Four of the five justices of the High Court held that the owner of land purchased after the date of reservation of the land under a planning scheme is not entitled to compensation for injurious affection, with respect to the existing reservation, under the Planning and Development Act 2005 (WA) (PD Act), where no compensation has previously been paid.
The only situation in which a subsequent owner of reserved land may be entitled to compensation under the PD Act is if there is an alteration to the existing reservation or an imposition of another reservation.
Southregal Pty Ltd, Mr Wee and Mr Leith (Owners) purchased land already affected by a reservation under the Peel Region Scheme. Under that scheme, the land has been reserved for a public purpose – regional open space. The Owners subsequently applied to develop the land. The applications for development approval were refused due to the reservation. The Owners applied to the WAPC for compensation for injurious affection under the PD Act – Southregal and Mr Wee claimed $51.6 million in compensation (they paid $2.6 million for their land) and Mr Leith claimed $20 million in compensation (he paid $1.28 million for his land). The compensation claims were refused.
The High Court reversed the unanimous decision of the Court of Appeal of the Supreme Court of Western Australia, which had upheld the decision of a primary judge of the Supreme Court.
The High Court interpreted the language of the PD Act and the legislation it replaced. Notwithstanding that:
- the language of section 177 of the PD Act makes reference to a claim for compensation being payable in the case of, amongst other things, a refusal of a development application; and
- compensation in such an instance is stated to be payable to “the person who was the owner of the land at the date of [the development] application” – without expressly limiting compensation being payable only if that person was also the owner of the land at the date of reservation,
the Court was of the view that section 177 did not extend the category of persons who could make a claim for compensation beyond the class of persons set out in section 173(1) of the PD Act. This is because the Court considered section 173(1) of the PD Act to be the provision which provides for an entitlement to obtain compensation and that that provision only entitles the owner of the land, at the time the land was reserved, to obtain compensation.
The Owners were not entitled to compensation because they did not own the land when it was reserved.
Whether you are proposing to buy or proposing to sell land, it may be prudent to check whether it is subject to a reservation under a planning scheme and the date on which that reservation came into effect.
If you are selling land subject to a reservation that came into effect during your ownership, you may have an entitlement to compensation. Be sure to give notice to the responsible authority of your intention to sell the land, sell the land in good faith and take all reasonable steps to obtain a fair and reasonable price for the land. Before compensation is payable, the person determining the amount of compensation must be satisfied, amongst other things, of these matters.
If you are purchasing land subject to a reservation, be sure to factor any potential impact of the reservation on the value of the land into the purchase price. You will not be entitled to make a claim for compensation for the existing reservation.
If you are proposing to develop land subject to a reservation that came into effect during your ownership, be sure to lodge a claim for compensation if your development application is refused or granted subject to unacceptable conditions as a result of the reservation. A claim in such case will only be allowed if the person determining the amount of compensation is satisfied that your development application was made in good faith.
If you consider that you are affected by a reservation under a planning scheme and want to know your rights, please contact us.