Johnston v Roads and Traffic Authority
[2000] NSWLEC 111
•06/16/2000
Land and Environment Court
of New South Wales
CITATION: Johnston v The Roads and Traffic Authority [2000] NSWLEC 111 PARTIES: APPLICANT
RESPONDENT
Johnston
The Roads and Traffic AuthorityFILE NUMBER(S): 30443 of 1998 CORAM: Cowdroy J KEY ISSUES: Compensation :- highest and best use - valuer notionally dividing land into separate components and applying comparable sales to each separate portion - method of valuation unorthodox - assessment of value determined by application of traditional principle of comparison of whole of lands with comparable sales - disturbance claim for loss of existing use rights - costs of relocation of heritage item. LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991
Roads Act 1993CASES CITED: Lodge v Water Conservation and Irrigation Commission (1967) 14 LGRA 88;
McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238;
Moreton Club v The Commonwealth (1948) 77 CLR 253;
N Stephenson Pty Limited v Roads & Traffic Authority of New South Wales (1994) 83 LGERA 248 ;
Pamalco Pty Limited v Minister (3) (1991) 71 LGERA 441;
Redeam Pty Limited v South Australian Land Commission (1977) 40 LGRA 151;
Riverbank Pty Limited v Commonwealth of Australia (1974) 48 ;
ALJR 483 ;
Russellan v Roads and Traffic Authority of New South Wales (1992) 75 LGERA 263 ;
Sher v The Commissioner of Main Roads (NSW) (1975) 24 Valuer 150;
The Commonwealth of Australia v Milledge (1953) 90 CLR 157 ;
Veins & Anor v Gosford Shire Council (1976) The Valuer 756DATES OF HEARING: 9/5/00, 10/5/00, 11/5/00, 12/5/00, 25/5/00, 26/5/00 DATE OF JUDGMENT:
06/16/2000LEGAL REPRESENTATIVES:
APPLICANT
Mr J Webster (Barrister)SOLICITORS
Stone & PartnersAPPLICANT
SOLICITORS
Mr J Maston (Barrister)
Crown Solicitors
JUDGMENT:
IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESMATTER No.30443 of 1998
CORAM: Cowdroy J
DECISION DATE: 16/6/00
Applicant
Respondent
1. By application class three the Court is required to assess compensation pursuant to the provisions of s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”) in respect of land described as:-
Lot 29 Deposited Plan 877915 being part of the land in Certificate of Title 12/755692 and Lot 30 Deposited Plan 877915 and Lot 2 Deposited Plan 123323 being parts of the Land in Certificate of Title Auto Console 5742-19.All those pieces or parcels of land situate in the Byron Shire Council area, Parish of Brunswick and County of Rous shown as Lots 28, 31 and 33 Deposited Plan 877915 being part of the lands in Certificate of Title 12/755692:
2. Such lands were compulsory acquired by notice published in the New South Wales Government Gazette dated 11 September 1998, for the purpose of the re-alignment of the Pacific Highway at Byron Bay. Such acquisition was made pursuant to the provisions of the Roads Act 1993.
3. The compulsory acquisition did not involve a substantial portion of the applicant’s land. Rather the lands compulsorily acquired comprise both small lots and small portions of other lots. All the lands were contained in two deposited plans. In DP 877915 the land consisted of the following: Lot 28 comprising 599.7 m2; Lot 29 comprising 5,249 m2 ; Lot 30 comprising 682.3 m2; Lot 31 comprising 33,420 m2 ; Lot 33 comprising 6,960 m2. Within Lot 123323 Lot 2 was acquired which had an area of 992.7 m2. In total 4.79 hectares was acquired thus leaving of the original 98.56 hectare property an area of 93.70 hectares comprising Lot 20 comprising 38.78 hectares, Lot 21 comprising 0.432 hectares and Lot 22 comprising 54.19 hectares.
The site
4. The applicant’s land is located on either side of the Pacific Highway near Byron Bay. The land is cleared and comprises steep slopes and ridges upon which is a weatherboard cottage of the Federation era with heritage significance known as “Araluen” (“the Araluen house”). Such house is located on a ridge adjacent to the existing Pacific Highway. The Araluen house presently enjoys rural views to the north to the Pacific ocean and Byron Bay lighthouse to the east and south-east and rural views to the south. A second cottage and workshop were erected on the lands. Both were rent producing but each has now been demolished since they were in the path of the new roadway. The land is zoned partly Rural 1(B1) (Agricultural Protection) and partly 7(D) Environmental Protection (Scenic Escarpment) pursuant to the Byron Bay Environmental Plan 1988 (“the LEP”). One of the principle objectives of the Rural 1(B1) zone is to preserve the quality of the agricultural land and to prevent its fragmentation. The major objective of the 7(D) zone is to embrace the scenic qualities of the Shire, to control development and minimise erosion.
Valuation Evidence
5. The Court has had the benefit of expert evidence from Mr Allsopp, valuer for the applicant and Mr G Bewes , Senior Valuer, from the Valuer General’s Department Murwillumbah for the respondent. The valuers approached the valuation of the subject lands by adopting the method of comparable sales but applying the method differently.
6. Mr Allsopp has provided evaluation of the subject lands in the pre-acquisition state (“the before valuation”) and in its post acquisition state (“the after valuation”). In assessing each valuation Mr Allsopp has notionally divided the property into four areas. One component comprises the Araluen house and an area of approximately seven hectares of curtilage. There is in fact no lot nor boundaries which accord with Mr Allsopp’s notional curtilage. This area is known as Area “A”. Another area selected is the land upon which a second cottage and workshop were erected. Such area is described as Area “B”. For this purpose Mr Allsopp has notionally allocated 9,000 m2 for the dwelling site and 1,000 m2 for the workshop making a total area of 1 hectare for his Area B. Again there is no separate lot for either of these areas. Area “C” contains an area of 50.68 hectares and comprises the rural land surrounding areas A and B. Areas A, B and C all comprise Lot 12 in DP 755692 the total area of which amounts to 58.68 hectares.
7. Area “D” identified by Mr Allsopp consists of Lots 1 and 2 in DP 123323 which comprises an area of 0.5995 hectares and Lot 5 in DP 263951 comprising 39.32 hectares.
8. Following the re-subdivision of the lands after the compulsory acquisition Lot 12 in DP 755692 became Lot 22 in DP 877915 and Lot 5 became Lot 20 in such plan. The lands contained in Lot 22 (Mr Allsopp’s notional Areas A, B and C) will hereafter be referred to as “the northern land”. The land contained in Lot 20 and a narrow strip of land which is a closed road being Lot 21 together will be referred to as “the southern land” (Mr Allsopp’s notional Area D).
9. As is detailed hereunder, Mr Allsopp sought to obtain comparable sales for the various areas identified by him as A, B, C & D in order to reach his valuation of the whole of the applicant’s land. Mr Allsopp then considered each area on a ‘before’ and ‘after’ basis. Mr Bewes has also considered the value of the applicant’s land on a ‘before’ and ‘after’ basis. However he has not adopted the approach of Mr Allsopp by notionally dividing the lands into components. Instead Mr Bewes has identified sales regarded by him as comparable to the whole of the applicant’s land and used such sales to assess compensation.
10. In some cases, the sales relied upon both by Mr Allsopp and Mr Bewes were common. For convenience such sales are hereafter referred to by number and the initials of Mr Allsopp “JA” and the letters “VG” to represent the respondents comparable sale.
11. Mr Allsopp’s method of notionally dividing the subject lands into separate compartments required him to use comparable sales in relation to each compartment. He utilised the sale of 100 Quarry Lane Ewingsdale (JA 3) and 3 other sales namely Lot 2 Pacific Hwy Newrybar (4.51 hecatares of vacant land JA 5); (Lot 1 Pacific Hwy, Knockrow (3.72 hectares of vacant land JA 6); and 28 Buckleys Road Tyagorah (JA 8) for the purpose of assessing Area A. In assessing Area B he relied upon a comparable property namely 10 Valley Court, Ewingsdale (0.5 hectares JA 7). Such sale comprised a residential allotment with a dwelling which he used for the purposes of assessing the one hectare parcel of land containing the second cottage (Area B) on the subject lands.
12. As to Area C Mr Allsopp relied upon the sale of Chabra Stud (JA1) and Flowerdale (JA2). For Area D a comparable sale relied upon was a property at Bangalow Road St Helena (JA4). Mr Allsopp aggregated separate values of each of the Areas comprising the whole of the applicant’s land in order to reach his final valuation. Mr Bewes applied his comparable sale VG1 (which corresponds to JA2) and VG2 (which corresponds to JA1) to the northern section of the applicant’s land which included the house, the second cottage, the workshop and the land. Mr Bewes also believed the sale at Knockrow (VG 3 and JA 6) was relevant to the southern area of land. He then made a direct comparison of VG1 and VG2 to make his final valuation.
Valuation of Mr Allsopp
(a) Before
13. As to Area A, Mr Allsopp assessed the value of the house and improvements at $195,000 and the seven hectare site in the sum of $550,000. Such assessment took into account views to the ocean and lighthouse and the Area’s existing proximity to the Pacific Highway. Accordingly a total of $745,000 was considered by him to be the valuation of Area A.
14. As to Area B he valued the improvements at $97,232 comprising the workshop and the cottage. Mr Allsopp valued the one hectare parcel of land at $85,000 for the cottage site and $85,000 for the workshop site making a total of $170,000 but allowed a 5% reduction because of proximity to a dip site resulting in a valuation of $161,500. Accordingly the total for Area B on a hectare site was valued at $258,732.
15. As to Area C namely the 50.68 hectare residue of Lot 12 he considered such land as suitable for agriculture and valued it at $725,760 or $14,320 per hectare. The total value of the northern portion of the land amounted to $1,729,492.
16. As to Area D being the southern portion of the land comprising a building entitlement for the cottage Mr Allsopp considered the value of such land to be $1,000,000. His assessment was based upon his sale JA 4, a property of 1.2 hectares. Accordingly he assessed the total value of the land and improvements in the before situation in the sum of $2,730,000.
(b) After
17. As to the after value for Area A Mr Allsopp assessed the value of the improvements at $135,000. This took into account the fact that the Araluen House would need to be relocated to a site nearby in view of the acoustic evidence that noise generated from the roadway would render the house unsuitable as a residence without extensive sound proofing. Due to heritage issues it was impractical to install such measures. As to the land value of the notional hectare site, he allowed the sum of $320,000 thereby providing a total of $455,000 for land and improvements for Area A. As to Area B, allowing for the possible re-instatement of a dwelling homesite he calculated a sum of $42,500. As to Area C he allowed $576,756 and Area D (now reduced to 39.2 hectares being Lot 20 and Lot 21 in DP 877915) the sum of $975,000. Accordingly the total after valuation was $135,000 for improvements and $1,915,000 for land making a total of $2,049,256 rounded to $2,050,000. The difference in the before and after valuation based upon Mr Allsopp’s approach is $680,000. Items of disturbance are to be added as detailed hereunder.
Respondent’s valuation
(a) Before
18. Mr Bewes considers that the northern land (Lot 12 in DP 755692) had a pre-acquisition value of $1,333,575 (compared to Mr Allsopp’s $1,437,260).
19. Mr Bewes applied the valuation of Flowerdale and Chabra Stud as being the most comparable valuations for the northern portion. Flowerdale consisted of a property containing 31.788 hectares within very close proximity to the subject lands. The improvements thereon consisted of two residences, various sheds and a retail store. The sale of such land was effected by contract dated 7 September 1998 for a consideration of $1,350,000. After allowing for the valuation of improvements assessed at $276,500 and after deducting plant and equipment, the land value was assessed at $1,023,500. This equated to an amount per hectare of $32,205.
20. As to Chabra Stud, Mr Bewes assessed the land value to be $790,000 yielding an average of $18,514 per hectare. Mr Bewes considered that the northern land was inferior to Flowerdale but superior to that of Chabra Stud. For this reason he assessed the value of the northern land at $22,726 which he later increased by 5% to $23,625 per hectare. Mr Allsopp valued such lands at $24,493 per hectare. He assessed the value of the northern land in the sum of $1,333,575 and the value of improvements at $177,500 (compared to Mr Allsopp’s $195,000).
21. Mr Bewes assessed the value of the southern land (Lot 5 in DP 263951 which became Lot 20 and Lot 21 in DP 877915) at $700,000 (compared to Mr Allsopp’s value of $1,000,000) thereby making a total of the value of the applicant’s land in the sum of $2,033,575. He assessed the improvements comprising the Araluen house together with carport, garage, workshop, tanks and landscaping together with the second cottage, garage and workshop and associated sheds in the sum of $275,000. As a consequence, Mr Bewes total valuation of land and improvements in the before situation amounts to $2,308,575.
22. In reaching his valuation of the southern land Mr Bewes considered a sale (VG3) of a 45.13 hectare property on the Pacific Hwy at Knockrow in the Shire of Ballina which adjoins the Shire of Byron Bay to be the most appropriate comparable sale. The contract for such sale was dated 9 April 1998 showing a purchase price of $775,000. Having made an allowance for improvements, Mr Bewes assessed the land value of such sale at $740,000 or yielding $16,397 per hectare. Applying this valuation, Mr Bewes allowed an increase to $17,811 per hectare for the southern land. The area of this land was 39.3 hectares resulting in his valuation of the southern land at $700,000.
(b) After
23. In the after valuation, Mr Bewes assessed the southern land (Lots 20 and 21 in DP 877915) at the same amount as in the before situation because he considered that the impact of the acquisition was negligible. Subsequently he reduced his valuation to $685,000 to reflect his assessment of the impact of the re-alignment.
24. Mr Bewes valued the northern land comprising part of Lot 22 namely 52 hectares at $19,000 per hectare totalling $988,000. The remaining portion of Lot 22 which was severed by the new highway comprising 21.9 hectares he valued at $10,000 per hectare amounting to $21,900. Accordingly the total value of all land (ie the southern and northern portions) is assessed at $1,694,900 in the after situation. To this sum he added the sum of $98,000 for the value of the improvements and a possible building entitlement of $50,000 resulting in a total value of land and improvements in the amount of $1,842,900. Deducting this amount from the before valuation of $2,308,575 the difference amounts to $465,675. From this sum an amount of $1500 was deducted being an amount already paid to a tenant (Mr Smallmon) leaving a balance of $464,175. This sum together with disturbance items detailed hereunder constitutes the respondent’s evidence as to the quantum of compensation which is liable to pay to the applicant.
Applicant’s reply
25. Mr Allsopp was critical of the respondent’s approach. He considered that his own approach of selecting various component parts of the subject lands was the method which took into account its special features. As to Area A such features comprised the position of the Araluen house which enjoys distant views of the ocean and Byron Bay lighthouse. The amenity of the house would be seriously affected by traffic noise from the new highway. One proposal is to re-locate the house at a cost of $129,600. In this event it would be affected by its loss of garden and setting and from its resited position and its views to the ocean would be substantially impaired.
26. As to Area B Mr Allsopp contended that the second cottage with its workshop was a valuable right. The workshop had initially been used for the repairing of farm machinery but in recent years its use had developed into an industrial use namely repairing and fabricating steel components. It was claimed that the workshop provided valuable existing use rights which were lost by virtue of the re-siting of the roadway. The second cottage was valued by him at $67,750 for the improvements and $34,600 for the value of the improvements of the industrial workshop. It was claimed that the rental produced from the industrial workshop was $230 per week and for the residential cottage $235 per week. The applicant claims to be entitled to the equivalent of another rent producing cottage and compensation for the workshop.
27. As to Area C Mr Allsopp considered that the quality of the land and its location (with no building entitlement) was valued at approximately $14,377 per hectare.
28. As to Area D Mr Allsopp maintained that his valuation of $1,000,000 (before) and $975,000 (after) was valid. He considered that such land would attract a special premium because of demand for small properties in the area of Byron Bay and of the premium which purchasers were prepared to pay for land in that vicinity (referred to by him as the ‘Byron Bay factor’).
Respondent’s reply
29. The respondent considered Mr Allsopp’s notional division of the subject lands as unsound. Mr Bewes considered that the highest and best use of the land was as a lifestyle of hobby farm with possible agricultural use. As to Araluen house whilst acknowledging that it possessed good quality views, Mr Bewes considered that its amenity was already severely depreciated because of the proximity of the highway and consequential noise impacts. The Araluen house had some heritage value but renovations carried out to the house were inappropriate. It is not an item of heritage pursuant to the LEP.
30. As to the second cottage and workshop, Mr Bewes’ valuation has made allowance for the value of improvements which were lost in consequence of the road re-alignment. Mr Bewes did not regard the workshop as providing a valuable existing use right as claimed by Mr Allsopp for the reason that the income from the business conducted therein was negligible. Both the cottage and workshop had been leased to a tenant, Mr Smallmon. The gross income for the business for the financial year preceding the acquisition was $18,000 excluding rent. Mr Bewes considered that if a rental factor were taken into consideration, the business would be producing a nil return.
31. As to the rural lands comprising the residue of Area C and Area D, Mr Bewes acknowledged the influence of the ‘Byron Bay factor’ which suggests that a premium is paid for land in the Byron Bay Shire in preference to land in the adjoining Ballina Shire. Nevertheless he considered that the land was constrained by poor access and sloping terrain. For this reason he considered it to be inferior to the Flowerdale property and made his assessment accordingly.
The appropriate valuation method
32. Section 55 of the Land Acquisition (Just Terms Compensation) Act 1991 requires the Court to determine the amount of compensation to which a person is entitled having regard to the following relevant matters only:-
(a) the market value of the land on the date of its acquisition;
(b) any special value of the land to the person on the date of its acquisition;
(c) any loss attributable to severance;
(d) any loss attributable to disturbance;
(e) - (f) not relevant
Section 56(1) defines the market value of land as:-
… the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but anxious buyer, …
33. Mr Allsopp’s method of notionally dividing the land into arbitrary compartments and then seeking to value each separate compartment is unorthodox. In Veins & Anor v Gosford Shire Council (1976) The Valuer 756 at 758, the Court valued rural land according to a dissection thereof into land types comprising creek flats, banks, creek terraces, open lightly timbered land and heavily timbered land. The plaintiffs valuers had used valuations of comparable properties as a whole. Waddell AJ said at 758:-
It seems to me that the usefulness of either approach depends very much on the circumstances. In the present case I think that the various sales mentioned in evidence cannot usefully be compared without resort, in part, at least to the dissection method but regard must be had to the overall values and, bearing in mind the large area of the resumed land and the nature of the market, the determination of its value is ultimately a question of judgment.
He continued:-
Sales of land consisting of only one land type may offer a guide to one value which should be attributed to that type of land in sales which involve land of several types. However such sales must be used with caution because the presence of several types of land in the one property may enhance the value of each and consequently of the whole.
34. The respondent submits that the components used by Mr Allsopp do not accord with land type but rather result from a random selection. This is not, it submits a situation of a rural farm, particularly of a large farm where dissection has been applied based upon land types. The respondent relies upon authorities in which a dissection of property based upon these physical attributes such as separating unproductive and stoney and timbered land from good grazing land has been utilised; see for example Lodge v Water Conservation and Irrigation Commission (1967) 14 LGRA 88 at 91. However such approach was acknowledged to produce fluctuating values, which was of ‘ limited value in appraising the subject property’ per Hardie J at 92.
35. As was apparent from the cross-examination of Mr Allsopp, fluctuating valuations can result from the subjective selection of arbitrary areas for separate valuation. As to the selection of areas A, B, C no physical or other boundary exists to define an area for valuation purposes. The boundaries selected for area A and area B, which necessarily affects area C are purely notional and do not relate to any physical characteristics of the land.
36. To achieve an appropriate valuation based upon comparable sales a more accurate result is likely to be achieved by minimising the number of adjustments: see Hemmings J in Pamalco Pty Limited v Minister (3) (1991) 71 LGERA 441 at 447. Similarly valuations which require ‘ mechanical adherence to calculation’ should not generally be adopted by a Court: see Moreton Club v The Commonwealth (1948) 77 CLR 253 at 259; see also The Commonwealth of Australia v Milledge (1953) 90 CLR 157 at 162. Mr Allsopp’s method requires numerous calculations and adjustments because of the need to compare comparable sales to each of the notional portions of the subject lands.
37. In contrast to Mr Allsopp’s method, Mr Bewes method of endeavouring to reach a valuation by the use of comparable sales of the whole is a widely accepted method and has been described by Stephen J as ‘ the conventional valuation technique’ ( Riverbank Pty Limited v Commonwealth of Australia (1974) 48 ALJR 483 at 484). Mr Bewes use of similar properties to value the lands is an accepted valuation practice and is accordingly adopted by the Court: see also Redeam Pty Limited v South Australian Land Commission (1977) 40 LGRA 151 at 156.
38. For these reasons the Court rejects the approach adopted by Mr Allsopp in arriving at the valuation of the subject land and accepts the method adopted by Mr Bewes.
39. Both Mr Bewes and Mr Allsopp paid regard to the sales of Flowerdale and of Chabra Stud. Such sales were used by Mr Allsopp for his Area C. Mr Bewes considered that there were special features concerning the Flowerdale sale which produced an artificially high price. It was purchased by an existing land owner for future development because of its location at a ‘gateway’ site. It was considered by Mr Bewes to have long term potential for rezoning. Both Mr Bewes and Mr Allsopp considered that Flowerdale was superior both in the before and after situation to the subject lands. For this reason, Mr Bewes considered that the sale of Chabra Stud represented a favourable comparison. He acknowledged that views from that property were insignificant and that views from the subject land were superior. However he took into account the fact that Chabra Stud was located in a quiet position compared to the exposure of the applicant’s land to the Pacific Highway. He did not take into consideration the fact that acid sulfate soils were shown to exist in the council map upon a portion of Chabra Stud and from the evidence it is impossible to discern whether such feature was a detriment. Nevertheless he was satisfied that the subject lands were inferior in value to Flowerdale, but greater in value than those of Chabra Stud. The sale of the former (VG2) yielded $32,205 per acre and Chabra stud $18,514 per acre.
The southern portion
40. This area contains 39 hectares of land. Mr Allsopp’s comparison was of a site (JA4) containing 1.2 hectares of land being the sale of a heritage home and surrounding grounds which were sold for $1,120,000 on 23 October 1998. Such land was located on a ridge with magnificent ocean and rural views. Mr Allsopp assessed the land valued to be $650,000 for a 1.2 hectare site.
41. In contrast Mr Bewes endeavoured to obtain a rural parcel of land of similar area to Lot 5. This comprised the sale of (VG3) being a parcel of 45.13 hectares at the Pacific Highway Knockrow. The land was essentially level rural land which also possessed high quality views of the ocean.
42. Both valuers agreed that the market prevailed at the date of acquisition for small rural residential allotments providing substantial homesites up to approximately 4 hectares of land and simultaneously a market for rural residential ‘lifestyle’ properties of approximately 40 hectares. Prices paid for one market obviously do not necessarily reflect the value of the other market: see Sher v The Commissioner of Main Roads (NSW) (1975) 24 The Valuer 150.
43. Considering this principle, the characteristics of the subject land are to be assessed. It was bounded by the Pacific Highway on the south and south-east. A ridgeline ran virtually north and south from which a distant view of the ocean could be achieved but otherwise the views were essentially of a rural character. The land in some places fell steeply away from the ridgelines. For the purposes of a future homesite, cl 31 of the Byron Local Environmental Plan would operate to restrict a dwelling house being sited on a ridgeline. Accordingly any dwelling would be unlikely to capture the distant views.
44. The sale of the land at Knockrow was located in the Shire of Ballina and it did not have the ‘Byron Bay factor’. However he considered that the land was superior and that the views were vastly better than those on the southern land. The sale of the Knockrow land yielded $16,397 per hectare upon Mr Bewes’ calculations. In respect of Lot 20 and Lot 21, Mr Bewes considered the sum of $18,000 per acre reflected its true value.
45. The Court considers that Mr Bewes selection as a comparable should be accepted and Mr Allsopp’s rejected. The sale relied upon by Mr Allsopp (JA 4) was of an entirely different property both as to nature and size. It had no agricultural potential and its current use was that of a bed and breakfast business which was operated in a heritage house located on the site. Mr Allsopp was unable to demonstrate evidence of any sale of land in the area in the sum of $1,000,000 or indeed above $700,000.
46. Since the land had been affected by the re-alignment of the road, Mr Bewes made the allowance of $15,000 for the difference in the before and after state of the land. Such allowance was made in the knowledge that that portion of land which was acquired was steeply sloping and virtually of no practical use for agriculture.
The after valuation - Lot 22 (the northern portion)
47. Mr Allsopp approached his valuation on the basis that the Araluen House would have to be relocated to a site which would result in diminished views. He assessed the after value of the land on his notional Area A at $796,756. This includes the value of improvements ($103,935 and associated shed with the seven hectare notional Area A $220,000) and 47.19 hectares of agricultural land ($576,756).
48. The respondent values the northern portion of the lands in the sum of $1,009,900. This sum is calculated upon an assessed $18,636 per hectare in respect of the 54.19 hectares. The valuers have agreed that the diminished value of the land in the after condition is 15%. Thus the application of this percentage produces different results if applied to different areas. Mr Allsopp applied such reduction to 47.19 hectares of the total 54.19 hectares of Lot 22. Mr Bewes applied the 15% to 52 hectares assessing separately the 2.19 hectares of the partially severed land and applying to that land $10,000 per hectare.
49. The arbitrary nature of the applicant’s notional apportionment of areas again produces results which are variable and therefore unreliable. Mr Bewes has discounted the value of the Araluen house by 50% and regarded the land in the northern portion as inferior to Chabra Stud. Both valuers agreed that the noise and adverse visual impact of the road and its change to the north of the land would be detrimental to the house.
Subsidiary Issues
50. Various matters were raised during the course of the hearing. It was suggested by the applicant that the use of “B Double” motor lorries on the new highway would add to the noise problems associated with the current situation of the Araluen house. No evidence was led however of any specific noise consequence from the use of such vehicles. Evidence was led of the Road Traffic Noise Guidelines which have been developed by the Environmental Protection Authority in conjunction with the Roads and Traffic Authority. The respondent did not challenge that the location of the current house would be severely affected by noise from the new roadway. For this reason, and taking into consideration the fact that the features of a heritage house do not permit appropriate measures for soundproofing, it will be necessary to relocate the house. Alternatives such as the development of an earth bank appear from the evidence to be impractical as such would obliterate any views. Whilst the house is already affected by traffic noise, the relocation of the house would appear to be inevitable.
51. The second matter agitated by the applicant was the loss of income from the second cottage and from the steel fabricating business both of which was comprised in Mr Allsopp’s notional Area B. Mr Bewes has taken such matters into consideration in the valuation of Flowerdale which, like the subject lands, had erected on it a second cottage and a retail outlet.
52. Another item referred to was the destruction of the front garden of Araluen. Some will remain and the Roads and Traffic Authority will be landscaping along the road verge. In due course the landscaping would develop and provide some amelioration of the exposure of the house in either its present or relocated position. It was estimated that approximately two-thirds of the garden would remain in any event.
53. A 2.19 hectare portion of the property will be divided from the northern portion of the lands by virtue of the new roadway. A section is already separated. Under the new arrangements an underpass would be provided so that access can be direct. Mr Bewes considered this to be a substantial advantage to the applicant.
54. The access driveway to the Araluen House may not be as convenient as it had previously existed. However this is a matter which again Mr Bewes had considered was taken into consideration in his valuation.
55. As to land values therefore the Court accepts the evidence of Mr Bewes and adopts his quantification.
Items of disturbance
(a) Stamp Duty
56. The applicant submits that because it has been deprived of the second cottage it is entitled to claim stamp duty for a hypothetical purchase of a substitute house. Mr Allsopp located a residence at 10 Valley Court, Ewingsdale upon a residential parcel of land which sold by contract over 1 June 1999 for $240,000. Such sale is relied upon purely to calculate the stamp duty that might be payable. There is no evidence however that the purchase of such a property will take place nor that it is essential for the applicant to undertake such purchase. The items for which the applicant is entitled to be compensated is confined to those categories referred to in s 55 of the Just Terms Act and compensation upon a reinstatement basis has no application. This is not a case in which the purchase of a property has been shown to be essential for the carrying of a business: contrast McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238 at 247. Nor is it a case involving a relocation of the applicant.
(b) Accountant’s advice
57. A claim has been made for accountant’s advice relating to possible tax liability arising from potential capital gains tax liability. In Russellan v Roads and Traffic Authority of New South Wales (1992) 75 LGERA 263 Pearlman J determined that a possible future liability for such tax by the dispossessed owner was not an item of special value for compensation under the provisions of the Public Works Act 1912. Her Honour observed:-
I do not think that the fact there might in the future be some income tax liability to the applicant arising from its disposal of a replacement property is a circumstance sufficiently derived from the subject property in the hands of the applicant so as to constitute a special value which must be added to the market value.
58. Similarly in these proceedings the claim for the cost of accountant’s advice could only be recoverable if it is an item sufficiently derived from the acquisition of the land: see s 55(c) and s 55(d) of the Just Terms Act. The cost of advice is not a loss attributable to severance, nor attributable to disturbance as referred to in the Act. Rather, it is a cost referrable solely to advice obtained by the applicant which is not ‘a loss’ resulting directly from the acquisition of the land. Accordingly this claim is rejected.
(c) Cost of removal of Araluen house
59. The Court considers that the Araluen house is an item requiring relocation to enable its reasonable use and as such, the costs of removal should be regarded as an additional claim pursuant to s 59(f) of the Act. The cost of relocating the house is assessed at $129,600. The re-alignment of the Pacific Highway will cause the Araluen house to be very exposed and its relocation will be essential. For this reason the costs of removal are allowed.
(d) Loss of Rent
60. A loss of rent of $6,500 is claimed in respect of the tenant which vacated the Araluen house because of construction noise associated with roadworks conducted on the Pacific highway re-alignment. The claim is made for a period of 26 weeks at a weekly rental of $250 per week, to the end of September 2000. The claim is resisted upon the ground that compensation is awarded as at the date of acquisition and statutory interest is paid thereafter. The acquisition was made on 11 September 1998 and the whole of the rental claimed relates to a later period. Mr Bewes’ valuation made as at the date of acquisition is made upon the basis of vacant possession of the house. On this basis, the respondent submits that any rent claim relating to a subsequent period is not compensable since the applicant’s entitlement crystallises at the acquisition date. The respondent also submits that a loss of rent is not a ‘financial cost incurred’ within the meaning of s 59(f) of the Just Terms Act. The latter argument was considered by Talbot J in N Stephenson Pty Limited v Roads and Traffic Authority of New South Wales (1994) 83 LGERA 248 at 262.
61. The Court has considered the final submissions of the applicant but finds that such claim is not compensable. To uphold the claim the applicant must establish that it is properly a matter for compensation pursuant to s 55 of the Just Terms Act. Loss of rent in the present circumstances is not a ‘loss attributable to disturbance’ as defined in s 59 of that Act, since it is not a ‘financial cost reasonably incurred’. Rather it is a loss for which compensation is reflected in the before and after valuation.
(e) Planning Advice
62. A claim for the cost of planning advice of $8,250 paid to Geolink is made. Such advice relates to the establishment of a second dwelling on the southern portion of the land and the re-location of the “Araluen” House. Pursuant to s 55(f)(d) of the provisions of the Just Terms Act such claim would be compensable if such expenditure has been incurred relating to the actual use of the land and as a direct and natural consequence of the acquisition. The possibility of replacing the second dwelling on the applicant’s land arises solely in consequence of the loss of the second cottage on part of Lot 12. The investigations relating to a possible site for the replaced dwelling and for the re-location of the “Araluen” house is reasonable and is allowed. It is noted that the respondent did not challenge such item in its valuation assessment.
(f) Other Items of Disturbance
63. Other items of disturbance are agreed between the parties as follows:-
Total $11,192Legal Expenses $5,500
Valuation Expenses $3,657
Road Extensions $2,035
Claim under Public Works Act 1912
64. The respondent has sought to amend the Class 3A application to add a claim for damages pursuant to s 96 of the Public Works Act 1912. That section provides that damages may be recoverable from a Constructing Authority arising out of damage sustained from the use of any land hereditaments and consequence of the exercise of powers pursuant to s 96.
65. The term ‘Constructing Authority’ is defined in s 3 of the Public Works Act as the Minister empowered to carry out any authorised work. ‘Authorised Work’ is also defined in s 3. The basis of the claim arises out of the fact that a Constructing Authority has undertaken work on the lands of the applicant.
66. The Public Works Act 1912 is not listed as one of the Acts in respect of which this Court has jurisdiction pursuant to the provisions of the Land & Environment Court Act 1979 as is relevantly set out in s 19 thereof. In N Stephenson Pty Limited v Roads and Traffic Authority of New South Wales Talbot J determined that such a claim is not within the jurisdiction of this Court.
67. As a further consideration an examination of the Act makes it clear that the damages for which a claimant maybe entitled to receive relate to temporary possession of the land. Section 82 of the Act enables a constructing authority to enter upon land for the purpose of activities such as reconstruction, repair, alteration, addition to or extension of public works. Section 84 refers to compensation to be made for temporary occupation. The Act does not extend to compensation where there has been a permanent acquisition of property. Talbot J in N Stephenson Pty Limited v Roads & Traffic Authority of New South Wales reaches the same conclusion. For this reason the claim for damages under this section is rejected.
Conclusion and Orders
68. In these proceedings the Court has found that the method of compensation sought to be relied upon by the applicant does not accord with the valuation principle. Secondly, the Court considers that the valuation method of Mr Bewes produces the appropriate and fair compensation, based upon the use of comparables which bear a close resemblance to the subject lands. His method eliminates the numerous mathematical calculations which are essential in the Mr Allsopp’s method and also the factors which can produce fluctuating results. Accordingly, the Court:-
69. Determines that the applicant’s entitlement pursuant to s 55 of the Acquisition of Land (Just Terms) Act is the sum of $613,217 calculated as follows:-
(a) Compensation for land $464,175
(b) legal expenses $5,500
(c) evaluation expenses $3,657
(d) road extensions $2035
(e) removal of house $129,600
(f) site re-location expenses $8,250
total $613,217
- The total compensation therefore payable is the sum of $613,217.
2. Costs be reserved.
3. The exhibits be returned.
8
2
2