Commissioner of Highways v Farmer No 2 Pty Ltd; Commissioner of Highways v M & B Farmer Nominees Pty Ltd

[2015] SASCFC 121

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD; COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD

[2015] SASCFC 121

Judgment of The Full Court

(The Honourable Justice Gray, The Honourable Justice Kelly and The Honourable Justice Nicholson)

25 August 2015

REAL PROPERTY - COMPULSORY ACQUISITION OF LAND - COMPENSATION - RIGHT TO COMPENSATION - GENERALLY

REAL PROPERTY - COMPULSORY ACQUISITION OF LAND - PROCEEDINGS FOR COMPENSATION - SOUTH AUSTRALIA - APPEALS

Appeals against a determination of a question referred concerning whether interest is payable on non-monetary compensation in respect of a compulsory acquisition of land.  The appellant compulsorily acquired the respondents’ land.  Part of the land acquired was surplus to the appellant’s requirements.  The parties agreed on a payment of monetary compensation in respect of the acquisition and that interest was payable thereon.  The parties further agreed on the provision of non-monetary compensation in respect of the acquisition, namely the transfer of the surplus land back to the respondents.  The parties could not agree on whether interest was payable on the non-monetary compensation.

Held per Gray J (Kelly J agreeing); Nicholson J (also agreeing with Gray J) (allowing the appeals):

1.       Interest is not payable on non-monetary compensation provided in respect of a compulsory acquisition of land.

Land Acquisition Act 1969 (SA) s 10, s 11, s 12, s 12B, s 15, s 16, s 17, s 22B, s 23, s 23A, s 23C, s 24, s 25, s 26, s 27, s 28 and s 33, referred to.
Commissioner of Highways v M & B Farmer Nominees Pty Ltd; Commissioner of Highways v Farmer No 2 Pty Ltd [2015] SASC 40; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; South Australian Land Commission v Perry (1977) 15 SASR 315, considered.

COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD; COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD
[2015] SASCFC 121

Full Court:  Gray, Kelly and Nicholson JJ

GRAY J.

1. These are appeals from decisions of a Judge of the Court concerning the Commissioner of Highways’ liability to pay interest pursuant to section 33 of the Land Acquisition Act 1969 (SA).

   Background

2. The parties tendered a statement of agreed facts at the hearing before the Judge under appeal.  In setting out the background to these appeals, I have drawn on that document, the affidavits tendered and received and the Judge’s summary of the facts. 

3. Between April and July 2008, the appellant, the Commissioner of Highways, compulsorily acquired an unencumbered estate in fee simple in land owned by the respondents, M & B Farmer Nominees Pty Ltd and Farmer No 2 Pty Ltd, in Penfield, South Australia.  As a consequence, the respondents’ land vested in the Commissioner.

4. The Commissioner acquired the land to enable the construction of the Northern Expressway.  Part of the land had been used by the respondents for, inter alia, the growing of almonds.  The respondents intended develop other parts of the land for growing almonds. 

5. Pursuant to section 23A(3) of the Land Acquisition Act, the Commissioner paid the sum of $4,490,000.00 into Court, representing his offer of compensation for the land.  This offer was not acceptable to the respondents.  In September 2008, the parties entered into a series of deeds which addressed the terms on which the Commissioner would have possession of the land acquired from the respondents.  The parties continued to negotiate over the compensation to be paid for the land. 

6. Parts of the land acquired by the Commissioner were surplus to his requirements. Although the whole of the land vested in the Commissioner, the possession deeds granted the Commissioner possession of only the parts of the acquired land which he required. Between July 2008 and 10 December 2012; the respondents used the surplus land for storage and drew on water from the bore; animals grazed on the land; modifications were made to fencing, a shed and two stables on the land; and an employee resided in a dwelling on the land. It is to be understood that, although the Commissioner was only using part of the land acquired from the respondents, the whole of the land had vested in him, pursuant to section 16 of the Land Acquisition Act. 

7. On 15 October 2015, the parties entered into a deed of settlement in relation to the acquisition of the land.  The agreed monetary compensation was a cash payment of $6,240,220.15, being the sum of $4,490,000.00 originally paid into Court by the Commissioner plus an additional sum of $1,750,220.15.  The agreed non-monetary compensation was the transfer of the surplus land back to the respondents.  The parties agreed that the value of the surplus land at the date of acquisition by the Commissioner was $1,794,420.00.  The total monetary and non-monetary compensation was valued by the parties at $8,034,640.15.  The surplus land was transferred back to the respondents on 10 December 2012.  

8. Pursuant to the deed of settlement and section 33 of the Land Acquisition Act, the respondents were paid interest by the Commissioner on the sum of $6,240,220.15, calculated from the date of acquisition. 

9. The parties were unable to agree on whether the respondents were entitled to interest on the non-monetary component of the respondents’ compensation.  The deed of settlement contemplated that the respondents would bring an application to the Court to determine the Commissioner’s liability to pay interest on the non-monetary compensation, namely the transfer of the surplus land.  This question was referred for determination to the Judge at first instance and is the question before this Court on appeal.  The parties agreed on the amount of interest that would be owed and a set-off for rent in respect of the respondents’ use of the land in the event that interest was payable. 

10. On 19 March 2015, the Judge concluded that the respondents were entitled to interest on the value of the non-monetary component of the compensation received pursuant to the terms of the deed of settlement.[1] 

    [1]    Commissioner of Highways v M & B Farmer Nominees Pty Ltd; Commissioner of Highways v Farmer No 2 Pty Ltd [2015] SASC 40.

    The Approach of the Judge under Appeal

11. Following a review of the evidence, the Judge commenced his analysis by considering section 33 of the Land Acquisition Act and the statutory provisions he considered to provide the relevant statutory context. Section 33 provides:

    Interest

    Where the Authority agrees with a claimant or is ordered to pay a greater amount of compensation than the amount paid into Court in respect of the acquisition of any land, the Authority must also pay the additional sum that would have accrued (whether as interest or otherwise) had the amount agreed or ordered been paid into Court instead.

12. The Judge had regard to dictionary definitions of the words “pay” and “amount” and considered that both words could refer to the provision of non-monetary compensation. The Judge concluded that “analysis based only on textual and contextual considerations leaves section 33 ambiguous.”

13. The Judge engaged in a purposive analysis of the section and concluded:

    The evident policy behind and purpose of section 25 and in particular subsection 25(1) is to ensure that a landowner is adequately compensated for any loss suffered by reason of the acquisition of land. Subsection 25(2) ensures that the landowner receives compensation for the primary loss being the value of the land lost or diminished and for secondary losses such as disturbance. The policy and purpose are advanced by subsection 23A(1), which requires the authority to make an offer of compensation contemporaneously with the acquisition. However, section 25 does not address the time value of receiving compensation at the time of the acquisition compared to later when the compensation is fixed by the Court or by negotiation and the landowner receives the principal compensation.

    The time value of the receipt of compensation is addressed in part by subsections 23A(3) and (4) which provide for the authority to pay into Court the authority’s initial assessment of the amount of principal compensation and for the landowner to receive interest thereon. Section 33 provides for those cases in which the authority’s assessment of principal compensation proves inadequate and ensures that the landowner receives interest on the shortfall as if the authority had paid into Court the correct amount of principal compensation. Given this rationale, there is no reason to differentiate between the form of the consideration ultimately agreed between the parties.

    The Appeals

14. On the appeals, the Commissioner submitted that the Judge erred in finding that section 33 of the Land Acquisition Act created an entitlement to interest on non-monetary compensation. It was argued that the Judge erred in his textual analysis of section 33. Attention was drawn to sections 23 and 23A. It was said that the Act distinguishes between compensation that is the subject of the “liability to pay compensation” and “non-monetary compensation”. It was pointed out that, read on its face, section 33 relates the “additional sum which would have accrued (whether as interest or otherwise)” to the “greater amount of compensation than the amount paid into Court... had the amount agreed or ordered been paid into Court”. It was said that section 33 could not apply to non-monetary compensation as non-monetary compensation could not be paid into Court.

15. With respect to the policy of the Act, the Commissioner submitted that the option of non-monetary compensation affords landowners flexibility when negotiating with an acquiring authority.  It was pointed out that landowners are free to eschew non-monetary compensation in favour of being compensated in full in cash.  It was argued that, if landowners make that choice, they are entitled to interest on the full amount.  However, if landowners choose non-monetary compensation, they make the choice forgo the benefit of a cash payment, including interest, in order to enjoy other benefits. 

16. The respondents supported the reasoning of the Judge at first instance. It was submitted that “compensation”, as defined in section 6 of the Act and as it appears elsewhere in the Act, is a reference to total compensation, both monetary and non-monetary. It was pointed out that, where it is relevant to draw a distinction between monetary and non-monetary compensation, such as in section 23(6), the Act expressly refers to “non-monetary compensation”. It was argued that section 25 assumes that a monetary sum may be attributed to non-monetary compensation. Against that background, it was submitted that the reference to the “amount of compensation” in section 33 referred to the total value of compensation to which the respondents were entitled, regardless of the form of compensation agreed between the parties.

    The Legislative Scheme

17. In Project Blue Sky Inc v Australian Broadcasting Authority, McHugh, Gummow, Kirby and Hayne JJ summarised the approach to statutory interpretation in the following terms:[2]

    ... The duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction (56) may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. ...

    [Footnote omitted.]

    [2]    Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, [78].

18. Before turning to consider in detail the relevant statutory provisions, it is appropriate to consider in broad terms the scheme created by the Land Acquisition Act as it relates to the present case. 

19. The first step in the process of a compulsory acquisition of land is the publication of a notice of intention to acquire land. Section 10 requires that an authority which proposes to compulsorily acquire land publish a notice of intention to acquire land. Section 11 provides for the provision of information to landowners by the authority and sections 12 to 12B address landowners’ rights to object to a proposed acquisition.

20. The second step is the acquisition of the land. Section 15 enables the authority, after publishing a notice of intention to acquire land, to acquire the land by agreement, rather than compulsorily. Sections 16 and 17 provide for the publication of a notice of acquisition of land in relation to land which is the subject of a notice of intention to acquire land. Those sections also address the vesting of land in the acquiring authority upon publication of a notice of acquisition of land. Sections 24, 27 and 28 address powers of entry and occupation by the authority.

21. The third step is compensating the landowners. Section 22B grants landowners an entitlement to compensation when their land is compulsorily acquired. Section 23 imposes an obligation on an acquiring authority to negotiate in good faith about compensation payable for an acquisition of land and empowers the authority to offer non-monetary compensation. Section 23A requires an acquiring authority to make an offer of compensation for the land when it publishes a notice of acquisition. Section 23C enables the parties to refer questions into Court and, in conjunction with section 26, sets out the Court’s powers to make orders in respect of compensation. Section 25 sets out the principles by which compensation is to be determined and section 33 creates an entitlement to interest on compensation. The Act further addresses the recovery of costs and compensation from the acquiring authority.

22. It is apparent that the Land Acquisition Act creates a regime whereby landowners are informed of an acquiring authority’s intention to acquire their land and are provided with an opportunity to oppose the acquisition or negotiate for a voluntary transfer of their land.  If the authority determines to proceed with a compulsory acquisition, the evident policy of the Act is to ensure that landowners are fully compensated for compulsorily acquired land.  To that end, the Act provides for landowners to be fully compensated in cash but also provides for the provision of non-monetary compensation following negotiation between the parties. 

    Consideration

23. Section 22B of the Land Acquisition Act provides:

    Entitlement to compensation

    Subject to this Act, a person is entitled to compensation for the acquisition of land under this Act if—

    (a)     the person's interest in land is divested or diminished by the acquisition; or

    (b) the enjoyment of the person's interest in land is adversely affected by the acquisition.

    The respondents were “entitled to compensation” pursuant to section 22B of the Act when their land was acquired by the Commissioner.

24. “Compensation” is defined in section 6:

    compensation means compensation to which a person is entitled under this Act, and includes the purchase price of land purchased by agreement

    On the hearing of the appeals, it was accepted that the reference to “the purchase price of land purchased by agreement” was a reference to section 15, which concerns the acquisition of land by consent prior to any publication of a notice of acquisition and did not arise for consideration on these appeals.

25. Section 25 addresses the principles by which compensation is to be determined and relevantly provides:

    Principles of compensation

    (1) The compensation payable under this Act in respect of the acquisition of land shall be determined according to the following principles:

    (a)     the compensation payable to a claimant shall be such as adequately to compensate him for any loss that he has suffered by reason of the acquisition of the land; and

    (b)     in assessing the amount referred to in paragraph (a) of this section consideration may be given to—

    (i)     the actual value of the subject land; and

    (ii) the loss occasioned by reason of severance, disturbance or injurious affection; and

    (c)     compensation shall be fixed as at the date of acquisition of the land; and

    ...

    The “compensation payable under [the] Act” to the respondents was to be determined as at the date of acquisition and assessed according to the principles in section 25. The respondents were to be compensated for their loss suffered by reason of the acquisition by reference to the “actual value” of the land itself and the “loss occasioned by reason of severance, disturbance or injurious affection”.

26. Section 23A addresses the making of offers of compensation and provides:

    Offer of compensation and payment into court

    (1) When the Authority gives notice of the acquisition of land, it must make an offer to the person or persons whom it believes to be entitled to compensation for the acquisition, stating the amount of compensation the Authority is prepared to pay.

    (2) The offer must (where appropriate) differentiate between, and quantify, the component of compensation representing the value of the acquired land and the component referable to disturbance or other compensable matters.

    (3) The Authority must, within seven days after making an offer of compensation, pay the amount offered into the Court.

    (3a) However, if the Authority has already paid an amount into the ERD Court under Division 1 in relation to the proposed acquisition, the Authority is required only to pay into the Court the amount (if any) by which the amount of the offer exceeds the amount already paid into the ERD Court.

    (4) Until compensation paid into Court under this section is applied by order of the Court, the money must be invested by the proper officer of the Court in an authorised trustee investment (bearing interest that compounds at intervals of one month or less) and the interest and other accretions accruing on the investment—

    (a)     must be paid to—

    (i) the person who would, but for the acquisition of the land, have been entitled to the rents and profits of the land; or

    (ii) a body constituted under the law of the State or the Commonwealth as trustee for the claimants to whom the compensation is offered; or

    (b)     must be dealt with in some other manner specified by the Court.

    Section 23A(1) required the Commissioner, after giving notice of the acquisition, to make an offer to the respondents of the “amount of compensation” that he was prepared to “pay” for acquiring the land. Pursuant to subsection (2), the Commissioner’s offer was required to “quantify” the “value of the acquired land” and the “disturbance or other compensable matters”. Pursuant to subsection (3), the Commissioner was required to “pay the amount offered” under subsection (1) into Court within seven days of making the offer. As a consequence, subsection (1) required the Commissioner to make an offer of monetary compensation to compensate the respondents in full for the acquisition of the land.

27. As noted earlier in these reasons, the Commissioner’s initial offer of compensation was not acceptable to the respondents. Section 23 addresses the negotiation of compensation and relevantly provides:

    Negotiation of compensation

    (1) The Authority must negotiate in good faith with interested persons about the compensation payable for the acquisition of land under this Act.

    ...

    (4)     The Authority may offer non-monetary compensation.

    Example—

    The non-monetary compensation might take the form of a transfer of land, the provision of goods or services, or the carrying out of work for the re-instatement or improvement of land remaining in the claimant's ownership after the acquisition.

    ...

    (6) The Authority's liability to pay compensation under this Act for the acquisition of land is reduced by the value of non-monetary compensation provided at the request of, or by agreement with, the person to whom the liability is owed.

    Subsection (1) enabled the parties to negotiate “about the compensation payable for the acquisition of land”.  Subsection (4) enabled the Commissioner to “offer non-monetary compensation” when negotiating the “compensation payable” to the respondents.  An example of non-monetary compensation provided in subsection (4) is “a transfer of land”.  The Commissioner’s offer to transfer the surplus land to the respondents was an offer of non-monetary compensation within the meaning of subsection (4).  Subsection (6) required that a “value” be determined for non-monetary compensation accepted by the respondents.  Pursuant to subsection (6), when the respondents accepted the Commissioner’s offer of non-monetary compensation, the Commissioner’s “liability to pay compensation under [the] Act for the acquisition of land [was] reduced by the value of the non-monetary compensation”.  As a consequence, the “liability to pay compensation under [the] Act” in subsection (6) and the “compensation payable” in subsection (1) are to be understood as references to monetary compensation.  The compensation that the Commissioner was liable to pay under the Act was the sum of $6,240,220.15, being the total compensation of $8,034,640.15 less the value of the non-monetary compensation, namely the transfer of land valued at $1,794,420.00. 

1. Section 33 addresses interest and, as earlier set out, provides:

   Interest

   Where the Authority agrees with a claimant or is ordered to pay a greater amount of compensation than the amount paid into Court in respect of the acquisition of any land, the Authority must also pay the additional sum that would have accrued (whether as interest or otherwise) had the amount agreed or ordered been paid into Court instead.

   The effect of the respondents’ acceptance of non-monetary compensation was that the Commissioner’s “liability to pay compensation under [the] Act” was reduced by the value of the non-monetary compensation. It follows that the amount of compensation that the Commissioner had agreed to pay for the purpose of section 33 was the sum of $6,240,220.15. That is a greater amount of compensation than the amount that was paid into Court by the Commissioner at the time of the acquisition, namely $4,490,000.00. The Commissioner is liable to pay interest that would have accrued had the amount of $6,240,220.15 been paid into Court instead of the amount of $4,490,000.00. The amount of $1,794,420.00, being the value of the non-monetary compensation, would never have been paid into Court. The Commissioner is not liable to pay interest on that amount. To hold otherwise would leave no work for section 23(6) to do. Section 23(6) expressly provides that the liability to pay compensation under the Act is reduced by the value of non-monetary compensation. An acquiring authority cannot be liable to pay interest on an amount of monetary compensation which it is not liable to pay as a result of a landowner’s decision to receive some other form of compensation. It is apparent that the Judge did not address the operation of section 23(6) in his reasons. In my view, this led to an erroneous interpretation of the Act.

2. This construction is consistent with the manner in which interest would be assessed if the parties had been unable to agree on the amount or form of compensation and the matter had proceeded to Court. Section 23C addresses the reference of matters to the Court and provides:

   (1) The Authority or a claimant may refer a question arising in the course of negotiations into Court.

   (2)     On the reference of a matter into the Court, the Court may—

   (a)     if of the opinion that the question should be the subject of further negotiation—adjourn the matter to allow further negotiation to take place; or

   (b)     make any order necessary to resolve the question.

   (3)     In particular—

   (a)     if there is a dispute about whether the claimant is interested in the subject land, or the nature of the claimant's interest—the Court may, subject to subsection (4), declare whether the claimant has an interest in the subject land and, if so, the nature of the interest; and

   (b)     the Court may make orders for compensation that the Court finds to be justified on the claim; and

   (c)     the Court may make other orders that may be just in the circumstances of the case.

   ...

   Section 26 empowers the Court to direct that compensation be applied in a particular manner:

   Application of compensation

   The Court may by order direct that any moneys paid into Court, or compensation ordered, under this Act be applied—

   (a)     in the purchase, redemption or discharge of any tax, debt, mortgage or encumbrance affecting the subject land; or

   (b)     in the purchase of other land or securities to be conveyed or settled upon or towards the same uses, trusts or purposes as the subject land; or

   (c)     in removing or replacing any buildings or substituting others in their stead, in such manner as the Court may direct; or

   (d)     in payment to any persons absolutely entitled to the moneys, or in the case of incapacity or disability to their trustees or guardians; or

   (e)     in such other manner as the Court thinks fit.

   The language of section 26(b) is to be contrasted with the language contained in the example in section 23(4). Section 26(b) refers to compensation being “applied... in the purchase of other land”, whereas section 23(4) refers to “a transfer of land”. If the Court orders that funds be applied in accordance with section 26, the Court is not making an award of non-monetary compensation. Rather, the Court is making an award of monetary compensation, having regard to the principles in section 25, and directing that the funds “be applied” in a particular manner at the time of making the order. As a consequence, the entire value of compensation would attract interest pursuant to section 33, as the entire amount of compensation would be a monetary sum. If the Court made an order under section 23C(3)(c), such as an order for non-monetary compensation, this would not be an award of compensation and would not attract interest pursuant to section 33.

3. The respondents had the option to insist on only receiving monetary compensation for the acquisition of their land.  Had the respondents opted to receive monetary compensation only, they would have been entitled to interest on the entire amount.  The respondents could then have applied the funds in a manner of their choosing, including to repurchase the surplus land.  This approach would have given them the benefit of greater interest payments, but exposed them to the risk of the value of the land increasing in the intervening period or competition to purchase the land in an open market.  In my view, the Judge erred by characterising the differences in these approaches as differences of form rather than substance.  It was considered commercially advantageous by the respondents to receive non-monetary compensation – they received a transfer of land in 2012 at its 2008 valuation rather than receive a lump sum in respect of the monetary value of the land in 2008 with four years’ interest and then repurchase the land in 2012.  Insofar as the respondents may have been prejudiced by a delay in the transfer of the land, that was a matter to be addressed when negotiating for compensation or by enforcing prompt performance of the terms of the settlement deed. 

4. This construction is consistent with the evident policy of the Act.  The Act provides for landowners to be compensated in full for the acquisition of their land.  In the event that there is a delay in the payment of compensation, interest is payable to protect the value of the compensation in real terms and to compensate the landowners for not having had the use of the funds from the time they were entitled to them.[3]  The Act also affords landowners the option to forgo monetary compensation in favour of non-monetary compensation.  Landowners could be expected to elect to receive non-monetary compensation where they would derive some intangible or commercial benefit from doing so – benefits which they would not derive from having cash held in an interest bearing account and which they could not readily procure by the use of those funds when they were eventually released to them. 

   [3]    See South Australian Land Commission v Perry (1977) 15 SASR 315.

5. In my view, section 33 of the Act does not entitle the respondents to interest on the value of the non-monetary compensation received from the Commissioner under the deed of settlement.

   Conclusion

6. I would allow the appeals.

7. KELLY J:             I would allow the appeals.  I agree with the reasons of Gray J.

   NICHOLSON J.

8. I have had the advantage of reading the judgment of Gray J and of his Honour’s recitation of the facts, description of the legislative framework and construction and application, to the facts of this case, of section 33 of the Land Acquisition Act 1969.  I agree that the appeals should be allowed for the reasons Gray J has given.  I wish to add the following.

9. The Land Acquisition Act, in the context under consideration, focuses on two concepts: “compensation” as defined in section 6 and “non-monetary compensation” as identified in subsection 23(4) and relevant, in the way provided for by subsection 23(6), to the scheme of the Act.  These two subsections, together with subsection 23(5)[4] contain the only references in the Act to “non-monetary compensation”.

   [4]    Subsection 23(5) pertains only to an asserted native title interest in land and is of no present relevance.

10. The fundamental question in these proceedings is whether “compensation”, as defined, includes, as a component, any agreed upon “non-monetary compensation” or whether they are independent concepts and treated separately in the Act.

11. Compensation is defined in section 6.

    Compensation means compensation to which a person is entitled under this Act, and includes the purchase price of land purchased by agreement.

    There are a number of matters to note about this definition.

    (i)The definition is, in part, self-referential – “compensation means compensation...”. 

    (ii)As such, the real work of the definition is performed by the qualifying phrase “to which a person is entitled under this Act”. 

    (iii)As can be seen, by reference to subsections 23(4) and (6), the acquiring authority and a claimant may agree upon non-monetary compensation.  This is the only manner by which a claimant might receive non-monetary compensation; there is no scope for a claimant to become “entitled under [the] Act” to non-monetary compensation or to compensation which includes, as a component, non-monetary compensation.  The scheme of the Act is such that, in the absence of agreement, a Court can order compensation but only by way of a monetary sum.[5]

    (iv)According to the definition, compensation includes “the purchase price of land purchased by agreement”.  It is common ground (with which I agree) that this is a reference to the power of the acquiring authority, by subsection 15(1), to purchase land by agreement after having served a notice of intention to acquire but before effecting acquisition, by publication of a notice of acquisition.  The inclusion of such an agreed price in the definition is consistent with “compensation” being an amount of money, either agreed upon or awarded by the court.

    (v)By way of contrast with any agreed price pursuant to subsection 15(1) the definition of compensation does not expressly include any notion of non-monetary compensation.  For example, the definition does not contain words to the effect, “and includes non-monetary compensation”.

    [5] See, in particular, sections 23C, 25, 26 and 36A of the Act. The court does have power under section 26 to order how any compensation ordered against the acquiring authority is to be expended which may have the effect of, ultimately, conferring a non-monetary benefit on a claimant. However, this is not the same as ordering the acquiring authority to provide non-monetary compensation.

12. With these observations in mind, it will be helpful to set out the terms of section 33.

    Where the Authority agrees with the claimant or is ordered to pay a greater amount of compensation than the amount paid into court... the Authority must also pay the additional sum that would have accrued (whether as interest or otherwise) had the amount agreed or ordered been paid into court instead. 

    The relevant comparison is between the actual amount of money paid into court and the amount of compensation to which [the claimant] is entitled under the Act (section (6)) agreed or ordered.

13. According to subsection 25(1)(a):

    (1)The compensation payable under this Act in respect of the acquisition of land shall be determined according to the following principles:

    (a)     The compensation payable to a claimant shall be such as adequately to compensate him for any loss that he has suffered by reason of the acquisition of the land. 

    The remaining paragraphs of subsection 25(1) provide for various considerations to be accommodated when a court assesses the amount that would adequately account for any loss suffered. Section 25 supplies the mechanism to assess the amount of (monetary) compensation payable in the absence of agreement by the parties. Any such agreement could involve monetary and/or non-monetary compensation.

14. However, where, as here, the parties have agreed upon non-monetary compensation, as envisaged by subsection 23(4) the acquiring authority’s “liability to pay compensation under [the] Act” (subsection 23(6)) and the compensation payable under the Act (subsection 25(1)) are correspondingly reduced.  Subsections 23(4) and (6) are in these terms. 

    (4)The Authority may offer non-monetary compensation.

    Example –

    The non-monetary compensation might take the form of a transfer of land, the provision of goods or services, or the carrying out of work for the reinstatement or improvement of land remaining in the claimant’s ownership after the acquisition. 

    ..  .  .

    (6)The Authority’s liability to pay compensation under this Act for the acquisition of land is reduced by the value of non-monetary compensation provided at the request of, or by agreement with, the person to whom the liability is owed.

15. The compensation (agreed or ordered) when first referred to in section 33 is the total compensation agreed or assessed pursuant to section 25, less the value of any non-monetary compensation agreed upon, if any.

16. Section 25 is to be read subject to subsection 23(6). In the absence of agreement as to any non-monetary compensation, the process required by section 25 will generate an amount of compensation to which the claimant is entitled and which is payable under the Act. However, the section 25 assessment will defer to any such agreement.

17. The respondents (claimants) contend that a reduced liability to pay compensation (subsection 23(6)) is not necessarily inconsistent with a claimant having a greater entitlement to compensation, inclusive of any agreed non-monetary compensation, for the purposes of section 33. I agree with this. Nevertheless, the construction of section 33 propounded by the appellant is to be preferred. It is supported by, in the sense of being consistent with, a practical and sensible operation of the scheme of the Act, as analysed by Gray J. However, it is also supported by a number of textual considerations.

    (i)The term “compensation” is central to a number of provisions in the Act including, of course, section 33. The word is defined in terms of that to which a claimant “is entitled under [the] Act”. There can be no entitlement under the Act to non-monetary compensation which is purely a function of agreement between the parties.

    (ii)The definition of compensation does expressly include an agreed purchase price (pursuant to subsection 15(1)) but, tellingly, the definition does not include any agreed non-monetary compensation. 

    (iii)As a consequence of (i) and (ii) the definition of compensation, on its face, embraces monetary amounts only to the exclusion of the notion of non-monetary compensation provided for in subsections 23(4) and (6). 

    (iv)Section 23 of the Act imposes an obligation on the acquiring authority to negotiate in good faith about compensation payable for the acquisition of land under the Act. The primary obligation set out in subsection 23(1) is to negotiate about the compensation payable.  Under subsection 23(6) the acquiring authority’s liability to pay compensation under this Act is reduced by the value of non-monetary compensation provided. In other words, and as would be expected, section 23 envisages that compensation is something that is paid, that is, a monetary amount, and non-monetary compensation is something that is provided because it can’t be paid.

    (v)Under section 23A the acquiring authority is obliged to make an offer of compensation and within seven days after making that offer to pay the amount offered into court.  The language of paying the amount offered by way of compensation into court and the statutory obligation to do so does not fit with a notion of compensation that includes non-monetary compensation.

    (vi)Other references within the Act uniformly refer to compensation, either agreed or ordered by the court, as being something that is to be “paid”. 

    (vii)Section 36A of the Act gives a right of recovery from the acquiring authority. It is in these terms.

    Compensation payable under this Act may be recovered by the Authority as a debt.

    This is the same phrase – compensation payable under this Act – used in the chapeau to subsection 25(1) which sets out the principles a court must observe when assessing compensation payable under the Act. To the extent that non-monetary compensation has been agreed, only the amount of compensation otherwise payable under the Act less the value of this non-monetary compensation (subsection 23(6)) can ever be recoverable as a debt. The term “compensation” is used in section 36A as embracing only the monetary amount payable.

    (viii)Section 33 also, consistently, uses language of payment and, in particular, operates on the assumption that the amount of compensation agreed or ordered could have been but was not paid into Court. There is no good reason to employ a meaning of the term “compensation” in section 33 different from its meaning as used in subsection 36A; indeed to the contrary.

    (ix)The approach contended for by the appellant adopts a grammatical and close to literal approach to the construction of sections 6 and 33.  No good reason, based on context, underlying policy, or inappropriate consequences sufficient to suggest a departure from this, ordinarily applicable, approach, has been demonstrated.[6]

    [6]    Cf; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78].

18. Finally, the construction for which the appellant contends is more likely to avoid the risk of over compensation.  Parties are at liberty to negotiate and to reach agreement concerning all or part of the compensation payable by the acquiring authority and to agree upon components of monetary and non-monetary compensation.  In the latter case, it is open to a claimant to insist upon a value that takes account of any delay in receiving the non-monetary compensation.  A claimant cannot be obligated to accept anything less.  It follows, that if a claimant is not satisfied that it can obtain, by agreement, the full value of any non-monetary compensation, in this sense, it can insist on receiving money instead, in an amount awarded by the Court if not agreed.[7] In either case, the claimant will have the protection of section 33. However, where non-monetary compensation is agreed to, a claimant does not need the protection of section 33.

    [7]    It can also, thereafter, seek an order that any compensation, that has been paid into court or ordered, be applied in some non-monetary way pursuant to section 26.