COUNCIL OF THE MUNICIPALITY OF KOGARAH v SOUTHERN SYDNEY AREA HEALTH SERVICE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, HANDLEY and SHELLER JJA 28 August 1992, 9 October 1992 [1992] NSWCA 47 RESUMPTION — road vested in Council in fee simple resumed for benefit of Area Health Service — compensation — whether Council entitled to market value or reduced compensation because resumption by Crown. CROWN — statutory corporation subject to Ministerial control — statute provides that it does not represent the Crown — whether corporation is nevertheless Crown but not entitled to Crown immunity. A road vested in the Council was resumed by the Governor under the Public Works Act for the Southern Sydney Area Health Service. The Council claimed compensation based on market value. The authority claimed that under s233(5) of the Local Government Act the compensation was reduced because the road had been resumed by the Crown. The Area Health Services Act provided that an area health board was subject to Ministerial control, but also provided that an area health service did not represent the Crown. The Land and Environment Court held that the Council was not entitled to market value. On appeal — Held: dismissing the appeal 1. The land had been resumed by the Crown for the purposes of s233(5). 2. The land had also been resumed by the Crown because the resumption was effected by the Governor under the Public Works Act, and the fee simple became vested in the health service in trust for the Crown. 3. Semble (per Clarke and Handley JJA) the Health Service being subject to Ministerial control was the Crown although not entitled to the immunities of the Crown. Clarke and Handley JJA Chapel Street, Kogarah, was until August 1989 a public road within the meaning of Pt9 of the Local Government Act 1919 ("the Act") which ran through the grounds of St George Hospital. The respondent desired to have the road resumed in order to incorporate it into the St George Hospital complex. In due course the resumption was effected by a notification in the Government Gazette on 16 August 1989. That notification read: "AREA HEALTH SERVICES ACT 1986 - PUBLIC WORKS ACT 1912 ACQUISITION OF LAND AT KOGARAH FOR THE PURPOSES OF THE AREA HEALTH SERVICES ACT 1986 It is hereby notified and declared by His Excellency the Governor acting on the advice of the Executive Council that pursuant to the provisions of s28(2) of the Area Health Services Act 1986 so much of the land described in the Schedule hereto as is Crown land is hereby appropriated, and so much of the said land as is private property is hereby resumed under the Public Works Act, 1912 for the purposes of the functions of the Southern Sydney Area Health Service as provided in the Area Health Services Act, 1986 and the said land is vested in the Southern Sydney Area Health Service". Prior to the resumption the fee simple in Chapel Road was vested in the appellant pursuant to s232 of the Act. Once the resumption had been effected the appellant sought compensation from the respondent. It was not disputed that the appellant was entitled to compensation but a dispute arose between the parties as to the amount of compensation to which the appellant was entitled. It claimed 2 UNREPORTED JUDGMENTS that as the owner in fee simple it was entitled to compensation pursuant to s45 of the Public Works Act 1912 assessed in accordance with the principles laid down in Spencer v The Commonwealth of Australia (1907) 5 CLR 418. The respondent contended that the compensation to which the appellant was entitled should be a much lower sum assessed pursuant to s233(5) of the Act. Cripps J found in the respondent's favour and it is from his decision that the appeal is brought. The question to be determined is whether the road was "resumed by the Crown" within the meaning of that expression where used in s233(5) of the Act. That subs reads: "(5) Where any public road is resumed by the Crown the council shall be entitled to claim compensation therefor. Such compensation shall be limited to the capital sum expended by the council upon the construction of the road together with the sum, if any, paid by the council for the purchase or resumption of the land therefor, together with the capital sum expended by the council in providing and constructing, laying, suspending, or otherwise placing upon, under or over the road, for or in connection with any water, sewerage or drainage works, or any trading undertaking, of the council, any pipes, tunnels, poles, wires, cables or structures which, at the time of the resumption by the Crown were owned and used by the council for or in connection with any such works or trading undertakings: Provided that where any such pipes, tunnels, poles, wires, cables or other structures can reasonably continue to be used by the council for or in connection with any such works or trading undertakings, no compensation shall be payable in respect of such pipes, tunnels, poles, wires, cables or other structures. Where the council finds it necessary to purchase or resume other land for, and to construct, a new road to replace that resumed by the Crown the council may in lieu of compensation as aforesaid claim as compensation the cost of the purchase or resumption and of the construction of such new road, together with the cost of providing upon, under or over such road all such necessary pipes, tunnels, poles, wires, cables or structures required to provide services similar to those owned and used by the council in the road resumed by the Crown; and in such case the compensation when paid shall be placed in the trust fund until it is expended on such new road and services." The appellant's argument is that the words "by the Crown" in the first line of s233(5) are important and demonstrate that the provisions of the subs are to apply only in the event that a resumption is effected for the benefit of the Crown or one of its agencies. According to the argument it is the purpose of the provision to ensure that local councils are not enriched at public expense for the loss through resumption of what may be regarded as public property. It is then said that this purpose is served if s235 operates in the case of resumptions for the benefit of the Crown or one of its agencies but has no role to play when a resumption is effected for the benefit of an organisation or authority which is not, and does not represent, the Crown. If this were not correct, so the argument goes, an authority which is not, and does not represent, the Crown would be wrongly enriched because it will not have to pay for the land resumed at its full value. In the alternative it is submitted that s233(5) of the Act is a provision restrictive of what would otherwise be the appellant's rights to compensation upon resumption and should be construed strictly so as not to derogate more from those rights than a "jealous interpretation" will allow (Board of Fire Commissioners of New South Wales v Ardouin (1961) 109 CLR 105 at 116). UWRQUNCIL OF THE MUNICIPALITY OF KOGARAH v SOUTHERN SYDNEY AREA HEALTS: SERVICE (Clarke and Handley JJA) Both submissions assume that the respondent is not "the" Crown, or "the State" and it is not self evident that this assumption is correct. The respondent is a body corporate established pursuant to s5, s7 and s11 of the Area Health Services Act 1986 ('the Health Act"). By s12 and s13 the affairs of an area health service are controlled by the area health board for that service. S14 provides for relevant purposes that an area health board is subject to the control and direction of the Minister. Nevertheless s11(1)(e) provides that an area health service "does not represent the Crown". Parliament has thus created a statutory corporation which is a servant or agent of the Crown because it is subject to Ministerial direction (see Prospect County Council v Blue Mountains City Council (Court of Appeal, 11 September 1992, unreported)) but has provided that it shall not be entitled to Crown immunity. A State Parliament may validly legislate in this way but nevertheless the area health service may still constitute "the State" for the purposes of the Commonwealth Constitution including s75(iv). See Deputy Commissioner of Taxation v State Bank of New South Wales (1992) 66 ALJR 250 at 253-4. On one view therefore the area health service may be the Crown although not entitled to Crown immunity. In view, however, of our conclusions on the appellant's submissions it is not necessary to express a final view on this question. In our opinion the appellant's submissions should not be upheld. Prior to the introduction of the Act in 1919 the interest in a public street which vested in a local council, under for instance, s67 of the Sydney Corporation Act, did not give to that council a right to claim compensation when the road was resumed (Municipal Council of Sydney v Young (1897) 18 NSWLR 44 and on appeal (1898) AC 357). That was of course changed by the passing of the Act. However, the Act did not merely vest the fee simple in a public road in the relevant local council but in s233(2)-S233(4) and S233(7) brought into existence specific provisions dealing with the property and other rights of the council in the public road. By subs(5) it provided for compensation to the local council upon resumption of that road. That compensation, putting it broadly, was to be limited to the cost of acquisition of the land and the construction of the road and allied works unless the council found it necessary to acquire other land and to construct a new road to replace the one that had been resumed by the Crown. In the latter event the Council was to be entitled to claim the cost of acquisition of the land and of the construction of the new road and allied services. The scheme thus provided in respect of the resumption of public roads was, as it seems to us, a sensible one which ensured that local councils were reimbursed in one or other of the two ways specified and not put in a position where they could claim compensation in the same way as could the owner in fee simple of private land and thereby, possibly, make a profit from its ownership of the public road. Accordingly, we do not think there is any room in this case for the operation of the principle in Ardouin's case. This was not a case where a right had been vested in a local council which was taken away by a later statute. On the contrary the legislative provision vesting the fee simple of public roads in the local council also contained the specific provision whereby those councils were to be compensated in the event that a public road was resumed. Although it is possible that the legislature intended that the compensation would be assessed in accordance with the provisions of s233(5) of the Act in a limited class of cases and upon another, and more generous, basis in the event that the authority for whom the land was resumed was not, and did not represent, 4 UNREPORTED JUDGMENTS the Crown it would seem to us that it is highly unlikely that such a consequence was intended given that the provision relating to compensation (s233(5)) was enacted at the same time, and in the same part, as the provision vesting the fee simple in public roads in the local councils. Nonetheless, the appellant submits that the reference to resumptions by the Council in the latter part of s233(5) is to be contrasted with the opening words of the subs as demonstrating that the words "by the Crown" had the limited ambit for which it contends. This argument seems to us to emphasise the form rather than the substance. What the latter part of s233(5) is dealing with is the occasion when a public road which is vested in a council is resumed in circumstances in which the council deems it necessary to provide a replacement road. It is, accordingly, directing attention to an alternative form of relief available to the council to which reference is made in s233(5) immediately following the words "by the Crown". In these circumstances we do not think that the legislature intended to limit the ambit of the phrase "by the Crown" or to ascribe any particular importance in the interpretation of that phrase to the later use of the words "the council". In our view each reference to the council in that subs is a reference to the body which is entitled to claim compensation assessed in one of the two ways set out in the subs Although in 1919 it may not have been accurate to speak about a council resuming land (at that time s536 provided the machinery for resumption by councils which involved the Minister for Public Works appropriating or resuming the land by the procedure described in the section) the recognition that at that time local councils could not resume land only serves to emphasise that the legislature was not seeking to limit the occasions when compensation were to be calculated in accordance with s233(5) to those in which the resumption was on behalf of an authority which was, or which represented, the Crown. The preferable explanation is that the legislature found it convenient to use the word "resume" in the last paragraph of s233(5) rather than the, perhaps, more accurate phrase "apply for the resumption of". Read in this way the section presents as a cohesive whole in which provision is made for compensation to a council which by virtue of s232 held an interest in fee simple in the public roads in the municipality. We would conclude, therefore, that s233(5) applies and that it is not of consequence that the authority on whose behalf the land is resumed does not represent the Crown. There are other ways of approaching the problem which lead to the same result. S28(1) of the Act provides that an area health service, with the approval of the Minister, may acquire land by resumption. subs2 provides that for the purposes of such an acquisition the Governor may resume the land under the Public Works Act 1912 and subs3 provides that the resumption shall be deemed to be for an authorised work and the health service shall, for such purposes, be deemed to be the constructing authority. The subject land was resumed under the Public Works Act by Gazette notification on 16 August 1989. S43(1) of the Public Works Act then in force provided, so far as relevant: "Upon the publication of such notification in the Gazette, the lands described... in such notification shall forthwith be vested in the Constructing Authority on behalf of His Majesty for the purpose of this Act for an estate in fee simple in possession... to the intent that the legal estate therein... shall be vested in the Constructing Authority as a trustee." In our opinion this road was resumed by the Crown for the purposes of s233(5) of the Local Government Act because: \WRQUNCIL OF THE MUNICIPALITY OF KOGARAH v SOUTHERN SYDNEY AREA HEALTH SERVICE (Sheller JA) (a) The resumption was effected by the Governor on the advice of the Executive Council, and (b) the resumed land was vested in the health service in trust for the Crown. It follows the provision in s11 of the Area Health Services Act 1986 to the effect that the respondent "does not represent the Crown" is a matter which does not bear on the appellant's right to compensation. That is to be assessed under $233(5). The appeal should be dismissed with costs. Sheller JA This is an appeal from a decision of Cripps J sitting in the Land and Environment Court dated 21 November 1990. It concerns the method of assessing the compensation payable to the appellant council as the result of the resumption of land which was a public road within the meaning of Pt8 of the Local Government Act 1919 and vested in it in fee simple pursuant to s232 of that Act, as then in force. $233(5) as then in force, which is set out in the joint judgment of Clarke and Handley JJA, which I have had the benefit of reading, limits the compensation payable to a council when such a public road is "resumed by the Crown". The notice and circumstances of the resumption are found in the joint judgment and there is no need for me to repeat them. The respondent area health service submitted successfully before Cripps J that the resumption answered the description in s233(5) and that the compensation payable was limited accordingly. The appellant council appealed on the basis that his Honour was in error, that the resumption fell outside the purview of the subsection and that compensation should be determined by reference to s45 of the Public Works Act 1912 and Spencer v The Commonwealth (1907) 5 CLR 418. The contest between the parties turned upon whether or not the resumption was one "by the Crown" within the meaning of the subsection. The respondent South Sydney Area Health Service is an area health service constituted by s5 of the Area Health Services Act 1986. S11(1) of that Act provides, so far as material: "An area health service: (e) does not represent the Crown." We were referred to various parts of that Act which by reference to the control and direction vested in the Minister of Health (s14), the powers of the Governor to remove any members or all members of an area health board and appoint an administrator (s18(1)), and the public nature of the objectives and functions of the service might suggest that, subject to s11(1)(e), an area health service is the Crown within the meaning of s233(5) of the Local Government Act or an emanation of the Crown. For present purposes I am content to accept, in favour of the appellant's argument, that the service is neither. I do not think it necessary for us to decide whether it is or is not. S27 and s28 of the Area Health Services Act, so far as material, provide as follows: "27. (1) An area health service may do all or any of the following things: (a) purchase or otherwise acquire, and use, land or any other property (whether or not the land or other property is required for the purposes of any hospital or other health service under the control of the area health service); (2) An area health service shall not: (a) acquire land by purchase, lease or exchange; 6 UNREPORTED JUDGMENTS without the approval of the Minister. 28. (1) An area health service may, with the approval of the Minister, acquire land for the purpose of the exercise of its functions by resumption or appropriation in accordance with this section. (2) For the purposes of the acquisition of land under subs(1), the Governor may, under the Public Works Act 1912: (a) resume any land; or (b) appropriate any land vested in Her Majesty or in any person in trust for Her Majesty. (3) A resumption or appropriation effected in accordance with subs(2) shall be deemed to be for an authorised work within the meaning of the Public Works Act 1912 and the area health service concerned shall, in relation to that authorised work, be deemed to be the Construction Authority within the meaning of that Act." S28 provides that the service may acquire land "by resumption....in accordance with this section", and for the purpose of such acquisition the Governor may resume the land "under the Public Works Act 1912". As a matter of language it is tolerably plain that when, pursuant to s28, an area health service acquires land by resumption, it is the Governor who "resumes" the land, not the service. This accords with the scheme of PtS of the Public Works Act 1912 "METHODS OF ACQUISITION OF LAND" Division 1 "The acquisition of land by Gazette notification", as then in force, which provided, relevantly, in 42, s43 and s45 as follows: "42. For the purpose of carrying out any authorised work, if the Governor directs that any land required for such work shall be taken under this Division of this Act, he may by notification to be published in the Gazette and in one or more newspapers published or circulated in the police district wherein is situated the land the subject of such notification declare that the land described in such notification has been appropriated (if Crown land) or resumed (if private property) for the public purpose therein expressed. An abstract of the land so appropriated or resumed, together with the purpose for which the same is required shall in every case be laid before Parliament, if in session at the date of such notification, within seven days after its publication in the Gazette; and if not, then within fourteen days after the commencement of the next ensuing session. 43. (1) Upon the publication of such notification in the Gazette, the lands described or referred to in such notification shall forthwith be vested in the Constructing Authority on behalf of His Majesty for the purpose of this Act for an estate in fee simple in possession, freed and discharged from all trusts, obligations, estates, interests, contracts, charges, rates, rights of way, or other easements whatsoever, and to the intent that the legal estate therein, together with all powers incident thereto, or conferred by this Act, shall be vested in the Constructing Authority as a trustee. 45. (1) The estate and interest of every person entitled to lands resumed under this Division of this Act or any portion thereof and whether to the legal or equitable estate therein shall by virtue of this Act be deemed to have been as fully and effectually conveyed to the Constructing Authority as if the same had been conveyed by the persons legally or equitably entitled thereto by means of the most perfect assurances of the law. (2) Every such estate and interest shall, upon the publication of such notification as aforesaid be taken to have been converted into a claim for compensation in pursuance of the provisions hereinafter contained. \WRQUNCIL OF THE MUNICIPALITY OF KOGARAH v SOUTHERN SYDNEY AREA HEALTH SERVICE (Sheller JA) (3) Every person shall upon asserting his claim as hereinafter provided and making out his title in respect of any portion of the said resumed lands be entitled to compensation on account of such resumption in manner hereinafter provided." When acquisition is by resumption the land vests in the Constructing Authority "on behalf of Her Majesty for the purpose of this Act for an estate in fee simple in possession.. and to the intent that the legal estate therein, together with all powers incident thereto, or conferred by this Act, shall be vested in the Constructing Authority as a trustee. " The resumption by the Governor with the advice of the Executive Council (s14 of the Interpretation Act 1987) is an act of the Crown meaning thereby the Government of the State; Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) (1955) 93 CLR 376 at 393. The land vests in the "Constructing Authority", in this case the area health service (s28(3) of the Area Health Services Act), as trustee for the Crown. The council sought to avoid this conclusion by pointing to the contrast in s233(5) between a resumption by the Crown and a resumption by a council. When the Local Government Act was passed in 1919 s233(5) was in different, but, for present purposes, not significantly different form, to that with which we are concerned. At that time s536 of the Act provided: " (1) Where the council proposes to acquire land by appropriation or resumption it may apply to the Governor through the Minister. (2) The council shall make provision to the satisfaction of the Governor for the payment of compensation for the land together with interest and all necessary charges for expenses incidental to the appropriate or resumption. (3) The Governor may authorise the appropriation of resumption of the land. (4) Thereupon the Minister for Public Works may; (a) appropriate or resume the land by Gazette notification under Division 1 of Pt5 of the Public Works Act, 1912; and (b) notify that the land is vested in the council. (5) Thereupon the land shall vest in the council." The argument on behalf of the council was that even though the Minister of Works "resumed" the land this resumption was described in s233 (5) as a resumption by the council. Accordingly it was said that the expression "resumed by the Crown" in the subsection must be given a meaning more restricted than it would otherwise have and not such as to extend to the resumption with which we are concerned. I do not think the meaning of the expression is so restricted. When subs(5) speaks about the council's finding it necessary to "resume" a new road it means by "resume" no more than that the council may set in train processes found elsewhere for a resumption to take place. In my opinion the appellant's argument is not advanced by looking at the Local Government Act in the form it took when enacted. Subsequent amendments to s536 and the insertion of s536A, sections ultimately repealed in 1991, enabled, at the time with which we are concerned, a council to cause land to be vested in it by publication in the Gazette of a notice of resumption without any intervention by the Crown beyond the approval of the Governor. Such a procedure is distinct from that provided for by s28 of the Area Health Services Act; it was not a resumption by the Crown. The amended section gives no support to the argument that in the present case the land was not resumed by the Crown within the meaning of s233(5). I agree that the appeal should be dismissed with costs. Appeal dismissed with costs. UNREPORTED JUDGMENTS Counsel for the Appellant: DF OFFICER QC and JA AYLING Instructed by: ABBOTT TOUT RUSSELL KENNEDY Counsel for the Respondent: WR DAVISON and CJ WHITELAW Instructed by: BARTIER PERRY PURCELL