A purchaser of land in WA injuriously affected by a
planning scheme reservation can't apply for compensation if the
reservation existed before they bought the land.
In a recent decision, the High Court has settled a controversy
that it generated 14 years ago through the split judgments in the
The High Court upheld the Western Australian Planning
Commission's appeal that injurious affection compensation for a
planning scheme reservation is not available to subsequent
Under the Planning and Development Act 2005 (WA), any person
whose land is injuriously affected by the making or amendment of a
planning scheme is entitled to obtain compensation from the
responsible authority. No compensation is payable until:
the land is first sold following the date of reservation;
a development application for that land is refused or granted
subject to unacceptable conditions.
Compensation is payable only once.
The Planning Act refers separately to compensation being
received by the person who was the owner of the land at the date of
reservation, and the owner of the land when a development
application is made.
In Western Australian Planning Commission v Southregal Pty Ltd
 HCA 7, the High Court considered whether the owner at the
date of the development application could be a subsequent
purchaser. By a 4:1 majority, the High Court found that once land
is sold following its reservation, only the original owner could
Why the High Court agreed with the Planning Commission
The respondents contended that (as compensation had not been
paid to the original owners) compensation was payable to them as
the land owners impacted by development applications being
The majority, in agreeing with the Planning Commission,
A subsequent purchaser does not fall within the description of
a person whose land is affected "by the making" of a
Purchasers are aware of the scheme provisions at the time of
purchase and are therefore not at the same disadvantage as the
Compensation for the value reducing effect of the reservation
would have been available to the previous owner at the point of
Factoring injurious affection compensation into your future
As the law currently stands in Western Australia, prospective
purchasers of land in Western Australia will not be entitled to
compensation for any land they acquire that has been reserved for a
public purpose. Being alert to this and reflecting any reduced
development potential into the purchase price is critical.
The potential for legislative change remains, although it's
unlikely given that the High Court has resolved the controversy in
the State's favour, and (as the High Court noted) the
controversy could have been, but was not previously been clarified
by the WA Parliament.
It's still unclear, however, if compensation can be claimed,
in respect of a development application, by a subsequent owner who
obtained title through inheritance.
If you intend to develop reserved land, our Environment and
Planning team can help assess any entitlement to claim
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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If an owner wants to remove a caveat, issuing a lapsing notice is a quick and easy way to shift the problem to the caveator.
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