E. Bergman v Council of the Municipality of Holroyd
[1988] NSWLEC 6
•07/06/1988
Land and Environment Court
of New South Wales
CITATION: E. Bergman v. Council Of The Municipality Of Holroyd [1988] NSWLEC 6 PARTIES: APPLICANT
Eugene BergmanRESPONDENT
Council Of The Municipality Of HolroydFILE NUMBER(S): 30650 of 1986 CORAM: Hemmings J KEY ISSUES: :- LEGISLATION CITED: Environmental Planning and Assessment Act, 1979
Local Government Act 1919CASES CITED: Housing Commission of N.S.W. v. San Sebastian Pty Limited, (1978) ;
Nuland Developments Pty Limited v. Parramatta City Council, 37 L.G.R.A. 258.;
Sydney Golf Club v. Federal Commissioner of Taxation (1957);
Leichhardt Municipal Council v. Seatainer Terminals Pty Limited & Anor (1981-82) ;
Horn v. Sunderland Corporation, [1941];
Balquhidder v. Minister for Environment and Planning, 58 L.G.R.A. 339 at 353.;
Robertson v. The Commissioner of Main Roads, Perrignon J(1987)DATES OF HEARING: DATE OF JUDGMENT:
07/06/1988LEGAL REPRESENTATIVES:
JUDGMENT:
HIS HONOUR: Eugene Bergman is the registered proprietor of premises known as No. 33 Hackney Street, Greystanes. By notice published in the Government Gazette on 8th July, 1986 the respondent Council of the Municipality of Holroyd ("Council") resumed the rear portion of that land having an area of 4,043 square metres, and being Lot 32, D.P. 706978 in a subdivision to create the parcel proposed for compulsory acquisition. The purpose of such acquisition was stated to be for "controlling and managing grounds for public recreation, and construction, extension, protection, maintenance, control and management works for the drainage of water".
The resumption severs an allotment which comprises all of that part of the premises zoned Open Space (Proposed Recreation) 6(b) pursuant to the provisions of the Holroyd Planning Scheme Ordinance. The residue, having an area of 1,383m2, is situate within a Residential 2(a) zone thereunder, and in which, pursuant to the provisions of the Holroyd Local Environmental Plan No. 25 (1985), residential flat buildings Class B are permitted with consent.
Since resumption the subject land has been significantly altered and now contains works of drainage and playing fields in conjunction with adjoining recreation areas. It is common ground that any affect upon value as a consequence of the construction of the said works must be excluded in the assessment of compensation.
As the dispossessed owner, the applicant claims:
A. That the value of the land must be determined as if:
1. It had not been zoned Open Space;
2. The highest and best use thereof is for medium density housing; and
3. It is not likely to be flood liable and could not be if drainage and bridgeworks are carried out.
B. Solatium.
The Council submits:
A. The land is zoned and therefore not "reserved" at all or, alternatively, not reserved pursuant to s.26(c) because open space was not the exclusive or sole use in the relevant zone;
B. The compensation must therefore be assessed on the basis that it is land zoned Open Space; and
C. The subject land is flood prone;
D. That solatium was not payable because the applicant's residence on the subject land was:
a) uncertain, and
b) unlawful.
The applicant makes no claim that the subject premises enjoys existing use rights within the meaning of the Environmental Planning and Assessment Act, 1979 ("the E.P.& A. Act").
The applicant purchased the premises in 1959 at a time when the locality was sparsely developed for urban purposes. No dwelling house at that time or since was erected thereon. At the date of resumption an incomplete timber frame of a dwelling had been for some time erected on the retained land. The applicant resided, without the prior consent of the Council, in a portion of a building on the resumed land. It appears that the said building was originally constructed as a poultry shed and alterations for residential purposes were also carried out without consent.
Erected also thereon were three timber framed structures clad with corrugated iron, that is:
* Workshop - 160m2, part earth floor
* Storage shed - 71m2
* Enclosed storage shed - 95m2
* Toilet/storage shed.
Storage space was also provided by a portable, timber framed structure clad with hardboard and with corrugated iron roof and having an area of approximately 16m2.
It appears that the prior approval for the erection of any of the said structures was not obtained from the Council. Little evidence was offered as to the nature or adequacy of the residential accommodation in the said workshop building. However, I am satisfied that it was substandard.
The subject premises was enclosed by a three metre timber framed corrugated galvanised iron clad fence, and mains supply of water, sewer, electricity, gas and telephone were either connected or available for connection to the subject premises.
The locality is a well established residential suburb and relatively convenient to local neighbourhood shops, schools and community facilities, and is about two kilometres from the Pendle Hill Railway Station.
Hackney Street is a fully constructed asphalt road with concrete kerb and guttering and a grassed footpath.
The applicant first rented the subject premises in 1957, prior to its acquisition in 1959. He is a trained radio technician and has been engaged in numerous activities involving the repair and sale of vehicles, parts, machinery and equipment for many years. He denied he used the premises for the purposes of a "junk yard" in the defined Town Planning sense, but from the photographs that appeared to me to be an appropriate description. As I understand his evidence, he used the subject premises for mechanical repairs, the storage and sale of machinery, the repair for sale of machinery and the storage and sale of building material. He conceded that at no time did he make an application to the Council to use the subject premises for any or all of the said uses, or for residential purposes.
However, there can be no doubt that the Council was aware of the occupation of the land and its use over many years. Consent for the erection of the dwelling house was granted in 1970 and he sought and received from Council consent to defer completion of the dwelling owing to lack of money. I assume, because of a lack of power in Council at that time to compel completion of the building, such "consent" related to the continuation of the unauthorised uses and occupation of the premises pending the erection of the approved dwelling house.
Such use and occupation continued after the date of resumption and the premises were vacated in April, 1987 after notice by the Sheriff.
Some materials, mostly timber, were removed in October 1986, and stored in temporary premises. In March, 1987 large quantities of materials were stored in containers on the residue, and moved to various rented premises including sites at Silverwater and Merrylands.
The applicant had no record of the materials in his possession at date of resumption, and had poor records of storage charges or receipts. Inadequate business records were produced in evidence. The applicant said he could not remember exactly the removal expenses incurred because at that time he was under stress.
The applicant has never seen the subject land or any part of it subjected to flooding by stormwater. The subject premises are burdened by an easement for drainage. At the time of his acquisition the land was cut by a natural stormwater drain in which water ran only after rain. Since 1964/65 he observed that the surrounding area was increasingly subdivided and developed and more water was thereby discharged into the said drain. He observed that the banks of the drain eroded and over time became much wider and deeper. However I am unpersuaded, on the evidence, that the likelihood of flooding from the said drain was significantly different at date of resumption from what it was prior to 1960.
The applicant opposed and resisted the acquisition of his land and remained in occupation until threatened with eviction. I am satisfied that the compulsory acquisition caused him stress and anxiety. He now resides in part of premises at 145 Woodville Road, and it appears that he believes he cannot obtain other accommodation until he receives full compensation for the resumption.
A major issue between the parties was the extent, if any, that the subject premises was inundated with stormwater after a 1% annual incidence probability flood (often described as the one in one hundred year flood).
Mr G.J. Shelley, a highly qualified and experienced consulting engineer, assessed the flooding liability of the subject land on behalf of the applicant, and in a detailed report which was received in evidence concluded that: |CF2.|PSI
"In terms of the 'Flood Development Manual' and with our present stage of knowledge it can be stated with 95% confidence
1. That the subject property has never been flood liable
2. That the property has not become flood liable - even after the various 'improvements' upstream have taken place." |CF1.|PSO
Mr Shelley was briefed only for the purpose of the assessment of compensation and his evidence was substantially a critique of the conclusions and recommendations of consultants to the Council. Willing & Partners, a well known firm of consultants, were engaged by the Council in 1982 to investigate and report on flood mitigation alternatives in Pendle Hill Creek. One of the purposes of the subject resumption was the implementation of one of the flood mitigation recommendations made by such consultants.
In any event, Mr Shelley was of the opinion that the subject land could be rendered flood free and suitable for development for medium density housing by the execution of works of drainage on the watercourse and the construction of a bridge. Such works were estimated by him to cost $30,000 as at the date of resumption.
Mr C.A. Woodley, consultant valuer, assessed compensation for the resumed land on the basis of the value to the owner, that the open space zoning must be disregarded and that all of the land was to be regarded as zoned to permit group housing with consent of Council. Relying upon information supplied by Mr Bergman, he accepted that the land was not flood liable, but required expenditure of the said $30,000 to permit development. He determined the value of the resumed land by way of a "before and after" valuation, that is - |CF2.|PSI
"Estimated market value of holding
before resumption based on potential
for 19 town houses with allowance
for costs of drainage and new bridge $321,000
Estimated market value of residue
after resumption 71,000
Deduced loss in value at date
of resumption $250,000" |CF1.|PSO
He explained that such calculation was based upon a potential for nineteen townhouses at $19,000 per unit, gross total $361,000, less drainage and bridge costs of $30,000 and contingencies of $10,000, i.e. $40,000, leaving a nett total of $321,000.
Mr Woodley was not challenged in any meaningful way as to the comparability of sales relied upon by him, or his reasons for the estimate of value of land before and after resumption.
Mr Woodley assessed compensation for solatium on the basis that the resumed land provided the applicant with a home and a business, and that the partly constructed residence would be of no value to him if the business was closed down. However, he considered suitable accommodation could have been obtained if the site had been sold to a developer for medium density housing.
Mr P.B. Kavanagh of the Valuer General's Department had previously made a valuation of the subject premises for the Council to meet requirements of the Department of Water Resources. Such valuation was unusually brief and was prepared not for this case but in relation to the construction of a stormwater retardation basin which was partially funded by that Department. He had assessed the market value of the fee simple exclusive of improvements at $30,000 having regard to its zoning as open space and its flood liability, but not any restrictive affect of the 1977 Flood Prone Land Policy or any subsequent policy or zoning planning from such policy. Mr Kavanagh in evidence stated that in his opinion the assessment of the value to the owner for the purposes of these proceedings would be the same sum.
An extensive valuation report supported by evidence of Mr L. Kenny, a valuer employed by Gilbert & Kennedy (Australia) Pty Limited, was, until submissions, relied upon by the Council to determine the value to the owner on a number of alternative bases. On the basis that it was land potentially suitable for typical medium density development, his estimate of the market value was nil if flood liable, and $50,000 if it was flood free. Each of these valuations was determined by the hypothetical development approach, but no attempt was made to value the land or check the said calculations by the use of readily available comparable sales. However, in final submissions senior counsel for the respondent placed no relevance on, and did not seek to support in any way, the evidence of Mr Kenny. The doubtful validity of a number of assumptions made by him for the purpose of such calculations, and the marked difference between the resultant valuations and the sales evidence which he did not seek to use or analyse, pointed
up the unreliability of his valuation on that basis. I prefer the before and after approach based on sales evidence as carried out by Mr Woodley.
Mr C.C. Champion, Deputy Engineer employed by Council, gave the history of flooding in the Pendle Hill Creek area and mitigation measures taken and proposed. In March, 1983 the Council consultant, Willing & Partners, reported on flood mitigation alternatives in Pendle Hill Creek and in July, 1983 the Council resolved to construct a retardation basin system and commissioned the consultants to undertake detailed design based on providing protection in the area in the event of the 1% annual incidence probability flood. In 1985 it adopted a Stage 2 retention basin design in anticipation of necessary land being acquired in the future. The subject land was required for such works.
Since 1973 in the determination of development applications relating to land affected by major stormwater systems, Council has considered the affect thereon of the said 1% probability flood. The Council did not have a policy of making contributions towards the reconstruction of drainage in such circumstances. Mr Champion said that he would have advised a prospective purchaser that it would be the obligation of a developer to pipe the subject drain.
Mr Champion produced photographs of the locality during and after recent storms which showed Hackney Street and other areas in flood. No photographs were taken of the subject land at that time because of the construction of the new works thereon.
Mr Champion said that if the zoning was disregarded and development was approved on the subject land he would assume it likely to be partly inundated to extent of 300 mm in the said 1% probability flood. He would have required as a condition of any development approval that floor levels be constructed 500 mm above such flood level.
Dr D.C. Black, also a highly qualified and experienced engineer and the Senior Engineer Water Resources of Willing & Partners, made an assessment of flooding on the subject land. This was made independently of the Pendle Hill Creek Trunk Drainage Study 1983, and other investigations made by Willing & Partners. He first became familiar with the subject site in 1985 when carrying out surveys for other works and also inspected it and took photographs of most features which, in his opinion, may affect flood behaviour.
He originally formed the opinion, not based on survey, that the whole of the resumed land was likely to be flooded at a one in one hundred year return period flood. The projected flooding of the subject land was clearly shown in Fig.10 to the Pendle Hill Creek Drainage Study 1983.
Dr Black was extensively cross examined as to the data and basis of his opinions and I am satisfied that such was reasonably open to him. He was prepared, after further consideration during cross examination, to modify the extent of the area of the subject land likely to be subject to flooding. Dr Black's estimates for the construction of works of access and drainage to enable development of the land were based on erroneous assumptions as to discharge in the drains, and provided for a ten metre bridge. On that basis he calculated costs in the order of $130,000 to enable development of the subject land.
Dr Black and Mr Champion disagree as to whether the following statement in a letter from Willing & Partners of 26th August, 1987, i.e. |CF2.|PSI
basin (Lot 1 DP15288) has not been possible, we not this area will be subject to inundation levels adjacent to this site and observations short duration flooding could occur in 100 year |CF2.|PSI
"1. From 1946 until 27th June, 1951 the land resumed provisions of the Local Government (Town and 2. On 27 June, 1951 the land was pursuant to the zoned as 'Greenbelt'.
(by his Under-Secretary) notified the Council that Greenbelt. In his letter of that date the Under-plans, one of which indicated that the land was 4. On 23 June, 1961 by proclamation in Government County of Cumberland Planning Scheme Ordinance, so 5. Between 23 June, 1961 and 29 May, 1964 the land XIIA of the Local Government Act.
hereof, the Council prepared and submitted a Control Plans. The first such plan showed the development. That plan never received the required by the Minister's direction of 22 June adopted by the Council and approved by the Pursuant to that Development Control Plan the land 7. Between 29 May, 1964 and 19 May, 1972 the land 8. The Holroyd Planning Scheme Ordinance was 9. The Holroyd Planning Scheme Ordinance was amended Plan No. 25.
was zoned Open Space (Proposed Recreation) 6(b).
land has remained zoned Open Space (Proposed |CF2.|PSI"by omitting section 124 and by inserting 124. For the purpose of ascertaining the be had by the court not only to the value of the the severing of the lands taken from other lands of powers by the council otherwise injuriously assess the compensation according to what it finds interest at the time the notice was published in the amount of the valuation notified to such in such value arising from the construction of any Provided that the court in ascertaining such effect to, by way of set-off or abatement, any such owner in any land adjoining the land taken or on the land taken, but in no case shall this made by such owner to the council in consideration Provided also that in the case of land under the for the purpose of constructing a subterranean a) the surface of the overlying soil is disturbed; b) the support to such surface is destroyed or such tunnel; or
adjacent to such land are thereby rendered |CF1.|PSO
Notwithstanding that the parties have made competing submissions as to the affect of s.116 of the E.P.& A. Act on the determination of the value of the land, it is common ground that the market value is to be assessed in accordance with the principles expressed in Spencer v. The Commonwealth of Australia, (1907) 5 C.L.R. 418 at 440.
Section 116(1) of the E.P.& A. Act provides: |CF2.|PSI
"Where land reserved by an environmental planning instrument pursuant to section 26(c) or proposed to be reserved by a draft environmental planning instrument is resumed or appropriated, the value of that land shall be determined as if it had not been so reserved or proposed to be reserved." |CF1.|PSO
The applicant submits that the resumed land, being zoned Open Space pursuant to the provisions of the Holroyd Planning Scheme, is thereby reserved pursuant to s.26(c), and if it had not been so reserved it would have been zoned in the same manner as the residue, that is, Residential 2(a).
The Council conceded that the said Holroyd Planning Scheme Ordinance was an environmental planning instrument for the purposes of s.116, and no issue arose as a consequence of the fact that the land was "reserved" or "zoned" only by a "deemed" instrument which was notified prior to the E.P.& A. Act.
The respondent submitted that there was a conventional distinction between land zoned and reserved by an environmental planning instrument, and that as the subject land was zoned and not reserved s.116 does not compel the value of the land to be determined as if it had not been so zoned.
However, it became apparent during the hearing that the respondent became aware for the first time of the decision of the Court of Appeal in Carson v. Department of Environment and Planning, 57 L.G.R.A. 390. The respondent thereafter sought to distinguish that decision because it dealt with the meaning of "reserves" in ss.26 and 27(1), and not s.116 of the E.P.& A. Act. In my opinion, such submission fails because the legislature intended the same word in ss.26 and 27 to have the same meaning when used in s.116 of the same Act. The Court of Appeal in Carson's case rejected similar submissions to those made by the respondent, and held that "reserve" in s.27(1) means to "set apart", and Mahony J.A. said it was not intended to apply |CF2.|PSI"only to land which, in the conventional sense, was 'reserved', but not to land the use of which was similarly affected but by zoning. The purpose of the section would, I think, see no purpose in that distinction." |CF1.|PSO And later |CF2.|PSI"In my opinion 'reserves' as us
ed in the section includes the kinds of restrictions imposed by zoning of the kind set forth in the table in the present [planning instrument]"|CF1.|PSO (Carson, supra at 400). I reject the submission of the respondent that the subject land being zoned open space is not thereby reserved within the meaning of s.116 of the E.P.& A. Act.
In the alternative, the respondent submitted that the following passage of the reasons of Samuels J.A. (Carson, supra at 395) is support for the proposition that the actual zoning of the subject land is not one within the purview of s.26, i.e.: |CF2.|PSI
"In my opinion, the proper meaning of the word 'reserve' in s.27(1) is the third offered in the Oxford English Dictionary, that is, 'to set apart'. In other words, s.27(1) is speaking of land which is set apart for exclusive or sole use for a particular purpose, that is to say, land which, by a relevant planning instrument, has been imprinted with a particular purpose and, more than that, the purpose must be an exclusive one, allowing of no other." |CF1.|PSO
(Emphasis added)
Reliance is placed by the respondent on His Honour's reference to the need for the use to be "exclusive". It pointed out, as in Carson's case (supra), that the relevant zone permits with consent not only open space, but also agriculture and other uses. The question as to whether the zoning of coastal lands protection considered in Carson's case was for a purpose referred to in s.26(c) was doubted by Samuels J.A., and not dealt by either of the other judgments. It was submitted therefore as a matter of fact that the subject land is not reserved for a 26(c) purpose because it is not zoned exclusively for open space or any other 26(c) use.
Section 26(c) provides: |CF2.|PSI
"reserving land for use for the purposes of open space, a public place or public reserve within the meaning of the Local Government Act, 1919, a public cemetery, a public hospital, a public railway, a public school or any other purpose that is prescribed as a public purpose for the purposes of this section;" |CF1.|PSO
Section 27 provides: |CF2.|PSI
"(1) Where an environmental planning instrument reserves land for use exclusively for a purpose referred to in section 26(c), that environmental planning instrument shall make provision for or with respect to the acquisition of that land by a public authority unless the land is owned by a public authority and is held by that public authority for that purpose. |CF1.|PSO
However, it must be observed that Samuels J.A. was considering s.27 which expressly provides that the relevant reservation be "exclusively" for a purpose referred to in s.26(c). A corresponding limitation does not appear in s.26(c) or in s.116. In my opinion, there is nothing in the above quotation from the reasons of Samuels J.A. to suggest that that word should be read into other provisions of the E.P.& A. Act to compel a test of exclusiveness. In my opinion the subject land is zoned for the purpose of Open Space and, notwithstanding other uses permissible with consent by the Holroyd Planning Scheme, is reserved by an environmental planning instrument pursuant to s.26(c) within the meaning of s.116. I reject the respondent's submission that the value of the land should be determined as if it was still so zoned or reserved. In any event I am satisfied that the connection between the zoning for open space and the subject resumption compelled that the affect of such zoning on the value of the land be ignored i
n the assessment of compensation; Housing Commission of N.S.W. v. San Sebastian Pty Limited, (1978) 140 C.L.R. 196; Nuland Developments Pty Limited v. Parramatta City Council, 37 L.G.R.A. 258.
The Court was almost submerged in the volume of technical evidence called by both parties concerning the competing submissions as to the flood liability of the subject premises. Had the task of this Court been to determine precisely as at the date of resumption the likely level and extent of flooding, if any, of the subject land at the one in one hundred flood, it would have been most difficult to choose between the opinions of the experts called in evidence. I accept that each expert properly exercised his obvious training and experience, and that it was open to each to come to a different conclusion on similar data. I can therefore assume that parties to the hypothetical sale would be likely to be faced with the same dilemma.
On the one hand, the vendor had never seen flooding and an expert advised him that he can say with 95% confidence that it would not do so, but that |CF2.|PSI"... it is impossible to make any statistically valid quantitative statement regarding the probability of occurrence of a particular rainfall intensity for a single small catchment where rainfall and run-off have not been concurrently gauged". |CF1.|PSO
On the other hand, the long history of flooding in the vicinity was notorious and, independently of any proposal for acquisition of the subject land, Council had engaged consultants to advise on flood mitigation. As part of such briefing, that consultant had published advice as to the flood liability of the subject land and, in my opinion, that information would be generally available to the public. I am completely satisfied that a prudent hypothetical purchaser making proper enquiries at the Council with respect to the development potential of the subject land at date of resumption would have been made aware that the Council had been advised by its consultants that the land was flood liable, and that any development thereon, if permitted, would be subjected to conditions requiring works of flood mitigation, access and drainage.
I am of the opinion, in such circumstances, that a purchaser would conclude that, notwithstanding the observations of the vendor and his expert's advice, the Council as consent authority would still more likely than not adhere to the recommendations and opinions of its own consultants. In my opinion, the parties to a hypothetical sale would not and could not resolve the doubts as to the precise likelihood of flooding. The parties would, in accordance with the principles set out in Spencer's case (supra), take the history of flooding in the locality and the fact of competing opinions of the flood liability of the subject land and the likely attitude of the consent authority into account, and on that basis arrive at a mutually acceptable value for the land.
On the findings I have made, Mr Kavanagh's valuation is on an inappropriate basis and is therefore rejected.
Mr Woodley's valuation assumes that the highest and best use of the land would have been for medium density residential development had it not been reserved for open space. I have accepted that this is the appropriate basis to determine the value of the subject land at date of resumption.
Mr Woodley adopted a before and after exercise to determine the value of the resumed land. This is a useful valuation method, particularly in circumstances involving severance and lack of frontage to the resumed parcel, and more likely to avoid double counting of damages; cf. Parramatta City Council v. Gestetner Pty Limited, 37 L.G.R.A. 246. No criticism was made by the respondent to this approach, I see no error of principle and I will adopt it.
Mr Woodley's estimate of a potential for development of the whole of the land, having an area of 5,426m2, before resumption of nineteen units was not seriously challenged and, on the evidence, it appears reasonable and I accept it.
Mr Woodley assigned a land value per unit of $19,000, which he derived from four sales in the locality and which were purchased and developed for medium density housing. I accept that such sales are the best available evidence. In my opinion both sales (2) and (4) are for allotments with development potential so significantly different from and smaller than that of the subject land on the "before" basis that they would appeal to a different section of the market. Sale (2), No.139 Dunmore Street, Wentworthville, had an area of 1380m2 and was developed for five two-bedroom villas, and for which a purchaser would be likely to be prepared to pay a higher price. Sale (4), No.51 Jersey Road, South Wentworthville, whilst having an area of 2952m2, required substantial subdivision and road construction and only developed on a lot of 1727m2 for an equivalent of six two-bedroom villas. The subdivision and development costs of that sale were not available or assessed to my satisfaction.
Sale (3), No.25 Magowah Road, Pendle Hill, having an area of 3370m2, was purchased and developed as twenty-six residential units for the aged for the Department of Housing. This sale, in my opinion, involved special circumstances and was acquired for different development from that assumed for the subject premises. I am unpersuaded that a purchase of land as part of a business arrangement to erect twenty-six aged persons' units at a land value per unit of $9,000 is of much assistance to assess the value of the subject premises.
In my opinion, however, of all the sales evidence (including that provided by Mr Kenny) only sale (1), 11/15 Smith Street, Wentworthville, is of real assistance in the assessment of the valuation of the subject premises. Sale (1) concerns land with an area of 6683m2 and approved and developed as twenty-three two-bedroom villas for the Department of Housing. Little more is known as to the circumstances of the sale and Mr Woodley did not peruse the contract. Great care should be exercised if compelled to rely mainly upon the evidence of one sale, and the problem here is compounded by the paucity of information concerning the circumstances of the sale, the terms of the agreement and the likely influence on the sale price of arrangements for its development for the Department of Housing. The price reflects influences in that sale which are irrelevant to the assessment of the value of the subject premises. In my opinion it should be used as the basis of valuation, but it would be inappropriate to assign the deduce
d land unit value of $19,000 (i.e. $361,000) to the subject premises without substantial adjustment.
The applicant concedes, and it appears from the evidence, that all relevant comparable sales were made with the benefit of a development approval or subject to obtaining such approval. The subject land had, of course, no such approval and therefore only a potential for development for nineteen units. Nor did any of the relevant comparable sales concern land considered by the consent authority as being likely to be inundated with floodwater after a 1% annual incidence probability flood. In my opinion Mr Woodley erred in failing to take into account the high risk of delay and uncertainty in obtaining an acceptable development consent, that the land was considered to be flood prone, and consequently also an uncertainty of expenditure for filling or additional development costs on the subject land. I have no evidence at all of the likely cost of filling to raise the land or building costs to raise floor levels above likely flood levels. Mr Woodley took into account a likely need to expend the sum of $30,000 on th
e land for drainage and bridgeworks, plus $10,000 for "contingencies". The drainage and bridge costs are those estimated by Mr Shelley and may be conservative. However, on the other hand I consider that Dr Black's estimate of $130,000 is to some extent on an erroneous basis and excessive. On balance I prefer the evidence of Mr Shelley and accept the assessment of Mr Woodley that likely drainage and access cost, plus contingency, is $40,000. As I understand the submissions of the parties, it is common ground that on the findings I have made, the Court could and should make a valuation which takes into consideration each of the above matters.
I am of the opinion they all arise out of "ordinary business considerations" which the hypothetical buyer and seller would not overlook, and which must be taken into account in the valuation. Unfortunately the evidence and submissions afford little assistance in quantifying the necessary adjustment in the application of the sales evidence.
Most of the above matters therefore would require the hypothetical vendor and purchaser to |CF2.|PSI"engage in sheer speculation"|CF1.|PSO; Royal Sydney Golf Club v. Federal Commissioner of Taxation (1957) 2 L.G.R.A. 203 at 216. Kitto J. considered that similar allowances were therefore |CF2.|PSI"necessarily a matter of guesswork", |CF1.|PSOand he made substantial adjustment to sales evidence. In my opinion, I am entitled to make one adjustment which takes into account all relevant considerations because it is impossible and inappropriate in this case to attempt to make precise mathematical adjustment for each matter when such are |CF2.|PSI"simply matters of judgment"|CF1.|PSO; Leichhardt Municipal Council v. Seatainer Terminals Pty Limited & Anor 1981-82 48 L.G.R.A. 409 at 436.
It is my duty to weigh Mr Woodley's valuation and all other relevant considerations in the final assessment of compensation. I must put myself, as far as possible, in the position of persons conversant with the subject land at the date of resumption and ascertain what a purchaser would have had to offer for the land to induce a willing vendor to sell it, or, in other words, to enquire at what point a desirous purchaser and not unwilling vendor would reach agreement.
Doing the best I can, in my judgment a desirous purchaser and a not unwilling vendor, both of whom were in possession of the above information would "come together" (Spencer's case at 432 and 441), at a figure of $221,000 as the value of the premises before resumption. I accept Mr Woodley's estimated market value of the residue after resumption of $71,000. In my judgment, the value to the owner of the resumed land is $150,000.
At the date of resumption the subject land was used as a residence by the applicant and for his business. The compensation for the compulsory acquisition, however, has been based upon a use yielding a higher figure than that which could be derived from such occupation and use. However, an applicant cannot obtain the benefit of a valuation for theoretical use and claim other items of compensation based upon the actual use of the subject land (see Wells J., Minister of Environment v. Petroccia, 55 L.G.R.A. 244 at 247). Generally speaking, when land has been valued on a highest and best use which is different from the actual use, the claimant cannot claim the value of improvement which will no longer be required when the land is put to its new notional use. Such value of improvements is absorbed in the higher value of the subject land; Horn v. Sunderland Corporation, [1941] 2 K.B. 26; Balquhidder v. Minister for Environment and Planning, 58 L.G.R.A. 339 at 353.
In my opinion, none of the improvements existing on the subject premises at the date of resumption were required or would be retained if developed for medium density residential purposes. Further, in order to realise a sale for such higher purpose the vendor would be compelled to remove and sell or store stock and equipment used in connection with the actual use of the subject premises. In my opinion, in such circumstances the dispossessed owner is not entitled to receive compensation for the value of improvements on the subject land or disturbance in the nature of removal or storage expenses.
The applicant also claims additional compensation in respect of solatium for the necessity to relocate his residence. If as a consequence of the necessity of relocating his residence subjective and imponderable factors such as nuisance, annoyance, inconvenience and distress may be caused to a dispossessed owner of land reserved or proposed to be reserved pursuant to s.26(c), additional compensation may be awarded pursuant to s.116(2)(d) of the E.P.& A. Act; cf. Robertson v. The Commissioner of Main Roads, Perrignon J., 9th September, 1987, unreported.
It is clear on the evidence that the applicant strongly opposed resumption and wanted to continue to use the subject premises as his residence. I have already noted and accepted evidence of the stress and anxiety caused to the owner by the circumstances of the compulsory acquisition and the obligation to relocate his residence.
In the exercise of the discretion vested by s.116(2)(d) to award additional compensation I am entitled to take into account that the obligation imposed on the dispossessed owner is to relocate from an unapproved and substandard residence. However, it was a "residence" for him and his family and had been since about 1960, and with the knowledge of the Council for a substantial number of years. In my opinion, it would have been likely to continue as his residence indefinitely had it not been terminated by the resumption. However, in my judgment, the circumstances suggest that this is not a case in which it is appropriate to award substantial additional compensation in respect of imponderable factors arising from the compulsory nature of the acquisition. In the exercise of my discretion I order an additional award for compensation in respect of solatium for the applicant's necessity to relocate his residence in the sum of $1,000.
I therefore make the following orders:
1. Compensation assessed at $151,000.
2. Exhibits may be released.
3. The respondent to pay the costs of the applicant.
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