Financial Securities Pty Ltd v Gold Coast City Council [2015] QSC 130

SUPREME COURT OF QUEENSLAND CITATION: Financial Securities Pty Ltd v Gold Coast City Council [2015] QSC 130 PARTIES: FINANCIAL SECURITIES PTY LTD ACN 119 404 483 (applicant) v GOLD COAST CITY COUNCIL (respondent) FILE NO: No 1912 of 2015 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 18 May 2015 DELIVERED AT: Brisbane HEARING DATE: 16 March 2015 JUDGE: Daubney J ORDERS: 1. The originating application is dismissed. 2. The applicant shall pay the respondent’s standard costs of and incidental to the originating application. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – JURISDICTION AND GENERALLY - GENERALLY – where the applicant sought declaratory relief – where the applicant sought to purchase land from the respondent – where the applicant wants the respondent to invoke a procedure under section 236 Local Government Regulation 2012 to facilitate the sale of land – where the respondent is not presently inclined to invoke the procedure – where the applicant seeks declaratory relief to overcome the respondents refusal to invoke the procedure – whether there is a present, factually-based controversy or dispute between the parties concerning actions taken by the council in relation to the procedure – whether the respondent had set up a barrier to the procedure. Civil Proceedings Act 2011, s 10 Local Government Act 2009, s 4 -- 1 of 21 -- 2 Local Government Regulation 2012, s 216, s 217, s 224, s 227, s 228, s 236 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Bass v Permanent Trust Co Ltd (1999) 198 CLR 334 COUNSEL: C Hughes QC with S Mcleod for the Applicant P Hastie QC for the Respondent SOLICITORS: Thomson Geer Lawyers for the Applicant Norton Rose Fulbright for the Respondent Introduction [1] The applicant owns certain land at Pimpama which it intends to develop as a district level shopping centre. [2] The respondent (“the Council”) owns two lots, described as Lot 5 on RP 911795 (“Lot 5”) and Lot 6 on SP 257481 (“Lot 6”), which adjoin the applicant’s land. Lot 5 and Lot 6 were uncontentiously described in the applicant’s written submissions1 as two elongated parcels of former railway land. Lot 5 and Lot 6 lie between the applicant’s land and the old Pacific Highway, and are separated by a road reserve which enables access from the highway to the applicant’s land. [3] The Council has resolved to dispose of Lot 5 and Lot 6, and the applicant wants to buy the land. The applicant wants the Council to invoke a particular procedure provided for under s 236 of the Local Government Regulation 2012 (“the Regulation”) to facilitate the sale. [4] For the reasons explained below, however, the Council is not presently inclined to invoke that procedure. [5] This application seeks declaratory relief which the applicant argues would have the practical effect of overcoming the Council’s present refusal to invoke the s 236 process. 1 Applicant’s submissions, para 3. -- 2 of 21 -- 3 [6] Before explaining the background in more detail, it is convenient to set out the relevant legislation. Local Government Regulation 2012 [7] Chapter 6 of the Regulation governs contracting by local governments in Queensland. Section 216 provides: “216 What ch 6 is about (1) This chapter is about a local government’s activities for the making of a contract for – (a) the supply of goods or services; or (b) the disposal of non-current assets. (2) However, this chapter does not apply to a local government making a contract of employment with a local government employee.” [8] Chapter 6 Part 2 at s 217 enables a local government to take a “strategic approach” to contracting by adopting contracting plans. If a local government does not take this approach, then the default procedures for contracting by the local government are set out in Chapter 6 Part 3. [9] It was common ground that the provisions of Chapter 6 Part 3 are relevant to the present case. [10] Chapter 6 Part 3 Division 2 commences with s 224 which, relevantly, provides that the division explains “what a local government must do before it enters into … a valuable non-current asset contract” – s 224(1)(c). A “valuable non-current asset contract” is, relevantly, a contract for the disposal of land – s 224(5), (6) and (7)(a). [11] Section 227 limits the means by which a local government may sell land by providing: “227 Valuable non-current asset contract – tenders or auction needed first (1) A local government can not enter into a valuable non-current asset contract unless it first – (a) invites written tenders for the contract under section 228; or -- 3 of 21 -- 4 (b) offers the non-current asset for sale by auction. (2) This section is subject to division 4.” [12] Section 228(1)(b) then sets out a code to be followed for the invitation by a local government of tenders for, inter alia, a “valuable non-current asset contract”. [13] Chapter 6 Part 3 Division 4, however, provides for certain exceptions for valuable non- current asset contracts. Relevant for present purposes are the following provisions in s 236: “236 Exceptions for valuable non-current asset contracts (1) Subject to subsections (2) to (4), a local government may dispose of a valuable non-current asset other than by tender or auction if – … (c) for the disposal of land or an interest in land – … (iv) the land is disposed of to a person who owns adjoining land if – (A) the land is not suitable to be offered for disposal by tender or auction for a particular reason, including, for example, the size of the land or the existence of particular infrastructure on the land; and (B) there is not another person who owns other adjoining land who wishes to acquire the land; and (C) it is in the public interest to dispose of the land without a tender or auction; and (D) the disposal is otherwise in accordance with sound contracting principles; or … (2) An exception mentioned in subsection (1)(a) to (e) applies to a local government disposing of a valuable non-current asset only if, before the disposal, the local government has decided, by resolution, that the exception may apply to the local government on the disposal of a valuable non-current asset other than by tender or auction. (3) A local government may only dispose of land or an interest in land under this section if the consideration for the disposal would be equal to, or more than, the market value of the land or the interest in land, including the market value of any improvements on the land. -- 4 of 21 -- 5 (4) However, subsection (3) does not apply if the land or interest in land is disposed of under subsection (1)(b), (1)(c)(ii) or (1)(f). (5) For subsection (3), a written report about the market value of land or an interest in land from a valuer registered under the Valuers Registration Act 1992 who is not an employee of the local government is evidence of the market value of the land or the interest in land. …” Background [14] In June 2014 the Council resolved, inter alia, that Lot 5 and Lot 6 “ be immediately endorsed for future disposal, subject to pre-disposal ‘optimisation’ as determined by the CEO”.2 [15] On 17 June 2014, the applicant wrote to the Council expressing its interest in purchasing Lot 5 and Lot 6. [16] Correspondence and negotiations between the applicant and the Council then ensued. [17] On 23 July 2014, the applicant offered to purchase Lot 5 and Lot 6 for $250,000. This offer was based on a valuation of the land which the applicant obtained from Mr Kogler, a registered valuer, on 21 July 2014. The applicant gave the Council a copy of this valuation when it made the offer. [18] In the negotiations which followed, the Council made it clear that its expectation as to the purchase price for Lot 5 and Lot 6 was far greater than the amount offered by the applicant, and this position was based on valuations which had been obtained by the Council from Heron Todd White (“HTW”). [19] On 3 November 2014, the Council gave the applicant a copy of an HTW valuation dated 18 September 2014. On its face, this was an update of a previous HTW valuation dated 21 February 2011. The 2014 HTW valuation of the two properties was $2 million. [20] After further correspondence, the Council supplied the applicant with a copy of the 2011 HTW valuation. 2 Affidavit of Brendan Leo Madden (sworn 11 March 2015), para 7, Exhibit BLM-1 page 1. -- 5 of 21 -- 6 [21] On 10 November 2014, the applicant wrote to the Council setting out some commentary on the HTW valuations, and confirmed an offer of $500,000 to purchase the two lots, describing this as a “fair market price”.3 [22] On 10 November 2014, the Council responded in an email which said:4 “As discussed when we met last week, the sale of any Council land must be supported [by] a valuation from a Registered Valuer. We have therefore provided all the further sales information to HTW, and will be catching up with them at their earliest convenience to discuss the matter further. Hopefully we’ll be able to meet with them before the end of this week. We’ll be in touch again once we’ve discussed the matter further with HTW.” [23] On 19 November 2014, the Council sent a further email to the applicant, confirming that it had held discussions with HTW to determine whether supplementary information provided by the applicant would lead to any revision in their valuation. The email continued:5 “After much discussion, [HTW] have concluded that based on our original instructions (see below), the value remains unchanged at $2.0 million. As discussed previously, Council has resolved to sell the land and that the Local Government Act (LGA) requires any sale take place by way of a public auction/tender. The LGA does provide certain exemptions with respect to the sale of land whereby Council can deal ‘in priority’ with an adjoining property owner. However, the ability for Council to deal in priority with an adjoining owner is subject to certain conditions including:  the requirement to obtain an independent valuation which forms the basis for the minimum selling price  the valuation must assume the ‘highest & best use’ for the land being sold is that it forms part of the adjoining site Therefore, whilst your assertions regarding the value of the site on a ‘stand alone’ basis may have some foundation, Council is unable to transact with you at such a value. However, we are not sure that the site value on the open market to a third party is diminished to the extent you assert, as it certainly enjoys good road frontage. 3 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document G. 4 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document H. 5 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document I. -- 6 of 21 -- 7 In the event Council is unable to conclude a negotiation based on a price that reflects the value of the land as part of an amalgamation with your existing site, Council will simply not sell. In such case the land would be retained by Council in its current form. As and when you commence development of your site, and with time the railway station issues get further advanced, we’ll be better placed at that time to look at a disposal by way of tender. In the interim, and assuming we are way too far apart on price to see a sale now rather than later, we’d just ask that you not clear any vegetation nor change any levels on our land as we would not want any disturbance of the onsite materials.” [24] The applicant responded in an email dated 24 November 2014 in which issue was taken with the notion of $2 million being a realistic market valuation. The legislative requirements were noted, and the applicant said:6 “We agree Council does not have to sell the property but it has been made clear to us that it is on the list of properties Council would like to dispose of and we want to purchase it at a fair market price.” [25] On 29 December 2014, the applicant’s solicitors wrote to the Council concerning the negotiations to date. The applicant’s solicitors advised that in November 2014 they had engaged Mr Laurie Hamilton of Taylor Byrne Valuers to undertake a review of the existing valuations. A copy of Mr Hamilton’s valuation report dated 23 December 2014 was enclosed. After some commentary, the applicant’s solicitors referred to Mr Hamilton’s conclusion that the fair market value for the land was a total of $460,000. Noting that their client had previously offered to pay $500,000, the applicant’s solicitors renewed that offer. [26] In relation to the requirements under the Regulation, the applicant’s solicitors noted the exceptions contained in Chapter 6 Part 3 Division 4, and said:7 “However, before the Council can proceed on the basis of the above exception, it must have decided by resolution that the exception applies and that the Council can dispose of its interest in the land without undertaking a tender or auction. We note that the necessary resolution by the Council has previously been made.” (footnotes omitted) 6 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document J. 7 Affidavit of Michael Findlay Marshall (sworn 23 February 2015), Exhibit MFM-01, Document A. -- 7 of 21 -- 8 [27] The Council responded by a letter dated 12 January 2015, in which it said:8 “Firstly, I need to correct a statement in your correspondence “that the necessary resolution by the Council has previously been made”. If, in context, you refer to Council having resolved a position in respect of section 236 of the Local Government Regulation (LGR), in fact Council has only resolved that the subject lots are surplus to Council requirements, not its position on the particular provisions of section 236(1)(c)(iv) which may be pertinent to the subject matter. Accordingly, and consistent with advice given to your client at an earlier meeting on the matter, if the Council is to dispose of its interests in the subject lots to an adjoining owner, an agenda report will need to be prepared for Council consideration and ultimate resolution. I have indicated my preparedness to put the matter to Council as a ‘willing seller’ but as your correspondence correctly suggests, an exemption from complying with tender provisions is at least in part dependent on the consideration for the disposal being “equal to, or more than, the market value of the land” (section 236(3) of the LGR).” [28] The letter from the Council then took issue with a number of comments which had been made critical of the HTW valuations, and made a number of assertions concerning the positive aspects of the property. The letter continued:9 “As your correspondence suggests, Council needs to be (and is) a willing seller of its land and then, give proper consideration to the statutory obligations under which a sale to an adjoining owner can proceed. My current assessment of the matter is that a sale to your client of the subject lots at circa $500,000 would be a windfall to them of significant proportion and thus inconsistent with the public interest and sound contracting principles which are binding on Council. However, as the Pimpama area develops further and Council’s new Planning Scheme comes into effect, I can see significant upside in the value of Council’s land, whether to your clients or another party. Lot 6 alone has a frontage of about 450 metres to Old Pacific Highway and a depth of not less than 25 – 30 metres, all of which is unaffected by flood. Therefore, should your client wish to avail itself of the opportunity of a potential purchase of Council’s land, which as noted above is not a ‘given’ in that Council still needs to resolve its position under section 236 of the LGR, an offer at $2,000,000 (as per HTW valuation dated 18 September 2014) will need to be the subject of a conditional contract which can then form the basis of an early report to Council.” [29] This response effectively brought an end to negotiations. 8 Affidavit of Michael Findlay Marshall (sworn 23 February 2015), Exhibit MFM-01, Document B. 9 Affidavit of Michael Findlay Marshall (sworn 23 February 2015), Exhibit MFM-01, Document B. -- 8 of 21 -- 9 [30] On 23 February 2015, the applicant filed the present originating application seeking the following relief: “1. A declaration, pursuant to s.10 of the Civil Proceedings Act 2011 (Qld) or alternatively the inherent jurisdiction of the Court that in a determination of market value pursuant to s.236(3) and (5) of the Local Government Regulation 2012 (Qld) it is necessary for any valuation to properly take into account: (a) the impact of contamination on the market value of the land; (b) inherent characteristics of the land including: (i) the extent to which the land is flood prone; (ii) the necessity for any development of the land to incorporate a provision for stormwater and flood flow conveyance over the land; and (iii) the existence of any encumbrances including easements or required easements burdening the land; (c) evidence with respect to relevant sales of comparable land. 2. A declaration, pursuant to s.10 of the Civil Proceedings Act 2011 (Qld) or alternatively the inherent jurisdiction of the Court, that the Valuation Reports prepared by Herron Todd White (“the Valuation Reports”) obtained by the respondent for the purposes of s.236(3) and (5) of the Local Government Regulation 2012 (Qld) in respect to Lot 5 on Registered Plan 911795 and Lot 6 on Survey Plan 257481, Pimpama, County of Ward (“the land”) do not represent market value of the land for purposes associated with s.236. Particulars The Valuation Reports failed to properly take into account various relevant considerations for the purposes of providing a written report about the market value of the land, namely: (a) at the direction of the respondent the valuer was instructed not to, and did not, take into account contamination issues associated with Lot 6; (b) that the land is partially flood prone; (c) the necessity for provision of a stormwater and flood flow conveyance channel over the land to be accommodated in any development of the land; (d) the existence of a trunk sewer main along a substantial part of the southern boundary of Lot 6 which is, or is required to be, secured by way of an easement which will be a permanent encumbrance upon the land; and (e) evidence with respect the sale of comparable land, and in particular the sale of adjoining land on 30 September 2014. -- 9 of 21 -- 10 3. Any such other orders as the Court thinks fit. 4. The respondent pay the applicant’s costs of and incidental to the originating application.” The HTW valuations [31] Central to the applicant’s position in the present application is the contention that the HTW valuations, particularly that of 18 September 2014, does not, and cannot, represent “the market value of the land” within the meaning of that term in s 236(3). [32] Mr Hamilton swore an affidavit in this proceeding. His evidence was not challenged by the Council. Mr Hamilton said:10 “5. While it is a matter for the Court, the definition of market value which I have adopted is that usually adopted by Registered Valuers, namely the “estimate amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion”. This definition is drawn from the International Valuation Standards Committee Definition of market value, which has been adopted by Australia Property Institute and Property Institute of New Zealand. 6. In any valuation considering market value it is, as a matter of valuation principle, essential to consider: 6.1 Constraints of the use or development of the land such as those referred to in 7.1 below; and 6.2 All available relevant sales information such as the sale referred to in 7.2 below. 7. In preparing any valuation report in respect of the subject land, in my professional opinion it is essential to consider the matters set out below as part of the assessment of market value of the subject land as they are matters which would have a material impact on the amount a hypothetical prudent purchase would be prepared to pay for the land. These are: 7.1 Constraints on the subject land, including: 7.1.1 Significant contamination (resulting in Lot 6 of the subject land being listed on the Environmental Management Register); 7.1.2 Flooding issues, primarily in the northern portion of the subject land; 10 Affidavit of Lawrence John Hamilton (sworn 20 February 2015), para 5 – 8. -- 10 of 21 -- 11 7.1.3 The necessity for any development of the land to accommodate stormwater and flood water flows; and 7.1.4 A pending sewerage easement in favour of a nearby land owner for the recently constructed sewer main that will burden Lot 6; and 7.2 The most recent “arm’s length” sales evidence with the most recent “arm’s length” sale being the purchase of the property immediately adjoining the subject land. That sale involved a purchase by the Applicant of 84,404m² of land for a total of $5,625,000 (excl GST), at a rate of $66.64/m² (excl GST) from Mirvac Pacific Pty Ltd). 8. I have had the benefit of reviewing two valuations that have been prepared by Herron Todd White with respect to the subject land, dated 21 February 2011 and 18 September 2014 which are exhibited to the Affidavit of Gregory Clifford Rix filed herein. My comments with respect to these two valuations are contained within my own valuation report, attached to this affidavit. In short, in my opinion, due to a failure to consider the factors set out above (noting that the most recent sales evidence was not available in 2011 and may not have been available at the time of the 2014 report), neither of those valuation reports properly assess market value.” [33] In argument before me, the applicant focused particularly on the contamination issue. [34] In that regard, the HTW valuation of 18 September 2014 expressly noted that “part of Lot 6 is known to have landfill contamination”.11 In the conclusion to that report, after adopting a valuation of $2 million, the HTW valuer said:12 “We acknowledge that part of the subject land is known to have landfill contamination. As per advice from the instructing party, the contaminated area would be of no significant detriment to commercial/retail development of the site. As such, we have applied the same pro rata land value to this component. Should advice come to light that this assumption is not accurate, this valuation should be referred back to the Valuer for comment. In most instances, it would be appropriate to discount the value of the contaminated land area.” [35] As against that approach, Mr Hamilton, when performing his valuation, took account of contamination in the following way:13 “Contamination 11 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document C. 12 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document C. 13 Affidavit of Gregory Clifford Rix (sworn 20 February 2015), Exhibit GCR-01, Document C. -- 11 of 21 -- 12 Lot 6 is listed under the Environmental Land Register as being subject to a Notifiable Activity, namely Hazardous Contaminant (arsenic levels) and Landfill. Baden Civil Contracting have advised that to load and haul the contaminated rubbish stockpile from the site would cost in the order of $752,250. The necessity to remove the contaminated rubbish stockpile will be triggered by any application for an Operational Works Approval to clear vegetation or Operational Works Approval to change the ground level. As both these Operational Works Approvals will be required in order for the land to be developed it follows that a cost of $752,250 will have to be included in any budget associated with redeveloping the combined site.” [36] The Council’s “Manager Property Services”, Mr Brendan Madden, took issue with Mr Hamilton’s approach. In an affidavit filed in this proceeding, Mr Madden referred to Mr Hamilton’s approach of allowing $752,250 as a necessary cost of decontamination and said: 14 “27. I do not agree with the assertion that Lot 6 will necessarily be required to be decontaminated. In this regard, I have the view that: (a) whether or not decontamination is required will depend on: (i) the precise extent of the contamination; and (ii) what development is proposed for Lot 6; (b) for example, if a car park is built over the contaminated section of Lot 6, the contamination will not necessarily need to be removed and Lot 6 should be able to be capped instead. (c) any well informed developer would always endeavour to limit development costs in favour of alternative less costly development outcomes. 28. Council has not been provided with a copy of the document where Baden Civil Contracting advised that to load and haul the contaminated rubbish stockpile from Lot 6 would cost in the order of $752,250.” [37] Specifically in relation to the contamination issue, counsel for the Council argued that the assumption by Mr Hamilton that the whole of the land was affected by contamination was of “high factual significance”15 and that, by reference to Mr Madden’s evidence, the assumption may not be correct. It was contended:16 14 Affidavit of Brendan Leo Madden (sworn 11 March 2015), para 27 – 28. 15 Respondent’s submissions, para 21. 16 Respondent’s submissions, para 22. -- 12 of 21 -- 13 “22. In short it cannot be demonstrated that the absence of any discounting because of the contamination is wrong. More importantly, the Court could not determine that because of the manner in which [HTW] approached the issue of contamination that the report does not represent market value.” [38] It is, however, not necessary for me to decide whether the HTW valuations, particularly that of 18 September 2014, represents “market value of the land for purposes associated with s 236”(as referred to in Para 2 of the Originating Application) because, leaving aside the fact that the s 236 procedure has not yet been invoked, the Council itself tacitly concedes that the HTW valuations should not – indeed cannot – be used to provide a market value under s 236. In his affidavit, Mr Madden said:17 “10 Although the Council Land is now on the list for land to be disposed of in the future, there is no urgency for the sale of the Council Land and no immediate need for Council to sell the Council Land. 11 If Council resolved to sell the Council Land in accordance with section 236 of the Local Government Regulation 2012, Council would obtain an up to date valuation of the land at the time that a Council resolution was being sought.” [39] In written submissions, counsel for the Council contended:18 “11. Although a report about the market value of the land is evidence of the market value of the land under s 236(5) of the Regulations, the fact is that there are now a variety of reports (including those provided by the applicant) as to the land and if the Council resolved to sell the Council land obviously it would obtain an up-to-date valuation of the land.” [40] In argument before me, counsel for the Council said: (a) There is nothing to show that the HTW valuations are regarded by the Council as a valuation for the purposes of s 236. Indeed, the opposite applies; the Council “would need a valuation to be done prior to any sale occurring under that Regulation”;19 (b) The valuation reports obtained to date and any material relevant to the use to which the land might be put which would be relevant to a valuation would be put to a 17 Affidavit of Brendan Leo Madden (sworn 11 March 2015), para 10 – 11. 18 Respondent’s submissions, para 11. 19 T 1-17, ll 35-40. -- 13 of 21 -- 14 valuer “at that time so that [the Council] can be confident that it had complied with the Regulation”.20 [41] Recognition that the HTW valuation of 18 September 2014 is not, and will not be, relied on by the Council as an opinion of “market value” of the land for the purposes of any subsequent invocation of the s 236 procedure then necessarily leads to consideration of the primary argument advanced by the Council on this application. Is declaratory relief available? [42] The Council’s primary position was that this application for declaratory relief was misconceived because: (a) the Court is being asked to make declarations with respect to what are essentially matters of evidence for the Council; (b) the legitimacy or otherwise of the HTW valuation is an abstract question. The legislation does not require the Council to “determine” the value of the land, and the Council has not undertaken this task. Any allegation by the applicant that the Council has made such a determination is simply wrong; (c) there is no evidence that the Council will rely on the HTW valuation if the s 236 procedure is invoked; indeed, as discussed above, it is clear that the Council will not rely on the HTW valuation. [43] The applicant, however, pointed to the fact that the HTW valuation of 18 September 2014 was being relied on by the Council as an effective barrier to the potential application of the s 236 procedure. In that regard, it will be recalled that the Council’s final letter of 12 January 2015 concluded by saying:21 “Therefore, should your client wish to avail itself of the opportunity of a potential purchase of Council’s land, which as noted above is not a ‘given’ in that Council still needs to resolve its position under section 236 of the LGR, an offer at $2,000,000 (as per HTW valuation dated 18 September 2014) will 20 T 1-18, ll 12-16. 21 Affidavit of Michael Findlay Marshall (sworn 23 February 2015), Exhibit MFM-01, Document B. -- 14 of 21 -- 15 need to be the subject of a conditional contract which can then form the basis of an early report to Council.” [44] Counsel for the applicant referred to the “local government principles” articulated in s 4 of the Local Government Act 2009. Section 4(1) provides: “Local Government Principles underpin this Act (1) To ensure the system of local government is accountable, effective, efficient and sustainable, Parliament requires – (a) anyone who is performing a responsibility under this Act to do so in accordance with the local government principles; and (b) any action that is taken under this Act to be taken in a way that – (i) is consistent with the local government principles; and (ii) provides results that are consistent with the local government principles, in as far as the results are within the control of the person who is taking the action.” [45] “Local government principles” are defined in s 4(2) to include: “(a) transparent and effective processes, and decision-making in the public interest; and … (d) good governance of, and by, local government; and (e) ethical and legal behaviour of councillors and local government employees.” [46] It was argued that the Council, through its officers in their dealings with the applicant, was not properly applying the legal requirements of the Regulation in assessing market value, to the detriment of the applicant, and that the application of s 236 between the Council and the applicant had reached an impasse which required the intervention of the Court. -- 15 of 21 -- 16 [47] In Ainsworth v Criminal Justice Commission,22 Mason C.J., Dawson, Toohey and Gaudron JJ said (omitting citations):23 “It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which “[i]t is neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise”. However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have “a real interest” and relief will not be granted if the question “is purely hypothetical”, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen” or if “the Court’s declaration will produce no foreseeable consequences for the parties.”” [48] Whilst, as has been observed in a leading text,24 an important feature of the declaratory judgment is that it is a flexible and discretionary remedy, the mere fact that the Court has the power to grant declaratory relief does not provide a universal panacea. The power to make a declaration is exercisable only in circumstances where: (a) there is a real question for the Court to answer, in the sense that there is a particular degree of connection between the law and the facts; and (b) the declaration to resolve the dispute is real, in the sense of not being purely hypothetical.25 [49] In Bass v Permanent Trust Co Ltd,26 the High Court of Australia had before it a case which had originated in the Federal Court. The proceedings essentially involved a contention that, in promoting a particular scheme to assist people to purchase homes, a number of parties, including the State of New South Wales, had engaged in conduct contrary to the Trade Practices Act 1974. Wilcox J at first instance formulated six questions which were to be heard separately and before any other question in the proceeding. These questions were then referred to the Full Court of the Federal Court for its consideration. The parties raised no objection to the questions formulated by Wilcox J or to their reference to a Full Court. The appellants then appealed to the High Court of 22 (1992) 175 CLR 564 at 581 – 582. 23 At 581-582. 24 Zamir & Woolf “The Declaratory Judgment” (4th ed) (Sweet & Maxwell, 2011). 25 See Meagher, Gummow & Lehane’s “Equity Doctrines & Remedies” (5th ed, 2015) at [19-155] – [19-165]. 26 (1999) 198 CLR 334. -- 16 of 21 -- 17 Australia from the answers given in four of the questions and the consequential orders made by the Full Court. [50] Several of the questions were posed by reference to “the matters pleaded in the amended statement[s] of claim and the material contained in the agreed bundle of documents”.27 As the plurality in the High Court observed,28 the Full Court noted that there was some doubt as to the status of those documents but said they provide some general background about the scheme and the roles of the parties. The Full Court also noted that there was no agreed statement of facts, no findings of fact had been made, and it was not possible for the Full Court to make any such findings. [51] Against that background, under which the Full Court had answered the questions posed and made consequential declarations, the plurality in the High Court made the following observations:29 “45 The purpose of a judicial determination has been described in varying ways. But central to those descriptions is the notion that such a determination includes a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy. In R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd,30 Kitto J said: “[J]udicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons … [T]he process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which … entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist.” 46 Similarly, Professor Borchard in his pioneering work, Declaratory Judgments31 stated: “A judgment of a court is an affirmation, by the authorized societal agent of the state … of the legal consequences attending a proved 27 At [43]. 28 At [43]. 29 At [45] to [49]. 30 (1970) 123 CLR 361 at 374. 31 (1934), pp 6-7. -- 17 of 21 -- 18 or admitted state of facts. It is a conclusive adjudication that a legal relation does or does not exist. The power to render judgments, the so-called ‘judicial power,’ is the power to adjudicate upon contested or adverse legal rights or claims, to interpret the law, and to declare what the law is or has been. It is the final determination of the rights of the parties in an action which distinguishes the judgment from all other public procedural devices to give effect to legal rights.” (Footnotes omitted.) 47 Because the object of the judicial process is the final determination of the rights of the parties to an action, courts have traditionally refused to provide answers to hypothetical questions32 or to give advisory opinions. The jurisdiction with respect to declaratory relief has developed with an awareness of that traditional attitude. In In re F (Mental Patient: Sterilisation)33, Lord Goff of Chieveley said that: “a declaration will not be granted where the question under consideration is not a real question, nor where the person seeking the declaration has no real interest in it, nor where the declaration is sought without proper argument, eg in default or defence or on admissions or by consent.” By “not a real question”, his Lordship was identifying what he called the “hypothetical or academic”34. The jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law and such a declaration will not be hypothetical in the relevant sense. Barwick CJ pointed this out in The Commonwealth v Sterling Nicholas Duty Free Pty Ltd35. However, that is not the present case. 48 It is true that some have seen the use of the declaratory judgment as little more than the giving of an advisory opinion36. However, one crucial difference between an advisory opinion and a declaratory judgment is the fact that an advisory opinion is not based on a concrete situation and does not amount to a binding decision raising a res judicata between parties. Thus, the authors of one recent text on declaratory judgments37emphasise that, where the dispute is divorced from the facts, it is considered hypothetical and not suitable for judicial resolution by way of declaration or otherwise. They say38: 32 Luna Park Ltd v The Commonwealth (1923) 32 CLR 596 at 600, per Knox CJ; Australian Commonwealth Shipping Board v Federated Seamen’s Union of Australasia (1925) 36 CLR 442 at 451, per Isaacs J; University of NSW v Moorhouse (1975) 133 CLR 1 at 10, per Gibbs J. 33 [1990] 2 AC 1 at 82. 34 In re F [1990] 2 AC 1 at 82. The New South Wales Court of Appeal (Mason P, Sheller and Powell JJA) in Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73 set aside a declaration on the ground that it dealt with a hypothetical question. 35 (1972) 126 CLR 297 at 305. 36 Foster, “The Declaratory Judgment in Australia and the Unites States”, Melbourne University Law Review, vol 1 (1958) 347, at p 373. 37 Zamir & Woolf, The Declaratory Judgment, 2nd ed (1993). 38 Zamir & Woolf, The Declaratory Judgment, 2nd ed (1993), p 132. -- 18 of 21 -- 19 “If … the dispute is not attached to specific facts, and the question is only whether the plaintiff is generally entitled to act in a certain way, the issue will still be considered theoretical. The main reason for this is that there may be no certainty that such a general declaration will settle the dispute finally. Subsequent to that declaration a person (the defendant himself or someone else) may be adversely affected by a particular act of the plaintiff. It may then be doubtful whether this act is covered by the declaration. In such a case the affected person will probably be entitled to raise the issue again on its special facts. Indeed, such a declaration will in effect be a mere advisory opinion.” 49 As the answers given by the Full Court and the declaration it made were not based on facts, found or agreed, they were purely hypothetical. At best, the answers do no more than declare that the law dictates a particular result when certain facts in the material or pleadings are established. What those facts are is not stated, nor can they be identified with any precision. They may be all or some only of the facts. What facts are determinative of the legal issue involved in the question asked is left open. Such a result cannot assist the efficient administration of justice. It does not finally resolve the dispute or quell the controversy. Nor does it constitute a step that will in the course of the proceedings necessarily dictate the result of those proceedings. Since the relevant facts are not identified and the existence of some of them is apparently in dispute, the answers given by the Full Court may be of no use at all to the parties and may even mislead them as to their rights. Courts have traditionally declined to state – let alone answer – preliminary questions when the answers will neither determine the rights of the parties nor necessarily lead to the final determination of their rights. The efficient administration of the business of courts is incompatible with answering hypothetical questions which frequently require considerable time and cause considerable expense to the parties, expense which may eventually be seen to be unnecessarily incurred.” (emphasis added.) [52] The fundamental hurdle faced by the present applicant is that there simply is no present issue between the parties. The provisions of s 236 have not been invoked – there has been no resolution passed by the Council under s 236(2). [53] Having regard to the principles stated above, that means that the declaration sought by paragraph 1 of the originating application would be, at best, an answer to a hypothetical question or, at worst, a form of advisory opinion. The relief sought amounts to nothing more than some general advice as to the matters which a notional valuer ought take into account when performing a valuation under s 236(3) and (5). A fortiori in the present case in which, to the extent that the seeking of a declaration in those terms was premised -- 19 of 21 -- 20 on the possible use of the HTW valuations for that purpose, the Council has expressly disclaimed such use. [54] The second declaration sought is similarly hypothetical, and in any event is unnecessary in light of the Council’s effective concession that the HTW valuations cannot be used as evidence of the market value of the land under s 236(5). [55] It is clear enough that it cannot be said that there is a present, factually-based controversy or dispute between these parties concerning actions taken by the Council under s 236. [56] It is equally clear, however, that the catalyst for the institution of this proceeding was the erection by the Council of an effective barrier to the s 236 procedure by requiring submission of an offer of $2 million (based expressly on the HTW valuation of 18 September 2014) before there would even be consideration within Council of the availability of the s 236 procedure. [57] It may be that, by erecting this effective barrier in express reliance on a valuation which the Council itself now concedes will not be relied on for the purposes of determining the market value of the land, the Council and/or its relevant officers have failed to act in ways consistent with the statutory “local government principles”.39 That, however, is not the basis on which the present proceeding was brought or argued, and it is neither necessary nor appropriate for me to express a view as to the cogency or potency of such an argument. It goes without saying that whether the Council and its officers take advice on such issues is completely a matter for them. [58] Given my conclusions as to the relief sought in the originating application, it necessarily follows that the application must be dismissed. [59] Accordingly it will be ordered: 1. The originating application is dismissed. 39 See [44] and [45] above. -- 20 of 21 -- 21 2. The applicant shall pay the respondent’s standard costs of and incidental to the originating application. -- 21 of 21 --