Majority of High Court finds against Western Australian landowners in compensation case

The High Court by a majority of 4:1 has today ruled that purchasers of reserved land are never entitled to claim compensation for injurious affection under the Planning and Development Act 2005 (WA) (Western Australian Planning Commission v Southregal Pty Ltd [2017] HCA 7).

The decision overturns the decisions of four Supreme Court judges in previous decisions of the Court of Appeal and the Supreme Court (general division) in this matter, all of whom found in favour of the landowners.

Justices Keifel and Bell in their joint judgment and Justices Gageler and Nettle in their separate joint judgment all appeared to place a degree of reliance on the potential practical outcomes associated with extending compensation rights to purchasers of reserved land. The majority also appeared to give a detailed analysis in relation to the convoluted and intricate legislative history, which they contended demonstrate an intention on the part of Parliament to confine compensation entitlements to original landowners at the date of reservation. The West Australian judges however had held that the legislative history was too inconclusive to be useful.

Justice Keane offered the only dissenting judgment and found that on a strict reading of the legislative provisions, a person who purchases reserved land may be entitled to claim compensation, given the relevant statutory criteria are met. The conclusions of Justice Keane reflected the approach of the Western Australian Supreme Court judges.

The High Court decision places a restrictive interpretation on the already highly qualified and limited rights to compensation afforded by the legislation. The High Court also noted that the State had not undertaken legislative change to clarify the position, despite the divided opinion of the High Court upon the same issue in the case of Temwood Holdings1 in 2004. The WAPC has flagged an intention to introduce legislative amendments that will further reduce the scope of compensation rights for owners.

The effect of the High Court decision may even impact on the rights of the original owners in that the owners’ right to claim after the sale of the land may be extinguished if the owner had made an earlier development application – and had failed to claim compensation if the development application was refused by the planning authority or made subject to unacceptable conditions.

The WAPC now routinely imposes conditions on structure planning proposals and subdivision applications to require the giving up of reserved land without compensation, which effectively means the owners concerned have to waive any compensation rights to obtain these approvals. Existing Court authorities hold that the WAPC can lawfully impose such requirements on subdivision and other applications. Through such methods the WAPC has been highly successful in acquiring large tracts of reserved land without paying any compensation.

All owners of land affected by planning reservations should be concerned as to the potential effect of this decision on their compensation rights. The High Court decision now makes clear that it is only the original owner at the time of reservation who is entitled to claim and then only where one of the trigger events (first sale or frustrated development application) has occurred. These issues have to be considered by an owner of affected land as there are risks that compensation rights will be lost, and the advice on their options should be sought from specialists in the area of compensation.

If you want to discuss these concerns further, please contact the Planning, Environment and Land Compensation team at Lavan.

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.
Paul McQueen
General Counsel Partner
Craig Wallace
Alex McGlue
Special Counsel
Land Compensation
Planning, Environment & Land Compensation

[1] Western Australian Plannning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30