Alan Francis Croghan v Hawkesbury City Council (5 June 1998)

[1998] NSWLEC 3

Land and Environment Court

of New South Wales

CITATION:	ALAN FRANCIS CROGHAN v. HAWKESBURY CITY COUNCIL (5 June 1998) [1998] NSWLEC 3
PARTIES:	Applicant: Croghan, A.F. Respondent Hawkesbury City Council
FILE NUMBER(S):	30199 of 1995
CORAM:	Bignold J
KEY ISSUES:	:-
LEGISLATION CITED:	Land Acquisition (Just Terms Compensation) Act 1991 Land and Environment Court Act 1979: s69A Public Works Act 1912 Land Clauses Consolidation Act (1845)
CASES CITED:	Hieronymous v Minister for Education (29 June 1989 per Hemmings J; J H Sharpe & Others v Forbes Shire Council (11 June 1992 per Stein J; Astron Properties Pty Limited v Department of School Education (7 October 1993 per Bannon J; Spencer v The Commonwealth (1907) 5 CLR 418; Housing Commission of NSW v San Sebastian Pty Limited (1978) 140 CLR 196; Latimer v North Coast National Agricultural and Industrial Society (1938) 14 LGR 30 ; Inland Revenue Commissioner v Clay (1914) 3 KB 466; Purden v Minister for Lands and Works (1966) 19 ; Phillipou v Housing Commision of Victoria (1969) 18 LGRA 254; Glass v Commissioner of Inland Revenue (1915) SC 449
DATES OF HEARING:	26 February 1998 Hearing 17 March 1998 Applicant's written submissions 25 March 1998} Respondent's written submissions 29 April 1998 }
DATE OF JUDGMENT:	06/05/1998
LEGAL REPRESENTATIVES:	Mervyn J Cathers Abbott Tout

JUDGMENT:

Table of Contents

A Introduction 2

B The “Adjoining Owner Influence” 5

C The Applicant’s Claim to Removal Expenses 29

D Interest on Compensation 30

E Costs 33

F Conclusions and Orders 34

IN THE LAND AND Matter No. 30199 of 1995
ENVIRONMENT COURT OF Coram: Bignold J.
NEW SOUTH WALES 5 June 1998

ALAN FRANCIS CROGHAN

Applicant

v.

HAWKESBURY CITY COUNCIL

Respondent

JUDGMENT


Bignold J :

a. Introduction

This is an objection pursuant to s66(I) of the Land Acquisition (Just Terms) Compensation Act 1991 (the Just Terms Act) against the amount of compensation offered to him by the Council in respect of the compulsory acquisition of land owned by the Applicant by Notice of Compulsory Acquisition (published in Government Gazette No. 86 of 14 July 1995 (the Notice)).

The Notice stated that the purpose for acquiring the land was “disposal of treated effluents”.

The compulsorily acquired land was comprises 4 adjoining or adjacent lots having an aggregated area of 48.413 hectares situate on the immediate outskirts of Windsor and fronting Windsor Road at McGraths Hill.

Most (that is some 40 hectares) of the aggregated area of the land is situated on the southern side of Windsor Road, there being a small area situate on the opposite side of that road. One of the lots so acquired (Lot 1 in Deposited Plan 59708) is said in the Notice to contain an area of 9.712 hectares. However part of that land comprising some 2 hectares was resumed in 1974 by the then Department of Main Roads. When this part of the Lot is disregarded for the purpose of the Notice, that part of the said Lot that was effectively compulsorily acquired from the Applicant, (now known as Lot 1 in Deposited Plan 656975) contains an area of 7.683 hectares.

At the outset of the hearing the parties informed the Court that subject to one matter (presently to be mentioned) agreement had been reached between the parties as to the market value of the compulsorily acquired land, namely a value that reflected the rate of $11,000 per hectare. Applying this rate to the totality of the area of the compulsorily acquired land produced a market value of $532,543.

This agreement on the relevant market value was subject to the adjudication of one matter upon which the parties were in dispute, namely the question of whether there should be added to that amount an additional amount said to represent the consequence of the Council, as the compulsory purchaser, being an adjoining owner of the compulsorily acquired land. The Applicant’s valuer, Mr Robertson, considered that this factor (which I shall hereafter refer to as “the adjoining owner influence”) would cause the market value of the compulsorily acquired land to be increased. He estimates the increase in the value of 10 percent above the amount of the market value that had been agreed upon by the parties. The valuers called by the Council, Mr Wood and Mr Gleeson, disagreed with Mr Robertson’s opinion. Hence in the present case the Court’s task of determining the value of the compulsorily acquired land is limited to an adjudication upon this one disputed matter.

As the case proceeded further agreements were reached between the parties concerning other matters that had originally been in dispute. These matters were:
(i) an agreement that there was an additional value of $5,000 in the acquired land by virtue of there being in existence at the date of compulsory acquisition a footpath traversing much of the length of the land which had been constructed by the Council some little time before that date; and
(ii) an agreement that the Applicant was entitled to the additional sum of $30,230 (as detailed in Exhibit 5) representing the costs of disbursements incurred by the Applicant in acquiring the replacement property: vide s59(d) and (e) of the Just Terms Act.

As a consequence of the foregoing agreements made by the parties, the only matters requiring adjudication are the following:
(i) whether there should be an increase in the agreed amount of market value by virtue of the “adjoining owner influence”;
(ii) the Applicant’s claim to an amount of $7,000 representing his costs of removing agricultural plant and equipment from the land to his property situate at Dubbo;
(iii) interest on compensation; and
(iv) costs of the proceedings.

I shall deal with each of these matters seriatim.

B. The “Adjoining Owner Influence”.

It is not in dispute that as of the date of compulsory acquisition the Council owned land adjoining the Applicant’s land, namely that part of the compulsorily acquired land that is situate on the southern side of Windsor Road adjoins the Council’s existing Sewerage Treatment Plant at McGraths Hill (the STP). The relationship between the adjoining land is shown on the copy of the location map annexed to Mr Gleeson’s valuation report (Exhibit B). I have annexed hereto a copy of that map to which I have added hatching showing the approximate dimensions of the compulsorily acquired land.

Mr Robertson’s valuation report (Exhibit 4) includes the following explanation for including an additional 10 percent over the market value he had assigned to the compulsorily acquired land:


“…assuming Council was not resuming the subject property (ie the status quo before resumption) it was open to the proprietor or intending purchaser of the subject land to come to a commercial arrangement with Council for the disposal of treated effluent on the subject property as a means of irrigating the property.


It was public knowledge that Council had to find a suitable method of disposing of the effluent from the sewerage treatment plant and as such this opportunity existed as at the date of resumption.


For the purpose of assessing compensation I have to ignore the public purpose proposed for the resumed land. I do not however have to ignore the fact that the resuming authority was the adjoining owner and that prior to resumption the adjoining land owner had an urgent need to dispose of this treated effluent.


Prior to resumption a commercial arrangement between the two property owners would have been a “win-win” situation for both parties. I acknowledge however that no such arrangement was in place at the date of resumption or had been discussed between the parties to my knowledge most likely because Council has resolved to use its power of acquisition to enable long term control of the site rather than negotiate an arrangement with the owner of the adjoining land.


It is clear from Council’s records that Council’s proposed development of the subject land that Council had a wider agenda for the usage of the resumed land other than for the “disposal of effluent” as descried in the notice of resumption.”

Mr Robertson’s report then cited three decisions of this Court in support of his opinion that there should be an additional allowance in determining the market value of the land by virtue of the fact that the Council was an owner of adjoining land, the use of which, required additional land for expansion. The three decisions (which are all unreported) are:
(i) Hieronymous v Minister for Education (29 June 1989 per Hemmings J);
(ii) J H Sharpe & Others v Forbes Shire Council (11 June 1992 per Stein J); and
(iii) Astron Properties Pty Limited v Department of School Education (7 October 1993 per Bannon J).

Documentary evidence (Exhibit 1) tendered by the Applicant indicates that from 1981 and 1982 the then State Pollution Control Commission was expressing concerns with the reception into the waters of South Creek (which forms an extensive boundary of the compulsorily acquired land and of the adjoining Council land used for the McGraths Hill STP) of treated effluent from the Council’s STP. By letter dated 11 July 1986 the State Pollution Control Commission had given the Council notice that the Commission was considering amending the effluent discharge licence then held by the Council to prohibit discharge of treated effluent into South Creek waters and instead to substitute a system of land irrigation. By letter dated 27 August 1991 the Council advised the State Pollution Control Commission that it was now proposing to recycle all treated effluent from its McGraths Hill STP and that it had engaged consultants to advise on the methods and location of disposal.

On 1 February 1994 the Council’s General Purpose Works Committee resolved to adopt a system of land irrigation of treated effluent from the McGraths Hill STP and that negotiations be undertaken with the owners of lands comprising an area of some 57 hectares situated to the north of the Council’s land for the purchase of such lands by the Council.

It should be noted that the Applicant owned almost the entire area of the lands identified by the Council for the purchase. (Indeed it may be inferred that he owned all of the land so identified.) The Council’s proposal involved more than simply acquiring these lands for spray irrigation of effluent from the STP. Rather there was in existence a Plan of Management “showing proposed development of the properties to achieve total utilisation of treated waste water effluent from the plant, enhancement of the environment with the extension of wetlands and planting of tree lots, and enhancement of the Windsor township approach from McGraths Hill” (Exhibit 1).

Soon thereafter the Council entered into negotiations with the Applicant to purchase his lands (Exhibits 1, 7 and 8). However these negotiations proved inconclusive leading the Council on 10 April 1995 to serve notice pursuant to Part 2 of the Just Terms Act of its intention to acquire the Applicant’s land by compulsory process (Exhibit 9). I should also note that on 8 January 1993 Elders Real Estate acting on behalf of the Council had offered to purchase the Applicant’s lands for the sum of $650,000: Exhibit 6.

This documentary evidence entirely supports Mr Robertson’s opinions that prior to the date of compulsory acquisition it was well known that the Council “had to find a suitable method of disposing of the surplus effluent from the sewerage treatment plant” and the Council “had an urgent need to dispose of its treated effluent”.

Documentary evidence also establishes that the Council’s problem of the disposal of effluent from the McGraths Hill STP was known to involve an overall development of the Council’s lands and of the adjoining lands which the Council had identified to purchase which contemplated an “integrated reuse and wetland system” with objectives of:


“minimising effluent discharge to South Creek and optimising reuse whilst meeting EPA requirements.


Improve the visual amenity of the entrance to Windsor through enhancement of natural environment.


Provide an economic return whilst minimising management costs.


Provide and improve floodplain wetlands, South Creek riparian zone and other potential habitats;


Provide a passive recreational resource; and


Maximise educational and research opportunities.”

Although I have taken the foregoing description of the overall development concept from a document prepared by the Council after the date of compulsory acquisition ( Exhibit 2 being a document styled “Improving Our Environment - McGraths Hill Effluent and Reuse Wetlands Project” dated 2 February 1996) the essential elements of that concept had been contemplated by the Council well before the date of compulsory acquisition. eg. the minutes of the Ordinary Meeting of the Council held on 8 November 1994: Exhibit 8 .

In his brief oral testimony Mr Robertson elaborated on his opinion that an additional value of 10 percent over market value was justified in the present case because of the known facts of the Council’s need to change its method of disposal of treated effluent from the McGraths Hill STP by adopting the land irrigation method of disposal and of the Council’s obvious and keen participation in the market to acquire the property. He described the additional element of value as forming part of the market value of the land as being in the nature of a premium for securing, or guaranteeing, acquisition of land and by the Council rather than by any other purchaser. He did not have any particular sales evidence to support his opinion but he adhered to it, as a phenomenon inherent in the market place, and hence in the concept of “market value”, which was applicable in the present case by the clearly known fact that the Council was very keenly interested in the acquisition of the property.

In the course of cross-examination it was put to Mr Robertson that the known keen interest of the Council to acquire the land rendered it an “anxious buyer” and hence took it outside the concept of “willing but not anxious buyer” (originally propounded in the classic formulation in the judgment of the High Court of Australia in Spencer v The Commonwealth (1907) 5 CLR 418, but now statutorily mandated by s56(1) of the Just Terms Act). Although Mr Robertson suggested that there was some element of anxiety in all purchases made by adjoining owners, when pressed he agreed that the Council’s interest in purchasing the land probably placed it in the position of being an anxious purchaser. Nonetheless he maintained his position that the Council’s interest as an adjoining owner, in acquiring the subject lands did not violate the limits of “market value” contained in s56(1) of the Just Terms Act.

Opposing Mr Robertson’s opinion were the opinions of Mr Gleeson and Mr Wood (who, like Mr Robertson, are highly experienced valuers). Mr Gleeson (who is a valuer in the Penrith Office of the State Valuation Office) prepared a valuation report in reply (Exhibit C) to Mr Robertson’s valuation report in which Mr Gleeson disputes Mr Robertson’s opinion based on the “adjoining owner influence” in the following passage at page 4:


“ In determining the total market value, Mr Robertson has included an amount equivalent to 10 percent of the properties’ value which he concludes that the acquiring authority should pay because they are adjoining owners. Such an assessment is precluded by s56(1)(a) of the Land Acquisition (Just Terms) Compensation Act 1991 which states that any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired should be disregarded .”

In his brief oral testimony Mr Gleeson stated that the Council, as an interested purchaser of the subject land, would be regarded as an “anxious purchaser” and hence not satisfying the “market value” test propounded by s56(1) of the Just Terms Act .

He acknowledged that there was recognised in the valuation industry a rule of thumb of 10 percent above market value factor for adjoining owner influence, but opined that whether in the given case such a factor was present would depend upon the analysis of the state of the sale transaction. In the present case he saw no justification for increasing the market value by a 10 percent factor.

Under cross-examination Mr Gleeson admitted that in his valuation report he had not referred to the fact (of which he had become aware post resumption) that the Council’s interest in acquiring the subject land had been broader than the sole purpose of the land irrigation of the treatment of effluent from the McGraths Hill STP.

Mr Wood also prepared a valuation report in reply (Exhibit E) to Mr Robertson’s report, and at page 3 disputes Mr Robertson’s opinion of the 10 percent premium factor in the following statement:


“I do not consider that an added premium should be paid because of an adjoining owner (Hawkesbury Shire Council) purchase. I consider the principle in the Raja’s case to be appropriate. “Even when the only possible purchaser of the land is an authority with compulsory powers, the arbitrator must find the price that would be paid by a willing purchaser to a willing vendor of the land with its potential in the same way as he would were there several possible purchasers.” In fact there could be a depreciating factor because of its proximity to the treatment plant.”

In his oral testimony Mr Wood elaborated on what he had said in his report in reply by expressing the opinion that the Council was anxious to acquire the subject land and on that account it was doubtful whether it satisfied the Spencer test of “willing but not anxious” purchaser. He expressed the opinion that the offer made on behalf of the Council in January 1993 to purchase the subject land for $650,000 ( Exhibit 6 ) was above market value. He gave as an additional reason for his opinion that the Council, despite its obvious interest in acquiring the land, would not have paid more than market value for the land the fact that there was “an absolute dearth of sales of flood prone land in Windsor between the early 1990s and the late 1990s”.

Like Mr Gleeson, Mr Wood acknowledged the general 10 percent rule of thumb for adjoining owner influence, and said that each sales transaction must be analysed because sometimes the purchase price may be less than market value and sometimes more than market value.

From the foregoing summary of the relevant valuation evidence it will be seen that Mr Robertson’s opinion of 10 percent premium of increase above market value for the subject land is principally founded in the fact that the Council was known in the market place to be very keen to purchase the subject land and this fact, was sufficient in itself, to invoke the 10 percent premium or increase in market value on account of the adjoining owner influence, whereas both Mr Gleeson and Mr Wood regard the Council’s known keen interest to purchase the land as rendering it “anxious” and hence not satisfying the test of “market value” mandated by s56(1) of the Just Terms Act.

Additionally Mr Gleeson regards the claim for increased value as being disqualified by s56(1)(a) of the Just Terms Act which requires market value to disregard “any increase … in the value of the land caused by … the proposal to carry out the public purpose for which the land was acquired” and Mr Wood regards the adjoining owner influence factor to be irrelevant on account of the absence of demand in the market place for land similar to the compulsorily acquired land at the time that it was compulsorily acquired.

It will thus be appreciated that the Council’s valuation evidence contests Mr Robertson’s opinion in support of the Applicant’s claim for a 10 percent increase or premium above the agreed market value of the subject land on account of the adjoining owner influence on two distinct levels:

(i) as a matter of legal principle the increase in market value violates s56(1)(a) of the Just Terms Act; and
(ii) as a matter of fact the increase in value is not justifiable.

Although the Council in its final address did not ultimately press its opposition based upon Mr Gleeson’s opinion that s56(1)(a) of the Just Terms Act disqualified the claim (being content to argue that in the circumstances of this case the increase in market value had not been justified) I think that I must nonetheless consider the effect of the section which perpetuates long established principle established both at common law and in statutory antecedents to the current section: Housing Commission of NSW v San Sebastian Pty Limited (1978) 140 CLR 196.

There is support for Mr Gleeson’s opinion not only in the language of s56(1)(a) of the Just Terms Act but in judicial decisions based upon the common law or statutory antecedents to the section. Thus in the oft cited judgment of Fletcher Moulton LJ in In re: An Arbitration between Lucas and the Chesterfield Gas and Water Board (1909) 1 KB 16 at 30 and 31 where his Lordship in considering the question of the value of land having a “special adaptability” only for the purposes of the authority having compulsory acquisition powers, summarises the principle in the following passage at 31:


“The decided cases seem to me to have hit upon the correct solution of this problem. To my mind they lay down the principle that were the special value exists only for the particular purchaser who has obtained powers of compulsory purchase it cannot be taken into consideration in fixing the price, because to do otherwise would be to allow the existence of the scheme to enhance the value of the lands to be purchased under it. But when the special value exists also for other possible purchasers, so there is, so to speak, a market, real though limited, in which that special value goes towards fixing the market price, the owner is entitled to have this element taken into consideration, just as he would be entitled to have the fertility or the aspect of a piece of land capable of being used for agricultural purposes.” (my emphasis)

However this passage was expressly disapproved by the Privy Council in Raja’s case (1939) AC 302 at 319/320 at least to the extent that Fletcher Moulton LJ’s dictum would prevent from being a possible purchaser, to exploit the special potentiality of the land , the acquiring authority having power of compulsory acquisition, the Privy Council holding at 319 that the principle stated by Fletcher Moulton LJ concerning a case where the land had special value only for the compulsory acquisition authority was not justified by authority, and holding at 320 that the taking into consideration of the fact that the special value exists only for the compulsory acquisition authority did not involve “allowing the existence of the scheme to enhance the value of the lands”.

The decision in Raja was also thought to raise doubts concerning the correctness of the earlier decision of Roper J in Latimer v North Coast National Agricultural and Industrial Society (1938) 14 LGR 30 - see Allan Hyam’s “Law Affecting Valuation of Land in Australia” 1995 2ed. at p268.

In Latimer the essential facts were similar to those of the present case in as much as the dairy land compulsorily acquired was contiguous to an existing showground and it was publicly known for some time, and it was obvious, that the showground must be extended and the compulsory acquisition of the appellant’s land was the only practical method of effecting the extension.

Based upon these facts it was contended that the land possessed a “special value”. Roper J dealt with the argument in the following passage at 32:


“These facts it is claimed, give an enhanced value to the land because purchasers would readily pay a higher price than its dairying value in order to squeeze a fancy price from the body controlling the showground. That body however is the only one which requires the use of that land for purposes other than dairying, and because of its objects it was, from the time that the need for additional land could be shown, entitled to have the land resumed. In face of these facts its is impossible that anyone could reasonably anticipate squeezing a fancy price from the society. The utmost that could reasonably be anticipated is that a slightly higher price than ordinary market value might be paid to avoid the costs of resumption.”

His Honour rejected the appellant’s reliance on the English decision in Inland Revenue Commissioner v Clay (1914) 3 KB 466, in holding that the case was not authority for the proposition that, “where land has a special value for one body only and that body must acquire it, but has power to acquire it compulsorily, the compensation to be paid is or has any necessary relation to that special value.”

His Honour concluded with these words at 32:


“The price to be ascertained is the value to the owner, not the taker, and in my opinion in this case it has not been shown that the value to the owner is different from the market value of the land considered as dairying land. The special need of the respondent society for it is offset by the existence of the power of resumption .” (emphasis added).

It may be that his Honour intended by this sentence I have emphasised to be applying the dictum of Fletcher Moulton LJ in Chesterfield Gas and Water Board that I have earlier recited, although somewhat curiously it is not cited in the judgment, although it was expressly relied upon in the argument (see at 31).

However the basis for distinguishing Clay’s case adopted by Roper J ie. that it did not involve a purchaser having compulsory acquisition powers is inconsistent with the Privy Council’s decision in Raja where their Lordships in expressly approving Clay at 317 stated:


“Had the house in that case been acquired compulsorily by a railway company or local authority under the provisions of the Land Clauses Consolidation Act (1845) , before its purchase by the trustee, the house ought in the Lordship’s opinion, and for the reasons already given, to have been valued at 1,000 pounds and not merely 750 pounds.”


(The reference to these sums is a reference to the value of the house to all but the trustees in the sum of 750 pounds and a reference to its value to the trustees who were the owners of an adjoining nurse’s home which they wished to extend.)

This somewhat inconclusive consideration of earlier authorities serves as a background to my consideration of the more recent cases decided by this Court that were relied upon by Mr Robertson in his evidence and the additional cases cited by the Applicant in his additional written submissions filed on 17 March 1998 which are collected at pages 77 and 268-271 in Hyam’s textbook. I shall consider firstly the trilogy of cases decided by this Court and then the others referred to in the textbook. My consideration of these cases has a twofold purpose - (i) to see what light they shed on the question whether s56(1)(a) of the Just Terms Act disqualifies the Applicant’s claim to additional market value on account of the adjoining owner influence and (ii) to see whether they support Mr Robertson’s opinion that the market value should be increased by 10 percent on account of the adjoining owner influence.

In Hieronymous the land which was zoned “Non-Urban” under the applicable planning laws was resumed for the purposes of a public school and immediately adjoined an existing public school. At page 12 Hemmings J noted that for the purposes of determining the compensation payable it had been conceded that the Education Department had decided to expand its land holdings and for that purpose it was appropriate for it to acquire the subject land. His Honour continues:


“If the Eduction Department is regarded as a possible buyer of the subject property, it should also be determined whether as an adjoining owner it may be prepared to pay similar prices to those paid by other adjoining owners in similar circumstances.”
His Honour next makes some pertinent comments concerning the intrinsic difficulty in utilising evidence of sales of land to adjoining owners in as much as “they are almost certain to be influenced by elements of a special value to the purchaser” and “(T)he factors influencing the purchaser of a particular parcel of adjoining land might have no relevance to the acquisition under consideration”. These factors of such sales emphasise that the sales “must be carefully analysed” … since “… the unreliability of the use of such sales without careful analysis has long since been recognised”: p12. In the result his Honour found that the evidence of two adjoining owner sales could be used to determine the value of the resumed land and moreover demonstrated the nature of the market for the land, leading to the following conclusion at 13:

“The sales confirmed to my satisfaction that it is proper to consider the Department of Education as an adjoining owner in the market place, likely to be a purchaser of the subject land”.

His Honour adopted a market value to the resumed land of $55,000 and entirely rejected the respondent’s valuation of $5,000 reflecting the value of the resumed land as part of the dairy farm.

In Hieronymous there is no reference to the proviso contained in s124 of the Public Works Act 1912 which is the statutory antecedent to s56(1)(a) of the Just Terms Act or to Latimer’s case or to the reasoning of Roper J in Latimer. There is however passing reference at 11 to Raja for the principle if (as was not the case) it had been found that the Education Department was the only likely purchaser of the resumed land. (His Honour had earlier held that the Department was the most likely purchaser).

In Sharpe the resumed land had been acquired by the Forbes Council for the purpose of extensions to the Council’s existing cattle livestock saleyards which adjoined the resumed land. Having determined that the market value of the resumed land was $100,000 Stein J proceeded to say at 6/7:


“Additionally, it is quite apparent that the Council, as adjoining owner of the saleyards and the land to the north of the resumed land, had a special interest in acquiring the site … In my opinion the Council would be prepared to pay more than market value. Mr John Robertson allowed $10,000 for this adjoining owner influence … In my opinion, it is proper to add $10,00 to the market value for the adjoining owner influence leading to a market value of $110,000 as urged in Mr Robertson’s report: Hieronymous v Minister for Education (Hemmings J, unreported Land and Environment Court, 29 June 1989).”

As with the judgment in Hieronymous there is no reference in Sharpe to the proviso to s124 of the Public Works Act 1912 , being the statutory antecedent to s56(1)(a) of the Just Terms Act , or to Latimer’s case or to the reasoning of Roper J in that case.

In Astron Properties the resumed land was acquired for extensions to an existing public school. Having determined compensation in the sum of $251,614 by employing the “before and after” maethod of valuation Bannon J at p11 stated:


“ On the other hand, I consider the resumed land did have a special value, because of the need of the Department to extend the grounds of the public school. I consider the Department from its past interest had shown a wish to purchase and indeed made an offer to purchase the resumed land. I consider a further sum could be assessed at 10 percent of the compensation figure: viz $25,161 for special value .”

As with the earlier judgments in Hieronymous and Sharpe (which were not cited) the judgment in Astron Properties makes no reference to the relevant proviso in s124 of the Public Works Act or to Latimer’s case or the reasoning of Roper J in that case.

My consideration of the trilogy of cases in this Court relied upon by Mr Robertson has demonstrated that they are entirely inconsistent with (i) the dictum of Fletcher Moulton LJ in Chesterfield Gas and Water Board; (ii) the decision in Latimer; and (iii) the application of the proviso to s124 of the Public Works Act 1912 which was the statutory antecedent to s56(1)(a) of the Just Terms Act.

Moreover the Council has not questioned the correctness of the trilogy of cases, although it submits that the decision in Astron Properties is unsupported by reasons. With respect I disagree with these submissions as I think that Bannon J did give reasons, namely that the resumed land had a “special value” because of the need of the Department to extend the grounds of the existing public school. In Sharpe Stein J had similarly referred to the “special interest” of the resuming authority in acquiring the resumed land.

In my respectful judgment the trilogy of cases were correctly decided and their authority necessarily implies that both the dictum of Fletcher Moulton LJ in Chesterfield Gas and Water Board and the decision of Roper J in Latimer no longer represent the law and probably were overruled by the Privy Council’s decision in Raja - expressly so in the case of the former dictum and necessarily impliedly so in the case of Latimer.

These conclusions, are in my judgment, reinforced by consideration of the additional cases referred to by the Applicant in the additional written submissions filed on his behalf on 17 March 1998 when reference was made to the cases collected at pp268-271 of Hyam’s text under the heading “Special potentiality to acquiring authority”. I need only to refer to two of these cases namely the decision of Crawford J in Purden v Minister for Lands and Works (1966) 19 The Valuer 729 and the decision of Barber J in Phillipou v Housing Commision of Victoria (1969) 18 LGRA 254, both cases dealing with what Crawford J describes as the “adjoining owner influence” in determining the market value of compulsorily acquired land. In Purden Crawford J at 730 noted that the issue raised in the case was “the unusual factor of what weight is to be given to what is usually referred to as “adjoining owner influence in the determination of compensation based upon market value”.

His Honour rejected the defendant’s submission that this was “never a factor in market value and certainly not where a value for this factor could not be justified”: 730. Instead his Honour held that it was a “question of fact” whether and to what degree the fact was to be considered, citing in support the Privy Council’s decision in Raja and the decision of the English Court of Appeal in Inland Revenue Commisioner v Clay (1914) 3 KB 466 approved by the Privy Council in Raja at 317.

Crawford J then proceeds to state, the following propositions, which in my respectful opinion provide a cogent exposition of the circumstances in which an adjoining owner’s need to expand his premises can lead to an increase the market value of the resumed land despite the facts: (i) that the adjoining owner is the acquiring authority with powers of compulsory acquisition; and (ii) the premises to be extended are to be extended for the public purpose for which the resumed land is required to be taken:


“If, on the facts, land has a potentiality because of an adjoining owner’s need to expand his premises and this is known to the vendor, and so could be made known to others who would be interested in buying, the market value may be increased thereby. I must treat this matter as I would if the facts were the same as here but another public authority had compulsorily acquired it, eg. the Commonwealth. It is not the fact that the Government of Tasmania is acquiring this land for the purposes of the Public Works Department which may give it a higher market value but the fact that it may be known that it has more potential for the Public Works Department as an adjoining owner and that the Government as a prudent purchaser may pay more than let someone else buy it for a lower price.”
Having established that the market value of the land, unaffected by any adjoining owner influence, was 6,000 pounds Crawford J proceeded at 731 to consider the “adjoining owner influence”. After considering the relevant evidence his Honour concludes at 731:

“It must have been plain to the Plaintiff, who would, I infer, pass it on to any purchase, that adjoining land had a special value to the Public Works Department”.

His Honour assessed the value of this “special value” (which he equated to a “potentiality” of the land as recognised in Raja ) by adding to the “ordinary” market value of the resumed land the amount of 3,500 pounds as estimated by the plaintiff’s valuer (ie. an additional value of more than 50 percent).

In Phillipou the land resumed by the Housing Commission adjoined land owned and occupied by the Macedonian Church which had previously made offers to purchase the land. The Land Valuation Board of Review in its determination of compensation reflecting market value found that the Macedonian Church was a “special buyer” of the resumed land and that in determining the value the Board made “an allowance for the presence of a special buyer”.

The resumee challenged the Board’s determination principally upon the ground that having found the Macedonian Church to be “a special buyer” of the resumed land, the Board should, as a matter of law, have determined the market value according to the amount of the higher offer made by the Church to purchase the land.

Barber J rejected the appeal on the ground that the question of how much additional value (above market value) the resumed land possessed by virtue of the interest of the Church as an adjoining owner, in acquiring it, was a question fact for the Board to decide.

Earlier in his judgment Barber J had held that the approach of the Board to regard the interest shown by the Church in acquiring the resumed land as a factor to be considered in assessing value was justified by the decisions in Clay, Raja and Glass v Commissioner of Inland Revenue (1915) SC 449 (also approved in Raja). Barber J regarded the essence of all three cases to be encapsulated in the following passage in Raja at 312:


“The compensation must be determined, therefore, by reference to the price that a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded. Neither must be considered as acting under compulsion. This is implied in the common saying that the value of the land is not to be estimated as its value by the purchaser. But his does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded. The wish of the particular purchaser, though not his compulsion, may also be taken into consideration for what it is worth.”
His Honour concluded at 259 by saying of the instant case:

“The Board rightly took into account the potentiality of the land, the likelihood of the Church authorities buying it, and being willing to pay something more than the market value because of its position, but just how much additional value should be allowed for this factor was a question of fact for the Board.”

Having regard to my survey of the cases relied upon by the Applicant I hold, conformably to authority and principle, that s56(1)(a) of the Just Terms Act does not disqualify the Applicant’s claim to additional market value on account of the adjoining owner influence, relevant in the present case, by virtue of the facts:
(i) of the Council’s STP being situated on land adjoining the resumed land;
(ii) the Council’s publicly known keen interest in acquiring the resumed land as a necessary adjunct (by virtue of the provision of additional land for land irrigation of the treated effluent) to its STP; and

(iii) the Council’s earlier offers to purchase the resumed land by offering a price above market value.

Moreover, in my judgment the evidence establishes that the resumed land possessed a special potentiality in the hands of the Council by enabling the Council, by acquiring it, to continue to operate the McGraths Hill STP by virtue of being land that adjoined the Council’s land accommodating that STP.

Finally I am satisfied that this special potentiality gave it a value additional to the market value that it would ordinarily have (but for that special potentiality).

Having regard to these conclusions I accept Mr Robertson’s estimate of that additional value, over its ordinary market value, of 10 percent. In so concluding I reject the competing valuation opinions of Mr Gleeson and Mr Wood. In particular I do not accept Mr Wood’s opinion that the dearth of sales of similar lands in the locality suggests that the Council could have acquired the subject land at its ordinary market value.

In large measure the disputed issue as presented by the parties is properly more narrowly confined than the manner in which I have considered the question. Strictly speaking the question is simply whether there should be added to the agreed market value an additional amount reflecting “the adjoining owner influence”. The answer to that question, in my opinion, is that Mr Robertson’s estimate of the additional value of 10 percentum is wholly supported, both as a matter of legal and valuation principle (as demonstrated by my survey of the decided cases) and as a matter of factual finding on the evidence in the case.

In truth both Mr Gleeson and Mr Wood in their valuation reports did not originally consider the question of “adjoining owner influence”. Their valuation reports in reply to Mr Robertson’s valuation allowing an additional value of 10 percent above market value essentially disputed the allowance on legal principle (in the case of Mr Gleeson by virtue of his reliance on s56(1)(a) of the Just Terms Act and in the case of Mr Wood on his understanding of Raja).

As I have earlier indicated much store was placed by the Council on the fact that its keeness to acquire the subject land bordered on “anxiety” to such a degree as to take its interest in acquiring the subject land beyond the legitimate bounds of the hypothetical prudent “willing but not anxious” purchaser. But the complete answer to the Council’s reliance on this evidence is provided by the dictum in Raja at 312 that the fact that some particular purchaser might desire the land more than others is not to be disregarded.

For all the foregoing reasons I accept Mr Robertson’s estimate of 10 percentum as the additional value of the market value of the compulsorily acquired land on account of “adjoining owner influence” and accordingly hold that the market value is $585,797 (being the agreed value of $532,543 plus 10 percent thereof being $53,254 on account of the adjoining owner influence).

C. The Applicant’s Claim to Removal Expenses.

The Applicant’s claim of $7,000 for removal expenses was challenged by the Council on two bases:
(i) it was not a recoverable item of compensation in the terms of the Just Terms Act; and
(ii) it had not been substantiated.

The Applicant gave evidence that he had used the compulsorily acquired land for grazing and cropping purposes and that in consequence of the compulsory acquisition he had had to move to his property at Dubbo plant and equipment which he had stored in a dilapidated shed located on the subject land. He claimed an amount of $7,000 to compensate him for the moving of the plant and equipment which he had himself carried out by making a number of separate trips between the two properties in his truck. He had also paid for the hire of a crane.

Despite the modest amount claimed I do not think the Applicant has established his entitlement under this head of compensation ie. s59(c) and (f) of the Just Terms Act (which I am prepared to assume is sufficiently broad to include removal expenses of agricultural plant and equipment). However this particular claim was not included in any of the documentation supporting the claim as required by Part 13 Division 8 of the Rules of Court and is not mentioned in any of the valuation reports which were received into evidence.

I do not doubt that the Applicant removed some chattels from the subject premises following the compulsory acquisition, but I am not satisfied that the costs were reasonably incurred within the meaning of s59(c) and (f), principally because I am not satisfied as to what precisely was removed, (and whether it was something of value) and why it had been removed to Dubbo. In these circumstances I am not satisfied that the costs claimed are relevantly recoverable. I intend no disrespect when I say that I think the claim was an afterthought and an opportunistic one at that. I must reject it for the reasons given.

D. Interest on Compensation.

In the written submissions dated 17 March 1998 filed on behalf of the Applicant various calculations of interest were proffered depending upon the amount of compensation that was ultimately determined by the Court in these proceedings. The calculations are based upon the rates contained in Schedule J to the Supreme Court Rules. The Council does not dispute the Applicant’s entitlement to interest but says that the interest payable is limited to the interest on the unpaid portion of compensation. In this respect the Court was informed by the Council that an amount of $442,999 representing 90 percent of the statutory valuation was paid to the Applicant on 20 March 1996.

I am satisfied that interest is payable on the amount of compensation awarded to the Applicant. However the statutory warrant for the payment of such interest is to be found in the combined operation of s49 and s50 of the Just Terms Act and s69A of the Land and Environment Court Act 1979. It is the provisions of the Just Terms Act that (i) confer the entitlement to interest from the date of acquisition (s49(1)); and (ii) determine the rate of interest to be payable (s50). The provisions of the Land and Environment Court Act confer an entitlement to interest in a case where the Court makes an order for payment of money “from the date the order takes effect … unless the Court otherwise orders (s69A(1)).”

However the Just Terms Act expressly amended s69A of the Land and Environment Court Act by inserting subsection (3) which provides:


“ In the case of an order of the Court for the payment of compensation under the Land Acquisition (Just Terms Compensation) Act 1991 the rate of interest is the rate determined under that Act in respect of the payment of compensation .”

Section 50 of the Just Terms Act prescribes as the rate of interest “such rate as the Treasurer may from time to time determine by notification published in the Gazette.” : subs(1) . Different rates may be determined: subs(2)

According to my researches the different rates of interest so determined by the Treasurer in respect of the amounts of $250,000 or more, that are relevant in the present case, where the compulsory acquisition occurred on 14 July 1995 are as follows:

Period Interest Rate Percent per annum

14 July 1995 to 30 January 1997 6.80

31 January 1997 to 9 October 1997 5.62

10 October 1997 and continuing 4.45

It is to be noted that these interest rates are considerably less than the rates contained in Schedule J of the Supreme Court Rules upon which the Applicant’s calculations of interest have been based.

Since the questions of (i) the entitlement to interest; (ii) the extent of that entitlement; and (iii) the relevant rates of interest, are wholly provided for by s49 and s50 of the Just Terms Act , and since in a case such as the present, interest payable pursuant to s69A of the Land and Environment Court Act operates to merely replicate the interest entitlement conferred by the Just Terms Act , I am of the opinion that the following are the appropriate orders to make in respect of interest in the present case:
(i) to the amount of compensation determined to be paid there is to be added the amount representing interest payable in accordance with s49(1) of the Just Terms Act ; and
(ii) section 69A of the Land and Environment Court Act 1979 shall not apply to the amount of compensation and interest so determined to be paid to the Applicant.

E. Costs.

Prima facie the Applicant having been substantially successful in the proceedings, enjoys a presumptive entitlement to a costs order. However since the Council has expressly asked me to reserve the question of costs I shall do so, having made that initial observation to assist the parties on this issue.

F. Conclusions and Orders.

It follows from the foregoing that the compensation in the present case should be determined in the following amount:

Agreed Market Value $532,543
Plus 10 percent for “adjoining owner influence” $53,254
Agreed value of pathway $5,000
Agreed value of disturbance claim $30,230
_________________________________________________
Total compensation $621,027

Plus interest payable in accordance with s49(1) of the Just Terms Act .

For all the foregoing reasons I make the following orders:

1. Objection allowed.
2. Determine the amount of compensation in the sum of $621,027.00 plus interest payable in accordance with s49(1) of the Land Acquisition (Just Terms Compensation) Act 1991
3. Section 69A of the Land and Environment Court Act 1979 shall not apply to the payment of the amount of compensation determined in Order 2.
4. Exhibits be returned.
5. Question of costs be reserved with liberty to apply on 3 days notice.


I HEREBY CERTIFY THAT THIS AND THE PRECEDING 34 PAGES ARE A TRUE AND ACCURATE COPY OF THE REASONS FOR JUDGMENT HEREIN OF HIS HONOUR MR JUSTICE N R BIGNOLD.

Associate