A sunny park

An important decision of the High Court was made on 8 February 2017, when it allowed an appeal against a decision of the Western Australian Court of Appeal on a landowner’s right to claim compensation for the loss in value of land affected by a public purpose reservation.

Southregal Pty Ltd and Mr David Wee together entered into a contract to buy a parcel of land. Prior to settlement of the contract, part of the land was reserved for regional open space under the Peel Region Scheme, a planning scheme made pursuant to the Planning and Development Act 2005 (WA) (PD Act). After settlement, the landowners applied to the Western Australian Planning Commission (WAPC) for approval to develop the land.

The WAPC refused the development application and the landowners submitted a claim for compensation under section 173 of the PD Act, which provides that ‘a person whose land is injuriously affected by the making … of a planning scheme is entitled to obtain compensation’. The WAPC declined each claim on the basis that the landowners did not meet the requirements of section 173. The WAPC asserted that only owners of land at the time the land is reserved, and not subsequent purchasers, are entitled to compensation.

The landowners were successful in the Supreme Court of Western Australia.[1] The trial judge held that section 173 must be interpreted in light of the requirements in section 177(2), which allows for later purchasers to receive payment for the reservation of land. Accordingly, Beech J held that the plain meaning of section 177 gave the owner of land at the date a development application was refused a right to compensation.

On appeal to the WA Court of Appeal, the landowners were also successful.[2] The WAPC argued that when section 177(2)(b) is read in the context of section 173(1), the only persons entitled to obtain compensation under section 177(2)(b) are those who were owners at the date the land was reserved. The landowners argued that the words “owner of the land at the date of application” in section 177(2)(b) would be denied their natural and ordinary meaning if they were to be read as only extending to owners of land at the date of reservation.

However, the High Court allowed an appeal from the Court of Appeal decision.[3]The majority held:[4]

  • section 173(1) confers on the landowner an entitlement to, and identifies who may claim, compensation in the event that land is injuriously affected by the making or amendment of a planning scheme;
  • section 177(1) provides for the point in time at which compensation is liable to be paid. That is either when the land is sold or when the development application is refused or approved with conditions unacceptable to the applicant;
  • once a claim is triggered by one of the events in section 177(1), a later occurrence cannot trigger further claims. In the present case, once the land was sold to the respondents, the refusal of their development applications could not trigger a claim for compensation; and
  • like section 177(1), section 177(2) does not identify persons who may claim compensation. Its purpose is to identify the person to whom payment is made. Section 177(2)(b) ensures that payment is made to the landowner, despite the possibility that it may be a different person making the application for development approval. It is not intended to extend the category of persons entitled to make a claim.

Implications of Southregal

  • The Court did not consider in any detail whether an ‘owner’ includes testamentary or intestate succession, although until this point is clarified it would be safe to assume that the transfer of ownership extends to testamentary or intestate succession of the land.
  • Only an ‘owner’ of land at the date of reservation can claim compensation for injurious affection.
  • The ‘owner’ of land may include ownership obtained through testamentary or intestate succession from the owner at the date of the reservation.
  • Subsequent purchasers of reserved land cannot claim compensation for injurious affection.
  • Owners of reserved land may claim compensation either when they sell the land or when a development application is refused or approved subject to unacceptable conditions.

If you are seeking clarification on your rights to claim compensation, please do not hesitate to contact the team at Glen McLeod Legal.

[1] Leith v Western Australian Planning Commission [2014] WASC 499.

[2] Western Australian Planning Commission v Southregal Pty Ltd & Anor; Western Australian Planning Commission v Leith [2016] WASCA 53; 332 ALR 477.

[3] Western Australian Planning Commission v Southregal Pty Ltd & Anor; Western Australian Planning Commission v Leith [2017] HCA 7.

[4] see Kiefel and Bell JJ at [1] – [56]; Gageler and Nettle JJ at [57]-[95]; C.f. Keane J dissent at [96]-[170].