which accord with such a harmonious object. In a sense, it boils down to do we have more flaws in our interpretation or do the respondents? We say the answer is perfectly clear that the respondent - - -

KIEFEL J: I do not think we are going to do scores.

MR PETTIT: Well, your Honour, if I could be so bold, the flaws in our friend’s case amount to - - -

KIEFEL J: You are proceeding now to paragraphs 13 onwards on your outline.

MR PETTIT: Yes, having dealt with 13 and 14 your Honour, could I move to my paragraph 15. We say that (a) to (g) of the consequences of our friend’s interpretation are unreasonable results. I use that word “unreasonable” because that engages section 19 of the Interpretation Act. Extrinsic materials can be used to gainsay unreasonable results. These, we say, are determinative. Compensation may be claimed by persons suffering no loss, I have dealt with that. Section 173(1) must depart its natural meaning. Section 177(2) is self-contradictory, on our friend’s case. This depends upon the Court accepting what we have said about “payable” but the point I am making here is that with the opening words of section 177(2):

Compensation for injurious affection to any land is payable only once under subsection (1) -

payable once in the sense under subsection (1). If that is true, that is correct, then it contradicts our friend’s interpretation of paragraph (b). Not only is our friend’s interpretation of 177(2)(b) inconsistent with 173(1), we say it is internally inconsistent.

GAGELER J: Mr Pettit, can I just ask you a question about your paragraph 15(a), that is the proposition that compensation may be claimed by persons suffering no loss? Are you implicitly treating section 179 as providing the measure of loss or simply a cap on loss? How do you measure loss in an injurious affection case? Is there a causal element or does section 179 provide the measure?

MR PETTIT: Can I begin by observing that the expression “not to exceed” in section 179 has not been tested. It was raised in one matter that I am aware of, but not determined. It is open to argument that it could be used to argue that a purchaser is limited in compensation to the amount actually lost; that is true. However, there are no parameters – sorry, there are no provisions in the Act under which that could be brought to bear. Take the present case. A single price was paid – and this is common - for the landholdings in both cases. Part only of that land was reserved. There is no way of determining what price was paid for the reserved part. That is the first problem. And there is no mechanism in the Act to allow that for development applications. So, my answer to your Honour is that a court should not fasten upon the words “not to exceed” as if it is an answer to the problem of purchasers being compensated for no loss.

The second thing to say about it, your Honour, is there ought to be – we say the legislature has presumed that there is no loss – relevant loss for a purchaser to be compensated in the first place. That is because of the repeated references in the parliamentary debates to due diligence. A purchaser buys land knowing it is reserved, so if there is an excess over the affected price paid by such a purchaser, it is not compensable anyway.

GAGELER J: So, as I understand it, there is no case law on section 179 that we should be aware of?

MR PETTIT: Not on that point, your Honour.

GAGELER J: Thank you.

MR PETTIT: (d):

Words in s 173(1 and elsewhere become redundant and misleading.

On the respondents’ case, I have not dealt with this this morning but it is in our written submissions - (e):

On the Respondents’ case, s 173(1) has two different meanings depending on which paragraph of s 174(1) is in issue.

Very shortly, the sole reason that our friends and Justice McHugh in Temwood and the courts below, the sole reason that it is said section 173 has changed its meaning after 1986 is section 177(2)(b). That is the sole reason. Section 177(2)(b) only applies to reserves. If you go back to section 174, there are three classes of injurious affection. Reserves is only one of them. The other two are unaffected by section 177.

Accordingly, for those other two types of injurious affection, the pre-1986 meaning of 173 must prevail, hence it seems to follow, we say, with respect, on our friend’s case, that section 173(1) has two different meanings at the same time. If it is addressing 177 – sorry, if it is addressing reserves, it has a non-temporal meaning. If it is addressing the other two forms, it has a temporal meaning. That, we say, is a very strange outcome and should be resisted. And (f):

The efficacy of limitation periods under s 178 is lost.

If “payable” becomes able to be claimed and paid once only and never again – if it does not mean that, then it is claimable for multiple development applications, as has been held, which we say is unacceptable. It means that limitation periods are virtually ineffective, as they pertain to development applications. And the last, (g), is:

The possibility of competing claims for compensation, with no statutory resolution.

I have not addressed that this morning but, in short compass, there is the possibility that the original owner may sell and has six months to claim compensation. He could do so and yet not be paid because of a dispute about the amount if he goes to court. In the meantime, the new owner makes a development application, which fails, and also claims.

On our friend’s case, if “payable once only” means no more than “can only be paid once” and does not have the meaning we contend for, then there are two competing claims and there is no statutory resolution of those competing claims. The statutory resolution appears to be, by default, that the first of them to be actually paid would win, and that could be a most unjust result because that could be a windfall gain by the purchaser to the disadvantage of the owner, who has suffered loss.

Lastly, your Honours, I repeat that the only alleged anomaly in our case is the different dates. We say that is a by-product of the amendments, which we ask your Honours to track through and we have given the appeal book references. We say that anomaly is simply not sufficient to imply a new class. It is within the machinery provisions, whereas the eligibility provision, 173, has never been amended and was never even discussed. And then (b), the 1986 second reading speeches, positively state that those amendments:

“do not constitute major changes” -

and I have given your Honour those references. There was no mention in any of those speeches as to eligibility changes.

KEANE J: Mr Pettit, just in relation to that, looking at page 299, in the right-hand column, at about line 30, the Minister says:

Next it is proposed to amend the Act in relation to the payment of compensation for land which has been reserved under the metropolitan region scheme so that it is clear that compensation for injurious affection is paid only once to the person who is the owner at the date of reservation when the land is first sold following the date of reservation; or the person who is the owner at the time when the responsible authority refuses an application –

Why is not the Minister there expressly recognising that, so far as injurious affection by way of reservation is concerned, it is one person or the other but only once? One owner or the other but only once?

MR PETTIT: The Minister is simply repeating the provision itself. We say that this does not assist at all, but perhaps this does assist a little, your Honour.

KEANE J: But is not the Minister clearly recognising the possibility that there will be different owners?

MR PETTIT: And so there might be. It might be the testamentary heirs - - -

KEANE J: Well, there is not a hint of that limitation, is there?

MR PETTIT: No, your Honour, that is true. Not expressly, but your Honour has to bear in mind that these reservations were anticipated that they might go on for not just years but a generation. So that there is the prospect that a different person will come to be the owner by succession before either of the triggering events, but this simply goes back to the exchanges between myself and Justice Kiefel, that it is debatable whether subsection (2)(a) should have been changed or subsection (2)(b) should have been differently expressed, but nothing the Minister said – and it is identical in both Houses – nothing the Minister said assists one way or the other.

The other thing I might add to what I have just said is that your Honours ought not read into anything to do with the order in which these triggers are expressed. They are expressed at the moment in both subsection (1) and (2) of 177 by reference first to sale and secondly to development applications but your Honours ought not read that as in any sense chronological for two reasons. One, it is perfectly clear that the original owner can make such a development application and obtain

compensation. The second reason is that this is just an accident of the legislative history because the original provision was the equivalent of paragraph (a) of subsection (2) and the other was added. So it is not a reference to chronological. So in part answer to your Honour, the - - -

KEANE J: In relation to that, section 171(1) says:

If compensation has been paid under a provision of this Part in relation to a matter or thing no further compensation is payable under any other provision of this Act as a result of the same matter or thing.

Why does that not mean that once compensation has been paid in respect of injurious affection resulting from a planning scheme that is the end of it, so that it really is once only to whichever owner is the owner at the time that the claim - - -

MR PETTIT: Yes, I understand the point, your Honour, and, with respect, entirely agree that one cannot – the upshot of that is that one cannot – one should not read “payable” in section 177 as confined in meaning to paid. It should not be read to mean is paid only once and is not to be paid again because that work is already done. That is done in section 171. That is a further reason why the word “payable” as it appears in 177 takes the meaning cannot be claimed or paid. It is simply not – and that accords with what was said in Temwood. There is simply no entitlement prior to that and once one of those events occurs and it does become able to be claimed and able to be paid and that passes without being paid or with being paid, it does not become payable in that sense again. So, with respect, your Honour Justice Keane, we take section 171 in our favour. If your Honours please, that is all I have to submit in opening.

KIEFEL J: Yes, thank you, Mr Pettit. Yes, Mr Jackson.

MR JACKSON: Your Honours, may I commence by just mentioning one matter in relation to what was said by your Honour Justice Keane, going to page 299 of the appeal book, in the right column, about halfway down the page? The Minister there was speaking in the Upper House. In the Lower House, on the preceding page at page 298, you can see the Minister for Planning, in the right column, saying exactly the same thing – hardly surprisingly, of course, in the speech to the Parliament. You will see the reference to the two categories of persons.

May I also say, your Honours, those are references to the Act in its position and form as it was sought to be in 1986. Your Honours will see in, for example, paragraph 16 of our learned friends’ outline of oral submissions, a great deal of reliance upon there being, in effect, adhocery in relation to the amendments and that was repeated in the oral argument.

But, of course, one is not just speaking about legislation that came into force in 1986 because your Honours will see from the document that we have attached to our written submissions, and commencing at page 22 at the top of the page, that there were serious amendments of the legislation generally speaking.

Your Honours will see there is a Part 11B of the Planning Commission Act there referred to and those provisions – and then your Honours will see, if I could go to section 31, but, more particularly, your Honours, to section 34 on page 24, it was the provision inserted in 1999 and your Honours will see that it contains the equivalent of section 176(2) your Honour Justice Kiefel asked about. Your Honours will also see – if one goes to section 33 – provisions which have similarities with section 177.

Your Honours, one goes from there, of course, to the fact that at a time after the decision in Temwood one then arrives at a situation where you have the Planning and Development Act 2005 which came into force at a time after the decision in Temwood and that takes one to the various provisions that are the subject of the present discussions. So, it is not really a case of there being ad hoc amendments. Maybe you could describe that – maybe that is an accurate description, perhaps, of what happened in 1986. But, your Honours, time has moved on rather, and one is looking at an Act in which this is a part of the enactment dealing with the subject.

Your Honours, having said that, may I say, with respect, that at the heart of the case for us is that we submit that the words of Division 2 of Part 11 of the Act in terms confer on the respondents the entitlement to compensation which is provided for by that part of the Act and we would submit, your Honours, there is not a principle basis by reference to which those words should be read down.

May we say, with respect, your Honours, that it does not seem, in a sense, a strong start for an argument the other way to say that one is looking at the purpose implied from the Act. Why not start with what the Act says and that provides a fair indication of what the purpose might be. Could we just say, your Honours, that it is all right to say, well, a lot of money is being claimed - that would come as no shock to anyone really, the claims are large, but the enactment provides that the quantum of any claim is to be determined independently and I will come to that in a moment, your Honours, but also by reference to the statutory criteria. Now, there may be some question about whether one is talking about “not in excess of” or how much within that, but it certainly is to be determined independently.

Your Honours, finally I should say by way of introductory matters that our learned friend’s argument is one where, towards an early part of it you look at the arrangement of this part of the Act, look at the headings to it, look at the subheadings and look at the headings to the sections. Now, your Honours, it may not matter, but the last of those things, of course, is not quite in accord with the Interpretation Act (WA) and I think it is section 33(2) which says that headings to provisions are not to be treated as part of the Act.

BELL J: But I think if I understand Mr Pettit’s argument, it is if one looks at 177(2) the opening words are “Compensation for injurious affection” and he submits simply what compensation is there to the purchaser who buys knowing the land is subject to a reservation.

MR JACKSON: Your Honour, what section 177 says, in our submission - it says “no compensation” in subsection (1), no compensation is payable until one or other event occurs.

BELL J: I understand that it is the concept of compensation. Is there something in the approach that Justice Callinan identified when his Honour spoke of the idea that the loss might not crystallise until the time of the application?

MR JACKSON: I think paragraph 172 of his Honour’s reasons in that case, a few paragraphs on from the one your Honour referred to earlier - may I come to that, your Honour, because I am going to deal with that aspect of the case?

BELL J: But that is your answer for the question of compensation?

MR JACKSON: Yes, your Honour, one has a situation - as his Honour described in that case, we would submit that is an appropriate description of the situation. Your Honours, the question of what is compensation in these circumstances is fundamentally one that depends on the interpretation of the statute and what the statute gives and to whom. Could I go, your Honours, to the collection of provisions which we submit should result in the Act being construed in the way we suggest?

Your Honours, one goes of course to section 173 and your Honours will see that it provides that first of all “any person”, secondly:

whose land is injuriously affected by the making or amendment of a planning scheme –

thirdly:

is entitled to obtain compensation –

and fourthly:

from the responsible authority.

But, your Honours, the opening words of the provision “Subject to this Part” make it obvious, we would submit, that section 173(1) is not the be-all and end-all of the matter. There are provisions, for example, such as section 173(2) which limit absolutely the entitlement to which the words of section 173(1) would otherwise refer.

Could I just note in passing, your Honours, that the reference to a date of approval of a planning scheme or amendment does have a relevance in those circumstances in relation to what your Honour was referring to earlier about why the words are there. Your Honours, there are other provisions of Part II which are potentially germane and their existence is also recognised by “Subject to this Part”.

Your Honours, the second point we would make about section 173(1) is that it does not say that the entitlement to compensation is given only to the owner of the injuriously affected land as at the time of making or amendment. It speaks of “any person”. Thirdly, the concept of injurious affection, as used in section 173(1), is not a freestanding notion and it does not have a meaning other than that given to it by section 174(1).

Your Honours will see that section 174(1) in its three paragraphs sets out the three sets of circumstances which fall within the concept “injurious affection” by the making of a planning scheme in section 173(1), and your Honours will note the words “if, and only if” in section 174(1).

Your Honours, the three sets of circumstances to which section 174(1) refers differ from each other, and may we mention one matter that our learned friend raised in his oral argument and was also in their reply at paragraphs 5 to 7, and that is that the proposition that section 174 defines the concept set out in section 173(1) is challenged. It is said first that 173(1) uses the word “by” whereas section 174(1) uses the expression “by reason of”, and that it is said - in the reply it is said it means that section 174(1) addresses but does not define the expression used in 173(1).

Your Honours, with respect, it may be absolutely accurate to say that the words are slightly different, but it is very difficult to see why the term “by” in section 173(1) does not mean by reason of. Your Honour, that is a very common legislative usage which I think had its first modern emanation in section 82(1) of the Trade Practices Act and exercised courts a great deal in finally arriving at the view that “by” might mean by reason of. Your Honours, that is referred to also by Justice Murphy in the Court of Appeal at page 347, paragraph 114 of his reasons.

Could I return to the three sets of circumstances in section 174(1)? The provision relevant at present is section 174(1)(a). It is where land is reserved under the planning scheme for a public purpose and that is a term defined in section 172. Your Honours, the reservation, the concept to which section 174(1)(a) refers, differs from each of the other two concepts referred to in section 174(1). Section 174(1)(b) refers to circumstances where the only permitted purpose of development is a public purpose. Section 174(1)(c) relates to the prohibition – if I might put it briefly, your Honours – on non-conforming uses.

The provisions of Division 2 then apply in different ways from those three concepts and, your Honours, an example relating to 174(1)(c), as distinct from say (1)(a), can be seen in subsections 174(3) and (4), which relate to the circumstances in 174(1)(c) rather than (a). In the case of reservations for public purposes, section 174(1)(a), the provisions which are of importance are sections 176 to 179.

May I commence with section 177 in that regard. Your Honours will see that in subsection (1), it provides for the events which must have occurred before there is any entitlement to compensation in section 174(1)(a) cases. Your Honours, it provides, in our submission, for two distinct sets of circumstances and your Honours will see the first of them is when the land is first sold, the second is when the responsible authority refuses or grants approval on unsatisfactory terms.

There is a limitation on the two sets of circumstances. The limitation is found in the opening words of the succeeding provision, namely section 177(2), namely that compensation is payable once only under section 177(1). If I could go back to section 177(1), the two sets of circumstances in 177(1)(a), on the one hand, and 177(1)(b) on the other, are each dealt with or worked out by what we would submit are separate streams of provisions. In the land, in the circumstances referred to in section 177(1)(a), that is, where compensation is not payable until:

the land is first sold following the date of the reservation –

the person to whom the compensation is payable is the person then referred to in 177(2)(a), namely, the owner as at the date of the reservation. There are several provisions which then deal with that case, that is, where the owner at the time of reservation wants to make a claim. One, your Honours will see in section 177(3)(a) and if your Honours go to that provision your Honours will see that it requires that:

the owner before selling the land gave written notice to the [appellant] of the owner’s intention to sell –

by section 177(3)(a)(iii) that:

the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price –

and thirdly, by 177(3)(a)(i) that the owner’s sale was at a lesser price because of the reservation.

KEANE J: Mr Jackson, just to interrupt you, this must be talking about before a contract of sale was entered into.

MR JACKSON: Those parts of it, yes, your Honour.

KEANE J: So it is talking about the contract, not the conveyance.

MR JACKSON: I am sorry, if I could just say if your Honour goes to section 177(3)(a)(ii) it speaks of “before selling the land”. Now, I suppose, your Honour, the terms “sale” and “sell” of course absent – one can sometimes see large definitions of it, sometimes narrow. But one would think that before selling the land prima facie meant before entering into a contract to sell, but equally, your Honour, it is possible that it would apply to the actual conveyance.

It may be that it has a meaning capable of different application to different circumstances but, your Honour, prima facie it does seem to apply to those circumstances, particularly when if one looks at subparagraph (iii) which speaks of having taken “reasonable steps to obtain a fair and reasonable price for the land” and presumably one has to give notice then of an intention consonant with that, your Honour, it is possible to imagine different circumstances and things occurring at the same time, but generally speaking I agree with you, yes.

What I was going to say, your Honours, the matters that are referred to in subsection (3)(a) in the case of sale are to be determined by the arbitrator appointed under section 176(2). Your Honours will see that any question as to the amount and manner of payment of the sum which is to be paid is to be determined by arbitration unless otherwise agreed, to put it shortly. Your Honours, the second provision which relates to cases of sale in the sale stream, if I can put it that way, is section 178(1)(a)(i). It provides that in the case of a claim for injurious affection referred to in 174(1)(a) at any time – I am sorry, the claim is to be made at any time within six months after the land is sold. Then, your Honours, section 179(1), sets out the maximum compensation payable as being the difference between:

the value of the land as so affected by the existence of such reservation; and

(b) the value of the land as not so affected –

But, of course – if I can just say that nothing very surprising about that – but the provisions for values are to be assessed in such a case as at the date referred to in section 179(2)(a), that is the date of sale. Then, your Honours, if one goes back to, what we would call, the other stream, it commences with section 177(1)(b) and it involves circumstances where the appellant refuses the application for development or grants it on unacceptable conditions. In that case, your Honours, section 177(2)(b) applies. The compensation is payable:

to the person who was the owner of the land at the date of application –

for the approval. There is a distinct change of language between paragraphs (a) and (b) of section 177(2) and the provisions also refer to the owner at different times.

Now, your Honours, the regime contemplated in the circumstances referred to in 177(1)(b) is reinforced by later provisions. If one goes to section 177(3)(b) it provides that in such a case - the development application must have been made in good faith and again that is something that is to be determined by the person – the independent person under section 176.

Your Honours, when section 177(1)(b) applies, the provisions of section 178 again come into play but this time one looks to section 178(1)(a)(ii) or (iii) and they give a different six month time limit. In such a case, section 179(2) provides that the time for assessment of the change in values is when the application is refused or granted on unacceptable conditions – 179(2)(b) and (c). Now, your Honours, if one asks in a sense how does it all fit together. Well, your Honours, we endeavour to pull together how the provisions work in the case of successive owners.

Your Honours, there is an entitlement inchoate in some respects to compensation by the making or amendment of a planning scheme which reserves land for a public purpose. Division 2 identifies two events, the occurrence of which can only give an entitlement to such compensation and they are those referred to in 177(1)(a) or 177(1)(b). Those events occur at different times and compensation is assessed as at different times. The persons to whom the compensation is payable differ in the way they are described in the statute. It is a reference in section 177(2) to potentially different people at those times.

Now, your Honours, the owner at the time of the making of the scheme may take action to claim compensation. There is no obligation to do so but the only way in which the owner can convert the inchoate entitlement into money is by either selling the land or applying successful, successfully or unsatisfactorily if I can put it briefly – sorry, did I say successfully? I meant to say unsuccessfully, your Honours, or unsatisfactorily for development approval.

Could I deal with that second course, that is, applying unsuccessfully or unsatisfactorily? Now, your Honours, the owner may or may not choose to claim compensation in such a case. If the owner does not seek compensation in those circumstances, within six months after the refusal or granting on unacceptable conditions, the owner’s entitlement to claim compensation on the basis of that application will have gone.

Your Honours, there may well be a question whether people can make a second application but that is not this case. To obtain compensation, the owner would then have to rely on the first sale provision in section 177(1)(a) and (2)(a) and that right would have to be exercised within six months after the land was sold, 178(1)(a)(i).

Now, your Honours, if one takes the case of an owner who sells but has not made a claim within six months, after having done so, or makes a claim which fails, for example, by reason of non-compliance with 177(3)(a)(ii) or (3)(a)(iii), your Honours, we would submit or ask in a sense, hypothetically, what is there to prevent a subsequent owner from making the application for development approval and relying on its refusal or grant on unacceptable terms.

In those circumstances, the claim by the subsequent owner does not offend the stricture of section 177(2), that compensation be “payable only once”. The terms of section 177(1)(b) apply literally. The subsequent owner satisfies the words of 177(2)(b). The application, one assumes, is made in good faith, under 177(3)(b) and the compensation is assessed as at the date of the application for approval, not the date of sale or acquisition.

Your Honours, may we deal then with the matter raised by our learned friend’s reply, for example, and also in their oral submissions in their - - -

KIEFEL J: Just before you do, Mr Jackson, when you are talking about the compensation that is payable, is there anything to be gleaned from section 179(1)(a) which has as its starting point the assessment of compensation by reference to the value of the land as affected by the existence of the reservation?

MR JACKSON: Your Honour, there must be, one would think, because you get a time from 179(2) – time as at which it is to be done – but the ultimate concept is that in 179(1) into which the time aspect feeds. Now, your Honour, there is no doubt left to the determination of the arbitrator what the result should be within those guidelines. Now, you would expect the arbitrator to do the arbitrator’s job and to arrive at what is the right answer in those circumstances.

KIEFEL J: But I wonder, although 179(2), like 177(2), refers to the date at which the valuation is to be assessed, I wonder whether 179(1)(a) might point to the affectation of the land for the purpose of the valuation really occurring at the point of reservation in the case of either a sale or development approval being refused or unacceptable.

MR JACKSON: Your Honour, could I just say this: one has to, in a sense, read into the words of (a) and (b) in 179(1) the relevant words from 179(2) so that one is looking, in a sense, at the value of land as affected by the existence of the reservation as at the date of, say, application for approval of development of the land. You look at the land in that situation then and then you look at what the value would be as at that date if it was not affected by it.

KIEFEL J: But what that suggests is that you are not looking at actual loss in relation to application for approval of development; you are looking at the effect of the making of the plan on the value of the land is going to be the same, whether it is the event triggering compensation is sale or application for development approval. So it is known, in a way, what in essence that is going to be at the point of reservation. Is that how one reads it?

MR JACKSON: Your Honour, what is known at the time of reservation is, in effect, what the reservation is. Now, it could be, as I think we have said in our written submissions, there is power to revoke or alter the reservations because they are reservations.

KIEFEL J: So it is taking account of anything that could have – the reference to the date in 179(2) is allowing for other things to have occurred.

MR JACKSON: Well, your Honours, yes, of course. I mean, it looks at the situation as at that point. But when one looks at it, it is a question of how taking the values, calculate those at that date, the situation is. And, your Honours, this is a circumstance of course where the compensation is payable, as section 173, I think, says, by the appellant. The appellant only pays once. It has the advantage of retaining the money until the time comes to pay and the identity of the person to whom it has to be paid at the time depends on how events have happened in the interim.

Your Honours, it is not a kind of one-way traffic where the only advantage is to the advantage of the owner whose land has been affected because affectation by use of land as a reserve is something that the effect of it will not come into true operation until, on the one hand, someone tries to sell the land or, on the other hand, someone tries to use the land and finds that they cannot use the land for the desired purpose because of the reservation for a public purpose which prevents that happening.

Now, the way in which the Act works is to recognise that things can happen in that way and at different times but there is always, of course, the provision of section 177(2), the only once for the payable of the compensation. Could we, in that regard, your Honours, refer to what was said by Justice Callinan in the Temwood Case which is [2004] HCA 63; 221 CLR 30 at page 92, paragraph 172, and his Honour said in the second sentence:

It allows the claim to be made when the true effect of the Scheme becomes known and the full loss is incurred.

Now, your Honours will see the remainder of that paragraph which I shall not read out. Could I just say, your Honours, that just perhaps to add something to what I said a moment ago? Where you have the case of a reservation, the reservation may be one that is not intended to – I am sorry, I am putting that badly – where you have a reservation, it may be a case that the reservation or the purpose of the reservation, the public purpose is one which is not affected for years.

It may come quickly, it may not, but the situation which obtains is either - we would say, under the Act - that there is a sale and the first sale brings into reality the compensation or, on the other hand, an application for development which is refused brings into play the fact that one then in effect concentrates the mind of the authority – that is the point at which, if it refuses it, it has to pay for the privilege of refusal. So, your Honours, we would say that the way in which Justice Callinan put the situation there is one which is correct.

KIEFEL J: Justice Callinan, I note at paragraph 160 on page 89, seemed to approach the matter through the perspective of principles relating to confiscation or acquisition of the property. I would have thought that would have favoured the appellant’s argument rather than the argument that you are advancing. It would identify the owner as affected.

MR JACKSON: Your Honour, if I could say two things about that. Marshall was a case in which it was not the owner of the land, as I recall it, who was affected but it was an effect on other land that was affected by the consequences of resumption. In Kettering, the observations there made were ones that adopted, in effect, the approach taken by Justice Gaudron in Marshall to compensation of the kind with which the Court is now concerned.

Your Honour, could I move on from there? Your Honours, I want to deal next, if I may, with the contention of the appellant that the use of the term “payable” in section 177(1) means that compensation becomes payable on, and only on, the first to occur of the events referred to in section 171. Your Honours, there is a slight difficulty in that regard because if one looks at section 177(1), it is expressed in its opening words to say:

Subject to subsection (3) –

and if one goes to subsection (3), it commences with the words:

Before compensation is payable under subsection (1) –

the relevant events must have occurred. Your Honours, in our submission, this submission made by our learned friends – and if I could take your Honours to their reply for a moment in paragraph 8. Even if I may say so, with respect, they are muted in the way sought to be done in the last sentence of paragraph 8 of the reply, in our submission, it does not sufficiently recognise the interrelationship between subsections (1) and (2) of section 177. Your Honours, I see the time. Would this be a convenient time?

KIEFEL J: Yes, thank you.

MR JACKSON: I expect to be half to three-quarters of an hour.

KIEFEL J: Thank you, Mr Jackson. The Court will adjourn until 2.15.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.14 PM:

KIEFEL J: Yes, Mr Jackson.

MR JACKSON: Thank you, your Honours. When the Court adjourned I was dealing with the question of the appellant’s contention that the use of the term “payable” in section 177(1) had the consequence that compensation became payable on and only on the first to occur of the events referred to in section 177(1).

Could we say that section 177(1) is involved in an interrelationship with section 177(2). The former provision provides the precondition to compensation becoming payable in that it provides that no compensation is payable to anyone until an event referred to in section 177(1) occurs, namely, the sale of the relevant land or the refusal of the development application.

Section 177(2), on the other hand, identifies the persons to whom compensation may be payable and the circumstances in which it may become payable to those respective persons. But there is a limit, of course, and the limit is found in section 177(2) in the provision that compensation is payable only once.

Your Honours, it prevents a situation where the original landholder could obtain compensation on the sale and then the purchaser could seek compensation for a loss associated with the refused development application. We would submit that the appellant’s contention does require words such as “upon the first to occur of” to be read into section 177(1) and that submission, correctly, in our submission, did not find favour with anyone in the courts below. Could I give your Honours the references in that regard - to the primary judge, Justice Beech, at page 136, paragraphs 48 to 51, and your Honours will see particularly paragraph 50:

In my view, the language of . . . two alternative but otherwise independent rights.

Then, your Honours, in paragraph 51 the present appellant’s construction of 173 and 177(1):

means that when the first sale after the reservation occurs, the right to compensation is exhausted. No claim is available to the purchaser.

Your Honours, that goes on for a few sentences. Then, at page 145, paragraphs 76 and 77, your Honours will see his Honour’s discussion of the introduction of what is now 177(2)(b) and then if one goes then to paragraph 77 his Honour says that he agreed with Justice McHugh’s view:

that, whatever the position before 1986, after the 1986 amendments the effect of s 36(3) was to create two alternative and otherwise independent entitlements -

and, of course, there is the limitation to one, compensation. In the Court of Appeal Chief Justice Martin, at page 335, in paragraphs 75 to 76, was to the same effect. Also, your Honours, page 335, paragraphs 75 to 76, was to the same effect. Also, your Honours, page 346, paragraph 110.

Could we refer your Honours to our written submissions in paragraphs 31 and 32. I do not need to take your Honours to those now. Your Honours, could I just say one further thing before moving on. There has been some reference to loss – who suffers the loss? But, your Honours, loss is not the concept that one finds in this part of the Act. That is referred to, your Honours, by Justice Beech, at page 139, paragraph 59. Your Honours will see about line 35, having set out in the first sentence of that paragraph the submission on the other side, he says:

First, loss is not a distinct concept given statutory force in pt 11. Rather, the relevant concepts -

Your Honours, I will not read it out, but your Honours will see that he deals with the submissions made on behalf of our learned friends, including the windfall argument – one of those arguments that always has a superficial but, in our submission, with respect, not lasting attraction.

Could I then deal with – and I will deal very briefly with this, if I may – we have set out in our written submissions in paragraphs 23 and following responses to the various contentions. Your Honours will recall there were nine separate contentions made by our learned friends in their written submissions. There are some aspects with which I would seek to deal orally and I will do so briefly.

Your Honours, one of them concerns the third contention which your Honours will see at paragraphs 29 and 30 of the appellant’s submissions as to the object or policy of Division 2. I adverted to the fact earlier, your Honours, that paragraph 29 of those submissions described the contended for object as implicit and that is not, we would submit, a strong start in identifying the object of a statute. A surer commencement point, we would submit, is the words actually used. Your Honours, in that regard, could we refer to the matters we have set out in our written submissions in paragraphs 29 to 31.

Your Honours, our learned friend’s reply in paragraphs 16 to 17 – and may I take your Honours to that – seeks to deal with the contentions that we made in our written submissions in that regard. Could we just say this, your Honours, that if one looks at paragraph 16 of the reply, your Honours will see it is said that we argue, secondly, that the Act does contain safeguards against payment of compensation. They say the safeguards identified go to a different point.

Your Honours will see what is said in paragraph 16(1) of the reply. The point we would seek to make is that that is simply an assertion which involves making an underlying, but unjustified, assumption in favour of the appellant. The assumption that it makes is that there is some requirement that there has to be something payable to a purchaser who did suffer loss. As we have submitted earlier, loss as such is not a relevant criterion.

If one goes to the reply submission in paragraph 16(2), it may be right in one sense to describe section 178 which, your Honours will recall is the provision that provides for when a claim has to be made - it might be right in one sense to describe it as a limitation period but the provision also is a recognition that different events will trigger the commencement of the relevant period and those events are related to sections 177(1) and (2), as the case may be.

If I could go then to paragraphs 16(iii) and also 17 of the reply submissions, your Honours will see that 16(iii) refers to a concern:

that such landowner might seek compensation by way of a development application not made in good faith.

Your Honours, the use of “such” in the expression “such landowner” does again, with respect, involve a degree of assumption. It pays insufficient attention, we would submit, to the change in description of the owner in the paragraphs of section 177(2). In relation to paragraph 17, could we say that that submission does not pay sufficient account to section 179(1).

Section 179(1), as your Honours are aware, says that the amount of compensation is not to exceed the difference in value of the land as though the reservation was never imposed and the value of the land affected by the existence of the reservation with the value being determined at the date the development application is refused or unacceptably conditioned.

Your Honours, in relation to that, section 179 sets out a perfectly intelligible limit on what compensation may be payable. It indicates when it is to be calculated and, as we have said earlier, leaves it in each case to an independent person to determine it.

Our learned friends have also contended in their contention 7 in their principal submissions – they make a contention to the effect that the Act does not postpone entitlement pending loss becoming apparent. I referred earlier, your Honours, to the reasons for judgment of Justice Callinan in Temwood at page 172. Could I say – I will not go back to that, your Honours, but that passage was relied on in the Court of Appeal by Chief Justice Martin at page 321, paragraph 27, and your Honours will see that his Honour there quotes the passage.

But may I also refer to what was said by Chief Justice Martin in this case at page 336, paragraphs 79 to 83, where his Honour was dealing with the reliance placed then, as now, by our learned friends on section 173. You will see that in paragraph 79 he said:

Understandably, WAPC places great reliance upon the use of the words ‘the making or amendment of a planning scheme’ –

Then he said in paragraph 80 that section 173(1) had to:

be read in the context of div 2 . . . and in the context of the Act as a whole.

Paragraph 81:

although the making or amendment of a planning scheme can, no doubt, injuriously affect land by constraining the use to which it can be put, the precise manner and extent of the injurious affection will not be apparent unless and until either –

and the two events are there referred to, and he said:

This consideration explains, at least in part, why the entitlement to compensation is deferred until one or other of those events occurs.

Then your Honours will see in paragraph 82, he said:

as a matter of logic, any injurious affection . . . must derive from the making or amendment of that scheme. Thus, the words used in s 173(1) might be explained as a recognition of that obvious fact, rather than by an attempt to define or constrain the class of persons . . . a topic more specifically addressed by s 177.

Your Honours will see his Honour’s conclusion in paragraph 83. Again, your Honours, to similar effect was Justice Beech at first instance at page 138 in paragraph 53.

Your Honours, could I come then to deal with Temwood. We have dealt with this in our written submissions in paragraphs 49 to 58, and the issues raised by the conflicting reasons in Temwood have been referred to in those paragraphs. But may I just say something more particularly about the reasons advanced by Justices Gummow and Hayne in support of their views in that case.

May I take your Honours to Temwood 221 CLR at 70 for a moment, and in particular paragraph 103. Your Honours will see that in paragraph 103 their Honours took the view that section 36(3) of the legislation then in question:

should be construed by treating the deferral of the entitlement to payment as terminated upon the first to occur of first sale or development proposal –

and then proceeded to give five reasons for that, commencing in paragraph 104. May I deal, your Honours, briefly with those reasons. Your Honours will see the first reason being in paragraph104:

the loss in value suffered on reservation “is less concrete or tangible” than “the kind of loss sustained on conveyance or development refusal where owners are prevented from developing land in accordance with their genuine intent”.

Your Honours, it might be right to say in the case of a reservation for public purposes under 174(1)(a) that in a case where there is a prohibition under the scheme, as in 174(1)(b) and (1)(c), that broadly speaking, however, the degree of uncertainty encompassed by terms such as “less concrete or tangible” lends support to the view that one needs to look at things - at the situation as things develop and rather supports the view, in our submission, that was advanced by Justice Callinan at paragraph 172, rather than the conclusion to which their Honours Justices Gummow and Hayne came.

The second reason given is in paragraph 105 – the reference to the reliance on the second reading speech. Your Honours, if one looks at the words actually quoted in paragraph 105, they are, with respect, entirely neutral on this question. But if one goes back to the passages referred to earlier today, at pages 298 and 299, they are really quite against the contention that there is only one basis.

KIEFEL J: Do not those references to which you have just made simply paraphrase the subsection?

MR JACKSON: I am sorry, your Honour, the references to?

KIEFEL J: The references that you have just made.

MR JACKSON: Yes, 298, 299.

KIEFEL J: Yes. Do they not simply paraphrase section 177(2)?

MR JACKSON: Yes, yes.

KIEFEL J: They do not exactly give you a “why”.

MR JACKSON: No, no. Your Honour, I would accept that with one reservation and, with respect, one comment about it. The reservation, your Honours, is that – you will see at page 298, immediately the third-last paragraph in the right column and, similarly, in the other House at page 299. It is said:

At present there is uncertainty about claims being able to be paid more than once in respect of the same portion of land.

Section 177(2) is the provision that provides that there will be only one payment. But it is also the provision that identifies the persons who may be the beneficiaries of that payment. So, the two things are tied together. The comment, your Honour, is that our learned friends had referred to the top of page 173 in the right column where:

do not constitute a substantial alteration –

But there is always a case – one does need to read on down those pages to see what is contemplated. Could I go back then, your Honours, to the next paragraph in the reasons for judgment of Justices Gummow and Hayne in Temwood at page 71. Paragraph 106 says:

Thirdly, the depreciation of which the Minister there spoke “becomes real” upon the first to happen of the stipulated events –

and, your Honours, that is, with respect, a statement without reasons of the conclusion and it says no more than, in effect, the first of those five reasons. Your Honours, one sees there also in paragraph 107 a fourth reason being an observation in the Legislative Council on the second reading speech. Now, your Honours, the observation was that:

s 36(3) was designed to protect the position of the owner at the time of the reservation so that when he later sold he was to be compensated if unable to realise the full market value, but “[s]ubsequent purchasers are aware of the scheme provisions at the time of purchase” so that they “would not be at the same disadvantage as the original owner”.

Now, your Honours, sometimes that would be true. Subsequent purchasers would not be at the same disadvantage as the original owner. But subsequent purchasers are likely to have bought with a view to development or usage of the land and the basis on which they are entitled to compensation differs from that of the owner in any event in terms of the time at which it is to be assessed, such as section 179.

Your Honours, if one has a situation where two different regimes are set up operating at different times, very difficult to say that one is subject to the other in the absence of some provision saying that. But, in any event, your Honours, why in the case of a reservation for public purposes should the government pay no one? Could we, in that regard, refer to what was said by Justice Callinan at page 91, paragraph 169 and also to Justice McHugh at page 49, paragraphs 41 to 42.

KEANE J: Because there is the possibility in the case of “land reserved for public purposes” of a development application being approved.

MR JACKSON: Of course, your Honour, yes.

KEANE J: So that it may be that the refusal of the approval of what might have been built had the approval been granted would have been very valuable.

MR JACKSON: Could be, yes.

KEANE J: So that it is actually contemplating the pursuit of a higher and better use than might have been in contemplation by the original owner.

MR JACKSON: Your Honour, if you took, for example, an area in a suburb being newly developed, the reservation of land for public purposes in a plan for an area including that, it is likely to be for quite a number of public purposes, some of which might cost a great deal to bring into being, some of which not so much.

But the land on which they are to be carried out is land which may well have been quite valuable for a number of purposes were it not for the reservation of it for public purposes. The position really is that there are inevitably uncertainties where there is a reservation of land for public purposes. The land is reserved, not taken, and so the effect of the reservation does not really bite until an event such as, on the one hand, sale or, on the other hand, the attempt to use it for a purpose and then being refused or granted on unsatisfactory terms.

KIEFEL J: Would not the reservation have to be cancelled to permit a development on land that is reserved?

MR JACKSON: Not necessarily, your Honour. It would depend - your Honour, I do not want to get into the sports - - -

KIEFEL J: Neither do I.

MR JACKSON: - - - world unduly because it is an area in which my competence is limited, but it is perfectly possible that an area might be reserved for a public purpose, the public purpose being sportsground. Now, views of what constitutes a public sportsground are likely to vary, and sometimes dramatically, depending on what it is to be used for, what sports are involved, and what infrastructure is to be built in relation to it.

It may well be that someone who owns the land has somewhat grandiose ideas about what could be built on it, what could be made on it. It may be that the application is granted, but on conditions which involve allowing only half, for example, the usage that was contemplated by the developer. So that is one possibility.

Again, it may be that the developer only wants to put up a small stadium, whereas, on the other hand, the authority has in mind that this is a suitable place for a substantial one. Your Honour, the point I am trying to make is that in terms of reservations, one is talking about a reservation now for something in the future and it can vary. That is the point I am seeking to make.

Your Honours, finally, in relation to the fifth reason – paragraph 108 at page 71 – the reference is made to section 36(3a) which later – or the current version of which, I should say, is section 177(2). Now, your Honours will see that their Honours say about this about six or eight lines from the bottom of the page:

The inclusion of the reference in para (b) of s 36(3a) to the owner of the land at the date of a development application . . . accommodates such special situations as the death by the owner before any sale and the making of a development application by those volunteers taking the land by testamentary or intestate succession from that owner. Paragraph (b) of s 36(3a) has no application where there has been a sale –

Well, your Honours, could we just say the language of the provision does not leap from the wording of the provision in the first place, but the second thing is that if one assumes that the owner of the land at the time of the making of the scheme died before the first sale, the compensation payable on the first sale that took place after the owner’s death would be payable to that owner – that is, to that owner’s estate, of course, and that does not seem to give rise to the issue that is referred to by their Honours. If one goes also to what Justice McHugh said at page 48 in paragraph 38, the last four lines of that paragraph:

It is impossible to escape the conclusion, therefore, that s 36(3a)(b) applies to a subsequent owner, and there is no reason for confining the class of subsequent owners to those who have obtained ownership other than by way of sale.

And (2)(b) does not talking about obtaining ownership in any particular way, it just speaks of the fact of ownership.

Your Honours, our learned friends also say that it is inappropriate to apply, to a case of this kind, the observations of the members of the Court in Marshall and Kettering. Could I just say these things about it? The provisions of Division 2 apply to give an entitlement to compensation to those whose land is taken, in effect, in one way or another, or to be taken, for the public good. It is in those circumstances, in our submission, legislation to which the observations of Justice Gaudron are in Marshall.

Could I take your Honours very briefly to that – [2001] HCA 37; (2001) 205 CLR 603 at page 623, paragraph 38, are prima facie applicable. Your Honours will see the reference by her Honour in paragraph 37 and also to paragraph 38. The fact, your Honour, the presiding Judge mentioned earlier that this present case is different in concept to the type of compensation from that in Marshall was recognised in Kettering but similar principles applied. You will see that in the reasons for judgment by members of the Court in Kettering (2004) 78 ALJR at 1022. It is pages 1029 to 1030. But, the relevant paragraphs are paragraphs [31] and [32]. Your Honours will see in paragraph [31], their Honours say:

Injurious affection by the taking and use of part of a landholding, and injurious affection occasioned by a planning change have in common the impairment or displacement of a private interest by a public one. This feature has led, in cases of the former, to –

And then your Honours will see various pronouncements, including that of Justice Gaudron in Marshall. Then, their Honours go on to say in paragraph [32]:

To resolve this appeal it is not necessary to resort to pronouncements of that kind –

et cetera, then a few lines further down:

Nor is it necessary to have regard to cases in which it has been held that exceptions in statutes are generally to be strictly construed –

Your Honours will see then, the last four or five lines of paragraph [32], and refers to a particular provision:

It provides an indication at least, that in a case of doubt an approach similar to that adopted by Gaudron J . . . is to be preferred.

Your Honours, those are general statements, of course, and we recognise that but, in our submission, they are apposite and, we would submit, that it is relatively clear that provisions of the kind in question constitute legislation which should be regarded as beneficial and remedial. Your Honours, as five members of the Court said in AB v Western Australia (2011) 244 CLR 390 at page 402 in paragraph 24, the last three lines:

It is generally accepted that there is a rule of construction that beneficial and remedial legislation is to be given a “fair, large and liberal” interpretation.

Your Honours, those are our submissions. We rely, of course, on our written submissions in addition and submit the appeal should be dismissed.

KIEFEL J: Thank you, Mr Jackson. Any reply, Mr Pettit?

MR PETTIT: Yes, please, your Honour. First, I hope your Honours have the result of our research over lunch in answer to your Honour Justice Kiefel’s inquiry about when it was that the equivalent of section 179 came into effect. It came into effect by virtue of Act No 29 of 1963 and this was the previous Act, of course, the Metropolitan Region Town Planning Scheme Act, that came into effect by virtue of section 2(e) of the amending Act and appears to be in the same terms as the present section. Your Honours might also note by the by that section 2(d) of that amending Act was also the occasion on which the words “or the permission is granted subject to conditions that are unacceptable to the applicant” were also added.

Now, in the order in which my learned friend addressed these matters, it is correct, as my friend suggested, that section 31 of the Interpretation Act deemed section headings not to be part of the Act. We are not relying on section 31 or any contrary proposition. We rely on section 19 of the Interpretation Act, which is in the appeal book. Section 19 provides when it is that extrinsic material may be used and section 19(2)(a) deems to be part of those extrinsic materials that may be used, and I quote:

all matters not forming part of the written law that are set out in the document containing the text of the written law as printed by the Government Printer –

in other words, section headings. My learned friend next addressed on the question of section 178 the Planning and Development Act this is the limitation period. We say about it - and further to our earlier submission - that these provisions need to be addressed in the order of the hierarchy. We say it is plain that section 178 takes its meaning from the preceding sections not so much that it has an influence on those preceding sections and a case in point, for example, your Honours, is that subsection (1)(a)(i) simply refers to 6 months after the land is sold whereas one must go back to section 177 to understand that that means when the land is first sold.

Next there was, in answer to a question I think from Justice Kiefel, about the words of section 179(1) being that (a) where there is reference to:

the value of the land as so affected by the existence of such reservation –

Two points I wish to make about that. The first is that the use of the words “the existence of such reservation” has a very clear purpose. It is to ensure that compensation is paid only for the fact of the reserve. This has in mind those cases such as Murphy v The Queen. It is not cited, but it is to the effect that the compensation due is only for the addition of the reserve on land that was intended to preserve a turtle rookery, or in Western Australian terms, a case called WAPC v Mt Lawley. But the general proposition is that if there is an underlying attribute of land such as an environmental condition, an environmental value that would preclude development in any event, then compensation is only for the additional loss of value caused by the reserve. It is not for the entire loss of value caused by the combination of the reserve and the turtle rookery. That explains the use of the word “existence”.

The other thing to say about it is to confirm that section 179 acts independently of any these triggers. It takes the value of the land – sorry, the compensation – the maximum entitlement to compensation means the difference between the land as so affected by the existence and not so affected. So, in answer to your Honour Justice Kiefel’s particular question, yes, indeed, that would be just as applicable at the moment after reservation as it would be at the moment of sale or a refused development application. The amount will vary, of course, but not the form of assessment or the relevance of matters going to that assessment.

Next, my learned friend took the Court to what was said by his Honour Justice Callinan in Temwood, at paragraph 172. My friend went back to this point later on. His Honour says that the construction which his Honour prefers “provides a fairer result”. Pausing there, your Honours, it does not appear to have been articulated to the Court or realised by any member of the Court that this construction, preferred by his Honour, will allow in many cases, not all cases – we say all cases – compensation to be granted to a person who has suffered no relevant loss. So this fairness balance exercise by his Honour appears, with respect, to have omitted the major component. His Honour goes on - “It” – that is his Honour’s preferred interpretation:

allows the claim to be made when the true effect of the Scheme becomes known and the full loss is incurred.

Your Honours, we made exactly the same criticism, with respect, of this similar observation made by the Chief Justice, Chief Justice Martin, below. It is self-contradictory, with respect. If the premise is that compensation – I pause to add that we do not accept the premise, but the premise of Justice Callinan and of the Chief Justice below is that somehow or other the idea that compensation is not known or fully felt or not realised such and such until a certain event somehow justifies a purchaser having compensation, the proposition is self-defeating, because the purchaser does not get the land until there has been a sale, and by virtue of the Act the sale is one of those occasions on which the full impact of the reservation becomes apparent.

So it is not logically possible, I say with great respect to both judges, to adhere to the proposition that a purchaser is entitled – or in fairness should be entitled to compensation on this ground. Next, our friend’s point, as was done against us in first instance, that the Act does not use the word “loss” or the word “damages” or any equivalent that is so, we admit, but the structure and the language of Division 2 is plainly, we say with respect, directed at compensating a landowner for something and that something is – at one point called injurious affection to the land which in ordinary language means loss in the value of that land and in section 179 points to the difference between the value of the land as so affected and not so affected. That is, in as many words, a loss to the balance sheet of the owner.

Next, our friends take your Honours to each of the five reasons relied upon by Justices Gummow and Hayne in Temwood at paragraphs 104 and following. The first is the loss in value:

“is less concrete or tangible” –

Your Honours will recall there are various ways of referring to this. “Less concrete or tangible”, we say with respect, is acceptable because that is the point at which the loss fully hits home, I suppose. It has nothing to do with whether its amount becomes apparent or the cause of it becomes apparent.

Their Honours here make little of this except that the loss in value is concrete and tangible upon first sale. It may become concrete and tangible before that on a development application which is refused, but only in the hands of the original owner. The next, 105:

this is confirmed by the Second Reading Speech -

Even if it be admitted that the references by their Honours in the footnote are incomplete we have now supplied to the Court all of those references and repeat our submission that those parliamentary references favour the appellant’s interpretation. Paragraph 106 - this is the precise point that I tried to articulate five minutes ago. Here their Honours are saying that the depreciation:

“becomes real” upon the first to happen –

and that can be no later than at sale. The next I have already dealt with. But there were some observations made by my friend about this paragraph that I wish to address, one of which was that the question – hypothetical question put by my learned friend which is why should government pay no one? Your Honours, that rhetorical question really answers itself. The point of the legislation is to compensate those who had suffered. The point of any compensation provision, whether it be for the land, other injuries, whether it be in this or another court, is always subject to – nearly always subject to a limitation period.

A limitation period comes and goes, no one then asks, well, does the government or the defendant get to pay no one? The answer is of course it does. Why would it be different here? To ask a rhetorical question in reply, why would the government wish, or the Parliament wish, to pay to a purchaser the compensation that has been unjustly lost by the vendor?

KEANE J: Mr Pettit, just in relation to 177(3), I appreciate that it is apparent from the record that the respondents made applications under the planning schemes and so forth so far as 177(3)(b) is concerned. Am I right in thinking there is no suggestion that the step contemplated by 177(3)(a)(ii) occurred?

MR PETTIT: There is no evidence of that one way or the other in the papers, your Honour.

KEANE J: Yes. It is just that compensation is so payable for the purposes of 177(2)(a) only if the arbitrator can be satisfied of 177(3)(a). Unless there is a basis for that happening, compensation could not be payable under 177(2)(a).

NETTLE J: On your analysis it could not be claimable either, could it?

MR PETTIT: We have this to say about the provision. Section 177(1) begins with “Subject to subsection (3)”. Nevertheless, subsection (1) and (2) go on to use the word - not payable, not payable until, and “is payable only once” - use that word in subsections (1) and (2) in the sense which I articulated in opening, that is, because there is no entitlement whatsoever, the word “payable” means becomes able to be claimed and able to be paid. We say that meaning remains.

The effect of the words “Subject to subsection (3)” and then subsection (3) itself are to be read in this way, that notwithstanding – even though for their own purposes subsections (1) and (2) use “payable” in the sense which I have advanced, nevertheless, even after a claim is made the arbitrator has to be satisfied of certain things before it is actually paid. So we say in answer to both your Honours’ questions that the expression in subsection (2) “is payable only once” still retains its meaning of once it becomes claimable and payable once, it is not claimable and payable ever again, and that meaning is unaffected by subsection (3) or the proviso to subsection (1).

NETTLE J: So “payable” in subsection (3) means payable rather than claimable, does it?

MR PETTIT: Yes, it can be paid.

NETTLE J: The same word would be used with two different senses within the one section?

MR PETTIT: It could be framed that way, yes, your Honour.

NETTLE J: It would have to be, would it not?

MR PETTIT: Well, no, your Honour, because the sense in which - the subject matter that is being discussed in (1) and (2) is the coming to life of an entitlement after a statutory deferral period. In that case the subject matter becomes able to be claimed and able to be paid, or even able to be claimed. But in subsection (3) it is an entirely different subject matter. Here the claim has been made and the arbitrator has to be persuaded of three things. In this case, subject to (3), it is simply an injunction upon the arbitrator ruling that payment is to be made without attending to these additional preconditions.

KEANE J: So, when section 177(1) says:

Subject to subsection (3) . . . no compensation is payable –

that means something different from what it means in subsection (3) itself - the word “payable”?

MR PETTIT: The two provisions are pointing to different aspects of “payable”. That is correct, your Honour, yes.

KEANE J: When subsection (2) says:

Compensation . . . is payable . . . and is so payable –

it is to be read as referring back to what is payable under subsection (1)?

MR PETTIT: Yes.

KEANE J: Or under subsection (3)?

MR PETTIT: Under subsection (1). Further, as to my friend’s address on paragraph 107 of Temwood, my friend made several submissions to the effect that the world is a complicated place – reservations will exhibit a vast array of different terms and conditions. In some cases, development approval might be given over reserved land. In other cases, it might not. All of that can be accepted. But none of it overcomes the basic problem for our friend’s construction that whatever the condition of the land when purchased, it will be known. That might be uncertain but that is the time at which both the landowner and the purchaser must make an assessment of what that value is.

KEANE J: But what cannot be known is whether the planning authority will refuse an application for use of the reserved land. I mean, you could make inquiries and you could see how the land lies and so forth, but that is something that can only be established when the application is made in respect of the reserved land. So the effect of that upon value – that is to say, the denial of approval for a use that might be granted consistently with the reservation, that cannot be known until the application is refused.

MR PETTIT: Your Honour, it has to be known otherwise the purchaser could not be compensated. Now, of course there will be uncertainties about what can be done with the land.

KIEFEL J: I think you mean whether the owner could be compensated.

MR PETTIT: I certainly did mean that, if I said something different. Before I begin, it has to be stressed that in the large majority of cases it is simply not true to say that it is unknown what fate will meet a development application. In this case, for example, the land is reserved – foreshore land is reserved for public open space, open reserve. Of course it is not going to be developed for the kinds of development which appear to underlie the claim for $56 million which is close suburban development. Of course it is not going to be supported, unless as your Honour Justice Kiefel said, the reservation is amended or revoked, which takes us out of this whole area.

Admitting for the purposes of argument that there might be occasions when a reserve is made over which a development application might be possible, in that case at the first sale both the parties will have to assess that and come to a price, but if they assess it as they should, because of due diligence – that is what a purchaser ought to do – proper inquiries will show that the reserve is there, fundamentally, they will know that the reserve is there. The legislation takes them to know that the reserve is there. The rest is just the quantification. The quantification might be difficult, but that is no reason to say that because the purchaser got the quantification wrong and paid too much the State should compensate him.

It is a conflation, with respect, of two different propositions and, as I said earlier, the proposition that it might be very difficult to come to a firm decision on the amount of compensation due at first sale, yes, of course, but that does not preclude the valuation being made. Section 183 of the Act requires it to be made and, because it is difficult, makes it required to be made by a board of valuers, and that can occur at any time.

So, with respect to our friends, we say those two points should not be conflated, that rock bottom underlying all of this is simply that the purchaser will know that a reserve is there or is taken under diligence to know that it is there and to pay accordingly and is not – cannot be entitled to compensation on any fair basis.

The last point to be addressed is our friend’s submission about the principle that beneficial legislation should be addressed without unnecessary restriction. All we do in respect of that is to repeat our submissions at our paragraph 49 and we rely on the cases we have cited at our footnote 38 being Victims Compensation Fund v Brown [2003] HCA 54 at paragraph 33 and that was an observation made by Justice Heydon with Justices McHugh, Gummow, Kirby and Hayne all agreeing. To the same point, his Honour Chief Justice Gleeson in Carr v Western Australia [2007] HCA 47 at paragraph 5. They are all to the effect that legislation of this kind strikes a balance between persons affected and other matters and

one cannot use – ought not use that principle in determining all questions of entitlement. Thank you, your Honours.

KIEFEL J: Yes, thank you.

MR JACKSON: May I have leave to give your Honours just a reference?

KIEFEL J: Yes, Mr Jackson.

MR JACKSON: It arises from the question your Honour Justice Keane asked my learned friend a few moments ago about whether there had been any previous claim, I think. Your Honour will see the form of the question of law at page 149 in the primary judge’s reasons – the primary judge’s order, I am sorry – and the concluding words of it, and the reason why it was in that form appears at page 125, paragraphs 12 to 15.

KIEFEL J: The Court reserves its decision in this matter and adjourns until 9.30 am tomorrow for pronouncement of orders and otherwise until 10.15 am.

AT 3.16 PM THE MATTER WAS ADJOURNED