On 24 March 2016 the Court of Appeal of the Supreme Court (headed by Chief Justice Wayne Martin) handed down a judgment (Western Australian Planning Commission v Southregal Pty Ltd and Leith [2016] WASCA 53) confirming on appeal the decision of a single judge (Beech J) holding that purchasers of land reserved for public purposes may be entitled to claim compensation if the original owner has not previously been paid compensation. The Court of Appeal dismissed the WAPC’s appeal against Beech J’s judgment and is a major win for the claimants who have been seeking compensation from the WAPC for the effects of the reservation of their land for many years.
The affirmation by the Court of Appeal of Beech J’s decision has clarified the issue of whether purchasers of land affected by a reservation under a planning scheme may be entitled to claim compensation for injurious affection to the land arising from the effect of reservation. There had been considerable uncertainty over the issue since 2004 when a divided High Court handed down judgment in the case of Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 (Temwood).
The WAPC has, since the Temwood decision (in line with the views of two High Court judges in the Temwood case) maintained that compensation is not claimable by an owner who was not the original owner at the time the land was reserved, and has consistently rejected such claims.
In the Southregal/Leith case the claimants had purchased properties which were partly reserved for Regional Open Space (ROS) purposes under the Peel Region Scheme in 2003. Each claimant sought to develop the reserved areas and made applications for development approval for their respective properties, both of which were refused by the WAPC on grounds that the areas were reserved for public purposes. Each claimant made claims for compensation for injurious affection as a result of the WAPC refusal. The WAPC rejected each claim on basis that neither of the claimants was the owner of the land at the time it was reserved for a public purpose, and that compensation under the Planning and Development Act 2005 (PDAct) was only available to persons who owned the land at the time of the reservation.
The claimants consequently commenced the Supreme Court proceedings for a determination as to whether they were entitled to make the claims for compensation. On 23 December 2014, Beech J delivered his decision which upheld the arguments made by Lavan Legal on behalf of the claimants and found that the PDAct allowed a subsequent owner to make a claim for compensation after a development application was refused (if compensation has not previously been paid). Beech J’s decision affirmed that there were two alternate rights to compensation, both by the original owner at the time of reservation and (if compensation has not previously been paid) by a subsequent owner.
The WAPC appealed against the decision of Beech J to the Court of Appeal. The three members of the Court of Appeal (Martin CJ, Newnes JA and Murphy JA) unanimously upheld Beech J’s findings that there were two alternative rights to compensation. After reviewing the differing opinions of the High Court judges in Temwood, the Chief Justice Wayne Martin CJ commented that given the division of opinion in Temwood, it is perhaps surprising that the State legislature did not move to clarify its intention either when the PDAct was passed in 2005, or some time thereafter.
Q&A
A - If you were not the original owner at the time of reservation, the right to compensation may only arise if you have made a bona fide application for development approval over the reserved area, and the application is either refused by the WAPC or approved but made subject to conditions that are unacceptable to the applicant. The refusal or other unacceptable conditional approval is seen as a trigger event that crystallises the loss, which can then be claimed for.
A - Although you are entitled to apply to the SAT to review the decision of the WAPC, there is no requirement for a SAT application to be made and determined before a claim for compensation is lodged.
A – The standard procedure after compensation is paid to the original owner is for a notification to be lodged on the title of the property by the WAPC, notifying that compensation for injurious affection has been paid. If compensation has been previously paid, then no right to claim compensation arises thereafter.
A – The WAPC is required, within 3 months of the claim being lodged, to elect whether or not to purchase the reserved land in lieu of compensation. If the WAPC elects to purchase, the purchase price is determined either by negotiated agreement, or failing agreement by one of the methods prescribed (application to SAT, private arbitration or other agreed method)
If the WAPC elects that it will not purchase the land, the claim is to be determined by private arbitration under the Commercial Arbitration Act 2012. Before determining the claim, the arbitrator must first be satisfied that the development application that triggered the claim was made in good faith, ie made with the genuine intention by the owner to carry out the development.
A – A subdivision application is not the same as an application for development approval under the relevant planning scheme, and the refusal of a subdivision application or imposition of conditions on a subdivision approval do not trigger any right to claim compensation for injurious affection.
A – The prevailing view, based on past High Court decisions, is that it is within the power of the WAPC to impose such a condition, if the condition satisfies three criteria (the so-called Newbury test) as follows:
A dissatisfied owner can request reconsideration by the WAPC, or can apply for review proceedings in the State Administrative Tribunal to review the objectionable condition and have it set aside. Alternatively it is open for an owner to apply for judicial review of the WAPC decision by the Supreme Court; such proceedings are, however, not a merits- based review and are limited to administrative law grounds as to the validity of the decision (ie the Newbury test).
