The High Court has allowed an appeal against a decision of the Western Australian Court of Appeal on the availability of compensation for landowners affected by a public purpose reservation. The respondents were in the process of purchasing a parcel of land when it was made subject to a public purpose reservation under pt 4 of the Planning and Development Act 2005 (WA), which prevented the respondents from developing the land without the appellant Commission’s approval. The appellant refused that approval, and the respondents then claimed compensation under pt 11 div 2 of the Act, s 173 of which provides that ‘a person whose land is injuriously affected by the making … of a planning scheme is entitled to obtain compensation’ for that injurious affection. The appellant then declined each claim on the basis that none of the respondents fitted the requirements of s 173 because only owners of land at the time a planning scheme is made or amended, and not subsequent purchasers, are entitled to compensation. The trial judge and Court of Appeal held, however, that s 173 must be interpreted in light of the requirements in s 177(2), which allows for later purchasers to receive payment for land reservations. Section 173 must therefore take on a meaning other than its plain reading, and the respondents were entitled to compensation.

The High Court allowed the appeals by majority, in two joint judgments (Kiefel and Bell JJ and Gageler and Nettle JJ).

After noting the contents of the relevant statutory provisions ([3]ff), Kiefel and Bell JJ discussed two lines of authority in Planning Commission (WA) v Temwood Holdings Pty Ltd [2004] HCA 63, which dealt with substantially equivalent provisions in the context of a dispute over whether a planning commission could validly impose a condition on the approval of a development, requiring the developer to cede a portion of the site to the Crown free of cost and without compensation (see at [12]). In that case, Gummow and Hayne JJ concluded the developer was not entitled to compensation, McHugh J and Callinan J held it was, and Heydon J held that the issue did not arise (at [13]). Kiefel and Bell JJ stated that the divergence between Gummow and Hayne JJ and McHugh J was that (at [17]ff):

Gummow and Hayne JJ were of the view that the equivalent of s 177(1) is to be construed by treating the deferral of the entitlement to payment as terminated upon the first of the three events to occur. Once one of the three events triggered a claim for compensation, the later occurrence of the two remaining events could not trigger a further claim. On this construction, because the land in question in these proceedings was first sold to the respondents by persons who owned the land at the date of reservation, the respondents are not able to claim compensation.

McHugh J, on the other hand, saw the insertion of the equivalent of s 177(2)(b) as having changed the category of persons who could claim compensation (at [18]ff), which meant that s 173(1) could no longer be read as confining the persons entitled compensation, and giving effect to s 177(2)(b) required that it apply to a subsequent owner (see [23]ff). Whereas the lower courts adopted the approach of McHugh J (see [26]), Kiefel and Bell JJ tended towards the approach of Gummow and Hayne JJ in construing pt 11. While s 173 provides for an entitlement to compensation, it does not say that the entitlement is payable on the event of reservation; instead, s 177 provides a disjunctive set of points at which compensation may be triggered, and, following the approach by Gummow and Hayne JJ, once one of those triggers is activated, the occurrence of the other two events cannot trigger a further claim: ‘in the present case, since the land has been “first sold” to the respondents, the refusal of their development application cannot trigger a further claim’ (at [33] and see the rejections of the respondents’ submissions at [34]ff). Kiefel and Bell JJ the noted that s 177(2) is not concerned with identifying who may claim compensation, but rather identifies to whom the payment is to be made, namely, to the owner (at [42]ff). ‘Nothing in the provisions of Pt 11 suggests that a subsequent purchaser of land, rather than its owner at the time of the reservation, was to be a claimant for compensation. The references to “first sold” and “payable only once” point the other way’ (at [45]), and no statements of legislative intention around the insertion of “only once” suggest this was a major change leading to the construction taken up by the lower courts (see [46]ff and especially [49]ff).

Gageler and Nettle JJ also held that s 177(2) only afforded a right of compensation to the owner of land and not to a subsequent purchaser. Noting also the constructional choice in Temwood (at [63]), Gageler and Nettle JJ held that the history of the legislation, its predecessor statute, and the extrinsic materials indicate — contrary to the suggestion from s 177’s sub-sections’ references to an owner at the date of reservation and an owner at the date of application — that it is not the purpose of the provision to suggest that the owner at the date of application could be a person other than the owner at the date of reservation (at [68]). After examining that history (see [69]ff), Gageler and Nettle JJ noted that it was unlikely that the amendments sought to introduce this distinction (see [81]), particularly because they did not purport to effect any such fundamental change to the central concept in the predecessor compensation scheme (see [82] and [90]). That provision made the owner of the land at the date of reservation the only person entitled to claim compensation (se [93]), and as the statue in the present case consolidated the earlier related statutes, s 177(2)(b) holds the same operation as that earlier provision (see [94]).

Keane J dissented, agreeing with the decisions of the lower courts, and stating that their answer best accords with the settled approach to the construction of compensation for injurious affection statutes (see [125]) and also with the text, context and purpose of pt 11: at [128]. Keane J accepted the respondents’ argument that the temporal operation of s 173 cannot be interpreted without attention to the provisions that inform its meaning and practical operation (including s 177, see [133]ff). Keane J noted that the appellant’s contentions that s 177(2)(b) should not operate literally relied on the submission that s 173 ‘controlled’ s 177 (at [136]). Keane J rejected that argument: s 173 is explicitly ‘subject to’ pt 11 (at [142]). Turning to the text, context and purpose of s 177, Keane J concluded that s 177’s purpose was to identify events upon which compensation is to be payable, and the first person to satisfy the requirements of the section was the person to whom the compensation is payable: ‘It is not only the owner of the land at the date of reservation who can satisfy the requirements of s 177(3)’, and the context and purpose of s 177 do not alter that conclusion (at [149], and see [144]ff and [170]).