Commissioner of Highways v M & B Farmer Nominees Pty Ltd; Commissioner of Highways v Farmer No 2 Pty Ltd
[2015] SASC 40
•19 March 2015
SUPREME COURT OF SOUTH AUSTRALIA
(Land and Valuation Division)
COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD; COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD
[2015] SASC 40
Judgment of The Honourable Justice Blue
19 March 2015
REAL PROPERTY - COMPULSORY ACQUISITION OF LAND - COMPENSATION - ASSESSMENT - INTEREST - WHEN ALLOWABLE
REAL PROPERTY - COMPULSORY ACQUISITION OF LAND - OCCUPATION OF ACQUIRED LAND
Question referred for determination in relation to compulsory acquisition of land pursuant to the Land Acquisition Act 1969 (SA).
Between April and July 2008, the Commissioner of Highways compulsorily acquired 75 hectares of land from the Farmer companies. The Commissioner contemporaneously offered compensation of $4.49 million and paid amounts totalling that sum into Court.
In 2012, the parties agreed that the Farmer companies were entitled to compensation totalling $6.24 million in cash together with the transfer of 22 hectares of land which the parties agreed was worth $1.79 million (being land acquired by the Commissioner from the Farmer companies but surplus to his requirements). The parties agreed that the Farmer companies were entitled to interest pursuant to section 33 of the Act on the difference between the cash component of the compensation ($6.24 million) and the amount paid into Court ($4.49 million). They disagreed whether the Farmer companies were entitled to interest on the difference between the total compensation ($8.03 million) and the amount paid into Court ($4.49 million). They agreed that the Farmer companies were entitled to apply to the Court to determine that question pursuant to section 23C of the Act.
The Commissioner contends, and the Farmer companies deny, that the Farmer companies were entitled to possession of the surplus land between 2008 and 2012. Neither party contends that the entitlement of the Farmer companies to interest under section 33 depends upon whether or not they were entitled to possession.
Held:
1. The Farmer companies were entitled to possession of the surplus land between 2008 and 2012 (at [39]-[42]).
2. Whether the Farmer companies were entitled to possession does not affect whether they are entitled to interest under section 33 of the Act (at [46]).
3. On its proper construction, interest is payable under section 33 on the difference between the total compensation, whether in the form of cash or otherwise, and the amount paid into Court (at [66]).
4. Accordingly, the Farmer companies are entitled to interest calculated on the difference between the total compensation ($8.03 million) and the amount paid into Court ($4.49 million) (at [67]).
Highways Act 1926 (SA) s 8; Land Acquisition Act 1969 (SA) s 6, s 8, s 16, s 23A(1), s 22B s 23, s 23C, s 24, s 25, s 26, s 33 ; Land Acquisition Regulations 2004 (SA) reg 8(a)(i), referred to.
COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD; COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD
[2015] SASC 40BLUE J.
These are questions referred by M & B Farmer Nominees Pty Ltd and Farmer No 2 Pty Ltd (the Claimants) for determination by the Court[1] in relation to compulsory acquisitions of their land by the Commissioner of Highways (the Commissioner).
[1] Under the Land Acquisition Act 1969 (SA) s 23C.
The question in each action is whether the Claimants are entitled to interest under section 33 of the Land Acquisition Act 1969 (SA) (the Act) calculated by reference to the total compensation for the relevant acquisitions or only by reference to the monetary component of that compensation.
The question turns on the construction of section 33 in the context of the Act as a whole.
Background
The land
The Claimants are part of a group of companies (the Farmer Group) owned and controlled by Barry and Marie Farmer. As at mid-2008, the Farmer Group inter alia grew almonds and potatoes in the Virginia area.
M & B Farmer Nominees Pty Ltd (Farmer Nominees) grew potatoes on 32 hectares[2] of land situated on Womma Road comprising allotments 460 and 461 (collectively Lots 460/461).
[2] All references to hectares are rounded to the nearest hectare unless otherwise stated.
Farmer Nominees grew almonds on 160 hectares[3] on three parcels of land:
·allotment 82 (Lot 82) comprising 71 hectares on the corner of Short and Pellew Roads;
·two allotments comprising 60 hectares[4] further north on the corner of Taylors and Womma Roads; and
·one allotment comprising 30 hectares[5] further north again on the corner of Taylors and Curtis Roads.
[3] Rounded to the nearest 10 hectares.
[4] Rounded to the nearest 10 hectares.
[5] Rounded to the nearest 10 hectares.
The Farmer Group had recently acquired two allotments adjoining Lot 82:
·allotment 80 (Lot 80) owned by Farmer Nominees comprising 12 hectares to the west of the northern half of Lot 82; and
·allotment 81 (Lot 81) owned by Farmer No 2 Pty Ltd (Farmer No 2) comprising 28 hectares to the west of the southern half of Lot 82.
Farmer Nominees acquired Lot 82 in May 2004 and planted almonds on it. Farmer Nominees acquired Lot 80 in March 2007. Lot 80 was vacant and largely unimproved. Farmer Nominees intended to plant almonds on Lot 80 and integrate it with the almond orchard on Lot 82.
Farmer No 2 acquired Lot 81 in February 2008. It had previously been used for intensive sheep feed lotting. It was fenced into relatively small feedlot style holding paddocks with troughs and tree shelter belts. It also contained yards, sheds, a bore and pumphouse and a house. It would have required extensive earthmoving and other preparatory works costing several hundred thousand dollars to prepare it for use as an almond orchard. The Farmer Group intended to develop it in the long term for use as an almond orchard but it is likely that it would have taken some years to develop.
The almond orchard on Lot 82 was irrigated from a dam in its south western corner. The dam was supplied by reclaimed and bore water. Farmer Nominees held an entitlement to 220 megalitres of Bolívar-reclaimed water for Lot 82, which was increased to 400 megalitres in September 2009 on transfer of the 180 megalitre entitlement of Lots 460/461. Farmer No 2 acquired with Lot 81 a water licence to pump underground water from a bore situated on Lot 81.
The acquisitions
In November 2006, the State government announced the planned construction of the Northern Expressway to extend 23 kilometres generally north-east from Port Wakefield Road, Waterloo Corner to the Gawler Bypass. It required a 70 metre wide corridor.
The Northern Expressway corridor was planned to bisect each of Lots 80 and 81. It would require 10 hectares of Lot 80 (Lot 80 Central), ultimately leaving 2 hectares in its south-eastern corner (Lot 80 South East).It would require 8 hectares of Lot 81 (Lot 81 Central), ultimately leaving 14 hectares on its eastern side (Lot 81 East) and 6 hectares in its north western corner (Lot 81 North West).
The Northern Expressway corridor was planned to pass through the north-eastern corner of Lot 82, requiring 3 hectares. It was planned to pass through Lots 460/461 further northeast, requiring the whole of those allotments.
The Commissioner is a body corporate.[6] On 10 April 2008, the Commissioner compulsorily acquired Lots 460/461.[7] The Commissioner offered to pay Farmer Nominees $1,920,000 for the land.[8] On 11 April 2008, the Commissioner paid $1,920,000 into Court.[9]
[6] Highways Act 1926 (SA) s 8.
[7] Land Acquisition Act 1969 (SA) s 16. Notice of acquisition published in The South Australian Government Gazette.
[8] Land Acquisition Act 1969 (SA) s 23A(1).
[9] Land Acquisition Act 1969 (SA) s 23A(3). Action LVD 480 of 2008.
On 3 July 2008, the Commissioner compulsorily acquired Lot 80.[10] The Commissioner offered to pay Farmer Nominees $705,000 for the land.[11] On 4 July 2008, the Commissioner paid $705,000 into Court.[12]
[10] Land Acquisition Act 1969 (SA) s 16. Notice of acquisition published in The South Australian Government Gazette.
[11] Land Acquisition Act 1969 (SA) s 23A(1).
[12] Land Acquisition Act 1969 (SA) s 23A(3). Action LVD 937 of 2008.
On 3 July 2008, the Commissioner compulsorily acquired Lot 81.[13] The Commissioner offered to pay Farmer No 2 $1,590,000 for the land.[14] On 4 July 2008, the Commissioner paid $1,590,000 into Court.[15]
[13] Land Acquisition Act 1969 (SA) s 16. Notice of acquisition published in The South Australian Government Gazette.
[14] Land Acquisition Act 1969 (SA) s 23A(1).
[15] Land Acquisition Act 1969 (SA) s 23A(3). Action LVD 936 of 2008.
On 17 July 2008, the Commissioner compulsorily acquired 3 hectares (Lot 35) in the north-western corner of Lot 82.[16] The Commissioner offered to pay Farmer Nominees $275,000 for the land.[17] On 13 June 2008, the Commissioner paid $275,000 into Court.[18]
[16] Land Acquisition Act 1969 (SA) s 16. Notice of acquisition published in The South Australian Government Gazette.
[17] Land Acquisition Act 1969 (SA) s 23A(1).
[18] Land Acquisition Act 1969 (SA) s 23A(3). Action LVD 810 of 2008. The Commissioner published a notice of acquisition on 12 June 2008 but it erroneously identified the land acquired and was corrected and republished on 17 July 2008.
The total compensation offered by the Commissioner to the Claimants and paid into Court was $4,490,000.
Section 24(1) of the Act provided that:
Where an interest in possession in land is vested in the Authority pursuant to this Act, the Authority must diligently endeavour to obtain agreement as to the terms on which it will enter into possession of the subject land.
On 21 May and 4 July 2008, solicitors for the Farmer Group wrote to the Commissioner expressing an interest in reacquiring any land compulsorily acquired that was ultimately surplus to the Commissioner’s requirements.
The Commissioner negotiated with the Farmer Group between 25 July and 30 September 2008 in an endeavour to obtain agreement as to the terms on which he would enter into possession of the land acquired from the Farmer Group for the Northern Expressway.
In the course of those negotiations, the Commissioner provided to the Farmer Group’s solicitors a plan showing the location of Lot 80 South East and Lot 81 East, Lot 81 North West and said that it was likely that these three parcels would ultimately be surplus to the Commissioner’s requirements (collectively the Surplus Land). The Commissioner agreed to negotiate with a view to agreeing terms for the transfer of the Surplus Land to the Farmer Group.
On 30 September 2008, the parties entered into four deeds (the Possession Deeds) relating to terms on which the Commissioner would enter into possession in respect of the four allotments of land acquired (the Land). The deeds relating to Lots 460/461 and Lot 35 (north-western portion of Lot 82) provided for the Commissioner to enter into possession of the whole of the land. The deeds relating to Lots 80 and 81 provided for the Commissioner to enter into possession of Lot 80 Central and Lot 81 Central respectively and made no provision for the Commissioner to enter into possession of Lot 80 South East, Lot 81 East or Lot 81 North West.
By exchange of letters dated 13 November and 15 December 2008, it was agreed that the Commissioner would negotiate in good faith for the transfer of the Surplus Land at market value to the former registered proprietor to the exclusion of any other party for a reasonable period until such negotiations were exhausted.
Use of acquired land
Between October 2008 and October 2012, the Farmer Group used Lot 81 East in the following ways:
·maintaining and operating the bore and pump house to supply water to the dam and in turn the almond orchard on Lot 82;[19]
·temporary storage of almonds, hay, boxes and bins in the sheds and yards;
·temporary storage of agricultural machinery while it was being used to work the almond orchard on Lot 82;[20]
·locking the Pellew Road gate entrance;
·permitting an employee to live in the house;
·permitting another employee to run 10 to 20 sheep on the land;
·keeping out strangers;
·making repairs, alterations and improvements to a shed, stables and fencing;
·removing fencing on and athel pines near the boundary with Lot 82 in the vicinity of the dam to the south.
[19] The water licence authorised the taking of 181 megalitres. The Farmer Group took varying quantities ranging from 49 to 141 megalitres per annum with a high of 239 megalitres in 2008/2009 that was subject to query or challenge by the Farmer Group.
[20] The machinery was transported from the almond orchards further north and left on the Land overnight as necessary.
Between October 2008 and October 2012, the Farmer Group removed fencing on and athel pines near the boundary of Lot 80 South East with Lot 82. The Farmer Group did not otherwise use Lot 80 South East. The Farmer Group did not use Lot 81 North West.
Between October 2008 and October 2012, the Commissioner did not generally use the Surplus Land. However, his contractors dumped surplus soil and other materials on the Land.
Compensation
Between 2008 and 2012, the parties negotiated with a view to agreeing on compensation for the acquisition of the Land. On 15 October 2012, the parties entered into a Settlement Deed. They agreed that the compensation to which the Claimants were entitled under the Act by reason of the acquisitions was $6,240,220.15 (the Cash Compensation) and the transfer to the Claimants or their nominee of an unencumbered estate in fee simple in the Surplus Land which had an agreed value of $1,794,420[21] (the Land Compensation). The Commissioner agreed to pay in cash the difference between the Cash Compensation and the amount he had paid into Court of $4,490,000. The Commissioner agreed to transfer the Surplus Land to the Claimants or their nominee.
[21] As at July 2008.
The parties could not agree on the entitlement of the Claimants to interest under section 33 of the Act. The Claimants contended that they were entitled to interest on the difference between total compensation of $8,034,640.15 (being the combined value of the Cash Compensation and the Land Compensation) and the amount paid into Court of $4,490,000. The Commissioner accepted that the Claimants were entitled to interest on the difference between the Cash Compensation of $6,240,220.15 and the amount paid into Court of $4,490,000, but denied that they were entitled to any additional interest in relation to the Land Compensation. The parties agreed that, if the Claimants were entitled to the disputed interest, the Authority was entitled to set off rent for the Surplus Land calculated at $23,053 per annum from October 2008 to the date of transfer to the Claimants of the Surplus Land. The parties agreed to settle the principal component of compensation and leave it to the Claimants to apply to the Court to determine their entitlement to interest under section 33 of the Act.
The evidence
At the hearing, a statement of agreed facts and book of agreed documents were tendered. Various other documents were also tendered.
The Claimants tendered an affidavit by Barry Farmer. Mr Farmer also gave oral evidence. The Commissioner tendered an affidavit of Philip Cheffirs, a qualified land valuer and Senior Acquisitions Advisor in the Real Estate Services Section within the Department of Planning, Transport and Infrastructure. Mr Cheffirs also gave oral evidence. The evidence of Mr Farmer and Mr Cheffirs related primarily to the extent and value of the use of the Surplus Land by the Farmer Group between October 2008 and October 2012.
The Commissioner tendered two affidavits of Robert Freeman, a Customer Services Manager at the Department of Environment, Water and Natural Resources. Mr Freeman also gave oral evidence. His evidence related to the amount of water drawn from the bore on Lot 81.
The Commissioner tendered an affidavit of Charles Bertram, Principal Acquisitions Advisor in the Real Estate Services Section within the Department of Planning, Transport and Infrastructure. Mr Bertram did not give oral evidence. His evidence related to the difficulty of quantifying the monetary value of works that historically have been undertaken by way of non-monetary compensation to various landowners the subject of compulsory acquisitions. He also gave evidence that he was not aware of a previous claim for interest in respect of non-monetary compensation.
Despite the fact that the principal witnesses, Mr Farmer and Mr Cheffirs, were cross-examined at length, ultimately no real challenge is mounted by either party to the credit or reliability of their evidence. Despite the fact that Mr Farmer tended to be argumentative and to minimise the extent and value of the Farmer Group’s use of the Surplus Land, this did not affect his evidence about the underlying facts. I accept the evidence of each of Mr Farmer and Mr Cheffirs. Ultimately, nothing turns on their evidence and the question for determination is a pure question of law involving the construction of section 33 of the Act.
Possession of the Surplus Land
The evidence at trial was mainly directed to the question whether the Farmer Group or the Commissioner had possession of the Surplus Land between October 2008 and October 2012. Despite the considerable time devoted to evidence relating to and contentions concerning this issue of possession, ultimately both parties accept that the question for determination by the Court does not depend on the issue of possession. However, I address it for completeness.
The issue of possession turns on provisions of the Act and the construction of the Possession Deeds. It does not turn on the extent or value of the use actually made by the Farmer Group of the Surplus Land.
Sections 16 and 24 of the Act relevantly provided:
16—Notice of acquisition
(1) Subject to this Act, the Authority may, at least three months after the last occasion on which a notice of intention to acquire was given but before the period for acquisition of the land comes to an end, publish a notice of acquisition in the Gazette.
(2) On publication of the notice of acquisition—
(a) the land vests in the Authority to the extent of the interest specified in the notice; and
(b) a mortgage, charge, encumbrance, trust or other interest affecting the land (except native title) is, to the extent it affects the land subject to the acquisition, discharged; and
(c) if a residual interest remains after the acquisition, the interest is modified to the extent required by the acquisition.
…
24—Entry into possession
(1) Where an interest in possession in land is vested in the Authority pursuant to this Act, the Authority must diligently endeavour to obtain agreement as to the terms on which it will enter into possession of the subject land.
(2) If at the expiration of three months after the publication in the Gazette of the notice of acquisition, the Authority has failed to obtain agreement upon entry into possession of the subject land, it may apply to the Court for—
(a) an order that any person be ejected from the subject land; and
(b) such further orders as may be just in the circumstances,
and the Court may make any such order.
(3) The period of three months referred to in subsection (2) of this section may be extended by agreement of the parties, or by order of the Court.
(4) The Court may, on the application of the Authority, order that any person in possession of land after the expiration of three months from the day on which a notice of acquisition in relation to the land was published in the Gazette, shall pay rent to the Court at a rate fixed by the Court.
(5) A person who remains in possession of land acquired under this Act after the expiration of three months from the day on which a notice of acquisition in relation to the land was published in the Gazette shall be deemed to be in possession in pursuance of a tenancy determinable at will by the Authority and subject to such terms and conditions as may be prescribed.[22]
[22] (Notes omitted).
Section 24 proceeds on the basis that, notwithstanding that an interest in possession vests in the authority pursuant to section 16, the authority does not, without more, have a right to possession vis a vis the former registered proprietor (or other person otherwise entitled to possession). Rather, the authority only gains a right to possession if the person entitled to possession agrees to yield possession to the authority or the Court makes an order under subsection 24(2) for possession. This construction of section 24 is confirmed by subsection 24(5) which creates a statutory tenancy at will and deems the person remaining in possession to be in possession pursuant to that tenancy. I reject the contention by the Farmer Group that the Commissioner is given a right to possession as an incident of his acquisition of the fee simple.
It is clear that on the dates of publication of the notices of acquisition in the Gazette on 3 and 17 July 2008 Farmer Nominees and Farmer No 2 were in possession of Lot 80 and Lot 81 respectively. They remained in possession of the Surplus Land thereafter.
The Possession Deed for Lot 81 contains, inter alia, the following recitals:
C. The Commissioner has an acknowledged that except for the corridor land [Lot 81 Central] Allotment 81 is surplus to his requirements.
D. In view of the matter referred to in Recital C, the Commissioner wishes to obtain agreement as to the terms on which he will enter into possession of the corridor land only, pursuant to Section 24 of the Land Acquisition Act 1969.
and the following substantive term:
1. Subject to this Deed, Farmer agrees to the Commissioner … entering into possession of the corridor land on 29 September 2008 for the purposes of undertaking all construction activities including demolition works, drainage works, road works, and accommodation works.
The Possession Deed for Lot 80 is similar.
It is clear that the Possession Deeds only gave to the Commissioner an entitlement to possession of Lot 80 Central and Lot 81 Central and did not give any entitlement to possession of the Surplus Land. I reject the Farmer Group’s contention that the Possession Deeds are silent as to the entitlement to possession of the Surplus Land. The Possession Deeds are inconsistent with the Commissioner being entitled to possession of that land.
The Possession Deeds are to be construed without regard to the subsequent conduct of the parties. Even if the subsequent conduct of the parties were taken into account, it would confirm the construction that the Farmer Group was left in possession of the Surplus Land. The Farmer Group acted in a manner inconsistent with the Commissioner being entitled to possession, principally in respect of Lot 81 East and to a lesser extent in respect of Lot 80 South East.
Regulation 8(a)(i) of the Land Acquisition Regulations 2004 (SA) provides:
The terms and conditions on which a person is taken to be in possession of land acquired under the Act as a tenant at will under section 24(5) are—
(a) that the tenant, or, where there are more than one, the tenants jointly and severally, are to be taken to have covenanted as follows:
(i) on the days and in the manner agreed between the Authority and the tenant, but in default of agreement, then weekly and at the place specified by the Authority for the purpose, to pay rent at a rate that represents a fair economic rate, having regard to the use that, during the currency of the tenancy, will probably be made of the land…
The Claimants were required to pay rent at a fair economic rate for Lot 80 and Lot 81.
While the Claimants were entitled to possession of the Surplus Land, they did not have security of tenure because the tenancy was terminable at will. They did not have security justifying substantial improvements such as development of an almond orchard. They were not able to mortgage their limited interest to raise finance.
As noted above, nothing turns on my finding that the Claimants were entitled to possession of the Surplus Land. While it follows that the Commissioner is entitled to rent at a fair economic rate, the parties have quantified that rent at $23,053 per annum and agreed that the Claimants will pay it if (and only if) they are successful on the issue of interest under section 33. Neither party contends that entitlement to interest under section 33 is affected by the question whether the Claimants were entitled to possession or whether they made use of the Surplus Land.
Construction of section 33
Section 33 of the Act provides:
33—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.
Section 33 requires a comparison to be made between two integers:
1.the amount of compensation the authority agrees or is ordered to pay in respect of the acquisition of the land; and
2.the amount paid into Court in respect of the acquisition of the land.
The Claimants contend that the first integer incorporates the total compensation agreed or ordered regardless of the form in which it is paid and it therefore includes any component paid in the form of non-monetary compensation. The Commissioner contends that it refers only to an amount that is paid and denotes only monetary compensation.
Section 33 needs to be construed in the context of the Act as a whole. Sections 6, 22B, 23, 23A, 25 and 26 relevantly provide:
6—Interpretation
(1) In this Act, unless the contrary intention appears—
…
compensation means compensation to which a person is entitled under this Act, and includes the purchase price of land purchased by agreement;
…
22B—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.
23—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.
(5) If a party to the negotiations who is the holder of native title in the land requests non-monetary compensation, the Authority must—
(a) consider the request; and
(b) negotiate in good faith with the party in relation to the request.
(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.
23A—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.
…
(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.
....
25—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
(d)where the claimant's interest in the subject land was liable to expire or be determined, any reasonable prospect of renewal or continuation of the interest must be taken into account; and
(e)any special suitability or adaptability of the land for any purpose shall not be taken into account if it could be applied to that purpose in pursuance only of statute, or if the suitability or adaptability is peculiar to the purposes or requirements of a particular person or of any Governmental or local governing authority but any bona fide offer to acquire the land made before the passing of the special Act shall be taken into account; and
(f)where the value of the land is enhanced by reason of its use, or the use of any premises on the land, in a manner that may be restrained by any court, or is contrary to law, or is detrimental to the health of any persons, the amount of that enhancement shall not be taken into account; and
(g)no allowance shall be made on account of the fact that the acquisition is effected without the consent, or against the will, of any person; and
(h)no allowance shall be made for any enhancement or diminution in the value of the land in consequence of—
(a) the passing of the special Act; or
(b) the acquisition under this Act of any other land; or
(c)any proposed or expected development of the land after its acquisition; and
(i)where the land is, and but for acquisition would continue to be, devoted to a particular purpose, and there is no general demand or market for land devoted to that purpose, the compensation may, if reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement; and
(j)allowance shall be made in favour of the Authority for any enhancement in value of land adjoining the subject land in which the claimant is interested by reason of development of the land after its acquisition, but in no case shall the claimant be liable to make any payment to the Authority in respect of such enhancement in value; and
(k)where a notice of intention to acquire land has been served upon a person interested in the land, any sales, transactions, arrangements, licences or approvals effected or obtained with respect to the land, and any improvements to the land effected, after service of the notice, shall not be taken into account unless it is proved that they were effected or obtained bona fide.
(2) The reference to loss in subsection (1)(a) extends, in the case of acquisition of native title, to diminution, impairment or other adverse effect on native title that results or will result from the acquisition project.
(3) Subject to subsections (1) and (2), the total compensation payable for the acquisition of native title must not exceed the amount that would be payable for the acquisition of an estate in fee simple in the relevant land.
4) A reference in this section to a claimant is limited to a claimant who is entitled to compensation.
26—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.[23]
[23] (Notes omitted).
The Commissioner argues that the words “pay” and “amount” are apposite to monetary consideration. The Commissioner points to the use of the word “amount” in the second integer in a monetary sense (the amount paid into Court) and argues that the same word used in the first integer should be interpreted in the same way.
The Commissioner points to the use of the words “amount” and “pay” in subsections 23A(1) and (3) in reference to monetary sums. The Commissioner points to the references to non-monetary compensation in subsections 23(4), (5) and (6) and to the use of the verbs “offer” and “request” rather than “pay” and the noun “value” rather than “amount”. The Commissioner points to the compensation required by section 23A to be offered and paid into Court being of necessity monetary consideration.
The Commissioner contends that “interest” only accrues on monetary amounts and that the purpose of section 33 is to compensate the landowner for the loss of use of the principal monetary amount that is ultimately received.
The Claimants argue that the words “pay” and “amount” have usages other than in reference to money. They argue that the usage of the word “amount” in the first integer is a reference to the total liability of the authority to the landowner which might be discharged by either monetary or non-monetary consideration. They argue that, while the second integer refers to an amount that is monetary, in turn the amount required to be paid into Court represents the entire value of the property and not just one component thereof.
The Claimants point to the use of the word “payable” in subsections 23(1) and 25(1)(a) to refer to the total compensation and to the implication in subsection 23(6) that the “amount” of monetary compensation is the net figure and the gross figure inclusive of non-monetary compensation is therefore also an “amount”. They point to the definition of “compensation” in section 6 which encompasses the entire compensation for the land acquired.
The Claimants contend that the policy of section 23 is that the authority is required contemporaneously with the acquisition of title to offer the full value of the land acquired and pay that amount into Court within seven days on the basis that interest on it accrues to the benefit of the former landowner. The policy of section 33 is that any ultimate shortfall between the true value and the offer should also bear interest.
Starting with the text of section 33, the word “amount” is often used to designate a monetary figure; however, it is equally commonly used to designate a non-monetary quantum. The Oxford English Dictionary includes the following definitions of the noun amount:
1. The sum total to which anything mounts up or reaches:
a. in quantity.
b. in number.
c. spec. The sum of the principal and interest due upon a loan.
2. fig. The full value, effect, significance, or import.
3. A quantity or some viewed as a total.[24]
[24] J.A. Simpson and E.S.C. Weiner, The Oxford English Dictionary (Clarendon Press, 6th ed, 1989) 411.
The verb “pay” is often used with money as its object; however it may also be used to refer to the provision of something other than money. The Oxford English Dictionary includes the following definitions of the verb pay:
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2. a. trans. To give to (a person) what is due in discharge of a debt, or as a return for services done, or goods received, or in compensation for injury done; to remunerate, recompense.
b. to pay off (rarely up): to pay in full and discharge; to give all that is owing to and thus settle accounts with; …
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3. fig. or gen. To reward, recompense, requite, give what is due or deserved to (a person)
a. in good or neutral sense.
b. in malam partem: to give (one) his just deserts, visit with retribution, chastise, punish. …
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4.To give a recompense for, to recompense, reward, requite (a service, work, or action of any kind): in a good or bad sense. Also, of a thing, to yield a recompense for, to reward.
5a. To give, deliver, or handover (money, or some other thing) in return for goods or services, or in discharge of an obligation; to render (a sum for amount owed). Also, with double obj. or dat. of person (‘I paid him the money’), and hence in indirect passive (‘he was paid the money’ = ‘the money was paid to him’).
b. With advbs. to pay away, in, over, out, etc. pay down: to lay down (money) in payment; to pay immediately or on the spot.
c. to pay with the fore-topsail: to leave port without paying one’s debtors or creditors.
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The word “payable” is used in subsections 23(1) and 25(1)(a) to refer to the entire compensation for the land independently of whether it might be provided in monetary or non-monetary form. The “amount” in the second integer in section 33 refers to the quantum of money paid into Court but this follows because money is the only practical form of consideration that can be paid into Court. Accordingly this does not dictate the meaning of the word when used in the first integer which is not so constrained by necessity.
Analysis based only on textual and contextual considerations leaves section 33 ambiguous. It is necessary to turn to purposive considerations.
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.
In cases in which there is a shortfall in the authority’s initial assessment of the amount of primary compensation, there are several possible permutations. The amount of compensation might be fixed by the Court in default of agreement between the parties. Assume that the Court fixes total compensation at $2 million when the authority had initially offered and paid into Court $1 million. If the Court then makes an order under section 26 that $500,000 be applied to the purchase of alternative land for the landowner, there is no reason why interest should not be payable under section 33 on the full $1 million shortfall. If the parties agree that the authority will sell to the landowner for $500,000 alternative land that the authority happens to own, there is no reason why interest should not be payable under section 33 on the full $1 million shortfall. If the parties agree that the authority will transfer to the landowner land in partial discharge of the obligation to pay the compensation of $2 million to the extent of $500,000, again there is no reason why interest should not be payable under section 33 on the full $1 million shortfall.
The amount of compensation might be fixed by agreement between the parties. Assume that the parties agree on total compensation at $2 million when the authority had initially offered and paid into Court $1 million. If the Court then makes an order under section 26 that $500,000 of the monies paid into Court be applied to the purchase of alternative land for the landowner, there is no reason why interest should not be payable under section 33 on the full $1 million shortfall. If the parties agree that the authority will sell to the landowner for $500,000 alternative land that the authority happens to own, there is no reason why interest should not be payable under section 33 on the full $1 million shortfall. If the parties agree that the authority will transfer to the landowner land in partial discharge of the obligation to pay the compensation of $2 million to the extent of $500,000, there is no reason why interest should not be payable under section 33 on the full $1 million shortfall.
Finally, if the parties agree that the compensation is to comprise $1.5 million in cash together with the transfer of the alternative land, there is no reason why the position should be any different. If the parties could not agree on the amount to be attributed to the consideration by way of the transfer of the alternative land for the purposes of the calculation of interest, it would be necessary for the Court to do so. However, this would be no more difficult than the Court’s valuing the land acquired or assessing the amount of compensation when the parties cannot agree thereon or on a quantum meruit or quantum valebat. This last case is likely to be comparatively rare and the paradigm case anticipated by the legislature is likely to be one in which the parties first agree on the amount of total compensation before dividing it between monetary and non-monetary compensation.
On an overall consideration of the text, context and evident purpose of section 33, the interest payable is to be calculated on the difference between the total amount of compensation, whether monetary or non-monetary in form, and the amount paid into Court by the authority.
Conclusion
The Claimants are entitled under section 33 of the Act to interest on the difference between the principal amount of compensation of $8,034,640.15 and $4,490,000 paid into Court by the Commissioner.
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