JANDAKOT CAPITAL PTY LTD and COMMISSIONER OF MAIN ROADS
[2024] WASAT 90
•30 AUGUST 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: LAND ADMINISTRATION ACT 1997 (WA)
CITATION: JANDAKOT CAPITAL PTY LTD and COMMISSIONER OF MAIN ROADS [2024] WASAT 90
MEMBER: DR S WILLEY, SENIOR MEMBER
HEARD: 8, 9, 10, 14, 15 AND 16 MARCH, 11 JULY 2023 AND 12 JULY 2024
DELIVERED : 30 AUGUST 2024
PUBLISHED : 30 AUGUST 2024
FILE NO/S: DR 18 of 2021
BETWEEN: JANDAKOT CAPITAL PTY LTD
Applicant
AND
COMMISSIONER OF MAIN ROADS
Respondent
FILE NO/S: DR 19 of 2021
BETWEEN: COCKBURN CENTRAL MOTORS PTY LTD
Applicant
AND
COMMISSIONER OF MAIN ROADS
Respondent
Catchwords:
Compulsory acquisition of land - Planning control area - Measure of compensation - Market value - Special value - Value to owner - Valuation methodology - Severance damage - Consequential loss and damage - Professional fees - Lease costs
Legislation:
City of Cockburn Local Planning Scheme No 3, cl 5.2.2
Evidence Act 1906 (WA)
Land Acquisition and Public Works Act 1902 (WA)
Land Administration Act 1997 (WA), s 166, s 167, s 168, s 169, s 170, s 171, s 177, s 178(2)(a), s 179(b), s 180, s 220, s 221(1)(b), s 226(1), s 226(2), s 241, s 241(1), s 241(2), s 241(6), s 241(6)(a), s 241(6)(b), s 241(6)(e), s 241(7), s 241(7)(a), Pt 9, Pt 10
Metropolitan Region Scheme
Planning and Development Act 2005 (WA), s 186, s 191, s 191(1), s 191(3), s 192, s 192(1), Pt 8, Sch 6, Div 2
Planning and Development Amendment Act 2020 (WA), s 103
State Administrative Tribunal Act 2004 (WA), s 9(b), s 15, s 32(2), s 32(2)(b), s 87(1)
Result:
Compensation determined
Category: B
Representation:
DR 18 of 2021
Counsel:
| Applicant | : | KM Pettit SC and J Hamdorf |
| Respondent | : | CP Shanahan SC and C Ide |
Solicitors:
| Applicant | : | McLeod Fisher & Hamdorf |
| Respondent | : | State Solicitor's Office |
DR 19 of 2021
Counsel:
| Applicant | : | KM Pettit SC and J Hamdorf |
| Respondent | : | CP Shanahan SC and C Ide |
Solicitors:
| Applicant | : | McLeod Fisher & Hamdorf |
| Respondent | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Arcus Shopfitters Pty Ltd v Western Australian Planning Commission (2002) 125 LGERA 180
Arkaba Holdings Ltd v Commissioner of Highways [1970] SASR 94; (1970) 19 LGRA 398
Avila and Main Roads Western Australia [2023] WASAT 79
Balquhidder Pty Ltd v Minister for Environment and Planning (1986) 40 SASR 63; (1986) 58 LGRA 339
Benton v Road Construction Authority (No 2) [1992] 2 VR 495; (1990) 76 LGRA 76
Bergman v Holroyd Municipal Council (1988) 66 LGRA 68
Birmingham City Corporation v West Midland Baptist (Trust) Association (Incorporated) [1970] AC 874
Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; (1999) 167 ALR 575
Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541, 544-545; (1973) 32 LGRA 170
Bronzel v State Planning Authority of South Australia (1979) 21 SASR 513, 525; (1979) 44 LGRA 34
Caltex Petroleum Pty Ltd v The Commissioner for Main Roads [2004] WASC 239
Cereni v The Minister for Transport [2001] WASC 309
Clark & Co Ltd v Commissioner for Railways (1949) 29 LVR 98
Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10 (1947) 74 CLR 358
Commonwealth Custodial Services Ltd (as Trustee for Burwood Trust Fund) v Valuer-General (NSW) (2006) 148 LGERA 38
Cook and Edwards v City of Stirling (1991) 4 WAR 469
Dangerfield v Town of St Peters [1972] HCA 15; (1972) 129 CLR 586
DBW Reynolds Pty Ltd as trustee for The DBW Reynolds Family Trust v Public Transport Authority [2023] WASC 165
Denshire v Roads and Maritime Services [2017] NSWLEC 181; (2017) 229 LGERA 118
Director of Buildings & Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 (1995) 1 All ER 846
Enerver v Minister (1933) 3 The Valuer 29
Fire Lake Pastoral Pty Ltd ATF the Simon Jenour Farming Trust and Commissioner of Main Roads [2024] WASAT 43
Griffith City Council v Polegato (1990) 20 NSWLR 969; (1990) 71 LGRA 203
Griffiths v Municipal Tramways Trust [1924] SASR 270
Hobart Bridge Co Ltd v Tasmania (1945) 9 The Valuer 62
Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547; (1981) 50 LGRA 334
ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447; (2008) 162 LGERA 59
Italiano v The Water Corporation [No 2] [2020] WASC 112
Jacobellis v Ohio, 378 US 184 (1964)
Kelliher v Commissioner for Main Roads [No 2] [2015] WASC 478
Kerry v State Transport Authority (1985) 55 LGRA 273
Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307
Konowalow & Felber v Minister for Works [1961] WAR 40, 41; (1960) 8 LGRA 75
Kozaris v Roads Corporation [1991] 1 VR 237; (1990) 75 lGRA 346
Lenz Nominees Pty Ltd v Commissioner of Main Roads [2012] WASC 6; (2012) 186 LGERA 58
Love v Roads Corporation [2011] VSCA 434
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2010] HCA 2; (2010) 240 CLR 409
McKay v Commissioner of Main Roads [2013] WASCA 135
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Minister for Works v Robinson (1965) 13 LGRA 390
Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273
Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158
New Aim Pty Ltd v Leung [2023] FCAFC 67; (2023) 410 ALR 190
Pastoral Finance Association Ltd v Minister [1914] AC 1083; (1914) 15 SR (NSW) 535
Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565; (1947) 63 TLR 486
Polaris Metals Pty Ltd and Valuer General [2023] WASAT 105
Purden v Minister for Lands and Works (1966) 19 The Valuer 729
Redeam Pty Ltd v South Australian Land Commission (1977) 40 LGRA 151; (1977) 17 SASR 508
River Bank Pty Ltd v Commonwealth (1974) 48 ALJR 483; (1974) 31 LGRA 244
Riverstone Meat Co Ltd v Sydney County Council (1956) 1 LGRA 216
Roads Corporation v Love [2010] VSC 32; (2010) 173 LGERA 1
Savage v Griffith City Council (1988) 66 LGRA 277
Spencer v Commonwealth (1907) 5 CLR 418; (1907) 14 ALR 253
St John Ambulance Association of Western Australia (Inc) v East Perth Redevelopment Authority [2001] WASC 85; (2001) 114 LGERA 112
Sterling Finances Ltd v Minister of Water Resources (1984) 52 LGRA 289
Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82
Turner v Minister for Public Instruction (1956) 95 CLR 245; [1956] ALR 367
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 (2008) 233 CLR 259; (2008) 170 LGERA 345
Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32; (2016) 213 LGERA 81
Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; (1991) 73 LGRA 47
Yates Property Corporation Pty Ltd v Darling Harbour Authority (1990) 70 LGRA 187
Yates Property Corporation Pty Ltd v Darling Harbour Authority (unreported, Land and Environment Court of NSW, 1 April 1992)
Table of Contents
(1)...... Issues
(2)...... Background
2.1. Lot 302
2.2. Planning Control Area 122
2.3. The Taking
2.4. The Taken Land and the Remaining Land
2.5. Relevant planning history of Lot 302
2.5.1. Application for new car dealership
2.5.2. Retrospective application for car retail sales, repairs and signage
2.5.3. Used car dealership application
2.6. The use of Lot 302 as at the Taking Date
(3)...... Legislative framework
3.1. My jurisdiction
3.2. PD Act: relevant provisions
3.3. LA Act: relevant provisions
(4)...... 11 key propositions
(5)...... Overview of the Applicants' case
5.1. The respective claims
5.2. Applicants' primary case
5.3. Applicants' alternate case
(6)...... Respondent's case
(7)...... The dealership damage claim
7.1. Applicants' evidence in support of its dealership damage claim
7.1.1. Mr Harold Schoolland
7.1.2. Mr Philip Oates
7.1.3. Mr Adam Roxby
7.1.4. Mr Ian Doubikin
(8)...... Why I do not accept the dealership damage claim
8.1. Conclusion on dealership damage claim
(9)...... Overview of the valuation evidence
9.1. Role and duty of expert valuers
9.2. The valuation evidence
9.2.1. Mr Paul Bradstreet
Compensation assessment
9.2.2. Mr Matthew Garmony
Unaffected (before) value
Affected (after) value
Compensation payable
9.2.3. Mr Steve Kish
9.2.4. Ms Kate Bingham
9.2.5. Mr Keith Wilson
Approach 1 - Improvements assumed to add value
Before
After
Approach 2 - Improvements assumed to not add value
Before
After
9.2.6. Mr Wayne Srhoy
(10)... Key findings
10.1. Evidence as between Jandakot and CCM
10.2. Instructions to Applicants' witnesses
10.3. What is the highest and best use of Lot 302?
10.3.1. Mr John Syme
10.3.2. Applicable planning framework
10.4. The question of special value
10.4.1. Special value: the concept
10.4.2. Lot 302 does not have special value to the Applicants
10.5. The valuation evidence I do not accept
10.5.1. Mr Paul Bradstreet
10.5.2. Mr Matthew Garmony
10.5.3. Ms Kate Bingham
10.5.4. Mr Wayne Srhoy
(11)... The valuation evidence that I accept and adopt
(12)... Compensation payable
12.1. The value of Lot 302 as at the Taking Date
12.2. The value of Lot 21
12.3. The question of severance damage
(13)... The claims for professional fees cannot be accepted
(14)... CCM's lease costs are not compensable
(15)... Assessment of compensation: Jandakot
(16)... Assessment of compensation: CCM
(17)... Orders
REASONS FOR DECISION OF THE TRIBUNAL:
Jandakot Capital Pty Ltd (Jandakot) purchased Lot 302, Knock Place, Jandakot (Lot 302) in 2015 and leased it to Cockburn Central Motors Pty Ltd (CCM). While Jandakot and CCM were separate legal entities, they operated in concert and together planned to develop Lot 302 for retail car sales and related uses.
On 17 April 2019 (Taking Date),[1] an 8,110m2 portion of Lot 302 was acquired for the purposes of the Metropolitan Region Scheme (MRS), a planning scheme made under the Planning and Development Act 2005 (WA) (PD Act).
[1] The Taking was first registered on 4 April 2019, but was later amended to be 17 April 2019.
More precisely, a portion of Lot 302 was acquired as part of the Armadale Road deviation roadworks (Taking). The Taking was part of a broader project to connect North Lake Road and Armadale Road, including the construction of free-flowing lanes on Armadale Road via grade separated roundabouts on Solomon Road and Tapper Road.
Under the applicable statutory regime provided by the PD Act, read with the Land Administration Act 1997 (WA) (LA Act), both Jandakot and CCM (together the Applicants) are entitled to compensation. The acquiring authority is the Commissioner of Main Roads (Respondent).
The Applicants advance a number of alternate claims. Jandakot is the lead claimant, and its primary case is premised on a novel argument that it should be paid compensation based on the cost of constructing a concrete slab to reinstate the volume of Lot 302 that was acquired. Jandakot's alternate case is that Lot 302 had special value. CCM's various claims are premised on the compensation that is awarded to Jandakot.
On account of the Taking, Jandakot claim between $23,330,188.83 and $4,489,933.33. CCM claim between $10,614,729.82 and $830,977.31.
The Respondent fundamentally rejects the premise of the Applicants' case. It submits it owes a total amount of compensation of $2,392,450, but no more than $2,814,170.[2]
[2] Respondent's Closing Submissions, 9 June 2023, paras 242 and 243 (Respondent's Closing). The Respondent paid Jandakot a further amount of $912,548.62 on 6 January 2022 to settle a claim under s 241(6)(a) of the LA Act in relation to the loss or damage arising from the relocation of lights, fences and shade sails from Lot 302.
In the result, for the reasons that follow, I find that Jandakot is owed $3,765,000 plus solatium and interest. CCM is owed $100 plus solatium and interest.
In these reasons, I will deal with the following matters:
(1)Issues
(2)Background
(3)Legislative framework
(4)11 key propositions
(5)Overview of the Applicants' case
(6)Respondent's case
(7)The dealership damage claim
(8)Why I do not accept the dealership damage claim
(9)Overview of the valuation evidence
(10)Key findings
(11)Assessment of compensation: Jandakot
(12)Assessment of compensation: CCM
(13)The claims for professional fees cannot be accepted
(14)CCM's lease costs are not compensable
(15)Orders
Issues
The ultimate issue that I must determine is the compensation that is payable to both Jandakot and CCM. However, in doing so, I will need to determine:
(1)Whether I accept what I will come to describe as the dealership damage claim;
(2)The highest and best use of Lot 302;
(3)Whether Lot 302 had special value;
(4)The value of Lot 302 in its unaffected (before) and affected (after) states;
(5)The question of severance; and
(6)The claims for professional fees and lease expenses.
Background
The following facts are not in dispute.
2.1. Lot 302
Lot 302:
(a)is located within the City of Cockburn (City);
(b)was purchased by Jandakot on 30 June 2015;
(c)had an area of 34,517m2 (3.45 hectares);
(d)was leased to CCM from 1 July 2015 (to 30 June 2020). The lease arrangements were not made on an arm's length basis;
(e)was, at all relevant times, zoned 'Industrial' in the MRS and 'Development' under the City of Cockburn Local Planning Scheme No 3 (LPS 3);
(f)was included in Development Area 20 and Development Contribution Area 8 within LPS 3;
(g)was, as at the Taking Date, identified as 'light and service industry' under the Cockburn Central East Structure Plan (Structure Plan);
(h)was bordered by Monash Gate to the north, Solomon Road to the east and Knock Place to the south;
(i)was previously used as part of a truck service and parts land use and contained sheds and built structures used in pursuit of that land use;
(j)was located close to Armadale Road, the Kwinana Freeway, the Cockburn Gateway Shopping Centre and Cockburn Central train station;
(k)had visual exposure, the extent of which is not agreed, to Armadale Road, Beeliar Drive and Solomon Road; and
(l)had multiple crossovers (the Applicants say six, the Respondent says four).
2.2. Planning Control Area 122
Planning control areas are made by the Western Australian Planning Commission (WAPC) pursuant to Pt 8 of the PD Act.
On 8 March 2016, Planning Control Area 122 (PCA 122) was declared by notice in the Government Gazette No 37. PCA 122 was declared 'over land to be protected for the future primary regional road reservation for the Armadale Road deviation (section between Knock Place and Solomon Road, Jandakot)'.[3]
[3] Exhibit 3, pages 161 and 162.
The purpose of PCA 122 was to:
(a)protect the future Primary Regional Road reservation for the Armadale Road deviation from adverse development outcomes;
(b)facilitate improved land use and transport planning within Cockburn Central; and
(c)allow for the final road design and land requirements to be confirmed prior to an MRS amendment being initiated.
PCA 122 was subsequently amended by adding additional land. Its purpose was supplemented as follows: 'to protect the future regional road reservation for the Armadale Road bridge/North Lake Road realignment'.[4]
[4] Exhibit 3, page 164.
PCA 122 was further amended in 2018[5] and in 2019.[6] The 2019 amendment included further land, but also altered the purpose to '… enable the land to be compulsorily taken, as funding has now been received for the project to occur'.
[5] Exhibit 3, pages 165 and 166.
[6] Exhibit 3, pages 167, 169 and 170.
At all times, PCA 122 included the land that was ultimately acquired from Lot 302 plus the adjacent sections of Solomon Road and Knock Place.
2.3. The Taking
On 17 April 2019, a Taking Order was registered for part of Lot 302.[7] The date of registration for the Taking Order was amended to 17 April 2019 and the taken portion of Lot 302 was transferred to the WAPC on that date.
[7] Exhibit 3, page 171.
The Taking Order was issued pursuant to s 191 of the PD Act.
Under the Taking Order, the portion of Lot 302 was required 'for the purpose of the planning scheme' and was 'designated for the purpose of the planning scheme'. The designation is '[PCA 122] - Armadale Road Deviation (Cockburn Central) under the [MRS]'.[8]
[8] Exhibit 3, pages 178 and 179.
2.4. The Taken Land and the Remaining Land
The portion of Lot 302 that was the subject of the Taking is now known as Lot 37 on Deposited Plan 415480 (Lot 37 or Taken Land).[9]
[9] Exhibit 3, page 30.
Prior to the gazettal of PCA 122, the Taken Land included hardstand, landscaping, fencing and curbing.[10] Aerial photographs show many cars sitting adjacent to the building located near the corner of (then) Knock Place and Solomon Road.
[10] Exhibit 3, tab 1.
The remaining land has an area of 26,459m2 and is now described as Lot 21 on Deposited Plan 4156480 (Lot 21 or Remaining Land).[11] Jandakot owns the Remaining Land which continues to be leased to CCM.
[11] Exhibit 3, page 31.
The Remaining Land:
(a)is bordered by Monash Gate to the north, Solomon Road to the east and the new roadworks to the south; and
(b)has three available crossovers: one from Solomon Road and two from Monash Gate.
2.5. Relevant planning history of Lot 302
A central plank in the Applicants' case is that Lot 302 was purchased because it was suitable to be developed for multiple car dealerships, up to 6. This form of development is known in the industry as a 'dealers row'.
However, by reason of the Taking, the Applicants' case is that those plans for a '6 dealership dealers row' cannot now be realised because, inter alia, Lot 21 is too small.
The Applicants refer to, and rely on, Lot 302's planning history as follows.
2.5.1. Application for new car dealership
Shortly before Lot 302 was acquired, on 25 June 2015, Jandakot submitted a development application (DA) to the City for a Hyundai new car dealership at an estimated cost of $6 million.[12] The proposed dealership included a showroom, office space and a workshop as well as parking. Concept plans were also developed showing how Lot 302 could be fully developed (in stages) for car dealerships at an estimated total cost of $21 million. The concept plans were shown to, but were never formally considered by, the City.[13]
[12] DA 15/0542.
[13] Exhibit 3, pages 158 - 160.
The dealership was on a portion of Lot 302 that would come to be included in PCA 122 (when it was declared in March 2016). Consequently, the application was amended, and the proposed new dealership was located on a portion of Lot 302 unaffected by PCA 122.[14]
[14] Exhibit 3, tab 31.
The New Car Dealership DA was conditionally approved by the City on 23 June 2016.[15]
[15] Exhibit 3, tab 32.
2.5.2. Retrospective application for car retail sales, repairs and signage
On 4 August 2015, Jandakot applied to the City for retrospective approval to change the use of Lot 302 from 'truck wrecking and storage' to 'motor vehicle sales/repairs'.[16] The large existing shed on Lot 302 was to be refurbished to provide for offices, employee amenities, service bays and car storage. Hyundai signage was also proposed.[17]
[16] DA 15/0653.
[17] Exhibit 3, tab 27.
Following some further amendments, the Change in Use DA was approved on 23 June 2016.[18]
[18] Exhibit 3, tab 32.
2.5.3. Used car dealership application
Following approval being granted for the New Car Dealership DA and the Change in Use DA, on 8 December 2016 Jandakot lodged an application to renovate the large existing building near the south-east corner of Lot 302 to provide for a showroom, offices, a workshop and area for taking photographs.[19] Signage for 'Car Giant' was also proposed. The estimated cost was $1.2 million.
[19] DA 16/0933.
While the City approved the application on 12 April 2017,[20] the WAPC did not approve the application as it related to the MRS because of the potential impact on land within PCA 122.[21] The application was subsequently amended on 8 June 2017.[22]
[20] Exhibit 3, tab 34.
[21] Exhibit 3, tab 35.
[22] Exhibit 3, tab 36.
The revised Used Car Dealership DA was approved by the City on 3 November 2017.[23] Condition 16 required that access to the photo booth be altered once the construction of the road on the land affected by PCA 122 commenced. The roller door located in the south-west corner of the building could no longer be used and access was to instead be provided through an alternate roller door.
[23] Exhibit 3, tab 37 (approved as DA 17/0433, not DA 16/0933).
2.6. The use of Lot 302 as at the Taking Date
As at the Taking Date, the Change in Use DA was acted upon which authorised Lot 302 to be used for the purposes of 'motor vehicle sales and repairs'. The Used Car Dealership DA was also acted upon, and Car Giant was operating as a standalone used car dealership. The existing buildings on Lot 302 have been refurbished to provide for a showroom, offices, a workshop area as well as a car photo booth. There was extensive hardstand and shade sails across Lot 302. The cost of these works was $12,200,000.[24]
As at the Taking Date, the New Car Dealership DA was no longer relied upon as CCM decided it was uncommercial to spend $6 million on a single car dealership. CCM decided instead to, from November 2016, locate the Hyundai dealership to the nearby Cockburn Gateway Shopping Centre.[25]
Legislative framework
3.1. My jurisdiction
[24] Exhibit 8, paras 37 and 38.
[25] Exhibit 8, para 8.
The Applicants have referred their claims for compensation to the Tribunal pursuant to s 220 of the LA Act. For the purposes of s 226(1) of the LA Act, I am a senior member and a qualified person. The parties have agreed that the Tribunal in this proceeding may be constituted solely by a judicial or senior member.[26]
[26] LA Act, s 226(2).
These claims arise in the Tribunal's original jurisdiction.[27] Accordingly, the Applicants, as the parties bringing the proceeding, carry the onus of proof. The civil standard applies, being the balance of probabilities.
[27] State Administrative Tribunal Act 2004 (WA) (SAT Act), s 15.
In these reasons, where I set out that I am satisfied as to the existence of fact, I mean that I am satisfied on the balance of probabilities that the relevant fact has been proved.
3.2. PD Act: relevant provisions
It is agreed between the parties that the Taking was authorised under the PD Act, but compensation is to be assessed under the LA Act, subject to the requirements of s 191(3) and s 192 of the PD Act.
As at the Taking Date, s 191(1) of the PD Act authorised a 'responsible authority' to, for the purpose of a planning scheme and with the consent of the Governor, compulsorily acquire land subject to Pt 9 of the LA Act, as if the land were required for a public work.
The phrase for the 'purpose of a planning scheme' has been construed to mean land reserved under a planning scheme. That is to say, to acquire land that has not been identified as being required for a public purpose, through the imposition of a scheme reserve, is not for the purpose of a planning scheme.[28]
[28] Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276 [41] (McLure JA); endorsed by the High Court in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2010] HCA 2; (2010) 240 CLR 409 [33] (French CJ, Gummow, Crennan and Bell JJ).
In this instance, the relevant portion of Lot 302 was not reserved under the MRS. However, while not reserved, the land nevertheless has been 'set aside' in PCA 122 as being required for the purposes of the Armadale Road deviation. As at the Taking Date, Sch 6 to the PD Act provided that land can be required for a PCA for the purposes of 'highways and important regional roads'.[29]
[29] After the Taking Date (so irrelevant for this proceeding), I note that s 103 of the Planning and Development Amendment Act 2020 (WA) amended Sch 6 to the PD Act to include the following purpose 'Highways, important regional roads and other roads that are necessary because of highways or important regional roads'.
The Applicants submit, and the Respondent agrees, that the power to acquire Lot 302 may be found in s 186 of the PD Act, even though that section refers to compensation for injurious affection under a PCA.[30] Nevertheless, s 186 provides that land that is injuriously affected by a PCA may be acquired by the WAPC in the same circumstances, and to the same extent, as if the land in the PCA, instead of being in a PCA, had been reserved under a planning scheme for a public purpose.
[30] ts 2 - 4, 8 March 2023.
Section 191(3) of the PD Act provides that when any land is compulsorily taken under s 191, the provisions of:
(a)sections 166 to 171 (inclusive); and
(b)section 180,
of the LA Act do not apply to or in respect of the land or the taking or in any manner whatsoever, and the LA Act is to be read and construed as if the provisions were deleted.
3.3. LA Act: relevant provisions
By reason of s 191(1) of the PD Act, Pt 9 of the LA Act applies to land that is acquired for the purpose of a planning scheme as if the land were required for a public work. Part 9 of the LA Act deals with the compulsory taking of interests in land. As I have set out above, while Pt 9 applies, its application is modified perforce of s 191(3) of the PD Act. As a consequence, neither the WAPC nor the Respondent issued a notice of intention to take on the Applicants. Ordinarily, in the context of a public work, that would be required pursuant to s 170 of the LA Act.
The Taking Order was issued on 17 April 2019 pursuant to s 177 of the LA Act. Section 179(b) of the LA Act provides that upon the registration of a taking order, every interest in the land, unless preserved by s 178(2)(a), is extinguished, and each person who formerly held such an interest has that holding converted into a claim for compensation under Pt 10 of the LA Act.
Ultimately, this well-worn statutory path leads to s 241 of the LA Act which sets out the heads of compensation where interests in land are compulsory acquired.
However, s 192(1) of the PD Act provides that, despite Pt 10 of the LA Act, the value of any land or improvements on land which is compulsorily acquired by a responsible authority under s 191 is, for the purpose of assessing the amount of compensation to be paid for the land and improvements to be assessed:
(a)without regard to any increase or decrease in value attributed wholly or in part to any of the provisions contained in, or to the operation or effect of, the relevant planning scheme; and
(b)having regard to values current at the time of acquisition,
but in assessing the amount of compensation, regard is to be had to any amounts of compensation already paid, or payable, by the responsible authority in respect of the land under Div 2.
Section 192(1) of the PD Act largely reflects s 241(2) of the LA Act which provides, in effect, that in assessing the value of the interest in the land acquired, the value is to be determined discounting any increase or decrease attributable to the proposed public work underlining the acquisition.
Section 192(1) simply recognises that compensation is being assessed by reason of the operation or effect of the planning scheme, rather than a public work. However, each provision requires that the value of the acquired land be assessed without regard to, in effect, the basis on which the land is being acquired. Such provisions are premised on the so-called Pointe Gourde[31] principle.
[31] By reference to the Privy Council decision in Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands (Trinidad) [1947] AC 565; (1947) 63 TLR 486 (Pointe Gourde).
Accordingly, in my view, the difference between s 192(1) of the PD Act and s 241(2) of the LA Act is of no moment in the context of these proceedings. For this reason, and for convenience, in these reasons I shall refer to only s 241(2) of the LA Act.
For ease of reference, s 241 of the LA Act is set out below:
241. How compensation to be determined
(1)In determining the amount of compensation (if any) to be offered, paid, or awarded for an interest in land taken under Part 9, regard is to be had solely to the matters referred to in this section.
(2)Regard is to be had to the value of the land with any improvements, or the interest of the claimant in the land, assessed as on —
…
(c)… the date of taking,
and discounting any increase or decrease in value attributable to the proposed public work.
(3)If a notice of intention was registered in relation to the interest on a date before the date referred to in subsection (2), and a transaction relating to the land made between those dates affected the value of the interest, regard may be had to the value of the interest assessed as at the date referred to in subsection (2) and discounting the effect of the transaction.
(4)No regard is to be had to the value of any improvements made without the consent of the Minister after the registration of a notice of intention.
…
(6)Regard is to be had to the loss or damage, if any, sustained by the claimant by reason of —
(a)removal expenses; or
(b)disruption and reinstatement of a business; or
(c)the halting of building works in progress at the date when the interest is taken and the consequential termination of building contracts; or
(d)architect's fees or quantity surveyor's fees actually incurred by the claimant in respect of proposed buildings or improvements which cannot be commenced or continued in consequence of the taking of the interest; or
(e)any other facts which the acquiring authority, the court, or the State Administrative Tribunal considers it just to take into account in the circumstances of the case.
(7)If the fee simple in land is taken from a person who is also the holder in fee simple of adjoining land, regard is to be had to the amount of any damage suffered by the claimant —
(a)due to the severing of the land taken from that adjoining land; or
(b)due to a reduction of the value of that adjoining land,
however, if the value of any land held in fee simple by the person is increased by the carrying out of, or the proposal to carry out, the public work for which the land was taken, the increase is to be set off against the amount of compensation that would otherwise be payable under paragraph (b).
(8)If the interest in land is taken without agreement, an amount considered by the court or the State Administrative Tribunal or, for the purposes of making an offer, by the acquiring authority, appropriate to compensate for the taking without agreement may be added to the award or offer.
(9)The additional amount under subsection (8) must not be more than 10% of the amount otherwise awarded or offered, unless the court or the State Administrative Tribunal, or, for the purposes of making an offer, the acquiring authority, is satisfied that exceptional circumstances justify a higher amount.
…
(11)If the interest in land taken does not produce any rents or profits, interest is to be paid at the rate prescribed under section 8(1)(a) of the Civil Judgments Enforcement Act 2004 as at the date of entry for construction or carrying out of the work or the date of registration of the taking order, whichever is earlier, and the interest is payable from —
(a)the date of the service of the claim on the acquiring authority; or
(b)the date of entry for construction or carrying out of the work,
whichever is earlier, to the date —
(c)when the offer was served on the claimant, if the compensation awarded by the State Administrative Tribunal or the court of competent jurisdiction is not more than the amount offered by the acquiring authority; or
(d)of settlement of the claim, in any other case.
11 key propositions
As I recently noted in Avila and Main Roads Western Australia (Avila),[32] the Supreme Court has now, on a number of occasions, set out the principles that apply in the assessment of compensation for the acquisition of an interest in land pursuant to s 241 of the LA Act.
[32] Avila and Main Roads Western Australia [2023] WASAT 79 [35].
Firstly, Beech J (as he then was) in McKay v Commissioner of Main Roads [No 7] (McKay [No 7]),[33] set out the relevant principles completely and authoritatively.
[33] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [156] - [158], [162] - [163], [175] - [176], [179] - [198], [213], [228], [339] - [379], [478] - [479], [1503], [2213]; see also the Court of Appeal in McKay v Commissioner of Main Roads [2013] WASCA 135 [137], [139] - [147] (Murphy JA, with whom Martin CJ and Buss JA agreed).
Secondly, Kenneth Martin J in Italiano v Water Corporation [No 2] (Italiano [No 2])),[34] also set out an extensive explanation of, at least some of, these relevant principles and repeated this exercise more recently in DBW Reynolds Pty Ltd as trustee for The DBW Reynolds Family Trust v Public Transport Authority (DBW).[35]
[34] Italiano v The Water Corporation [No 2] [2020] WASC 112 [73] - [77] (Kenneth Martin J).
[35] DBW Reynolds Pty Ltd as trustee for The DBW Reynolds Family Trust v Public Transport Authority [2023] WASC 165 [71] (Kenneth Martin J).
Thirdly, Edelman J in Lenz Nominees Pty Ltd v Commissioner of Main Roads (Lenz),[36] set out what he terms as a number of 'basic legal propositions' being 'propositions which are generally relevant to the determination of the valuation of' interests in land taken for the purposes of the LA Act.
[36] Lenz Nominees Pty Ltd v Commissioner of Main Roads [2012] WASC 6; (2012) 186 LGERA 58 [65] (Edelman J).
It is unnecessary to set out all these statements of principle. For the purposes of these reasons, I extract the following 11 key legal propositions from Lenz:
(1)Assessment of compensation must be conducted with regard only to the matters contained in s 241 of the LA Act.[37] Plainly, in this matter, s 241 needs to be read in the context of the requirements of the PD Act.
[37] LA Act, s 241(1); Konowalow & Felber v Minister for Works [1961] WAR 40, 41; (1960) 8 LGRA 75, 76 77 (Virtue J) (Konowalow).
(2)The purpose of the assessment of compensation for resumed land is to ensure that the person to be compensated is given a full money equivalent of his or her loss.[38]
(3)Compensation for the value of the resumed land should be assessed in a theoretical, albeit artificial, fashion by assuming that the land had been sold on the date of its acquisition by the resuming authority.[39] Value means exchange value.[40]
(4)This theoretical approach to assess compensation for the resumption of the land requires the court to identify the price which would be paid under a hypothetical bargain between a person 'desiring to buy the land … to a vendor willing to sell it for a fair price but not desirous to sell'.[41] This is known as the Spencer test.
(5)In assessing the price payable in this hypothetical sale, it must be assumed that the hypothetical purchaser would be purchasing the land for the most advantageous use for which it is, or may be, adapted.[42] This 'most advantageous use' is commonly referred to as the 'highest and best use' of the land.[43]
(6)The highest and best use of the land may be a single use, or a package of alternative uses.[44] However, where a package of alternative uses is contemplated, care must be taken to ensure that those alternative uses are not inconsistent with each other.[45]
(7)The hypothetical purchaser must be assumed to have regard to all relevant available information, and to be cognisant of all circumstances which might affect the value of the land.[46]
(8)However, the hypothetical sale and the determination of the value of the plaintiff's interest in the land taken, and the compensation payable to the plaintiff must be conducted by 'discounting any increase or decrease in value attributable to the proposed public work'.[47] In the context of this case, the effect of the planning scheme on the value of Lot 302 is to be put to one side.
(9)In conducting the valuation exercise, I must not usurp the skill and experience of a valuer. In other words, I am not to become a 'third valuer'.[48]
(10)However, the prohibition against becoming a 'third valuer' does not, and cannot, prevent me from making my own adjustments to the valuations, particularly where a valuer's adjustments to comparative sales are not wholly accepted. Judicial adjustment to the valuation may sometimes be unavoidable because a court cannot adopt adjustments which it has rejected; the court would otherwise be left with no basis to assess the value of the subject land.[49]
(11)If any doubts exist in assessing the compensation payable, then those doubts should be resolved by a liberal estimate in favour of the dispossessed owner.[50]
[38] Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10 (1947) 74 CLR 358 at 373 - 374 (Dixon J) (Executor Trustee).
[39] Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; (1999) 167 ALR 575, [265] and [271] (Callinan J) (Boland v Yates).
[40] McKay [No 7] [144] by reference to Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547; (1981) 50 LGRA 334, 570 (Mahoney JA).
[41] Spencer v Commonwealth (1907) 5 CLR 418; (1907) 14 ALR 253, 432 (Griffith CJ) (Spencer test); Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 [25] (the Court).
[42] Spencertest, 441 (Isaacs J).
[43] ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447; (2008) 162 LGERA 59 [40] (the Court) (ISPT); Commonwealth Custodial Services Ltd (as Trustee for Burwood Trust Fund) v Valuer-General (NSW) (2006) 148 LGERA 38, 45 [15] (Biscoe J).
[44] ISPT [57].
[45] Love v Roads Corporation [2011] VSCA 434 [63] - [66] (the Court).
[46] Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 (2008) 233 CLR 259; (2008) 170 LGERA 345 [51] (Walker Corporation) (the Court); Boland v Yates [271] - [274] (Callinan J).
[47] LA Act, s 241(2).
[48] Bronzel v State Planning Authority (1979) 21 SASR 513, 523; (1979) 44 LGRA 34, 44 (Bronzel) (Wells J); Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541, 544 - 545; (1973) 32 LGRA 170, 173174 (Wells J); Arcus Shopfitters Pty Ltd v Western Australian Planning Commission (2002) 125 LGERA 180 [76] (Pullin J) (Arcus).
[49] McKay [No 7] [2484].
[50] Executor Trustee, 373 - 374 (Dixon J); Boland v Yates [100] (Gaudron J); [111] (Gummow J); [356] (Callinan J); Avila [246] to [252].
Overview of the Applicants' case
5.1. The respective claims
Both Jandakot and CCM are entitled to compensation as they each owned an interest in Lot 302 as at the Taking Date. Jandakot owned Lot 302 in fee simple. CCM held a leasehold interest. Each claimant presses a number of different claims. The variations between each claim are premised on what compensation has been awarded to the other.
In summary, the various claims are as follows:
Jandakot
Claim 1: $12,055,188.83 Sought on basis of value of Taken Land to Jandakot, measured as costs of restoring the area of land and presentation it enjoyed before the Taking.
Premised on s 241(2) of the LA Act.
Claim 2: $12,055,188.83
Same amount as Claim 1 but on basis that compensation is for disruption and re-instatement of a business under s 241(6) of LA Act.
Claim 3: $2,124,933.33
Claim 4: $6,854,933.33
Claim 5: $4,654,933.33Claims 3, 4 and 5 are pressed as alternatives and reflect the possibility that there is a discount of compensation awarded to Jandakot by reason of the lease to CCM. While the compensation claimed by Jandakot is lower, the corresponding claim by CCM has increased.
Claim 6: $20,965,188.83
An alternative claim pressed pursuant to s 241(7) of the LA Act. Claim 6 assumes that the improvements on Lot 21 have been rendered worthless by the Taking.
CCM
Claim 1: $830,977.31
Claim 2: $10,614,729.82
Basic compensation is $830,977.31 OR $10,614,729.82. Claim 1 is premised on Jandakot being paid full compensation. Claim 2 is premised on Jandakot not being paid full compensation by reason of the lease to CCM.
Notes:
(1)Interest not included in any claims.
(2)Claims 1 and 2 for Jandakot are premised on Jandakot's compensation not being discounted on the basis of the lease to CCM.
(3)Jandakot's claims 1, 2 and 6 constitute what I have termed the Applicants' primary (dealership damage) case. However, Claim 6 was not addressed in detail at the hearing.
(4)All Jandakot's claims are in addition to the advance payment of $2,365,000.
5.2. Applicants' primary case
The Applicants press a primary case and an alternate case.
The Applicants' primary case is not a valuation case per se. Rather, they submit that the compensation that is owed to Jandakot are the additional construction costs which would be required to be incurred in order to restore the Applicants to their pre-Taking commercial position. The primary case proceeds from the principle of value to the owner and is described in these reasons as a 'dealership damage' claim.
That pre-Taking position, on the Applicants' case, is the capacity to operate 6 car-dealerships (1 used and 5 new). Such a development was available to them on Lot 302, but not on Lot 21. They submit that Lot 21 can only accommodate three car dealerships (1 used and 2 new).
Consequently, the most appropriate measure of compensation is the additional construction costs that would be required to, in effect, restore Lot 21 to the original area of Lot 302 before the Taking.
Hence, the Applicants' dealership damage claim is for, in effect, the cost of development of 6 car dealerships on Lot 21 as against the costs that would have been incurred on Lot 302. It is the difference between those two cost estimates which the Applicants submit should, in effect, be the compensation to which they are entitled under s 241 of the LA Act. The additional costs arise from the need to construct a suspended concrete slab to reinstate the volume of land on Lot 21 that was lost by reason of the Taking.
5.3. Applicants' alternate case
The Applicants' alternate case is more orthodox and includes the additional evidence of its two valuers.
The Applicants submit, in the alternative, that Lot 302 had special value on the basis that it was suitable for use as a 6 car dealership dealers row. Lot 21 does not have the same capacity to accommodate such a development and therefore the compensation that is payable must reflect the value that Lot 302 had to the Applicants as at the Taking Date.
Furthermore, the assessment of compensation must acknowledge the lost opportunities to profit from the dealerships that would have been located on Lot 302, as well as the inherent efficiencies and synergies (such as the number of employees required and the proximity of workshops) that would have been available by having 6 dealerships colocated.
Respondent's case
The Respondent fundamentally rejects the dealership damage claim.
The Respondent is also, in an overarching sense, critical of the manner in which the Applicants have, in effect, presented a merged or blended case for compensation. It points to the alternate claims that are advanced by CCM, each of which are adjusted to reflect what Jandakot may, or may not, be awarded because it had, in fact, leased Lot 302 to CCM as at the Taking Date.[51]
[51] Respondent's Closing, paras 33 to 35.
The Applicants' case presents Jandakot and CCM as a single entity. However, the Respondent stresses that Jandakot and CCM are not 'related corporate plaintiffs' and did not share the same management.[52] The Applicants' claims arise from different interests in Lot 302 and their entitlement remains separate. Jandakot cannot be treated as the operator of car dealerships and CCM cannot be treated as the owner of Lot 302.
[52] Respondent's Closing, para 40 by reference to Exhibit 5 (pages 190 - 192) and Exhibit 11.
The Respondent submits that the Applicants' case is also misconceived because it is, in effect, a claim for damages whereby Jandakot claims an entitlement to be put back in its pre-Taking commercial position.[53]
[53] Respondent's Closing, para 7.
In rejecting the Applicants' case as a misconceived claim for damages, the Respondent refers to the recent comments by Kenneth Martin J in DBW,[54] that restoration of those who own interests in land which are acquired under the LA Act back to the exact dollar position is 'rarely achievable'.[55] It further submits that the compensation regime provided for by the LA Act is not to intended to provide 'full compensation' for 'any damage' suffered by a claimant.[56]
[54] DBW [194]. As at the date of these reasons, an appeal against DBW to the Court of Appeal had been heard and the decision reserved. DBW was a case that involved a claim for special value. After hearing from the parties on 12 July 2024, I decided that I would proceed to deliver judgment in this matter rather than await the Court of Appeal's judgment of DBW. I did so because I was unsure as to when the Court of Appeal would deliver its reasons and also because it was unclear the extent to which the Court of Appeal would deal with the question of special value.
[55] DBW [194].
[56] Kelliher v Commissioner for Main Roads [No 2] [2015] WASC 478 (Kelliher [No 2]) [157] (Pritchard J).
Rather, the Respondent submits that the entitlement to compensation begins with the nature of the interest acquired (for example, fee simple landowner versus a lessee) and the statutory provisions that confer an entitlement to compensation.[57] It is those provisions which frame, and limit, the entitlement to compensation.
[57] DBW [195] see also McKay [No 7] [206] - [207] (Beech J).
In terms of the claims, the Respondent is critical of the alternate bases on which Jandakot frames its claim under either s 241(2) of the LA Act (as modified by the PD Act), s 241(7)(a) or 241(6)(b). It compares Jandakot's claim to comments made by Kenneth Martin J in Italiano [No 2],[58] where, in that matter, his Honour described the claim as:
… something akin to the shape shifting characteristics of a piece of mercury when poked.
[58] Italiano [No 2] [107].
The Respondent submits that Jandakot's claim involves 'jumping from one provision to the other to claim a particular amount'.[59] In doing so, the Respondent considers that Jandakot seeks to turn the orthodox process for assessing compensation under s 241 of the LA Act on its head.
[59] Respondent's Closing dated 9 June 2023, para 11. Jandakot's Amended Application at Appendix 1A $10,977,505 is sought first under s 241(2) (Claim 1); or s 241(6)(b) (Claim 2); or s 241(7)(a) (Claim 6).
Contrary to the Applicants' dealership damage claim, the Respondent stresses that the starting point is consideration of the statutory entitlement. It submits that what Jandakot has instead done is determine the compensation it wants and has then sought to 'fit' that into a number of heads of compensation under s 241 of the LA Act.
The Respondent also disputes Jandakot's alternate claim of 'value to owner' or 'special value'.[60] Through the evidence of Mr Syme, an architect and strategic consultant, the Respondent argues that there is no special value in Lot 302 because it was a lot that held attraction for a wide range of potential land users. Accordingly, the value of Lot 302, and the compensation payable to the Applicants, is properly assessed by determining its market value.
[60] Respondent's Closing, para 4.
Relying on the evidence of Mr Langridge, a forensic accountant at Deloitte Financial Advisory, the Respondent challenges the profit estimates for car dealerships set out in the evidence of Mr Schoolland.
In the context of CCM, the Respondent submits that its claim 'fails' entirely unless the Tribunal makes a nominal award.[61]
[61] Respondent's Closing, para 12.
The dealership damage claim
The dealership damage claim (as well as the alternate claim) relies, heavily, on what the Applicants say are the attributes of Lot 302 including:
(a)its location close to Armadale Road and the Kwinana Freeway which are high volume traffic roads;
(b)its visual exposure to traffic on Armadale Road, Beeliar Drive and Solomon Road;
(c)it had six available crossovers (two each from Solomon Road, Knock Place and Monash Gate);[62]
(d)its location close to Cockburn Gateway, being a major shopping precinct;
(e)the proximity of public transport, namely the Cockburn Central train station;
(f)its location is a growth area, and surrounded by developing communities (and consequently homeowners);
(g)its size, being large enough to support multiple car dealerships;
(h)that it was larger than the requirement for a single car dealership;
(i)that the applicable planning controls allowed for car dealership land use; and
(j)that there were no other car dealership competitors within the catchment area.[63]
[62] The Respondent says there were only four available crossovers.
[63] Applicants' Amended Statement of Issues, Facts and Contentions dated 10 June 2022 (SIFC), para 13.
The gravamen of the Applicants' cases (both the dealership damage claim and the alternate claim) is that to pay Jandakot market value would not result in 'fair compensation'.[64] Rather, the Applicants claim that compensation should be awarded on the basis of Lot 302's value to Jandakot. In other words, Jandakot's claim is for 'value to the owner'[65] on the basis that the highest and best use of Lot 302 was as a '6-dealership dealers row'.[66]
[64] Kilmaley Investments Pty Ltd v City of Wanneroo [No 2] [2017] WASC 307 [171] (Tottle J).
[65] The principle for which derive from the decision of the Privy Council in Pastoral Finance Association Ltd v Minister [1914] AC 1083; (1914) 15 SR (NSW) 535.
[66] Applicants' Written Opening Submissions dated 8 February 2023, para 105 (Applicant's Opening).
The Applicants' various claims overlap. However, the focus of the hearing was very much on Jandakot's claim. CCM's claims were framed in response, and as an alternative, to Jandakot's claim.
The fact that a claim is made for 'value to the owner' is not novel. What is novel is that, rather than compensation being paid as per the relevant heads of compensation available under s 241 of the LA Act, the dealership damage claim is, in essence, for the costs associated with 'recreating' (or reconstructing) the land area lost (8,110m2) as a result of the Taking by way of the construction of a suspended concrete slab.
The Applicants submit that such an approach is necessary in order to compensate for the 'full money equivalent' of their loss.[67]
[67] Applicant's Opening, para 124 referring to Lenz [66] (Edelman J).
The Applicants' dealership damage claim is put under either/or a number of alternate heads of compensation under s 241 of the LA Act; being either s 241(2), s 241(7)(a) or s 241(6)(b). I explain these alternate heads of compensation later at [117] of these reasons.
For completeness, it is convenient here to note that the Applicants' case for reconstruction costs is not strictly put on what is sometimes termed, the 'reinstatement principle'.
The principle has been applied in some cases across Australia but as explained by Gobbo J in Kozaris v Roads Corp,[68] has not been definitively analysed. However, in general terms, it is said to apply in circumstances where there was no market or general demand for the property in question. The land uses involved tend to be churches, schools, houses of exceptional character or businesses that can only be conducted under special conditions.[69] That is plainly not the case here.
[68] Kozaris v Roads Corporation [1991] 1 VR 237; (1990) 75 lGRA 346, 240 - 241.
[69] Birmingham City Corporation v West Midland Baptist (Trust) Association(Incorporated) [1970] AC 874, 894 (Lord Reid).
While the Applicants do not rely on the reinstatement principle per se, one of the planks to their argument is that the reconstructed slab is necessary to restore their business. Section 241(6) refers to disruption and reinstatement of a business.[70]
[70] ts 59, 8 March 2023.
In cases where reinstatement is sought, the application of the principle 'must be confined within the limits of reasonableness such that the expenditure can in all of the circumstances be said to have been reasonably incurred'.[71]
7.1. Applicants' evidence in support of its dealership damage claim
7.1.1. Mr Harold Schoolland
[71] Riverstone Meat Co Ltd v Sydney County Council (1956) 1 LGRA 216, 219 (Sugarman J); see also Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82 [80] (Pain J).
Mr Schoolland, a director of CCM, prepared a number of statements setting out inter alia the governance arrangements of CCM, its lease arrangements as well as its plans for Lot 302. His statement details his long experience in the motor vehicle retailing industry. He is not a director of Jandakot but, prior to its purchase, he was asked his opinion on Lot 302 and its suitability for retail car sales.
Mr Schoolland's evidence is that CCM operated its business on Lot 302 which included Car Giant and a Hyundai dealership. The Hyundai Franchise Agreement was signed on 6 July 2015. There was also an intention to develop Lot 302 in stages for multiple car dealerships and that there had been a meeting with the City in this regard. He says that what was initially contemplated (as the first stage) was 2 new car dealerships together with a single used car dealership.
However, the plans for a dealers row were never progressed once CCM became aware that a portion of Lot 302 would be acquired.
Once CCM and Jandakot entered into a five-year lease, with options to renew, Jandakot then made improvements to Lot 302 including earthworks, building refurbishments, the laying of hardstand, the erection of floodlights and car shade sails. The improvements progressed from 2016 to 2018 and cost approximately $12,200,000.[72]
[72] In Exhibits 8 and 10, Mr Schoolland explains the works in some detail. $7,485,083.25 was spent on what was regarded as stage 1 works. A further $3,173,098 was spent on what was stage 2. Mr Schoolland clarified in his oral evidence that the stage 2 works 'were to suit the business', not on account of the impending acquisition: ts 169 - 170, 10 March 2023.
Mr Schoolland became aware that a portion of Lot 302 was proposed to be acquired from about September 2015, but was not aware of the proposed timeframe.
Mr Schoolland considers that Lot 302 was suited to be used as a car dealership due to its:
(a)size (and thus it could accommodate multiple car dealerships together with a workshop);
(b)location:
(i)close to high volume traffic roads, namely Armadale Road and the Kwinana Freeway;
(ii)near a major shopping precinct (Cockburn Gateway);
(iii)close to the Cockburn Central train station; and
(iv)close to areas where population growth was expected,
(c)visual exposure to traffic on Armadale Road, Beeliar Drive and Solomon Road;
(d)number of crossovers to the adjacent roads (Solomon Road, Knock Place and Monash Gate);
(e)zoning and applicable land use controls; and
(f)distance from other existing car dealerships.
Mr Schoolland considered that Lot 302 had potential to accommodate a dealers row.
Mr Schoolland also prepared a supplementary statement that, inter alia, estimates that a new car dealership could 'on average' make '$1.97 million profit per year'.[73] He estimates this by calculating the average yearly profit of the dealerships for which he is a director in the same prime market areas (in Melville and Palmyra). In doing so, he included the financial statements of these car dealerships from 2019 to 2022.
7.1.2. Mr Philip Oates
[73] Exhibit 9, para 6.
Mr Oates has extensive experience in the automotive industry, in particular property requirements. He has experience in sourcing new greenfield sites for automotive retailing and notes a trend within the industry towards larger sites but not for standalone dealerships. Rather, multiple brands co-locate together to form a dealers row. An example of this is in Osborne Park where the old North City Holden site has been converted into a 4 or 5 car dealership site.[74]
[74] Exhibit 21, paras 25 and 26; see also ts 223 - 224, 14 March 2023.
Mr Oates also notes an imbalance between car dealerships north and south of the Swan River, with increased distances between dealerships south of the river. He was also aware that Cockburn had been designated as a growth area where further urban infill is planned. He had been trying to secure sites for Automotive Holdings Group (a competitor to Jandakot) in and around the Cockburn area.
Mr Oates explains that when he became aware that Jandakot secured Lot 302, he was annoyed because he considered it was the best site for multiple car dealerships in the Cockburn area. This was because Lot 302 was:
(a)large enough to accommodate multiple dealerships;
(b)east of the Kwinana Freeway;
(c)next to a fuel station and close to Bunnings;
(d)opposite a large park-n-ride; and
(e)conducive to a multi-level development due to its site levels.[75]
[75] Exhibit 21, para 44.
Mr Oates considers that the Taking has damaged what was Lot 302 'for the simple reason that you have lost space and thus reduced the maximum number of dealerships you can accommodate'.[76] The loss of the potential for new dealerships means a loss of future profit.
[76] Exhibit 21, para 57.
Mr Oates explains:[77]
My opinion is the resultant Lot 21 post the land taking, and assuming existing buildings were to remain, would at best be able to accommodate 2 additional brands to the west. The major issue is the current building being a major visual block to customers seeing the sea of the cars. My immediate opinion, when visiting the site after the road changes, was the building housing Car Giant needed to be demolished as it was just about useless if the site was to maximise its key location for automotive dealerships.
[77] Exhibit 21, para 59.
In oral evidence, Mr Oates clarified that Lot 21 would be able to accommodate 5 to 6 new car dealerships (each together with an associated used car operation).[78] Mr Oates agreed that not all dealerships have a 'sea of cars'[79] (some in East Victoria Park along Shepparton Road) and that premium dealerships (for luxury car brands such as BMW) operate outside the normal operating requirements.[80]
[78] ts 240 - 241, 14 March 2023.
[79] A 'sea of cars' is, in effect, the visibility of multiple rows of cars which are available for sale. Preferably, the cars would be visible to passing traffic.
[80] ts 242, 14 March 2023.
On the question of the substantial refurbishment of the buildings on Lot 302 undertaken at a cost of $12.2 million with knowledge of the Armadale Road roadworks, Mr Oates' evidence was that he would 'struggle' to advise to undertake that refurbishment.[81] He would have instead recommended that Lot 302 be 'decked' to double capacity (although such an approach would be unusual in the Perth market).[82]
[81] ts 244, 14 March 2023.
[82] ts 244, 14 March 2023.
Mr Oates agreed that the visibility of Lot 21 has been improved by the roadworks and that its signage is also 'pretty visible now'.[83]
[83] ts 244, 14 March 2023.
Mr Oates also explained the rationale for car dealerships to gravitate towards 'dealership hubs' or known car retailing destinations.[84]
7.1.3. Mr Adam Roxby
[84] ts 260, 14 March 2023.
Mr Roxby is an architect who specialises in the design of car yards. He was engaged by the Applicants to prepare a design for the suspended slab to, in effect, reinstate the volume of land that had been acquired from Lot 302.
His brief included a design for the development of a dealers row on Lot 302 in its unaffected state. This plan is dated 8 December 2022 (Roxby Before Plan).
He was also briefed to prepare a design for Lot 21 (that is, taking account of the acquisition) that provided for a similar number of bays and built area as would have been available on Lot 302. The brief required a further 4 car showrooms as well as a centrally located administration. The undercroft would be used for a workshop and covered parking.[85] His initial plans for Lot 21 were dated 7 May 2020. On 28 January 2022, he was instructed to prepare revised plans (Roxby After Plan).[86] While there are some differences between these two after plans, the overarching concept did not change.
[85] Exhibit 15, para 14.
[86] Exhibit 16.
It is these plans for a dealers row on Lot 302, and subsequently on Lot 21 via the suspended concrete slab, on which the dealership damage claim is premised.
7.1.4. Mr Ian Doubikin
Mr Doubikin, a builder, costed both the Roxby Before Plan and the Roxby After Plan.[87]
[87] Exhibit 19, as amended by Exhibit 20.
Mr Doubikin estimates that the Roxby Before Plan would cost $29,610,545.00 (+ GST) to construct.[88] He further estimates that the Roxby After Plan would cost $42,438,050 (+ GST) to construct due largely to the costs of the suspended concrete slab.
[88] Exhibit 20, Annexure 1.
It is the difference between these two cost estimates (approximately $12,800,000) which provides the conceptual basis for the dealership damage claim.
The Applicants then return to the statutory scheme of s 241 with the estimated increased costs of developing a dealers row and submit that that quantum of compensation could be payable under either s 241(2) (as a decrease in the value of Lot 302), s 241(6) (as disturbance costs) or s 241(7) (as severance).
Why I do not accept the dealership damage claim
The dealership damage claim proceeds from the uncontroversial proposition that a claimant is entitled to the 'full money equivalent' of their loss. The Applicants submit that the application of that principle means that Jandakot's compensation can, and should, be calculated by reference as to what it would cost to, in effect, reinstate the Taken Land on Lot 21 via the construction of a suspended concrete slab.
For the following reasons, in my view, the dealership damage case is fundamentally misconceived and conceptually flawed.
Firstly, it is necessary for me to address a misconception in the manner in which the Applicants' case is framed. A recurrent theme in their submissions is that they are entitled to 'damages' arising from the taking of Lot 37. This reference to restorative damages is allied with their broader submission that compensation must reinstate 'the full money equivalent' of their loss.
The notion that the Applicants are entitled to 'damages' is simply not correct. Section 241 is directed to the consequences of an event, being the compulsory acquisition of an interest in land. The effect of that acquisition is that that relevant interest converts to an entitlement to compensation that ultimately leads to the terms of s 241 of the LA Act.
True it is that both s 241(6) and s 241(7) of the LA Act each refer to 'damage' that may have been caused in the context of the impact of the, in this case, planning scheme. However, it is simply incorrect, by reference to the language of s 241, to characterise such an entitlement as 'damages'. Section 241(1) of the LA Act, which frames, defines, and ultimately limits, the application of s 241 explains that what is being determined is 'compensation', not damages. It may well be compensation for the damage caused to land, such as in the context of s 241(7), but the statutory entitlement remains compensation, not damages.
In DBW, Kenneth Martin J also explained a not dissimilar argument as a 'misconception':[89]
… a recurrent feature encountered in the plaintiffs' approach to this compensation exercise was to contend that because the first plaintiff's land had been compulsorily taken from it, that its right to statutory compensation was to be assessed on the basis of something akin to tortious reliance loss damages. The plaintiffs' position, expressed constantly, was that they ought to be restored back to the same position, in effect, to the exact dollar by statutory monetary compensation, so as to, in effect, transplant and relocate both plaintiffs to almost identically reconstructed replacement premises that would replicate every equivalent feature to the former business premises once owned, or as leased to the second plaintiff. That is rarely achievable.
[89] DBW [195].
I agree with the Respondent that to frame an argument for compensation as 'damages' distorts the assessment that is required under the LA Act and is unhelpful.[90] The entitlement to compensation arises under, and must be assessed through, the statutory prism provided by the LA Act, not on any common law principle of damages.
[90] Respondent's Closing, para 9.
Secondly, neither the PD Act nor the LA Act prescribe how compensation is to be evaluated, calculated or derived. The LA Act contains no references to comparable sales, the direct comparison method, the piecemeal approach or a hypothetical subdivision analysis.
Furthermore, the methods by which compensation may be calculated or assessed are not closed.[91] I should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable.[92] New or novel approaches to assessing compensation should not be dismissed out of hand.
[91] Boland v Yates [280] (Callinan J).
[92] Bronzel, 38 (Wells J).
Mr Pettit SC, counsel for the Applicants, submits that regardless of the method by which compensation should be assessed that is contented for by a party, the lodestar by which that method should be evaluated - in terms of whether it is 'valid, useful or applicable' - is whether it results in 'fair compensation' being compensation that's 'not too much and not too little, compensation that is fair'.[93]
[93] ts 57, 9 March 2023.
The requirement that a claimant 'is entitled to be compensated fairly and fully for [their] loss' was explained by Lord Nicholls of Birkenhead in Director of Buildings v Shun Fung Ltd,[94] a House of Lords decision emanating from Hong Kong.
[94] Director of Buildings & Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 (1995) 1 All ER 846, 125.
I accept Mr Pettit's submission that, whatever method is used, the result must be fair compensation. However, the qualification that I would add is that the determination of what is fair compensation must also align with the requirements of the applicable statute, in this case the LA Act read with the PD Act. The terms of the statute are paramount.[95]
[95] Walker Corporation [47] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).
Thirdly, the proposition that a claimant is entitled to the 'full money equivalent of their loss' must be applied reasonably and sensibly. I find that the dealership damage claim is misconceived because I do not consider that the costs of, as it were, physically reconstructing the acquired land are a true, nor fair, measure of the Applicants' loss.
Embedded within the dealership damage claim is an inferred or implied legislative intent that claimants are to be restored, in an absolute and literal sense, to their pre-acquisition position. However, I can discern no such intent from the statutory scheme.
As Kenneth Martin J explained above in DBW, it is 'rarely' possible to be able to put claimants into 'transplanted' or 'relocated' or, I might add, 'reconstructed' commercial premises which delivers them every feature that was present before the acquisition. That is so notwithstanding that the task of assessing compensation is to provide the claimant with the 'full money equivalent' of their loss.[96]
[96] Lenz [66(3)]; Executor Trustee 373 - 374 (Dixon J).
Furthermore, in Kelliher [No 2], Pritchard J (as her Honour then was) rejected the notion that s 241 of the LA Act is directed to provide 'full compensation' or 'compensation for 'any damage' suffered by the owner of land which is taken for a public work'. On the contrary, her Honour explained that there are only specific 'heads' of compensation available.[97] Pritchard J was 'unable' to accept the submission advanced by counsel for the plaintiffs that the purpose of the LA Act 'is to ensure that a dispossessed landowner is fully compensated'.[98]
[97] Kelliher [No 2] [157].
[98] Kelliher [No 2] [159].
In my view, the construction costs on which the dealership damage case is premised are not a fair measure of that loss but are instead a measure of what it would cost to redeliver an equivalent volume of land on Lot 21. In my view, the two are conceptually not the same thing. The value of land is its exchange value. Estimated construction costs are something different.
Nor do I find that the cost of construction of a suspended slab is an accurate measure of what has been lost, at least in this instance. In my view, the costs of that construction and restoration project are worth far more than the exchange value of what the Applicants have lost by reason of the Taking.
Section 241 of the LA Act is directed to the question of how much compensation is owed to a claimant by reason of, typically at least, an acquisition related to a public work.[99] Compensation is not, at least ordinarily, and other than in circumstances where reinstatement is regarded as a proper basis on which compensation is to be determined, directed to restoring, in a physical sense, what a claimant may have lost by reason of the acquisition.
[99] In this case, the MRS.
Drawing this analysis together, in my view, the heads of compensation available in s 241 must be applied in a manner that is fair and reasonable, and not on the basis that there is an absolute legislative imperative to fully, and completely, restore claimants to their preacquisition position, regardless of the quantum of compensation that would ultimately be payable.
My conceptual concerns with the dealership damage case are perhaps best illustrated by two examples.
Firstly, if the Applicants' approach were to be accepted as an appropriate measure of compensation under the LA Act, one can readily imagine that, going forward, in circumstances where a portion of, for example, farmland were acquired for a controlled access highway leaving 'adjoining land' on either side of that highway, the measure of compensation would thus become the costs to reconstruct the acquired farmland somehow (either physically or by acquiring immediately adjacent comparable farmland) but, in addition, to also construct either bridges over, or tunnels under, the highway for use by that farmer.
That is because only that assessment of compensation is one that, in effect, 'restores' that farmer to their pre-acquisition position of having the same sized farm and also immediate and uninterrupted access to the entirety of their farm holding. Anything less, on the Applicants' case, is not 'full compensation' because the farmer has lost a portion of their land from which they derive an income (like the Applicants) and because, in the after scenario, they are unlikely to continue to enjoy immediate access to all their farmland (because they must farm the land conjointly across a highway).[100]
[100] See, for example, Benton v Road Construction Authority (No 2) [1992] 2 VR 495; (1990) 76 LGRA 76 (Gobbo J).
Yet it is obvious that the cost of constructing a suspended slab and/or bridges or tunnels under/over a highway is extremely unlikely to bear any relationship to the exchange value of the farmland that was acquired, or the damage caused to farming operations.
Secondly, a further example can be highlighted by reference to some of the facts in St John Ambulance Association of Western Australia (Inc) v East Perth Redevelopment Authority (St John Ambulance),[101] where the (then) Compensation Court was considering a claim for special value[102] following the acquisition of a portion of an ambulance depot in East Perth.
[101] St John Ambulance Association of Western Australia (Inc) v East Perth Redevelopment Authority [2001] WASC 85; (2001) 114 LGERA 112 (St John Ambulance) (Hasluck P, Priest RJ, Gauntlett GI).
[102] Under the former legislative scheme provided by the Land Acquisition and Public Works Act 1902 (WA).
Part of the attraction and suitability of the depot site for the ambulance service was that it provided ambulances ready access to major arterial roads. The claim for special value centred on the increased construction costs arising from the depot site being reduced in size.
However, departing from the facts in that case to illustrate my example, if the acquisition in St John Ambulance was such as to truncate, or to make more difficult, or even slightly delay, ambulance access to nearby major roads by reason of altered road patterns and traffic management arrangements, then, on the Applicants' case, the measure of compensation would be the costs of constructing alternative access to those major roads for use by the ambulance service.
That is because that would be the only measure of compensation that would, in an absolute sense, 'restore' the claimant to its preacquisition position.
In each of those examples, the costs involved in 'fully restoring' a claimant would, in my view, result in a disproportionate burden falling on an acquiring authority to pay compensation for hypothetical reconstruction costs which likely far exceed the exchange value of the interest acquired. In my view, those estimated construction costs are not a true, nor fair, measure of the value of the interest that has been acquired.
In this case, it is not without significance, in terms of contemplating what might be regarded as fair compensation, that Jandakot purchased Lot 302 in 2015 for $12 million in circumstances where the market for industrial land through to the Taking Date, at its most generous, could be regarded as stable.
Notwithstanding this, the dealership damage claim (Claims 1, 2 and 6) would result in total compensation that far exceeds Lot 302's total purchase price in circumstances where less than 25% was acquired only four years later and no improvements were taken. I am not at all satisfied that such an approach would yield 'fair compensation' in the circumstances.
Fourthly, the fact that solatium is expressly provided for in the LA Act tends to indicate that it is anticipated that claimants cannot be fully and completely restored, or made completely whole, by compensation under the different heads of compensation available in s 241 of the LA Act, hence the provision for a discrete head of compensation for 'comfort'.[103]
[103] Lenz [454].
As was explained by Edelman J in Lenz, such solace payments are to provide a 'monetary redress for a non-pecuniary loss arising from the taking of land without agreement'.[104] It may reasonably be inferred that, by making such payments available in the statutory scheme, the legislature has recognised that it may be somewhat inevitable that there is some kind of loss that occurs through the compensation process.
[104] Lenz [454].
More recently, in Fire Lake Pastoral Pty Ltd ATF the Simon Jenour Farming Trust and Commissioner of Main Roads (Fire Lake Pastoral),[105] Jackson DP reiterated that solatium is an additional sum that may be awarded where the acquiring authority (or a court or tribunal):
… is satisfied that the sum otherwise payable as compensation is unlikely to put the landowner in the same position that they would have been had they retained their property and not suffered the taking of their land.
[105] Fire Lake Pastoral Pty Ltd ATF the Simon Jenour Farming Trust and Commissioner of Main Roads [2024] WASAT 43 [312] - ]313] referring to the decision of Anderson J in Cook and Edwards v City of Stirling (1991) 4 WAR 469, 478.
Fifthly, the basis for the premise of the dealership damage case does not at all align with the terms of the LA Act. There is a discernible logic to the structure and sequencing of s 241.
Section 241(1) limits the compensation that is available under the LA Act to those matters expressly identified in the remaining subsections of s 241.
The starting point in determining compensation is that regard is to be had to the interest in land that has been acquired (including improvements) under s 241(2).[106] Ordinarily, that interest in land is valued based on its market value applying the Spencer test. If there is special value, the quantum of that special value needs to be separately determined and added to the market value.[107]
[106] Section 192(1) of the PD Act refers to the assessment of 'the value of any land or improvements on land that have been compulsorily acquired' without regard to the effect on value attributable to the relevant planning scheme.
[107] DBW [115], see also [406] below.
After the value of the acquired interest has been determined, attention can then turn to whether any consequential or disturbance losses are payable under s 241(6) and, if applicable, where the fee simple is acquired and the claimant owns adjoining land, to consider whether any compensation for severance and/or injurious affection is payable. The question of betterment may also arise. These considerations are addressed by s 241(7) of the LA Act.
An assessment of those three heads of s 241 comprises the compensation that is payable for the taking of the interest (that is to say, any amounts awarded under s 241(2), s 241(6) and s 241(7) are added together). The question of solatium and interest on that sum is then addressed by the subsections that follow. It is these three heads that are ultimately my lodestar in determining the compensation that is payable.
However, the effect of the statutory scheme is that the assessment of compensation must commence by first ascertaining the value of the interest that has been acquired by the taking in question pursuant to s 241(2).
Logically, that must be so because unless there is a compensable interest that has been acquired for the purposes of s 241(2) of the LA Act, the remaining subsections simply have no application. Section 241(2) is therefore a gateway provision through which one must pass to be eligible for compensation. Once the exchange value of the acquired interest in land has been ascertained, one then moves to consider the remaining heads of compensation.
Indeed, in my view, valuation principles and the case authorities support this approach. For example, under s 241(2) of the LA Act, land is required to be valued based on its highest and best use.[108] However, where the highest and best use is different from the actual use being made of the land as at the taking date, then that affects how the remainder of compensation is to be assessed. In such circumstances, compensation for any disturbance to the existing use are not payable. This is because these costs are taken to be absorbed into the higher valuation attributed to the taken land.[109]
[108] Turner v Minister for Public Instruction (1956) 95 CLR 245; [1956] ALR 367 Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 [123] (Steytler, Templeman and Simmonds JJ).
[109] Balquhidder Pty Ltd v Minister for Environment and Planning (1986) 40 SASR 63; (1986) 58 LGRA 339, 78 (Jacobs J); see also Bergman v Holroyd Municipal Council (1988) 66 LGRA 68, 80 (Hemmings J).
A common example is where farmland is acquired that has urban potential. In such circumstances, compensation will be based on the value of the land taking account of its urban potential. In doing so, no compensation would be available for damage to farming operations. That is because to compensate for both would be to allow double recovery.
The point being that the value of the interest that has been acquired is addressed first because that then informs the remainder of the compensation assessment under s 241.
However, the dealership damage claim turns this process on its head. It is instead premised on ascertaining the cost of reconstructing the Taken Land in a manner which does not involve any kind of evaluation or consideration of the exchange value of that which has been taken. Having established the costs of reconstruction, the Applicants seek to return to, and then, in my view, awkwardly 'fit' that estimated cost into, any and each of the heads of compensation provided for in s 241 of the LA Act. Like Italiano [No 2],[110] I agree with the Respondent that the dealership damage claim has 'shape shifting characteristics akin to mercury being poked'.
[110] Italiano [No 2] [107].
For example, despite Claim 1 being premised on s 241(2) of the LA Act,[111] no attempt has actually been made to ascertain the market value of Lot 37, nor what additional component should be payable as special value/value to owner. All that is claimed is a global figure of $15,192,505 (being 12,827,505.00 + the advance payment of $2,365,000). The authorities suggest that the component of special value, beyond its market value, is required to be quantified.[112] The Applicants have made no attempt to do so.
[111] PD Act, s 192(1) in the context of this case.
[112] For example, in St John Ambulance the amount awarded for special value was $384,736.
In saying that, I do accept that the Applicants' evidence does point to the suitability of Lot 302 for car sales retailing. However, it is simply not the case that the totality of the evidence before me points only to that use, and that use alone, being the appropriate premise on which to value Lot 302.
Furthermore, while the Applicants' evidence is that the development of Lot 302 for multiple car dealerships would have been staged,[261] the evidence is silent on how that staging would have worked, and over what time horizon. For example, it might reasonably be expected that the success, and therefore profitability, of Lot 302 for car retailing would, at least in part, rely on (or follow) the wider urbanisation occurring across the region. The relationship between the anticipated population growth, and the development of Lot 302, is not answered in any meaningful way by the evidence.
[261] Exhibit 3, pages 158 - 160.
The demographic analysis from Spectrum, attached to Mr Bradstreet's witness statement, goes no further than suggesting between 2019 and 2027 the population within a 5-kilometre radius of Lot 302 is expected to grow at a higher rate (being 27.12%) as compared against Greater Perth (being 25.40%). Even accepting that analysis, that does not mean that Lot 302 was immediately ripe for up to a 9 (or even a 6) multi-brand dealership as at the Taking Date so as to, in effect, corner the retail car sales market in the region.
Ultimately, because I do not accept the factual premises on which Mr Bradstreet proceeds, it undermines the utility of his valuation, particularly given the lack of a suitable comparator for a very large 3.4hectare proposed car dealership site.
Fourthly, I cannot accept Mr Bradstreet's overarching valuation assessment of the unaffected and affected values of Lot 302. After noting that the total investment in Lot 302 was $24,200,000 as at 2017, he thereafter ascribes a rounded improved value of $16,900,000 in its unaffected state (at an assessed capital value of $488/m2). That is so, notwithstanding that the value of the recently completed improvements undertaken on Lot 302 were $12,200,000.
I cannot accept that before valuation in the context where Mr Bradstreet considers that Mr Schoolland and others who were well experienced in the retail car sales industry would invest $12,200,000 in improving a site, they considered to be most apt for such uses, only for that investment to depreciate so quickly as at April 2019. His before valuation, at some level, defies common sense.
I find that Mr Bradstreet's after valuation makes even less sense. His after value, relying on his capitalisation approach, is that in its affected state, Lot 21 has a rounded value of $8,500,000 at a capitalised rate of $318/m2. The Taking resulted in the acquisition of 23.5% of the area of Lot 302 (that is to say, 8,110m2 of what was a 34,517m2 lot).
However, on Mr Bradstreet's valuation, the Taking reduced the value of what was Lot 302 by over 50% in circumstances where the acquisition, while substantial, involved less than one quarter of its area and where no improvements were acquired. To the extent that Mr Bradstreet justifies the further depreciation of the improvements on the basis that the Taking 'negatively effects the existing improvements', I am not satisfied with that explanation given the very heavy depreciation evident in his before.
10.5.2. Mr Matthew Garmony
For the following reasons, I do not accept the evidence of Mr Garmony.
Firstly, like Mr Bradstreet, Mr Garmony was instructed to focus on the Applicants' use of Lot 302 for car retailing as the basis on which any valuation report ought to be grounded. His exchanges with Mr Shanahan, reproduced above,[262] highlight the manner in which Mr Garmony understood and followed these instructions.
[262] At [341] and [347] above.
I am reasonably satisfied, and I find, that Mr Garmony chartered a course that fulfilled his brief to value Lot 302 in a manner which highlighted what the Applicants considered to be its special value. I am not at all satisfied that Mr Garmony's valuation was the product of an independent assessment of the attributes of Lot 302. That is not a criticism of Mr Garmony. He could only work to his instructions.
Secondly, and more importantly, I have had much difficulty in following Mr Garmony's methodology. He analysed a very wide range of sales from 'high profile sites' and 'industrial development sites/vacant land sales evidence' from the suburbs of Canning Vale, Cockburn Central and Bibra Lake as well as Kenwick. He also analysed 'investment sales evidence' from Bassendean, Forrestfield, Joondalup, Kewdale, Malaga, Morley, Padbury and Bibra Lake as well as 'car yard rental evidence' from Maddington, Wangara, Melville and Midland.
The relevance of a basket of sales that wide is hard to understand. To cite just one example, I am unclear as to how a 2,281m2 commercial site adjacent to the Hepburn Heights Shopping Centre in an almost purely (coastal) residential suburb can be at all relevant to valuing a 3.4-hectare industrial development site in Jandakot which, I note, is some 40 kilometres away and located east of the Kwinana Freeway.
In reality, I agree with Mr Wilson that despite the large volume of sales evidence that Mr Garmony refers to, there are only six sales that are sufficiently comparable.[263] Those six sales[264] are of sites that are comparable in terms of size and scale to Lot 302 which I consider (and find) to be among its standout features prior to the Taking.
[263] Exhibit 37, page 4.
[264] Exhibit 28: Lot 500, 1 Armadale Road (para 203), 1 Brewer Road, Canning Vale (para 209), 10 Craft Street, Canning Vale (para 210), 76 Cutler Road, Jandakot (para 216), 178 Railway Parade, Bassendean (para 223) and 100 Chisholm Crescent, Kewdale (para 227).
Mr Garmony analysed four of those sites at land rates between $178/m2 and $640/m2.[265] Two of the sites were analysed on the basis of land and improvements at land rates of $439/m2 and $446/m2 respectively.[266]
[265] Lot 500 was analysed at a land rate of $640/m2, 1 Brewer Road was analysed at a land rate of $276/m2, 10 Craft Street was analysed at a land rate of $325/m2, and 76 Cutler Road was analysed at a land rate of $196/m2.
[266] 178 Railway Parade and 100 Chisholm Crescent.
However, Mr Garmony does not further analyse the comparability of those six sales to Lot 302. In addition, his analysis does not adopt an overall land valuation but instead proceeds on a piecemeal approach to the value of Lot 302, whereby the western portion (10,461m2) was valued at $275/m2, the Taken Land (8,110m2) was valued at $450/m2 and the eastern portion (16,000m2) was valued at $400/m2 which derives an overall value of $374/m2 across Lot 302.
In my view, in order to justify that approach, Mr Garmony would have to analyse sales in comparable locations, with comparable exposure and zoning etc in order to then apply them to the different portions of Lot 302. The various portions of each comparable property would then need to be analysed, as well as the value on any improvements, in order to derive the applicable piecemeal land rates. That analysis must be done before any comparison is made to Lot 302.[267] Otherwise, the valuation exercise involves the adoption of an aggregated or averaged land rate from the sale property to then be used to justify a piecemeal valuation of Lot 302.
[267] Exhibit 37, pages 4 and 5.
Mr Garmony did not do that. Put bluntly, without that more finegrained analysis of the comparative sales, Mr Garmony appears to me to be comparing apples with oranges. It follows that I do not accept this valuation approach in this regard.
Thirdly, I do not accept his assessment of the value of Lot 302 in the before. His overall valuation of Lot 302 in an unimproved state is $12,925,000. However, in circumstances where Lot 302 was upgraded with improvements between 2016 and 2018, at a cost of $12,200,000, his overall value of Lot 302 in the before is only $17,700,000.
I cannot follow, and do not understand, why Mr Garmony depreciated the value of the improvements generally by 60% given the Taking Date (April 2019) in circumstances where any impact of the public work[268] on the value of Lot 302 is to be ignored. The improvements on Lot 302, undertaken by those with experience in retail car sales, were only recently completed. Nevertheless, Mr Garmony explains that he considered that the improvements were towards the 'middle of their economic life'.[269] I struggle to see how that assumption can be justified. I do not accept Mr Garmony's before value which is a fundamental plank of his overall valuation assessment.
10.5.3. Ms Kate Bingham
[268] In this instance, the planning scheme.
[269] At [227] above.
I have found Ms Bingham's analysis to be very helpful, but I do not prefer it.
In short, Ms Bingham employed a direct comparison approach which focused on car sales and service centres but also other sales. She observes that Lot 302 was significantly larger than the average site used for motor vehicle retailing which she notes, consistent with my findings, is predominantly 1 hectare or less.
Of the analysed sales, she considered that those yielding rates of less than $200/m2 were either industrial in nature, of a significantly greater size or in an inferior location to Lot 302.
Ms Bingham focused on car sales and service centres but, on account of there being few comparable transactions, considered other sales. Ms Bingham considers the sale of 76 Cutler Road, which evinces an analysed rate of $178/m2, demonstrates a sale in close proximity, but with an inferior use. In contrast, 370 Victoria Road, Malaga, at an analysed rate of $355/m2, reflects a smaller site, with a superior exposure compared to Lot 302.
Ms Bingham considers that Lot 302's value in its unaffected state lies between $270/m2 and $300/m2. Ms Bingham then adopts the midpoint of $285/m2 (x 8,110m2) which results in compensation of $2,311,350, rounded to $2,312,000.
I find there is nothing inherently wrong with Ms Bingham's approach and her reasoning and method is clear and logical, and it would seem, based on the data, that the industrial land market between 2015 and the Taking Date was somewhat stagnated.
However, Mr Wilson analysed Lot 302's land rate at $330/m2 as at the date of purchase. The overall effect of Ms Bingham's analysed rate of $285/m2 would mean that Lot 302 was worth 15% less than what Jandakot paid for it in 2015.
While I accept that s 241(2) directs attention to the 'value of the land' as at the Taking Date, and that 'value' means exchange value, I prefer the more liberal approach taken by Mr Wilson which assumes, perhaps generously, that Lot 302 had not depreciated in value. I do so because, at the conferral, the valuers each agreed that the relevant land market was relatively stable in the two years leading up to the valuation date.[270] In Roads Corporation v Love, Osborn J explained that:[271]
Other things being equal, if there is a doubt as to the amount properly payable by way of compensation that doubt should be resolved in favour of the more liberal estimate.
[270] Exhibit 39, point 9.
[271] Roads Corporation v Love [2010] VSC 32; (2010) 173 LGERA 1 [122].
To that I would add that Jandakot is not a volunteer to the hypothetical sale process that forms the basis of the Spencer test. Mr Wilson agrees with Ms Bingham that the value of Lot 302 may have decreased but would certainly not have increased. However, Mr Wilson, for the purposes of assessing compensation, assumed that that value had not decreased. Such an approach is, in my view, self-evidently much fairer to an affected claimant. For that reason, I am more attracted to the liberal estimate which underpins Mr Wilson's approach because it gives the benefit of the doubt as to the underlying land value of Lot 302, as at the Taking Date, to Jandakot.
10.5.4. Mr Wayne Srhoy
While I have also found Mr Srhoy's analysis to be helpful, for two reasons, I do not prefer his evidence.
The first is that, like Ms Bingham, his valuation derives the result that Lot 302, in real terms, fell in value following Jandakot's purchase in 2015.
For the same reasons as I explained with Ms Bingham, while Mr Srhoy's valuation methodology is no doubt orthodox, I am dealing with a highly artificial and concocted scenario in order to determine what is fair compensation for the Applicants. While the performance of industrial land sales, as at the Taking Date, is no doubt a very relevant consideration in that assessment, it is not the only factor that I need to take account of when considering compensation under s 241 of the LA Act.
Again, I prefer Mr Wilson's approach, which recognises that it may well be the case that industrial land sales had stalled or even slightly declined since 2015, but for the purposes of assessing compensation for a dispossessed owner, he nevertheless assumed that Lot 302 had not reduced in value as at the Taking Date.
The second is that, while Mr Srhoy does include comparability analysis in the context of each of his 28 sales, there is no overarching analysis where he sets out the basis on which he determines that Lot 302 had an assessed land rate of $295/m2 as at the Taking Date. There is simply no overall concluding evaluation of how he ultimately derives his assessed value. While the authorities make it clear that there is no requirement for a valuer to identify the most important sale or even sales, I still need to be able to follow the intellectual path of reasoning that has been deployed to fix a value which, in the case of Mr Srhoy, I could not do.
Even a careful reading of all 28 of his comparability comments does not naturally lead into his conclusion on value. There are still not insignificant adjustments and evaluative judgments he is making in his valuation which are not, in my view, adequately explained.
The totality of Mr Srhoy's concluding analysis is as follows:
(210)As the subject property's land area has been reduced by 23.46% in the 'after' scenario, there is an argument that the subject property could attract a higher land rate in the 'after' scenario due to its lower quantum of value.
(211)In general, it is not unusual for similar zoned properties to achieve higher land rates if they have smaller land areas and subsequent lower quantums of value.
(212)Despite the above, I have generously applied the same land rate in both the 'before' and 'after' scenarios.
(213)Based on the above comments and the identified sales evidence, I have adopted the following 'before' and 'after' value for the subject land [of $295/m2].
In my view, 'the above comments and identified sales evidence' do not, in and of themselves, adequately explain the intellectual process that led to his ultimate valuation of $295/m2.
The valuation evidence that I accept and adopt
For the following reasons, I accept and adopt the valuation provided by Mr Wilson
I find that Mr Wilson's valuation was the most comprehensive. He set out the intellectual process that informed his valuation in a level of detail which the other valuers did not. He considered, and made observations, in relation to all the evidence put forward by each party, not just the Respondent.
Without intending to be critical, Mr Wilson also fulsomely considered the terms of s 241 of the LA Act in a manner which Ms Bingham and Mr Srhoy did not. I say that because his valuation directly addressed the question of severance under s 241(7)(a) of the LA Act, whereas the valuation reports of both Ms Bingham and Mr Srhoy did not.
While it may reasonably be inferred that neither Mr Srhoy nor Ms Bingham considered that compensation for severance was payable, it would have been preferable for them both to say so. Only in his responsive statement did Mr Srhoy[272] address the question of severance and Ms Bingham only conceded the issue in cross-examination.[273]
[272] Exhibit 32, para 706.
[273] ts 339 - 340, 16 March 2024.
Mr Wilson is plainly a very experienced valuer. I have provided an overview of his valuation earlier in these reasons.[274] It is unnecessary to repeat that analysis.
[274] Refer [269] to [297] above.
What I can say is that his valuation report was clear, and I was able to follow his path of reasoning that led to his overall opinions. He focused on six sales, including Lot 500[275] and Lot 302, and provided a succinct market commentary of the state of industrial land sales through to April 2019. He highlighted his market analysis by reference to nine further sales.
[275] Lot 500, 1 Armadale Road, Jandakot.
He explained that in the context of Lot 302, two valuation methods could be deployed but ultimately decided that a before and after approach was preferred as he was concerned that a piecemeal approach would not address all relevant factors.
He also undertook two different valuations. The first assumed that the improvements on Lot 302 added value. On this basis Mr Wilson assessed compensation at $3,620,000. The second assumed that the improvements added no value. On this basis, compensation was assessed at $3,765,000.
Mr Wilson adopted the higher of these amounts on the basis that such an approach was more liberal and favoured the Applicants.
Further, while it is ultimately a question for me, Mr Wilson did not consider that there is an argument for 'special value' for Lot 302. The land values adopted by Mr Wilson reflect market values for industrial land in this locality with exposure levels similar to that enjoyed by Lot 302 in its unaffected state.
Mr Wilson does not consider that Lot 302 had any special attributes that would cause a prospective buyer to pay more than its market value. Mr Wilson observes that this is supported by the purchase price paid for Lot 302 by a purchaser which intended to use it for a car dealership. I have already discussed the question of special value.[276]
[276] At 10.4 above.
During his oral evidence, Mr Wilson struck me as a frank and forthright witness that diligently responded to questions without fear nor favour to the position of the Respondent. He was a most impressive witness.
To cite just one example, in a broader discussion about the concept of value to the owner and special value, Mr Wilson was able to offer an opinion which, to my mind, cut through much of the ambiguity and confusion around these concepts. Mr Wilson astutely observed that the question of whether there is special value or value to the owner 'all hinges' on what is the (hypothetical) asking price.[277] Only unless someone is prepared to pay more than that asking price, does one enter the realm of special value.
[277] ts 389, 15 March 2023.
A further example of his independence was Mr Wilson's view that severance damage was payable for the Taking of Lot 37. This view, which he steadfastly maintained at the final hearing, was contrary to the case advanced by the Respondent.
Before I conclude my discussion of the valuation evidence, I wish to make it clear that, save for where I have expressly referred to Mr Kish, I have not placed any weight on his valuation, given that the Applicants decided not to call him.
However, I do note, in passing, that Mr Kish's overall assessment of compensation of $3,500,000 ($3,800,000 including the loss of unsalvageable improvements) very much aligns with the compensation assessment undertaken by Mr Wilson, whose valuation opinion I accept and adopt.
Compensation payable
12.1. The value of Lot 302 as at the Taking Date
In his valuation analysis, Mr Wilson identifies six sales. Two of these sales are regarded as superior to Lot 302 (370 Victoria Road (355/m2) and Lot 500 ($462/m2)), one was Jandakot's acquisition of Lot 302 (land rate $330/m2, overall rate $347/m2) and three were regarded as inferior (33 Barley Place ($250/m2), 49 Buckley Street ($284/m2) and 4 Luisini Road ($278/m2)).
From this, Mr Wilson focuses on the sale of Lot 302 in June 2015 and the performance of the industrial real estate market through to the Taking Date on 17 April 2019. As I have already explained, Mr Wilson considers that the market would suggest that the value of Lot 302 decreased between June 2015 and the Taking Date, but for the purposes of assessing compensation he adopts the assessed value rate of $347/m2, rounded to $350/m2.
Mr Wilson considered the highest and best use of Lot 302 to be industrial and mixed uses. While he did not state that expressly, it can be reasonably inferred.[278] It can also be reasonably inferred from his analysis that Mr Wilson considers that the prior sale of Lot 302 is the most comparable sale to ascertain its value as at the Taking Date. This is because the industrial land market was relatively stable,[279] if not depressed, between June 2015 to the Taking Date.
[278] ts 342 - 343, 16 March 2023.
[279] All valuers agreed in their joint statement that the market was stable for the two-year period leading to April 2019.
I pause here to address Mr Pettit's closing submissions to the effect that, if the Spencer test is to be applied, the value of Lot 302 should be regarded as comparable to the value of Lot 500.[280] While Mr Pettit was critical of all the Respondent's valuers, who all considered that Lot 500 was superior to Lot 302, I find that criticism is misplaced. The fact is that the Applicants' valuers also considered that Lot 500 was superior. Mr Kish considered that Lot 302 would attract a lower value as did Mr Garmony. I agree with each of these valuers. Lot 500 enjoyed far superior traffic exposure which would attract much more retail focused, and therefore more profitable, land uses.
[280] ts 451, 11 July 2023.
Mr Wilson assesses the value of Lot 302 in its unaffected state to be 34,569m2 x $350 to result in a value of $12,100,000, inclusive of improvements. I agree with Mr Wilson in this regard.
I therefore find that the unaffected value of Lot 302 is $12,100,000.
12.2. The value of Lot 21
As I have set out above, Mr Wilson adopted two approaches when assessing the compensation payable to the Applicants.
The first scenario assumed that the improvements on Lot 302 added value (assessed at $609,000).[281] Therefore, Mr Wilson deducts $609,000 from the unaffected land value of Lot 302 (to $11,491,000 rounded to $11,500,000 which translates to a land value of $333/m2).
[281] Including a 10% discount on the cost of upgrading the improvements that occurred before CCM became aware of the roadworks and the need to acquire a portion of Lot 302.
In this first scenario, in its affected state, Mr Wilson applied a 10% discount to the value of the land and improvements. Deducting the Taken Land (8,110m2 from Lot 302) leaves an area of 26,459m2 at a rate of $300/m2 (being 90% of $333/m2) which equates to $11,491,000 rounded to $11,500,000. To that he adds back the value of the improvements ($609,000 x 90% = $550,000) which results in an overall value of Lot 21 of $8,480,000.
Therefore, compensation is assessed at $12,100,000 less $8,480,000, resulting in $3,620,000 being payable.
In the second scenario, Mr Wilson adopts the same overall rate of $350/m2 (with an overall value $12,100,000) but assumes that the improvements that were on Lot 302 have no value in the context of Lot 21. Mr Wilson has then assumed, based on the evidence of the Applicants' consultants, that these improvements would need to be demolished in order to develop a dealers row on Lot 21.
He then deducts what he estimates the cost of demolition to be (being $100,000) from the value of Lot 302, resulting in an unaffected value of $12,000,000.
In its affected state in the second scenario, Lot 21 equates to a value of $8,335,000 (being 26,459m2 x $333 (being 90% of $350) from which he deducts the $100,000 in estimated demolition costs to give an affected value of $8,235,000.
Mr Wilson then assesses the compensation payable on this second scenario to be $3,765,000.
Mr Wilson adopts the higher of these two figures. In doing so, he resolves the doubt, that the improvements on Lot 302 could have been demolished as part of the development of a dealers row, in favour of the Applicants.
I find that Mr Wilson has been generous to the Applicants in this approach. That is because it, in effect, ascribes no value to the improvements which the Applicants spent $12,200,000 on, even with knowledge that a portion of Lot 302 would be acquired (although on an unknown timeframe).
The authorities speak of the need to resolve doubts in favour of the affected claimant.[282] Mr Wilson's approach, which I accept, does that.
12.3. The question of severance damage
[282] Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 at 373 - 374 (Dixon J); Avila [247].
Embedded within Mr Wilson's valuation is an amount of $915,000 as severance damage.
Section 241(7)(a) of the LA Act provides for compensation for a claimant that owns 'adjoining land' in fee simple, for any damage suffered by that claimant 'due to the severing of the land taken from that adjoining land'. In this instance, Jandakot owned Lot 302 in fee simple, only a portion of which was acquired. Therefore, s 241(7)(a) is enlivened.
'Severance damage' arises where the retained (adjoining) land is depreciated by the taken land being severed from it. Whether there is severance damage to adjoining land is a question of fact.
Contrary to the Respondent's case, I agree with Mr Wilson that severance damage ought to be payable as a result of the acquisition of a portion of Lot 302. However, I will set out my own reasons for so finding.
The acquisition of Taken Land has resulted in the removal of the portion of Lot 302 that fronted Armadale Road.
Having regard to the species of land uses which comprise the highest and best use of Lot 302 as at the Taking Date - such as bulky goods retailing and service commercial uses - the loss of the sliver of land that fronts Armadale Road would be significant as that land was highly visible. Mr Kish observed that the loss of this land reduces the versatility of Lot 302 in an overall sense.[283] I agree. Mr Syme also emphasised that Lot 302 had a number of features which were unusual (such as its access, visibility and scale).[284] The accessibility and scale of Lot 21 is not the same as Lot 302. Those features highlighted by Mr Syme have been damaged by the Taking. Mr Garmony's evidence also points to the impact that in-direct (as against direct) vehicle access can have on the value of such land.[285]
[283] Exhibit 40, page 40.
[284] Refer [369] above.
[285] Refer [223] - [224] above.
As the Applicants also emphasise,[286] the size of Lot 302 offered benefits in terms of inherent efficiencies and synergies which has been diminished by the Taking. The diminution of those additional advantages depreciates the value of Lot 21. There is also the loss of a crossover. In my view, all of these factors serve to depreciate the value of, the remaining (adjoining) land. Jandakot, as the owner of Lot 21 in fee simple, is entitled to that compensation.
[286] Refer [70] above.
Mr Wilson assesses the value of the Taken Land at $2,850,000, with his total compensation assessment being $3,765,000. The differential of $915,000 is severance damage. I so find.
Therefore, compensation should be apportioned as follows:
s 241(2):
$2,850,000
s 241(7)(a):
$915,000
I therefore find that the compensation payable for the acquisition of Lot 37 is $3,765,000.
The claims for professional fees cannot be accepted
While the Applicants put forward a number of variations to the orders it seeks, based on how the claim was ultimately assessed in the context of s 241 of the LA Act, one perennial order that was sought was the recovery of 'professional fees' in the amount of $281,757.57. Jandakot claims such fees pursuant to s 241(6)(e) of the LA Act. Likewise, CCM also claims $293,036.89 in professional fees.
Section 241(6) of the LA Act is what is known as a 'disturbance' or 'consequential losses' head of claim. The opening words of the subsection speak to 'loss or damage sustained by a claimant' and thus govern the nature of what is compensable pursuant to s 241(6). Such matters include removal expenses, disruption and reinstatement of a business or losses resulting from the halting of works in progress as at the date the interest was taken.
In Avila,[287] I explained how s 241(6)(e) has been applied in Western Australia. Without repeating what I said there, the short point is that, based on existing Supreme Court authorities that commence with the decision of Virtue J in Konowalow,[288] such professional fees are not recoverable as disturbance costs. As a senior member of an administrative tribunal, I am bound by these authorities.
[287] Avila [260] - [263].
[288] Konowalow ; see more recently Cereni v The Minister for Transport [2001] WASC 309 (Parker J); Caltex Petroleum Pty Ltd v The Commissioner for Main Roads [2004] WASC 239 [28] - [34] (McKechnie J) and Lenz [409] - [420].
More recently, as was explained by Jackson DP in Fire Lake Pastoral,[289] in the context of a claim for costs associated with 'proving up the potential of the [land]', such costs, to the extent they may be recoverable, may be addressed in an order for costs.
[289] Fire Lake Pastoral [290(c)].
Of course, whether a costs order should be made, and in favour of which party, is not an issue that is presently before me. However, it is sufficient to note, for present purposes at least, that the question of costs in the Tribunal, even in its original jurisdiction, is to be determined in accordance with the requirements of the SAT Act, with the starting point being that each party is to bear its own costs.[290]
[290] SAT Act, s 87(1); see also Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32; (2016) 213 LGERA 81.
I find that no compensation is payable for the 'professional fees' incurred under s 241(6)(e) of the LA Act.
CCM's lease costs are not compensable
CCM also claims loss and damages associated with the decision to rent a showroom in the Cockburn Gateway Shopping Centre for a Hyundai dealership between November 2016 to July 2019. CCM claims an amount of $462,297.03 in this regard.
This claim is made pursuant to s 241(6)(b) of the LA Act which provides that regard may be had to the loss or damage, if any, sustained by a claimant by reason of the disruption and reinstatement of a business.
I find this claim is not recoverable for two reasons.
The first is that I find that the evidence does not establish a sufficiently causal link between the Taking and the decision to relocate the Hyundai dealership to the Cockburn Gateway Shopping Centre. The land upon which the temporary Hyundai dealership[291] was to be erected was located well away from Armadale Road (Knock Place) boundary where the land would be acquired for the roadworks.
[291] As set out in the Amended New Car Dealership DA (approved on 23 June 2016).
Moreover, I do not accept Mr Schoolland's evidence that it made commercial sense to relocate the temporary Hyundai dealership to a shopping centre was due only to the uncertainty associated with the roadworks. Such evidence is, I find, inconsistent with the decision to continue to spend more than $12,200,000 upgrading and refurbishing the existing improvements on Lot 302, even though CCM was aware that a portion of Lot 302 would be acquired.
The existing improvements that were upgraded were located much closer to Armadale Road than the proposed new temporary Hyundai Dealership. The Taking did not make it necessary, nor prudent, nor reasonable, to relocate the temporary Hyundai dealership to the Cockburn Gateway Shopping Centre. Furthermore, the article headed 'new shop and drive for Perth' explains that CCM's decision was, in effect, to try a new 'shop-and-drive' concept which had been successfully tried by Hyundai in London.[292]
[292] Exhibit 12.
As Mr Schoolland himself explained, in his view, it was not commercially viable to sit on Lot 302 even though there was knowledge of the acquisition.[293] I find that CCM's decision to relocate its Hyundai dealership to the Cockburn Gateway Shopping Centre was made for its own reasons and was not necessitated by the Taking.
[293] Exhibit 10, para 14(c).
In fairness to Mr Schoolland, he appeared to concede as much:[294]
MR SHANAHAN: So can you just tell us what CCMs plans were?---
MR SCHOOLLAND: Because when I - when I - when I discovered that we had - we were intending to put a Hyundai franchise - a single Hyundai franchise on the Jandakot Capital property at a cost of $6 million, I knew that it would not be viable and I said, "No. We are not spending that much money on that location to build a Hyundai Dealership".
MR SHANAHAN: So it wasn't because of the road - the road changes?---
MR SCHOOLLAND: It was because I thought $6 million was imprudent and a shopping centre investment for a much lower cost, let's try it as a noble experiment, which failed.
[294] Ts 177 - 178, 10 March 2023.
The second is that there is simply no evidence of the actual loss that was incurred by reason of the lease at the Cockburn Gateway Shopping Centre.
Section 241(6) of the LA Act provides for recovery of disturbance costs. That is to say, to make good losses and costs arising from the disruption that has been forced upon a business by reason of an acquisition. It follows that the premise that sits behind s 241(6)(b) is that there has been a loss occasioned by that disruption that ought to be compensable.
Therefore, even if I were satisfied that CCM's claim did fall within the scope of s 241(6)(b) (which I am not), on the materials I have, there is simply no evidence or quantification of any relevant loss.
Assessment of compensation: Jandakot
I find that Jandakot is owed a total of $3,765,000. Account should be taken of the advance payment of $2,365,000 plus interest.[295] Solatium at 10% is payable plus any outstanding interest.
[295] The advance payment was made on 10 March 2020. As I explained at fn 2, on 6 January 2022 the Respondent also paid Jandakot $912,548.62 plus interest to settle its claim under s 241(6)(a) in relation to loss and damage arising from the relocation of lights, fences and shades from the Taken Land, and for the removal and duplication of hardstand. Such arrangements were reflected in the amended orders made on 27 May 2022: see ts 461, 11 July 2023.
Assessment of compensation: CCM
I find there is little compensation that is owed to CCM. My reasons in this matter have dealt extensively with the impact of the acquisition on Lot 302.
The focus of the Applicants' case was on the impact on Lot 302, which necessarily directs attention to the interests of Jandakot, as the fee simple owner. Indeed, as was made plain in the claims that Jandakot and CCM each pressed,[296] Jandakot was the lead claimant.
[296] Refer [62] above.
The claims that were pressed by CCM were very much presented in the alternative to Jandakot, in the event that 'full compensation' was not awarded on the basis that Lot 302 was leased as at the Taking Date.
If I did not discount the compensation payable to Jandakot on account of the lease, CCM only sought nominal compensation for the acquisition of a portion of its leasehold interest in Lot 302. The amount claimed was $100 plus solatium.[297]
[297] Application by CCM pursuant to s 221(1)(b) of LA Act, Appendix 1A.
I have not discounted the compensation payable to Jandakot on the basis of the lease to CCM. I therefore find that CCM is owed $100 plus 10% solatium and interest.
Orders
The parties should confer as to the orders necessary to give effect to these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
DR S WILLEY, SENIOR MEMBER
30 AUGUST 2024
0
30
8