Garry Charles Sleeman & Anor v SPI Electricity Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0037

GARRY CHARLES SLEEMAN & ANOR	Appellants
v
SPI ELECTRICITY PTY LTD	Respondent

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JUDGES:	NETTLE, BEACH and KYROU JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 September 2014
DATE OF JUDGMENT:	3 October 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 243
JUDGMENT APPEALED FROM:	Sleeman v SPI Electricity Pty Ltd [2014] VSC 49 (Emerton J)

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STATUTORY COMPENSATION – Works by respondent on land near appellants’ land involving installation of electricity poles – Works allegedly prevented appellants from using their land as an aerodrome – Whether appellants entitled to compensation under s 93(2) of Electricity Industry Act 2000 or are left to common law remedies such as nuisance – Whether ‘any land’ in s 93(2) is confined to land upon which works were undertaken or includes any land adversely affected by the works – Former interpretation is correct.

STATUTORY COMPENSATION – Principles determining compensation for injurious affection in the United Kingdom and Australia – Whether principles apply to a landowner whose land has not been partially acquired or upon which no statutory powers have been exercised.

STATUTORY COMPENSATION – Whether works undertaken in exercise of powers under s 93(1) of the Act or pursuant to easements and consents granted by neighbouring landowners – No specific factual finding by trial judge – Court of Appeal unable to determine factual issue.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr N J O’Bryan SC with Mr J F Bleechmore	Pearce Webster Dugdales
For the Respondent	Mr M R Scott QC with Mr J G Pennell	Solicitor, SP AusNet

NETTLE JA
BEACH JA

KYROU JA:

Introduction and summary

The key issue in this appeal is whether the compensation provisions in s 93(2) of the Electricity Industry Act2000 (‘Act’) are confined to the owner of land upon which an electricity corporation undertakes activities authorised by s 93(1) or whether those provisions also extend to the owner of any land which suffers detriment in consequence of those activities.[1]
[1]In this judgment, references to an owner of land include all persons who have an interest in that land.

Section 93(2) of the Act provides as follows:

In the exercise of the powers under subsection (1), an electricity corporation must do as little damage as may be and, must, if required within 2 years from the exercise of the powers, make full compensation to the owner of and all parties interested in any land for any damage sustained by them in consequence of the exercise of the powers.[2]

[2]Section 93 of the Act, to the extent that it is relevant, is set out at [21] below.

The primary judge held that the compensation provisions in s 93(2) of the Act are confined to the owner of land upon which an electricity corporation undertakes authorised activities.[3] According to her Honour, it followed that the appellants, who are the owners of land whose value was said to have been adversely affected by the installation of electricity poles by the respondent on neighbouring land, were not entitled to compensation under s 93(2).
[3]Sleeman v SPI Electricity Pty Ltd [2014] VSC 49 (‘Reasons’).

For the reasons that follow, we have concluded that the primary judge correctly held that the appellants are not entitled to compensation under s 93(2) of the Act.

By its notice of contention, the respondent has asserted that the primary judge erred in finding that the respondent had exercised any of the powers in s 93(1) of the Act in relation to the activities it undertook on the neighbouring land, and therefore s 93(2) could not apply to the appellants. For the reasons that follow, we have concluded that the factual position is insufficiently clear to enable the notice of contention to be upheld.

Accordingly, we would dismiss the appeal.

Facts and procedural history

The respondent is an electricity corporation which is regulated by the Act.

The appellants purchased land at 280 Wandong Road, Kilmore (‘Property’) in July 2008 for $800,000. The Property is in the shape of an elongated rectangle, with the length running west to east and the width running north to south. The eastern boundary of the Property abuts Wandong Road.

When the appellants bought the Property, there were existing electricity poles on an easement running across the entire width of the land near its western boundary. There were also electricity poles on an easement running west to east in the centre of the land to the north of the Property (‘Northern Land’) and poles that ran north to south approximately 44 metres to the east of the eastern boundary of the Property, and east of Wandong Road.

Mr Sleeman has a commercial pilot’s licence and desired to build an aerodrome on the Property for private and commercial use. When the appellants purchased the Property in 2008, it had been marketed as being suitable for an aerodrome. Mr Sleeman gave evidence that the appellants had paid a premium because of this feature of the Property.

The appellants informed the respondent of their proposal to build an aerodrome on the Property in November 2008. In April 2009, they obtained a planning permit for works that included an aerodrome. It appears that, due to the existing electricity poles on the western end of the Property, it was proposed that planes would take off from the west and land from the east.

During the course of 2011, the respondent undertook works that were described as the ‘eastern line upgrade’ (‘ELU works’). The ELU works involved the following:

(a) the electricity poles on the Northern Land were relocated closer to the northern boundary of the Property and continued to run west to east along that boundary;

(b) the electricity poles running north to south to the east of the Property were relocated closer to the eastern boundary of the Property as follows:

(i) the poles running west to east on the Northern Land turned south and continued in a southerly direction along the Wandong Road reserve (on the western side of the road) less than five metres from the eastern boundary of the Property; and

(ii) when those poles reached roughly 60 per cent of the way down the eastern boundary of the Property, they crossed Wandong Road and continued south on the eastern side of the road; and

(c) the height of the poles on the eastern side of the Property was increased from 9.2 metres to a maximum height of 16.5 metres.

Prior to the ELU works, the poles that ran west to east and north to south were located on easements that had previously been granted to the respondent (or its predecessors in law) by the owner of the Northern Land and the owners of the properties east of Wandong Road. The respondent took the following steps as part of the ELU works:

(d) on 15 November 2010, a new easement was acquired from the owner of the Northern Land to permit new poles to be installed closer to the northern boundary of the Property;

(e) by letters dated 15 September 2010 and 16 February 2011, VicRoads gave consent to the respondent to relocate some of the poles running north to south on the road reserve between the eastern boundary of the Property and the western boundary of Wandong Road; and

(f) in 2010, further easements were granted by the owners of land on the eastern side of Wandong Road to enable the remaining poles running north to south on that side of the road to be moved closer to the road.

The appellants decided that the relocation of the electricity poles closer to the eastern boundary of the Property and the increased height of those poles rendered unsafe the proposed aerodrome, and they abandoned their plans to build it. They obtained a sworn valuation dated 19 April 2011 from Hollingsworth St Clair Property Pty Ltd (‘Sworn Valuation’) which stated that the ELU works had decreased the value of the Property by $300,000.

The appellants sought compensation of $300,000 from the respondent pursuant to s 93(2) of the Act. Their claim was set out in letters dated 4 and 15 July 2011 from their lawyers to the respondent. The letter dated 15 July 2011 stated as follows:

Our client … has sustained damage as a result of [the respondent’s] exercise of its powers granted by [s 93(1) of the Act] in constructing electricity assets adjacent to our client’s property. Our client therefore seeks compensation in the sum of $300.000 in accordance with the [Sworn Valuation].

By letter dated 2 November 2011, the respondent denied that it was liable to compensate the appellants pursuant to s 93(2) of the Act. The respondent relied on two grounds. The first ground was that the ELU works were undertaken pursuant to easements and a licence rather than in the exercise of any of the powers in s 93(1). The second ground was that, in any event, compensation under s 93(2) was payable only to owners of land who had a right of action independent of s 93 which has been extinguished by the enactment of that section.[4]
[4]The respondent relied on Rohricla Nominees Pty Ltd v BHP Petroleum Pty Ltd (Unreported, Supreme Court of Victoria, 29 August 1986, Gobbo J) (‘Rohricla’).

On 20 July 2012, the dispute between the parties was referred to the Trial Division pursuant to a Notice of Referral under s 80 of the Land Acquisition and Compensation Act 1986 (‘LAC Act’).

On 27 March 2013, Emerton J made an order that the trial proceed on the issue of liability alone.

Relevant statutory provisions

The main purpose of the Act is to regulate the electricity supply industry.[5]
[5]Act s 1.

Part 5 of the Act is headed ‘Powers of Electricity Corporations’ and comprises ss 85 to 94. Section 86(1) confers power on electricity corporations to compulsorily acquire easements for the purposes of erecting, laying or maintaining power lines. Section 86(2) provides that the LAC Act applies to s 86, that the Act is a ‘special Act’ for the purposes of the LAC Act, and that an electricity corporation exercising powers under s 86(1) is an ‘Authority’ for the purposes of the LAC Act.

Section 93 of the Act relevantly provides as follows:

93 Powers as to works etc
(1)For the purposes of this Act, an electricity corporation, subject to this Act—
(a)may enter upon any lands and sink bores and make surveys and do any other acts or things necessary for sinking bores or making surveys; and
(b)may, with any equipment or devices, receive, store, transmit, or supply electricity, water, brown coal or products of brown coal over, or under, any land and may enter on any land upon either side of such equipment and fell or remove any tree or part of a tree or any obstruction which in the opinion of the electricity corporation it is necessary to fell or remove; and
(c)subject to the Water Act 1989, may divert water from any waterway, lake, lagoon, swamp or marsh, or alter the bed, course or channel of any waterway; and
(d)subject to the Road Management Act 2004, may enter upon any public or private land or roads and construct any works or place on under or over any such land or road any structure or equipment and may repair, alter or remove any such structure or equipment or any works under its control; and
(e)may do all other things necessary or convenient for constructing, maintaining, altering, or using any works or undertakings of, or under the control of, the electricity corporation.

(2)In the exercise of the powers under subsection (1), an electricity corporation must do as little damage as may be and, must, if required within 2 years from the exercise of the powers, make full compensation to the owner of and all parties interested in any land for any damage sustained by them in consequence of the exercise of the powers.
(3)Compensation under subsection (2) shall be either a gross sum or a yearly rent as may be agreed and, in default of agreement, shall be determined in the manner provided in the Land Acquisition and Compensation Act 1986.

The main purposes of the LAC Act are to establish a new procedure for the acquisition of land for public purposes and to provide for the determination of the compensation payable in respect of land so acquired.[6] Unsurprisingly, most of the provisions of the LAC Act are directed to these purposes. The principal means by which the LAC Act operates in relation to an acquisition of land made by a body pursuant to another statute is to designate that statute as a ‘special Act’ and that body as an ‘Authority’. The definitions of ‘the Authority’ and ‘the special Act’ in s 3(1) of the LAC Act are as follows:
[6]LAC Act s 1.

the Authority means a person or body who or which—
(a) is authorized by or under the special Act to acquire land; and
(b)in the special Act is expressed to be the Authority for the purposes of this Act;

the special Act means an Act or a provision of an Act which is expressed to be a special Act for the purposes of this Act.

The LAC Act can also apply to the activities of a body under another statute even if that statute is not designated a ‘special Act’. This is because s 3(2) of the LAC Act provides that the LAC Act ‘applies to any Act or provision of an Act to which it is expressed in that Act or provision to apply.’

The only provisions of the LAC Act which deal with compensation where land is not acquired are pt 5, which comprises ss 46 to 48, and pt 9, which comprises ss 74 to 79.

Sections 47, 48, 75, 76 and 77 of the LAC Act relevantly provide:

47       Compensation for entry or temporary occupation
(1)Any person with an interest in land that has been entered or temporarily occupied pursuant to Part 9 who has—
(a)       sustained any pecuniary loss; or
(b)       incurred any expense—
as a direct, natural and reasonable consequence of that entry or occupation may claim the amount of that loss or expense from the Authority.
(2)Subject to section 106(1), a claim under subsection (1) must be made within two years after the day on which the Authority was last in occupation of or upon the land.
(3)In addition to the amount of loss or expense which may become payable under subsection (1), the Authority must during the period of its occupation of the land pay half-yearly or quarterly to the person or persons entitled to receive the rent from the land the amount of rent agreed upon between the parties or, failing agreement, fixed by the Court or the Tribunal, as the case may be.

48 Form of claim
(1)A claim for compensation under this Part is made by serving on the Authority a notice of claim which must—
(a) be in the prescribed form; and
(b)state the amount of compensation to which the claimant claims to be entitled under this Act; and
(c)state the interest which the claimant had in the land concerned; and
(d)give details of the loss sustained or expense incurred which gave rise to the claim.

(2)Subject to section 106(1), the Authority must before the expiration of three months after the day on which a notice of claim is served on it under this Part serve upon the claimant a statement in writing replying to the notice of claim.

(3)       The Authority may in that statement—
(a)       admit the claim; or
(b)       make an alternative offer of compensation; or
(c)       reject the claim.

…
(7)Subject to section 106(1), if the Authority makes an offer of compensation, the claimant must within two months after the date of service of the offer—
(a) accept the offer; or
(b) reject the offer.
(8)If the claimant rejects or fails to accept within the time prescribed under subsection (7) an offer of the Authority, or the Authority rejects a claim by the claimant under this Part, the claim becomes a disputed claim for the purposes of this Act.

…

75 Temporary occupation
(1)The Authority, or any person authorized in writing to that effect by the Authority, may enter upon any land to which this section applies and occupy the land so long as is necessary for the purposes of the special Act.
(2)The Authority or any person authorized by the Authority may for the purposes of the special Act—
(a)dig and take from the land occupied pursuant to subsection (1) any clay, stone, gravel, earth or other substance; or

(b)       deposit any material on that land; or
(c)       make cuttings or excavations on that land; or
(d)      take timber from that land; or
(e)       make and use roads on that land; or
(f)       manufacture on that land any materials required; or
(g)erect workshops, sheds and buildings of a temporary character on that land.

…

76 Obligations in relation to the occupation of land
The Authority, or any person authorized in writing to that effect by the Authority must—
(a)in exercising the powers under this Part cause as little harm and inconvenience and do as little damage as possible to the land and anything on or growing on the land; and
(b)remain upon the land only for such period as is reasonably necessary; and
(c)remove from the land on the completion of the occupation of the land all plant, machinery, equipment, goods or buildings brought onto, or erected on, the land other than any of those things that the owner or occupier agrees may be left on the land; and
(d)leave the land, as nearly as possible, in the condition in which it was immediately before the land was occupied; and
(e)use all its best endeavours to co-operate with the owner and occupier of the land.

77 Liability of Authority for nuisance
Nothing in this Act exempts the Authority from any action for nuisance or other injury (if any) done in the exercise of the powers given under section 75 to the land or residence of any person other than the person whose land is entered, occupied or used for any of the purposes referred to in that section.

Decision under appeal

The primary judge considered the application of s 93(2) of the Act to the appellants on the basis that none of the ELU works were carried out on the Property and that the respondent did not enter the Property to carry out the works.[7] Her Honour concluded that, on its proper construction, s 93(2) of the Act did not entitle the appellants to compensation for the diminution in the market value of the Property as a result of it no longer being suitable for use as an aerodrome because of the construction of power lines on adjoining land.[8]

[7]Reasons [13].

[8]Reasons [53].

In reaching this conclusion, her Honour rejected a submission from the respondent that s 93(2) of the Act could not apply because the respondent had not exercised any of the powers in s 93(1) but rather had relied exclusively on the easements granted by the neighbouring landowners and the consent granted by VicRoads. Her Honour dealt with this issue without making a discrete finding of fact in relation to it. Her reasoning was as follows:

The evidence is that the respondent had permission to enter onto land to the north and east of the [appellants’] property to construct the power‑lines comprising the eastern line upgrade. …
…
In my view, the question of liability in this case cannot be decided simply on the basis that the respondent held licences to enter the land on which the works for the eastern line upgrade were carried out. The grant of licences by land-owners may not protect the respondent from claims by other persons (such as adjoining land-owners) from whom it has not extracted any authority to undertake the works. The fact that works were undertaken on land entered pursuant to a licence given by VicRoads (in the case of the works on the Wandong Road reservation) and easements granted by land-owners to the north and the east of the [appellants’] land, may not relieve the respondent from reliance on the powers in s 93(1) to protect it from suit by other land-owners, including the [appellants]. If s 93(1) authorises electricity corporations to carry out works in a way that, absent the authority that it confers, would constitute private nuisance, then it may be of no consequence that the powers have not been invoked to authorise entry onto land to carry out the works. The fact that the Authority did not need to rely on the powers in s 93(1) to enter the Wandong Road reserve or the private land to the north and the east to carry out the works for the eastern line upgrade does not necessarily mean that s 93(1) had no work to do. It remains necessary to construe s 93 to determine whether compensation is available to land-owners who have suffered loss and damage as a result of the construction of power-lines on adjoining land.

…
Insofar as the respondent has exercised any statutory power resulting in damage to the [appellants], the relevant power is that conferred by s 93(1)(d).[9]

[9]Reasons [10], [12], [23].

The judge rejected the appellants’ submission that the phrase ‘any land’ in s 93(2) of the Act should be given its natural meaning rather than reading it down to mean the land upon which work was undertaken by an electricity corporation pursuant to s 93(1). The appellants had contended that their submission was supported by the nature and scope of the powers conferred by s 93(1), some of which — such as s 93(1)(c) — were said not to necessarily require entry upon the land which suffered detriment as a result of the exercise of those powers. Her Honour held that each of the powers in s 93(1) contemplated the entry upon land in circumstances that would otherwise constitute trespass in order to perform particular functions in connection with that land. According to her Honour, the purpose of s 93(2) is to provide compensation for any detriment that was caused to the land that was entered as a result of the performance of those functions.[10]
[10]Reasons [21]–[23], [27].

Her Honour concluded that the phrase ‘any land’ in s 93(2) of the Act refers to ‘the land which is entered upon and upon which the actions or events causing damage have taken place’[11] and that the compensation obligation in s 93(2) must be read as ‘make full compensation to the owner of and all parties interested in any relevant land.’[12]
[11]Reasons [27].
[12]Reasons [28] (emphasis in original).

The judge found that s 93(2) of the Act imposes two obligations on electricity corporations when exercising any of the powers in s 93(1), namely, to ‘do as little damage as may be’ and to make compensation for any damage sustained by the owner of ‘any land’ in consequence of the exercise of those powers.[13] Her Honour also found that the Act required that the two obligations and the activities authorised by s 93(1) must be linked in that only detriment to the owner of the land upon which the activities were conducted could be the subject of the obligation to pay compensation. Her Honour’s reasons were as follows:

The damage in the first obligation is damage that is ‘done’ to land in the course of exercising the powers in question, suggesting a direct physical connection between the exercise of the powers and the damage of which as little must be done ‘as may be’. The damage for which compensation is payable in the second obligation is not expressly limited to the damage referred to in the first obligation. Persons may sustain damage in respect of land owned by them where no physical damage is done to the land, but where they are prevented from using the land, or part of it, because of the presence of works or infrastructure on the land. ‘Damage’ in the context of the second obligation (the obligation to make compensation) is not necessarily limited to physical damage to the land. Hence, while there must be interference with the land, it could be with the owner’s use or enjoyment of the land. On this analysis, the right to compensation under s 93(2) would be enlivened where there was no physical damage to land but where the land-owner suffered a loss of enjoyment of the land (or part of it). In the absence of other indicators, such damage could be a function of conduct that would otherwise give rise to liability for trespass or for nuisance.
In my view, however, the damage referred to in the first obligation (of which as little must be done as may be) is the damage for which compensation is payable under the second obligation. Compensation is payable because, as long as the damage caused by the works is as little as may be, it is authorised by s 93(1). Damage is permitted as a consequence of the corporation’s entry upon land and construction of works and/or placement of structures or equipment on it, so long as it is minimised and the land-owner is compensated for the damage. The damage for which compensation is payable is therefore the damage caused by the construction and/or placement, maintenance, repair and removal of works and equipment on land that has been entered upon by the corporation for that purpose. The damage may involve physical damage such as the destruction of trees and other flora, or it might involve occupancy of part of the land, preventing or inhibiting its use by the land-owner. Hence, s 93(3) refers to compensation taking the form of a gross sum or a yearly rent.[14]

[13]Reasons [24].

[14]Reasons [25]–[26] (citations omitted).

The judge relied on authorities such as Rohricla Nominees Pty Ltd v BHP Petroleum Pty Ltd[15] and Metropolitan Water, Sewerage and Drainage Board v O K Elliott Ltd[16] in support of the proposition that s 93(2) of the Act does not confer an entitlement on a landowner to compensation for a diminution in the market value of his or her land where works have been carried out on adjoining land in circumstances where that owner would not be entitled to compensation at common law for reasons other than the availability of the defence of statutory authority. Her Honour held that to construe s 93(2) as conferring an entitlement to compensation in those circumstances ‘might, for example, require compensation to be paid to land‑owners claiming for loss of market value as a result of the construction of power‑lines that are visible from their properties’ and that this ‘cannot … have been the intention of the legislature.’[17]
[15](Unreported, Supreme Court of Victoria, 29 August 1986, Gobbo J).
[16](1934) 52 CLR 134 (‘O K Elliott’). This case is discussed at [84]–[87] below.
[17]Reasons [37].

The judge held that, as the respondent had a choice of where to locate the power poles when undertaking the ELU works, the alleged detriment to the Property was not an inevitable consequence of the works and therefore it was open to the appellants to pursue a claim in private nuisance at common law against the respondent. Her Honour said:

In this case, the works for the eastern line upgrade — the construction of poles and conductors (power-lines) on private and public land — was authorised by the Act and the Act contemplated that this might cause injury to others, specifically the persons on whose land the power-lines were constructed. However, it is much less clear that the injury complained of in this case, that is, the inability to use adjoining land as an aerodrome, is an injury of the kind contemplated by the Act. In my view, the damage complained of was not a contemplated consequence of the conferral of power to enter onto land to construct and maintain power-lines.
Put another way … I am not persuaded on the current rather scant evidence that the damage complained of by the [appellants] was an inevitable consequence of the exercise of power to enter adjoining or neighbouring land to construct works under s 93(1)(d) … While it is tolerably clear that [the] respondent was required to construct power-lines in order to secure the transmission and distribution of electricity in designated areas, the manner in which that task was to be performed was left to the respondent. So far as I can tell, the respondent was not required to construct the power-lines along the Wandong Road reserve in a way that inhibited aircraft movements on the [appellants’] land. It would not ‘nullify’ the power to require the construction of power-lines for the transmission of electricity to be carried out without causing damage of the kind alleged.
The onus of proving ‘inevitable consequence’ lies with the authority. In this case, the respondent has not endeavoured to establish that the damage suffered by the [appellants] was the ‘inevitable consequence’ of the exercise of its statutory powers. Rather, it submits that the [appellants] are not entitled to compensation under s 93(2) of the Act, but must exercise their common law rights to sue for nuisance. It is therefore open to the [appellants] to pursue a claim in nuisance against the respondent.[18]

[18]Reasons [50]–[52] (citations omitted).

Her Honour considered the provisions of the LAC Act and noted that they were directed at compensation for acquisition of land. She did not refer to pts 5 and 9 of the LAC Act. Her Honour stated:

The difficulties applying the compensation regime in the LAC Act to nuisance of the kind alleged must be viewed as an indication that compensation for damage caused by that nuisance is not contemplated by s 93(2). It is not, in my view, open to a land-owner to simply assert interference with his or her land in the form of nuisance and to then claim for a diminution in the market value of the land.[19]
[19]Reasons [32].

Grounds of appeal and notice of contention

In their amended notice of appeal, the appellants rely on the following grounds:

1.The learned trial judge erred in law in concluding that the appellants were not entitled to be compensated, pursuant to section 93(2) of the [Act] for the diminution in the market value of their land as a result of it no longer being suitable for use as an aerodrome because of the construction of power lines, by the respondent, on adjoining land.
2.The learned trial judge erred in law in limiting the compensation which is recoverable pursuant to s 93(2) of the Act only to damage done to ‘the land which is entered upon and upon which the actions or events causing damage have taken place’ [J para [27]].
3.The learned trial judge erred in law in finding that it was not open to the [appellants] to assert interference with their land in the form of an actionable nuisance or to make a claim under s 93(2) of the Act for diminution in the market value of the land as a result of actionable nuisance [J para [32]]. This finding was contrary to authorities such as State Planning Commission v Della Vedova (SCWA, Full Court, unrep., 4 April 1990) and the appellate and other authorities referred to therein.
4.The learned trial judge erred in law in concluding [J para [50]] that ‘the damage complained of [by the [appellants]] was not a contemplated consequence of the conferral of power to enter onto land to construct and maintain power-lines’ and that accordingly the damage suffered by the appellants was not ‘an injury of the kind contemplated by the Act’.

The respondent’s notice of contention relies on the following ground:

The fact that the works were undertaken by the Respondent pursuant to a licence or easement and without entry onto the Appellants’ land or exercising any right or power conferred on the Respondent by s 93(1) of the [Act] precludes liability pursuant to s 93(2) of [the] Act.

Notice of contention

It is convenient to deal first with the notice of contention. This is because, as s 93(2) of the Act applies only when an electricity corporation exercises the powers in s 93(1), if the respondent did not exercise any of those powers in relation to the ELU works, s 93(2) will not apply to the appellants.

At trial, the respondent contended that the ELU works were undertaken pursuant to easements granted by the owner of the Northern Land and the owners of land east of Wandong Road, and the consent granted by VicRoads in relation to the Wandong Road reserve. The respondent produced the easements and the letters of consent in evidence at trial.

The appellants’ complaint — that the poles and power lines that were installed as part of the ELU works prevented the Property from being used as an aerodrome and thus contributed to the diminution in the value of the Property — was principally directed at the relocation and increased height of the power poles on the eastern side of the Property rather than the poles and power lines on the Northern Land. The poles and power lines on the eastern side of the Property are located on land upon which the respondent had easements or rights pursuant to the VicRoads letters of consent.

The original easement on the Northern Land was acquired by the respondent’s predecessor in law, the State Electricity Commission of Victoria (‘SECV’), on 30 October 1973 for $550. The new easement was acquired by the respondent on 15 November 2010 for $150,000. The latter easement granted the respondent ‘[t]he right … to enter and pass over the Servient Land’ for various specified purposes that include the installation of power poles and power lines.

In relation to the land on the eastern side of Wandong Road, the SECV acquired some easements in 1973 and the respondent acquired new easements on 14 April 2000 and 4 June 2010. The consideration for the easements varied from nominal consideration of $1 to $45,000. The most recent easement is similar in form to the easement dated 15 November 2010 which is discussed at [39] above.

The VicRoads letters of consent stated that VicRoads ‘hereby gives consent to the proposed works’ subject to certain conditions that are not presently relevant. The letters did not provide for the payment of compensation to VicRoads or any other person.

As stated at [27] above, the judge did not make any finding of fact as to whether all or any part of the ELU works were completed in reliance exclusively on the easements or the VicRoads consent. Her Honour simply concluded that the respondent must have relied in part on the powers in s 93(1) of the Act to give it statutory protection in respect of the ELU works.

On the appeal, the respondent maintained its position that no part of the ELU works that could be said to have interfered with the flight path of the proposed aerodrome was performed in reliance upon the powers in s 93(1) of the Act, and therefore s 93(2) was not engaged.

The appellants initially submitted that if any part of the ELU works was undertaken in reliance on any power in s 93(1) of the Act then, irrespective of whether or not that part was proximate to the Property, s 93(2) would be engaged. The appellants subsequently resiled from that position in view of the requirement in s 93(2) that the damage sustained must be ‘in consequence of the exercise of the powers’ in s 93(1). The appellants’ revised submission was that s 93(2) would be engaged unless the parts of the ELU works that were performed in exercise of any power in s 93(1) were undertaken in an area that was so remote from the Property that it could not possibly have any adverse impact on the Property.

The appellants contended that a broad view should be adopted of the phrase ‘in consequence of the exercise of the powers’ in s 93(2) of the Act in order to prevent electricity corporations from attempting to ‘opt out’ of the statutory compensation scheme by purporting to undertake works independently of the powers in s 93(1). According to the appellants, it would be against public policy for bodies undertaking public works which adversely affect third parties to avoid statutory compensation schemes by entering into contractual arrangements with a particular landowner. The appellants acknowledged that this consideration would not apply where a body undertook works entirely on its own land.

In our opinion the appellants’ submissions are stated too broadly. Ordinarily, where alternative sources of power are available to a body for the doing of an act, that body may choose the source of power upon which it relies, provided that it satisfies all preconditions for the exercise of the chosen power. This is generally so notwithstanding that some sources of power are statutory and others are proprietary in nature, and that the legal consequences of the exercise of the available powers may differ.[20]
[20]Hinkley v Star City Pty Ltd (2011) 284 ALR 154, 159–60 [23]–[26], 184–7 [138]–[149].

In the present context, if an electricity corporation elects to undertake works entirely upon an easement compulsorily acquired pursuant to s 86 of the Act, compensation will be payable under that section rather than s 93(2). If the electricity corporation already owns all the land upon which it undertakes works, the owners of any neighbouring lands which are adversely affected by the works will have available any applicable common law remedies, such as the tort of nuisance, rather than compensation under s 93(2).

It must follow that, where an electricity corporation undertakes the entirety of its works exclusively in reliance on a power or a combination of powers which are entirely independent of the powers in s 93(1) of the Act, s 93(2) will not apply. That is because, in that situation, it cannot be said that any part of the works is undertaken ‘in the exercise of the powers’ in s 93(1).

Where the works extend over a wide area and some parts of the works are undertaken in reliance on any power in s 93(1) of the Act, s 93(2) is capable of applying to a landowner who sustains damage where that damage is ‘in consequence of the exercise of the powers’ in s 93(1). Whether this causal connection can be satisfied is a question of fact to be determined in the circumstances of the particular case, including the nature and scope of the works and their geographical location, and the nature of the damage suffered by the landowner.

In resolving the factual issue of causation, it would be artificial to consider only the works in the immediate vicinity of the affected property. The overall project of which those works are a component will need to be considered as a whole. Where the works are part of an integrated and interdependent project rather than a project that comprises discrete, discontinuous and self-contained segments, the fact that the works in the immediate vicinity of the affected land were not performed in direct reliance on any power in s 93(1) of the Act may not be determinative. It may be that where the adverse effects of an integrated project on particular land cannot be disentangled and parts of the project rely on the exercise of a power in s 93(1), it would be open to a judge to find that those effects were in consequence of the exercise of that power.[21]
[21]Commonwealth v Morison (1972) 127 CLR 32, 39, 44, 53–4, 56–7; Marshall v Director General, Department of Transport (2001) 205 CLR 603, 622 [33]–[34], 626–7 [47]–[48] (‘Marshall’).

The onus of satisfying the Court that an electricity corporation exercised any of the powers in s 93(1) of the Act and that the alleged damage was sustained in consequence of that exercise is on the person seeking compensation under s 93(2). Whether the onus is satisfied depends on an objective assessment of the evidence as a whole. The subjective intention of the electricity corporation is not determinative.

In the present case, although it was clear from the evidence in the trial that the ELU works traversed a large area of land that was owned by different individuals with whom the respondent entered into arrangements to facilitate the works, there was insufficient detail of the overall project. The question of whether any part of the works was undertaken in reliance on any power in s 93(1) of the Act and whether the appellants sustained any damage in consequence of the exercise of that power required careful examination of the overall project as well as the works in the immediate vicinity of the Property.

If the evidence of the easements and the VicRoads consent had been placed in the context of the overall project then, having regard to the onus of proof, it may have been open to the judge to decide that she was not satisfied that any power in s 93(1) of the Act was exercised in relation to any part of the ELU works that affected the Property. However, there was no clear evidence of the overall project. Also, because of the approach that the judge adopted on the question of whether any power in s 93(1) was exercised by the respondent — as set out at [27] above — her Honour did not consider the evidence in any detail and did not make any factual findings in relation to it. As a result, this Court does not have available to it all the relevant evidence or the benefit of detailed and informed findings of fact to enable us to make our own factual findings.

In these circumstances, it would be inappropriate for this Court to seek to resolve these complex factual issues in order to determine the correctness of the judge’s decision that there has been sufficient reliance by the respondent on the powers in s 93(1) of the Act for the purposes of engaging s 93(2).

For the above reasons, we are unable to uphold the notice of contention.

We now turn to the grounds in the notice of appeal.

Grounds 1 and 2 in the notice of appeal

As grounds 1 and 2 broadly assert that the judge misconstrued s 93(2) of the Act, they can be considered together. The broad assertion was based on contextual considerations which were argued at trial and also on a number of cases dealing with the concept of ‘injurious affection’ to which no reference was made at trial. We will first consider the contextual considerations.

Contextual considerations

The appellants relied principally on the phrase ‘any land’ in s 93(2) of the Act and contended that this phrase should be given its natural meaning and that there is no reason in principle or policy for reading it down. According to the appellants, the judge was wrong to interpret the section as requiring that the land which has been entered for the purpose of undertaking works be the same as the land in respect of which compensation is payable under s 93(2), and to use this interpretation as a justification for adding the word ‘relevant’ before ‘land’. The appellants relied on the well-known principle that, in the absence of clear necessity, it would be wrong for a court to read into a statutory provision words that Parliament did not include.[22]
[22]Thompson v Goold & Co [1910] AC 409, 420; Director-General of Education v Suttling (1987) 162 CLR 427, 433.

The appellants submitted that, read as a whole, s 93 of the Act does not require that the land which has been entered for the purpose of undertaking works be the same as the land in respect of which compensation is payable because not all of the paragraphs in s 93(1) necessarily involve entry upon land for that purpose. Paragraph (c) was said to be such a provision because it does not make any reference to land, still less entry upon land, but nevertheless contemplates damage to land other than the land upon which work was undertaken.

The appellants contended that a literal interpretation of s 93(2) of the Act would more effectively promote the purpose of the Act — the regulation of the electricity supply industry — as it would provide for compensation for the adverse consequences for all landowners of acts of an electricity corporation which would be unlawful in the absence of the powers in s 93(1).

The appellants took issue with some specific aspects of the judge’s reasoning. The first aspect was her Honour’s finding that the word ‘damage’ where it twice occurs in s 93(2) of the Act was confined to physical damage. This was said to be another example of her Honour reading into s 93(2) of the Act words which are not there. The second aspect was that the damage referred to in the first obligation in s 93(2) (of which as little must be done as may be) is the damage for which compensation is payable under the second obligation. The third aspect was her Honour’s finding that s 93(2) is confined to circumstances where the owner of land would have had a right of action independent of the section for the damage in question. The fourth aspect was her Honour’s detailed consideration of the scope of the tort of nuisance to inform her construction of s 93(2) when their claim was never based on that tort.

The respondent submitted that the judge had properly interpreted s 93(2) of the Act and had correctly confined the entitlement to statutory compensation to the owner of land upon which any of the powers in s 93(1) were exercised. Contrary to the appellants’ submission, the respondent contended that all of the paragraphs in s 93(1) involve some form of incursion on land, and that it is in respect of the adverse consequences of such an incursion that compensation is payable under s 93(2). In the case of para (c), the respondent submitted that land which is adversely affected by the diversion of a waterway suffers direct damage from the exercise of that power even if there is no entry on the land. The respondent also emphasised that the powers in s 93(1) are not mutually exclusive and can be exercised concurrently.

In our opinion, a reading of s 93 of the Act as a whole, in conjunction with the other statutory provisions to which it refers, indicates that the entitlement to statutory compensation is confined to the land upon which the powers in s 93(1) were exercised.

Section 93(1) of the Act uses the phrases ‘any land’ or ‘any lands’ on four occasions[23] to indicate that the section is not confined to any type of land. The phrase ‘any land’ is then used in s 93(2) to make clear that that provision is concerned with any of the land that had been the subject of the activities set out in s 93(1). The phrase ‘any land’ was probably selected as a shorthand expedient to avoid a detailed description such as ‘any land referred to in subsection (1)’. It is also likely that the phrase was selected to identify the type of legal interest that a person must have in order to be entitled to compensation, namely, he or she must be ‘the owner of’ or a person with some other proprietary interest ‘in any land’.
[23]The phrase ‘any lands’ is used once in s 93(1)(a), the phrase ‘any land’ is used twice in s 93(1)(b), and the phrase ‘any public or private land’ is used once in s 93(1)(d).

This interpretation of the phrase ‘any land’ in s 93(2) of the Act fits neatly into the structure of s 93 as a whole. Section 93(1) confers powers on an electricity corporation the exercise of which will invariably involve a physical incursion on someone else’s land and s 93(2) imposes two obligations in relation to that exercise, namely to do as little damage as may be in relation to that land and to pay compensation for any damage that is actually sustained by the owner of that land.

Paragraphs (a), (b) and (d) of s 93(1) of the Act expressly refer to the entry upon land by an electricity corporation. While paras (c) and (e) do not expressly do so, the exercise of the powers in those paragraphs will often involve entry onto land. In the case of para (c), one means by which water may be diverted from any waterway, lake, lagoon, swamp or marsh or the bed, course or channel of any waterway may be altered is by entering the land on which the structure is located. Section 93(2) would be applicable to the owner of land which is entered for such a purpose. As for the owner of any other land which is damaged by a diversion or alteration of any waterway, para (c) is subject to the Water Act 1989 and, accordingly, statutory compensation will be governed by that Act.[24]
[24]See, eg, ss 16–17 of the Water Act 1989.

As the appellants pointed out, s 93(1)(d) of the Act contains the phrase ‘any such land’. That phrase is used as a link to the phrase ‘any public or private land’ in the same paragraph. As discussed below, the phrase ‘any such lands’ rather than the phrase ‘any land’ appeared in the progenitor to s 93(2), but the change in language has not affected the meaning or scope of the provision.[25]
[25]See [74]–[83] below.

There is another important contextual reason why the interpretation of s 93(2) of the Act that is set out at [63] above is correct, namely, the terms of s 93(3). That provision states that, in default of agreement, the compensation payable under s 93(2) ‘shall be determined in the manner provided in the [LAC Act].’

As can be seen from [22]–[25] above, the only provisions of the LAC Act that are not confined to acquisitions of land are pts 5 and 9. Those parts apply in respect of land that has been temporarily entered to conduct works. The owner of such land is entitled to compensation in accordance with s 47. Section 77 makes it clear that compensation under pt 9 is not available to an owner of land whose land has not been entered, occupied or used, and that such an owner continues to have rights under the common law, including the law of nuisance.

These provisions of the LAC Act mean that the appellants’ preferred interpretation of s 93(2) of the Act could not have been intended. This is because, on that interpretation, effect could not be given to s 93(3) as the LAC Act does not contain any mechanism for the determination of compensation payable to an owner of land upon which there has been no incursion by an electricity corporation in the exercise of its powers under s 93(1). On the other hand, the interpretation set out at [63] above enables effect to be given to s 93(3), read in conjunction with pts 5 and 9 of the LAC Act.

It is true that, where s 93 of the Act applies, an electricity corporation enters land under that section rather than pursuant to pt 9 of the LAC Act. It is also true that a claim for compensation under s 93(2) is not a claim under s 47 of the LAC Act and that the scope of compensation available is determined by s 93(2) rather than by s 47.[26] However, s 93(3) refers to ‘the manner provided in the [LAC Act]’ and this is capable of invoking the provisions of pts 5 and 9 of the LAC Act to the extent that they are not inconsistent with the Act. There are many similarities between s 93 of the Act and pts 5 and 9 of the LAC Act, including the two year limitation period and the provisions relating to the payment of rent. Importantly, the procedures in s 48 of the LAC Act are capable of applying to a claim under s 93 according to their terms.
[26]Section 3(3) of the LAC Act — which provides that, in the event of inconsistency between a special Act and the LAC Act, the latter prevails — does not apply because the LAC Act does not designate s 93 of the Act as a special Act.

In the course of oral argument on the appeal, the appellants suggested that even though there is no specific provision in the LAC Act that provides for determination of compensation for a person in their position, this Court can adapt the wording of that Act to enable it to apply to their circumstances. According to the appellants, the provision of the LAC Act which most closely reflects their claim for diminution in the value of the Property is s 41. They contended that s 41 should be applied to their claim notwithstanding that, according to its terms, the provision is confined to the acquisition of an interest in land. The removal of the Property’s capacity to accommodate an aerodrome safely was said to be tantamount to the acquisition of the appellants’ air rights.

The appellants’ submissions on the interaction between s 93 of the Act and the provisions of the LAC Act cannot be accepted. The provisions of the LAC Act must operate according to their terms in relation to a claim made under the Act or any other statute. While it may be possible to read the LAC Act flexibly for the purposes of facilitating its operation in relation to another statute where the terms of that statute contain some gaps or ambiguities, it is not possible to radically alter the effect of the LAC Act by applying provisions which are predicated on an acquisition of land to a case where no such acquisition has taken place. The appellants’ suggestion that the ELU works have resulted in an acquisition of their air rights cannot be accepted. Use of the Property as an aerodrome was a proposed rather than an existing use. In any event, the appellants did not submit their claim for compensation or pursue it at trial as involving acquisition of their air rights.

The legislative history of s 93(2) of the Act might, on first impression, be seen to cast some doubt on the interpretation set out at [63] above. On closer analysis, however, such a conclusion is not warranted.

Section 93 of the Act can be traced back to s 29 of the Electricity Commissioners Act 1918 (‘1918 Act’). Section 29(1) of the 1918 Act set out the powers of the Electricity Commissioners in terms very similar to those used in the Act and s 29(2) provided as follows:

In the exercise of the foregoing powers the Electricity Commissioners shall do as little damage as may be and shall if required within two years from the exercise of such powers make full compensation to the owner of and all parties interested in any such lands for any damage sustained by them in consequence of the exercise of such powers, and such compensation shall be either a gross sum or a yearly rent as may be agreed, and in default of agreement the same shall be determined in manner provided in the Lands Compensation Act 1915.[27]

[27]Emphasis added.

Under the State Electricity Commission Act 1920 the Electricity Commissioners became the SECV. Section 29 of the 1918 Act ultimately became s 106 of the State Electricity Commission Act 1958 (‘1958 Act’). The words ‘do as little damage as may be’ and ‘shall if required … make full compensation to the owner of and all parties interested in any such lands for any damage sustained by them in consequence of the exercise of such powers’ remained unaltered until 1993.

The Electricity Industry Act 1993 (‘1993 Act’) provided for the restructuring of the electricity supply industry. Section 106 of the 1958 Act became s 47 of the 1993 Act. Section 47(2) adopted the wording now found in s 93(2) of the Act. In particular, the words ‘any land’ were substituted for the previous words ‘any such lands’. The Explanatory Memorandum and the second reading speech to the Electricity Industry Bill 1993 did not refer to this change in wording.

At first blush, it might be thought that the substitution of the words ‘any land’ for the words ‘any such lands’ was intended to alter the scope of the compensation obligations in s 47(2) of the 1993 Act and thus those in s 93(2) of the Act. Changes in the language used by Parliament are ordinarily treated as being made deliberately to give effect to a change in intended meaning. As the words ‘any land’ are wider than the words ‘any such lands’, it might be thought that Parliament intended that the former words operate independently of any previous references to lands in s 47(1) of the 1993 Act. If this is the case then the change in wording would support the appellants’ preferred interpretation of s 93(2) of the Act.

The above analysis, however, cannot withstand close scrutiny. This is primarily because the change in wording was not accompanied by any explanation, still less any explanation consistent with an intention to radically depart from the nature and scope of the statutory compensation scheme that had applied since the 1918 Act. It would have been expected that if a significant change in policy had been adopted, namely the severing of the link between the land upon which works had been conducted and the land in respect of which compensation was payable, that that change in policy would have been adverted to, at the very least, in the second reading speech. It is simply not credible that Parliament would have intended to make such an important change in the law and not expressly drawn attention to it.

Further, if Parliament had intended to effect such a significant change in the law, it would have adopted more direct and explicit language to give effect to it. For the reasons discussed at [64] to [67] above, the phrase ‘any land’ in s 93(2) of the Act is apt to refer to the previous references to the same phrase in s 93(1), in the same manner as the phrase ‘any such lands’. Language such as ‘any land, whether or not any of the activities referred to in subsection (1) were conducted on that land’ would have more clearly conveyed the putative change in the law. However, such language was not used.

In any event, as discussed below, Paddle v State Electricity Commission (Vic)[28] did not regard the phrase ‘any such lands’ as decisive in determining the scope of the compensation scheme in s 106(2) of the 1958 Act.
[28][1968] VR 425 (‘Paddle’).

In Paddle, the SECV proposed to construct a power line between Templestowe and Kew and, for that purpose, to install electricity poles on private land along the proposed route, including on the land of the plaintiffs.[29] The plaintiffs sought an injunction to stop the construction of the line on a number of bases. One of the bases was that the proposed route would cause more damage than an alternative route and thus the SECV was acting beyond power because the proposed route would not ‘do as little damage as may be’ as required by s 106(2). Menhennitt J rejected the plaintiffs’ claims on a number of grounds. His Honour said the following about the compensation regime in s 106(2):

The words ‘do as little damage as may be’, in the context, appear to me to refer to damage on particular land. These words are followed by the words that the Commission ‘shall if required ... make full compensation to the owner of and all parties interested in any such lands for any damage sustained by them in consequence of the exercise of any such powers’. These words reinforce the conclusion that the words ‘shall do as little damage as may be’ are related to conduct on a particular piece of land and do not contemplate or involve a comparison between damage done on one piece of land with damage on another piece of land if a different route were followed. Whatever the words may mean, and whatever their effect may be, they appear to me to be confined to the position on one piece of land if as little damage as may be were done in contrast with the position on that land if more damage [than] may be were done. …
[T]he plaintiffs’ contention proceeds on the basis that only properties actually traversed are to be taken into account, presumably because of the concluding words of s 106(2), and this seems, on any view, to be necessarily involved in the application of s 106(2). …
On any view of s 106(2) it refers only to damage. … [A]ny effect on the public from an aesthetic point of view cannot be measured, and does not, in my view, come within the concept of damage.[30]

[29]The SECV proposed to acquire easements over the plaintiffs’ land.

[30]Paddle [1968] VR 425, 437–8, 439, 442.

As can be seen, Menhennitt J concluded that the compensation scheme in s 106(2) of the 1958 Act applied only to the owners of land upon which the powers in s 106(1) were exercised. His Honour reached this conclusion on the basis of the phrase ‘do as little damage as may be’. The words ‘any such lands’ simply ‘reinforce[d] the conclusion’.

O K Elliott[31] concerned a claim for damages in negligence and nuisance by an owner of land which was adversely affected by water flowing from a burst water main under a public road. The water main was under the control of the Metropolitan Water, Sewerage and Drainage Board (‘MWSDB’) which was obliged by the Metropolitan Water, Sewerage and Drainage Act 1924 (NSW) (‘1924 Act’) to maintain it. The 1924 Act conferred certain powers on the MWSDB and s 32(4) of that Act provided that: ‘In the exercise of any of the powers hereby conferred the [MWSDB] shall inflict as little damage as may be … and shall make full compensation to all parties interested for all damage sustained by them through the exercise of such powers.’ If the plaintiff’s claim fell within s 32(4) of the 1924 Act, it would be within the jurisdiction of the Land and Valuation Court, and if not, it would be within the jurisdiction of the Supreme Court of New South Wales.
[31](1934) 52 CLR 134.

The High Court held that the plaintiff’s claim did not fall within s 32(4) of the 1924 Act because the claim alleged that the damage to the plaintiff’s land was caused by the MWSDB’s tortious conduct and did not assert an entitlement to statutory compensation under s 32(4) on the basis that the damage was in consequence of the exercise of the MWSDB’s statutory powers. In separate judgments, Starke and Dixon JJ considered the scope of the compensation scheme in s 32(4) of the 1924 Act.

Starke J stated:

It has long been settled that if public authorities or persons do acts which they are authorized by statute to do, and do them in a proper manner, then, though the acts so done work special injury to a particular individual, the individual injured cannot maintain an action at law. He is without remedy unless compensation is provided by the Act, and his only remedy is that given by the statute, namely, compensation … The compensation is for losses sustained in consequence of what the authorities or persons may lawfully do under the powers conferred upon them … But it is equally well settled that if the injury or loss is caused by an act which, notwithstanding the statute containing or incorporating a compensation clause, is not made lawful, the remedy by action is not taken away and is open to the person injured. Statutory powers must be exercised ‘with reasonable regard to the rights of other people,’ and if an act is done in excess of the statutory power, or carelessly or negligently, then the person injured can put in force the ordinary legal remedy by action in the Courts of law.[32]

[32]O K Elliott (1934) 52 CLR 134, 143–4 (citations omitted).

Dixon J held that, notwithstanding the width of the language in s 32(4) of the 1924 Act and the absence of any express reference to land, only persons with a proprietary interest in the land upon which one of the statutory powers was exercised were entitled to statutory compensation. His Honour said:

But it does not follow that the Board incurs an absolute statutory liability to make compensation to the occupiers of premises [in] adjoining streets for damage sustained by their goods or premises by reason of outbursts of water from the Board’s water-mains in the roadway.
Upon the similar, but not identical, provisions of the English Act,[33] no such absolute liability has been imposed, but persons complaining of such injury have been put to an action of negligence to recover damages …
In my opinion the same result follows from the provisions of the [1924] Act. The Board is required to inflict as little damage as may be, and shall make full compensation to all parties interested for all damage sustained by them through the exercise of such powers. When these words are related to the power of maintenance, they mean, I think, to confer a right to compensation upon a party who has some specific interest in land which is affected by an operation of maintenance. The word ‘inflict’ points to some active operation, and the word ‘interested’ to some proprietary right. … Clear expressions are needed before statutes, giving a general right of compensation in respect of public works and undertakings, are construed to impose an absolute liability upon an Authority for every accidental loss which may be suffered in the course of its daily conduct. …
Damage from the escape of water from a bursting main is not, in my opinion, injurious affection to land from the exercise of a power of maintenance.[34]

[33]His Honour was referring to the Waterworks Clauses Act 1847 (UK) 10 Vict, c 17.

[34]O K Elliott (1934) 52 CLR 134, 149–51 (citations omitted). See also McTiernan J at 155.

Rudd v Hornsby Shire Council[35] concerned a claim in nuisance by a landowner whose land was adversely affected by water flowing onto it as a result of the alleged negligence of the defendant council in constructing a drainage system in the vicinity of the plaintiff’s land. The defendant argued that the work was authorised by ss 240, 241 and 382 of the Local Government Act 1919 (NSW) and that, in accordance with that Act, the exclusive remedy available to the plaintiff was a claim for compensation under s 96 of the Public Works Act 1912 (NSW). That section provided that, in the exercise of its statutory powers, a constructing authority ‘shall do as little damage as possible’ and if required, make ‘full satisfaction … to all persons interested in any lands … which are taken, used, injured, or prejudicially affected, for all damages sustained by them by reason of the exercise of such powers.’
[35](1975) 31 LGRA 120 (‘Rudd’).

Holland J said the following about s 96 of the Public Works Act 1912 (NSW):

It is arguable that the reference to lands ‘injured or prejudicially affected’ would extend the right of compensation to owners of neighbouring lands which suffered detrimental consequences from works or activities carried out on other land. This question does not appear to have been decided. Leaving aside deprivation and loss caused by the taking or the using of land, I am inclined to the view that the section is directed to compensation for damage and injury to land necessarily caused by the actual performance of works and activities incidental thereto which are carried out in exercise of the powers given by the Public Works Act and not to compensation for subsequent or consequential deleterious effects suffered by remoter lands such as occurred in the present case. Whether or not this be so, the section does not, in my opinion, purport to deal with a continuing nuisance which has been created by the works and, therefore, ought not to be used to say that the powers in question must be construed as authority for the creation of such a nuisance.[36]

[36]Rudd (1975) 31 LGRA 120, 136.

In State Planning Commission v Della Vedova,[37] the Full Court of the Western Australian Supreme Court considered s 41(1) of the State Electricity Commission Act 1945 (WA) (‘WA Act’). That section provided that, ‘[i]n the exercise of the powers conferred by [the WA] Act, the Commission shall do as little damage as possible, and shall make adequate compensation to all local authorities and persons interested for any damages sustained by them by reason of the exercise of such powers.’ The scope of s 41(1) arose in the context of an application for compensation by the respondents in respect of the installation by the State Electricity Commission of pylons and transmission lines upon a section of the respondents’ rural land. The claim for compensation was said to comprise loss of use of the land upon which the pylons were installed and surrounding land for farming purposes, and loss of market value for the entirety of the respondents’ land.
[37](Unreported, Full Court, Supreme Court of Western Australia, Wallace, Brinsden and Walsh JJ, 4 April 1990) (‘Della Vedova’).

The Full Court held that compensation was available under s 41(1) of the WA Act for both components claimed by the respondents. After considering Paddle and O K Elliott, Brinsden and Walsh JJ stated:

The authorities we have quoted indicate that the provisions of s 41(1) have commendable antiquity and fully support a construction that they cover a claim for compensation based on injurious affection by reason of the deprivation of the use of the land covered by the works, and indeed, injurious affection if any, to neighbouring land owned by the same owner.[38]

[38]Della Vedova (Unreported, Full Court, Supreme Court of Western Australia, Wallace, Brinsden and Walsh JJ, 4 April 1990) 16.

The authorities discussed at [82]–[91] above demonstrate that statutory compensation schemes that are comparable to the scheme in s 93(2) of the Act are confined to owners of land upon which work has been undertaken in the exercise of statutory powers. In none of the cases has statutory compensation been awarded to an owner of land which has not been entered for the purpose of undertaking such work even though that land has been adversely affected by work undertaken on neighbouring land. It follows that these authorities support the interpretation of s 93(2) set out at [63] above.

Case law on injurious affection

The phrase ‘injurious affection’, which has featured in some of the cases we have already discussed, can be traced back to the Lands Clauses Consolidation Act 1845 (UK) 8 Vict, c 18 (‘UK Act’). The UK Act consolidated statutory provisions ‘authorizing the taking of Lands for Undertakings of a public Nature.’ Section 63 of the UK Act provided that compensation was payable not only for the value of land that was acquired, but also for ‘the Damage, if any, to be sustained by the Owner of the Lands by reason of the severing of the Lands taken from the other Lands of such Owner, or otherwise injuriously affecting such other Lands by the Exercise of the [relevant statutory powers]’. Section 68 of the UK Act provided that, if any party ‘shall be entitled to any Compensation in respect of any Lands … which shall have been taken for or injuriously affected by the Execution of the Works’, then that party was entitled to compensation in an amount to be determined in the manner set out in that section.

Section 68 of the UK Act was considered by the House of Lords in Metropolitan Board of Works v McCarthy.[39] The plaintiff was the lessee of a house in close proximity to a public draw-dock which opened into the River Thames. He used the draw-dock, as a member of the public rather than pursuant to any private right, for the purposes of his business as a supplier of building materials. The access to the draw-dock enhanced the value of the house. Pursuant to works authorised by the Thames Embankment Acts, the Metropolitan Board of Works stopped up the draw‑dock and permanently destroyed the plaintiff’s access to the Thames for the purposes of his business. It was found as a fact that this permanently damaged the property by diminishing its value.
[39](1874) LR 7 HL 243 (‘McCarthy’).

Prior to McCarthy, it had been held in Beckett v The Midland Railway Co[40] and Chamberlain v The West End and Crystal Palace Railway Co[41] that compensation was available under s 68 of the UK Act for a permanent deprivation of a landowner’s access to a highway where this permanently damaged his or her land. On the other hand, in Ricket v The Metropolitan Railway Co,[42] it had been held that s 68 did not apply where the deprivation of access to a highway was either temporary or which affected an individual personally or in the conduct of his or her business without causing any damage to his or her land. In McCarthy, the House of Lords held that the permanent damage to the plaintiff’s land by the deprivation of his access to the Thames entitled him to compensation under s 68 and that the fact that he had previously enjoyed access to a waterway rather than a highway was not a basis for distinguishing Beckett and Chamberlain.
[40](1867) LR 3 CP 82 (‘Beckett’).
[41](1863) 2 B & S 636 (‘Chamberlain’).
[42](1867) LR 2 HL 175.

Lord Cairns LC, Lord Chelmsford and Lord O’Hagan adopted the following principle:

where by the construction of works there is a physical interference with any right, public or private, which the owners or occupiers of property are by law entitled to make use of, in connection with such property, and which right gives an additional market value to such property, apart from the uses to which any particular owner or occupier might put it, there is a title to compensation, if, by reason of such interference, the property, as a property, is lessened in value.[43]

[43]McCarthy (1874) LR 7 HL 243, 253, 256, 264. See also Lord Hatherley at 261.

Lord Chelmsford added this qualification: ‘where the right which the owner of the house is entitled to exercise is one which he possesses in common with the public, there must be something peculiar to the right in its connection with the house to distinguish it from that which is enjoyed by the rest of the world.’[44] Lord Penzance and Lord O’Hagan agreed with this qualification.[45]
[44]McCarthy (1874) LR 7 HL 243, 256.
[45]McCarthy (1874) LR 7 HL 243, 263, 266.

Lord Cairns LC approved the following test that had been applied in previous cases: ‘the proper test is to consider whether the act done in carrying out the works in question is an act which would have given a right of action if the works had not been authorized by Act of Parliament.’[46] Lord Hatherley and Lord Penzance agreed with this test.[47] Lord O’Hagan doubted the correctness of this test but did not express a final view.[48]
[46]McCarthy (1874) LR 7 HL 243, 252.
[47]McCarthy (1874) LR 7 HL 243, 260, 261.
[48]McCarthy (1874) LR 7 HL 243, 265–6.

The appellants placed strong reliance on McCarthy because the plaintiff in that case was awarded damages for injurious affection in relation to his interest in the property even though no work was undertaken on that property pursuant to any statutory power. As the Australian Law Reform Commission noted however in its report ‘Lands Acquisition and Compensation’,[49] the suggestion that a claim for compensation could be sustained in Australia on the basis of the English notion of injurious affection recognised in McCarthy overlooks that McCarthy was based on a very questionable construction of s 68 of the UK Act[50] and that there is no longer any counterpart of s 68 in Victoria.[51] As the Commission said: ‘In the absence of comparable Australian legislative provisions the English decisions are inapplicable.’[52] No Australian court has awarded compensation under a statutory provision comparable to s 93(2) of the Act for injurious affection where the plaintiff’s land has not been partially acquired or upon which no works have been undertaken pursuant to statutory powers.
[49]Law Reform Commission, Lands Acquisition and Compensation, Report No 14, 1980 (‘Report’).
[50]Argyle Motors (Birkenhead) Ltd v Birkenhead Corporation [1975] AC 99, 129.
[51]As is noted in the Report, early colonial legislation did make some provision for compensation for persons injuriously affected where no land was taken, see, eg, Public Works Act 1865 (Vic) s 326, but this is no longer the case: at 158 n 52.
[52]Report, 158 [296].

The leading Australian case on statutory provisions dealing with injurious affection is Marshall v Director General, Department of Transport.[53] That case concerned s 20(1) of the Acquisition of Land Act 1967 (Qld) (‘Qld Act’) which provided as follows in relation to compensation payable when land was compulsorily acquired:

In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage, if any, caused by either or both of the following, namely —
(a) the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.

[53](2001) 205 CLR 603.

The facts in Marshall were that a constructing authority compulsorily acquired part of the plaintiff’s land for the purpose of extending a highway. Ultimately, no work relating to the extended highway was undertaken on the resumed land. The plaintiff, who retained land abutting the extended highway, claimed compensation for injurious affection pursuant to s 20 of the Qld Act on the basis that the altered drainage system for the extended highway had made the retained land more susceptible to flooding.

The Queensland Court of Appeal followed the English Court of Appeal decision in Edwards v Minister of Transport[54] (which dealt with s 63 of the UK Act) and held that it was a condition of a right to compensation for injurious affection that there be actual works undertaken on the resumed land. The High Court disapproved of Edwards and held that no such condition applied. The Court stated that the plaintiff was entitled to compensation for any injurious affection to the retained land that he could establish was caused by the exercise of the statutory powers by the constructing authority outside the resumed and retained land.[55]
[54][1964] 2 QB 134 (‘Edwards’).
[55]Marshall (2001) 205 CLR 603, 616 [20], 622 [33]–[34], 623 [39], 624 [41], 625–7 [44]–[48], 631 [59], 633–4 [65], [67].

Gaudron J stated the following important principle of interpretation:

It is a basic rule of statutory construction that legislative provisions are to be construed according to their natural and ordinary meaning unless that would lead to a result that the legislature must be taken not to have intended. The rule serves the important purpose of ensuring that those who are subject to the law understand the nature and extent of their rights and obligations. And because it serves that purpose, good reason must be shown before it will be concluded that the legislature did not intend the consequences that would flow if the provision in question were given its natural and ordinary meaning.
Although the rule that legislative provisions are to be construed according to their natural and ordinary meaning is a rule of general application, it is particularly important that it be given its full effect when, to do otherwise, would limit or impair individual rights, particularly property rights. The right to compensation for injurious affection following upon the resumption of land is an important right of that kind and statutory provisions conferring such a right should be construed with all the generality that their words permit. Certainly, such provisions should not be construed on the basis that the right to compensation is subject to limitations or qualifications which are not found in the terms of the statute.[56]

[56]Marshall (2001) 205 CLR 603, 623 [37]–[38] (citations omitted).

The other members of the High Court made statements to a similar effect.[57]
[57]See Marshall (2001) 205 CLR 603, 616 [20], 625–7 [44]–[48], 633–4 [67].

The principles of interpretation stated by Gaudron J in Marshall have been applied in the subsequent cases of Kettering Pty Ltd v Noosa Shire Council[58] and Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd.[59]
[58](2004) 207 ALR 1, 10 [31]–[32] (‘Kettering’).
[59](2011) 243 CLR 492, 503 [33]–[34] (‘Cumerlong’).

Kettering involved a claim for compensation under s 3.5 of the Local Government (Planning and Environment) Act 1990 (Qld) on the basis that the coming into force of a development control plan injuriously affected the plaintiff’s land by reducing the yield from future subdivision. Section 3.5 provided for compensation where a person’s interest in land was injuriously affected by the coming into force of any provision in a planning scheme. The Court held that the section did not expressly or by implication confine compensation to affection which is direct and immediate.[60] The Court also held that ‘[i]njurious affection by the taking and use of part of a landholding, and injurious affection occasioned by a planning change have in common the impairment or displacement of a private interest by a public one.’[61]
[60]Kettering (2004) 207 ALR 1, 9 [28], 10 [30].
[61]Kettering (2004) 207 ALR 1, 10 [31].

Cumerlong did not deal with a claim for compensation but with safeguards in s 28 of the Environmental Planning and Assessment Act 1979 (NSW) against a planning instrument adversely affecting a regulatory instrument (in that case, a restrictive covenant).

As stated at [99] above, no Australian case has held that a person in the appellants’ position, whose land has not been partially acquired and upon which no works have been undertaken by a body exercising statutory powers, is entitled to compensation for injurious affection under a statutory provision similar to s 93(2) of the Act. That is so for an interference with an existing use of land, and even more so for a proposed future use, as here.

Indeed, the plurality in Marshall (Gleeson CJ, Gummow, Kirby and Callinan JJ) acknowledged that the exercise of statutory powers may injuriously affect landowners whose land is partly resumed as well as landowners who retain all their land, and that the latter are not entitled to compensation under s 20(1)(b) of the Qld Act.[62] The plurality also stated that ‘injurious affection’ is ‘a neat, expressive way of describing the adverse effect of the activities of a resuming authority upon a dispossessed owner’s land’ and that its use ‘serves well to distinguish the statutory right [to compensation] from the common law claim in nuisance.’[63] Similarly, in Kettering, McHugh, Gummow, Hayne, Callinan and Heydon JJ, in a joint judgment said:

‘Injuriously affected’ … is … an expression of wide import … used in … enactments providing for compensation for many kinds of deleterious effects on the value of land left in a dispossessed owner’s hands and arising out of the compulsory acquisition and use of other parts of it.[64]

[62]Marshall (2001) 205 CLR 603, 620 [28].

[63]Marshall (2001) 205 CLR 603, 622 [32] (emphasis added).

[64]Kettering (2004) 207 ALR 1, 8 [23] (emphasis added).

In our opinion, the observations in Marshall and Kettering refute the contention advanced by the appellants before us that the injurious affection cases demonstrate that the judge fell into error.

It may be accepted that there is no exhaustive list of adverse effects that can constitute ‘injurious affection’. However, even if the alleged diminution in the value of the Property can, in a factual sense, be described as ‘injurious affection’, that does not mean that the cases on injurious affection have the effect that the appellants are entitled to compensation under s 93(2) of the Act. That is because those cases were decided in the context of their own specific statutory provisions which use different language from that in s 93(2). While some of the general principles of interpretation in those cases may, in a broad sense, inform the approach to interpretation of s 93, the meaning of that section largely depends on the specific matters that we have already considered.

In oral submissions in reply, senior counsel for the appellants submitted that the principles in McCarthy[65] apply to the appellants’ claim because their case is a ‘highway case’ in the sense that the proposed aerodrome is a modern highway. This submission must be rejected. For the reasons already discussed, insofar as McCarthy stands for the proposition that a person whose land has not been partially acquired and on no part of which any statutory powers have been exercised is entitled to statutory compensation for injurious affection, that proposition has never been applied in Australia in the context of a statutory provision such as s 93(2) of the Act. In any event, the appellants did not submit their claim for compensation or pursue it at trial on the basis that the ELU works deprived them of access to a highway. Indeed, the first appellant, Mr Sleeman, gave evidence that he operated his helicopter from the Property.
[65](1867) LR 2 HL 175.

It follows that there is nothing in the case law on injurious affection that requires any departure from the interpretation of s 93(2) of the Act that we have adopted.

It also follows that grounds 1 and 2 of the notice of appeal have not been made out.

Ground 3 in the notice of appeal

Under cover of ground 3, the appellants seek to impugn para 32 of the judge’s Reasons which is set out at [33] above. They contend that, in that paragraph, the judge made a finding that it was not open to them to assert interference with their land in the form of actionable nuisance or to make a claim under s 93(2) of the Act for diminution in the market value of the land as an actionable nuisance. The appellants submit that this finding is contrary to Della Vedova.[66]
[66]Della Vedova is discussed at [90]–[91] above.

As appears from [33] above, the judge’s statements about nuisance were made in the context of the difficulties of applying the LAC Act to the appellants’ claim, which did not involve either acquisition of, or entry upon, the Property by the respondent. For the reasons discussed at [68]–[73] above, those difficulties are real. The judge’s statements were not intended to be a statement of general principle relating to the circumstances in which a claim falling within the tort of nuisance may or may not be the subject of compensation under s 93(2) of the Act. In any event, it is not necessary for this Court to decide whether there is some error in the manner in which her Honour expressed herself, as any such error would not assist the appellants for the reasons already discussed under grounds 1 and 2.

Ground 4 in the notice of appeal

Under cover of ground 4, the appellants seek to impugn para 50 of the judge’s Reasons which is set out at [32] above. They contend that, in that paragraph, the judge erred in concluding that the damage of which the appellants complained, namely, their inability to use the Property as an aerodrome, was not a contemplated consequence of the conferral of power to enter onto land to construct and maintain power lines.

Once again, in view of the conclusion we have reached in relation to grounds 1 and 2, it is not necessary for this Court to decide whether there is some error in the judge’s reasoning in para 50 of the Reasons. What is important is the correctness of her Honour’s ultimate conclusion that, as no works were performed on the Property, the loss claimed by the appellants did not fall within s 93(2) of the Act.

Conclusion

For the reasons set out above, we would dismiss the appeal.

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[2014] VSCA 243

3 October 2014