Court affirms owners' rights to claim compensation over reserved land

Lavan Legal has won a landmark case for landowners in a recent decision of the Supreme Court which has clarified the rights of owners of reserved land to claim compensation for injurious affection pursuant to s 178 of the Planning and Development Act 2005 (WA) (PD Act), by affirming that it is not only the original owner at the time the reservation was made that can make a claim but also can extend to a subsequent owner who purchased the land after the reservation was made.

On 23 December 2014, His Honour Justice Beech delivered his decision in Leith v Western Australian Planning Commission [2014] WASC 499 (Leith case) upholding the arguments made by Lavan Legal on behalf of the Plaintiffs in conjoined proceedings (Trevor Leith, Southregal Pty Ltd and David Wee) that the PD Act allowed a subsequent owner of reserved land to claim compensation in certain circumstances.

In particular, Beech J held that the compensation provisions set out at s 178(1) of the PD Act gave rise to two independent alternative rights to compensation for injurious affection being in favour of:

  • the owner of the land at the date of reservation after the land is first sold; or
  • the owner of the land at a date a development application is made and refused (or granted subject to unacceptable conditions) who may be either the original owner or the subsequent owner of the land.

Beech J affirmed the Plaintiffs’ rights to make a claim for compensation in circumstances where the properties concerned had been sold following the date of reservation (for Regional Open Space under the Peel Region Scheme), and where no compensation had previously been paid.

There had been considerable uncertainty over the years as to the nature of the compensation rights of owners, and in particular whether a subsequent owner purchasing reserved land after the reservation was made, could make a claim for injurious affection.  The High Court was divided over the issue in Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 (Temwood case).  In the Temwood case two High Court Judges (Gummow J and Hayne J) concluded that a purchaser who required the land after reservation under the relevant planning scheme in that case (the Metropolitan Region Scheme) had no entitlement to compensation for injurious affection. 

Two other High Court Judges (McHugh J and Callinan J) delivered separate reasons in which they both came to a contrary conclusion.  The fifth Judge of the High Court, Heydon J, expressed no view on the question.  For over 10 years since the Temwood case, the Western Australian Planning Commission (WAPC) has consistently rejected claims for injurious affection made by subsequent owners of reserved land, in line with the views of Gummow J and Hayne J in theTemwood case.

The decision in the Leith case, however, has rejected the WAPC’s position, and affirms that there are two alternate rights to claim compensation, both by the original owner and (if compensation has not previously been paid) a subsequent owner of the reserved land.

The Leith case now squarely raises the issue as to whether the position taken by the WAPC over the last 10 years to reject all claims by subsequent owners of reserved land has been justified.  All owners of land affected by public purpose reservations under a region planning scheme (the Metropolitan Region Scheme, the Greater Bunbury Region Scheme and Peel Region Scheme) or other planning schemes should review their potential rights in light of the decision in the Leith case.

In the discussion paper for the Review of the Planning and Development Act 2005 (WA), dated September 2013, the Department of Planning indicated an intent to limit the entitlement to claim compensation to only the original owner of the land at the time the land was reserved.  The WAPC may possibly proceed to amend the legislation, notwithstanding the findings of His Honour Justice Beech in the Leith case.

In view of the possibility that the State Government may initiate legislative amendments in the near future all owners of land which are affected by public purpose reservations, or have previously sought to deal with the WAPC over their potential compensation rights, should carefully review their potential entitlements and seek legal advice.

Lavan Legal is a leader in the area of land compensation law and has one of the largest legal teams focussing on this area in WA.  If you wish to get legal advice on your potential compensation rights arising as a consequence of this judgement please contact Paul McQueen on 9288 6943 or Brian McMurdo on 9288 6893 to discuss.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.