Longo v Roads Corporation
[2013] VSC 636
•20 November 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION COMPENSATION & PLANNING LIST
S CI 2013 2306
| ANTHONY LONGO | Appellant |
| v | |
| ROADS CORPORATION | Respondent |
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JUDGE: | EMERTON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 September 2013 | |
DATE OF JUDGMENT: | 20 November 2013 | |
CASE MAY BE CITED AS: | Longo v Roads Corporation | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 636 | |
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LAND ACQUISITION – Appeal from Victorian Civil and Administrative Tribunal under the Victorian Civil and Administrative Tribunal Act 1998 (Vic) - Compensation for compulsory acquisition of land – Whether the Authority bound by its initial offer made under s 31 of the Land Acquisition and Compensation Act 1986 (Vic) – Whether the amount offered by the Authority for the market value of the land is ‘not disputed’ for the purposes of s 31(8) of the Land Acquisition and Compensation Act 1986 (Vic) where the claimant claims a higher amount – Authority revoked initial offer on the ground of mistake – Whether Authority’s offer was based upon reliance on mistaken information – Whether the power to vary an offer under s 36(2) of the Land Acquisition and Compensation Act 1986 (Vic) allowed the Authority to reduce its offer – Appeal dismissed – Land Acquisition and Compensation Act 1986 (Vic) ss 31, 33, 36, 57.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr P Barton | Pearce Webster Dugdales |
| For the Respondent | Mr P Chiappi | Garland Hawthorn Brahe |
HER HONOUR:
Introduction
The appellant, Mr Longo, owned vacant grazing land to the west of Melbourne facing onto the Western Highway. On 18 December 2006, the respondent (the ‘Authority’) gazetted a Notice of Acquisition under the Land Acquisition and Compensation Act1986 (the ‘LAC Act’) in respect of a part of the land.[1] The acquired land was required for the realignment of Leakes Road to enable a bridge to be constructed over a section of the Western Freeway.
[1]7.909 hectares of the 11.734 hectares.
On 18 January 2007, the Authority wrote to Mr Longo offering $645,000 compensation for the acquired land and enclosing a certificate of valuation dated 18 December 2006 valuing the land at $630,000 as at the date of acquisition. A further amount of $15,000 was offered for valuation and planning expenses. Mr Longo requested and was granted an advance in the amount of that offer.[2]
[2]Mr Longo received a payment of $15,000 and an advance of $630,000.
However, by letter dated 2 May 2007, the Authority wrote to Mr Longo explaining that, following the payment of the advance of $645,000, it had received planning advice that had caused it to request a review of the valuation upon which its earlier offer was based. On the basis of the revised valuation, the Authority offered Mr Longo compensation in the sum of $1,460,000. The offer was expressed to be on the same terms and conditions as set out in the letter of offer of 18 January 2007, save for interest.
On 7 May 2007, Mr Longo wrote to the Authority refusing the revised offer but requesting an advance of the additional $830,000. The additional amount was advanced on or about 22 May 2007, bringing the total amount advanced to $1,460,000.
Over six months later, on 21 November 2007, Mr Longo completed a ‘Response to Offer’ form by which he made a claim for compensation pursuant to s 33 of the LAC Act.[3] He disputed the amount of compensation which the Authority had offered and claimed the sum of $2,165,774.85, made up of $1,591,020 for the market value of the acquired land, solatium of $159,102, and further (significant) amounts for interest on loans, costs and expenses, valuation fees and legal costs, and for loss of his time and travel expenses.
[3]Mr Longo completed Part C – Rejection of Offer in Full and Notice of Claim for Compensation.
On 3 December 2007, the Authority wrote to Mr Longo rejecting his claim and repeating the offer contained in its letter of 2 May 2007. The Authority asked to be provided with a copy of the certificate of valuation upon which Mr Longo’s claim was based and noted that, pursuant to s 36(9) of the LAC Act, the claim was now a ‘disputed claim’ for the purposes of that Act.
On 21 February 2008, the Authority again wrote to Mr Longo. It advised that the offer of $1,460,000 was revoked, and made a fresh offer of $657,600 made up of the $630,000 for market value assessed for the first offer, plus $12,600 for solatium and $15,000 for legal, valuation and other expenses. The valuation and certificate of valuation relied upon by the Authority was the same as for the offer of 18 January 2007. This third offer concluded with the statement that, pursuant to the provisions of s 36(6) of the LAC Act, Mr Longo had two months to either accept or reject the revised offer.
Apparently Mr Longo did neither.
More than three and a half years later, on 8 November 2011, the Authority applied to the Victorian Civil and Administrative Tribunal (the ‘Tribunal’) under s 80 of the LAC Act for determination of a disputed claim.
The Tribunal heard the Authority’s application between 13 and 15 February 2013. At the commencement of the hearing, Mr Longo told the Tribunal that he wished to accept the Authority’s offer of $1,460,000 made on 2 May 2007, arguing the Authority was bound by this offer pursuant to the terms of s 31(8) of the LAC Act and that, as a result of his acceptance of the offer, there was no longer a disputed claim to be resolved. Mr Longo asked the Tribunal to make orders confirming his acceptance of the offer of $1,460,000.
The Tribunal heard the matter in full and ruled on Mr Longo’s submission in the course of giving its reasons.
The Tribunal held that the 2 May 2007 offer of $1,460,000 was ‘made redundant’[4] when the Authority made its later offer of $645,000. It held that s 31(8) of the LAC Act only applied to the initial offer or, where multiple offers of compensation were made, to the most recent offer. Moreover, the qualification in the opening words of s 38(1), ‘[t]o the extent that an amount of compensation offered under this section or any part thereof, is not disputed …’ made s 31(8) inapplicable because Mr Longo had disputed the whole of the compensation offered on 2 May 2007. Furthermore, the LAC Act did not prevent the Authority from revising its initial offer downwards. This was consistent with the fact that s 51(9) of the LAC Act provided that an amount of compensation paid to a person under s 51(8) by way of advance would not prejudice the final settlement or determination of the amount of compensation payable under the LAC Act.
[4]Roads Corporation v Longo [2013] VCAT 588 [57].
On the evidence before it, the Tribunal found that the market value of the land at the date of acquisition was $630,000, and that Mr Longo was entitled to $25,000 for solatium, nothing for disturbance, $36,241.62 for pre-referral legal costs and disbursements, and $9,350 for pre-referral expert planning and valuation expenses. This meant that Mr Longo was required to re-pay $783,758.38 to the Authority. The Tribunal made an order to this effect.
Grounds of appeal
Mr Longo contends that:
(1)The Tribunal erred in holding that it was open to the Authority to withdraw its offer of compensation of $1,460,000;
(2)The Tribunal erred in not holding that the offer of compensation of $1,460,000 continued to be open for acceptance at the hearing of the application to the Tribunal and that the offer had been duly accepted by Mr Longo or remained open for acceptance; and
(3)The Tribunal should have held that Mr Longo was not required to pay any sum to the Authority.
Statutory scheme
Section 30 of the LAC Act confers a claim for compensation on every person who has an interest in land that is divested or diminished by the acquisition of the interest pursuant to the Act.
Part 3 of the LAC Act contains a regime for the making of offers and claims which, if not accepted, will generate a ‘disputed claim’ that may be referred to the Tribunal or the Court for determination.
Section 31 requires the Authority within 14 days of the acquisition to make an offer in writing to each claimant of whose entitlement to compensation the Authority is aware (the ‘initial offer’). The initial offer must set out the amount that the Authority, on the information available to it, has assessed as a fair and reasonable estimate of the amount of compensation payable to the claimant under the LAC Act.[5] The initial offer must be accompanied by a copy of the certificate of valuation to which the Authority had regard in making the initial offer and a statement setting out the principal rights and obligations of the persons whose interests in land have been acquired.[6]
[5]Section 31(3). Such offer is made on the assumption that the claimant held the interest in respect of which the offer is made
[6]Section 31(4). Where there is a difference between the offer and the valuation, the initial offer must include a statement explaining the difference between the two figures.
Section 31(8) provides:
To the extent that an amount of compensation offered under this section, or any part thereof, is not disputed, the amount offered is binding upon the Authority unless the Authority can demonstrate that the information contained in the offer and relied upon by the Authority in making the offer was incorrect.
Section 33 provides for the claimant to make a response to the initial offer by serving on the Authority a notice of acceptance or a notice of claim. Failure to do so within three months of the date of service of the initial offer will result in the matter becoming a ‘disputed claim’ for the purposes of the LAC Act.[7]
[7]Section 33(2).
Section 35 sets out the requirements for a notice of claim. It requires the claimant to state the amount of compensation to which the claimant claims to be entitled and, if the claimant accepts the amount of compensation offered but claims to be entitled to a further amount, the notice must say so and specify the amount of further compensation to which the claimant claims to be entitled. Where there is a dispute as to the valuation to which the Authority has had regard, the claimant must provide its own certificate of valuation.
Section 36 then relevantly provides:
(1) Subject to section 106(1), the Authority must, before the expiration of three months after the date of service upon it of a notice of a claim under section 33, serve upon the claimant a statement in writing replying to the notice of claim.
(2) The Authority may in that statement-
(a)admit the claim as to whole or to part; or
(b)offer to vary the amount of the compensation previously proposed in relation to the claimant's interest; or
(c)reject the claim and repeat its offer under section 31.
…
(4) The Authority is liable to satisfy the claim to the extent that it admits the claim.
…
(6) Subject to section 106(1), if the Authority offers to increase or vary the compensation previously offered, the claimant must within two months after the date of service of this revised offer-
(a)accept the offer; or
(b)reject the offer.
(7) A revised offer under subsection (6) may leave specified matters to be determined by negotiation.
(8) If the claimant accepts a revised offer under subsection (6), the claimant may accept this in part, leaving specified matters to be determined by negotiation.
(9) To the extent that the claimant rejects the revised offer of the Authority, or the Authority rejects the claim by the claimant, the claim becomes a disputed claim for the purposes of this Act.
Part 3 therefore provides for the Authority to make an initial offer, which may be accepted in whole or in part. To the extent the Authority’s offer is refused, the claimant must serve a notice of claim. The Authority may accept the claim in whole or in part and, insofar as it does not accept the claim, may make a revised offer. Both the revised offer and any acceptance of it may leave specified matters to be negotiated. If the Authority rejects the claim it must repeat the initial offer.
Importantly, rejection of the claim by the Authority or rejection of the revised offer by the claimant generates a ‘disputed claim’ – but only to the extent of the rejection.
Part 4 of the LAC Act makes provision for the measure of compensation to be paid. Section 41 provides[8] that in assessing the amount of compensation, regard must be had to the following factors:
[8]Except as otherwise provided by Part 4.
(a) the market value of the interest on the date of acquisition;
(b) any special value to the claimant on the date of acquisition;
(c) any loss attributable to severance;
(d) any loss attributable to disturbance;
(e) the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;
(f) any legal, valuation or other professional expenses necessarily incurred by the claimant by reason of the acquisition.
What this makes clear is that compensation payable under the LAC Act is made up of components. In any given case, some components will be applicable and some will not. Where land is acquired compulsorily, the market value of the land at the date of acquisition (measured, where only part of the land is acquired, by reference to ‘before’ and ‘after’ values) will always be an element in the compensation to be paid. However, losses attributable to special value, disturbance or severance will only be compensable where such losses can be made out by the claimant.
Part 5 of the LAC Act deals with the payment of compensation and interest on compensation. Section 51 provides for advances of compensation to be made where an offer is not accepted.[9] If an advance is made and the Authority makes a later offer increasing the amount of compensation, the Authority may be required to make a further advance of the difference between the first and later offers.[10] If the amount paid under s 51 as an advance (or as advances) exceeds the amount of compensation finally determined, the person who received the advance is liable to pay to the Authority the difference between the amount of the advance and the amount of the compensation which is determined.[11]
[9]By providing that the claimant may require the Authority to advance an amount equal to the amount of compensation offered in respect of the claimant’s interest or the loss or expenses sustained or incurred by the claimant: section 51(1).
[10]Section 51(6).
[11]Section 51(7).
Competing submissions
Mr Longo’s submissions
Mr Longo submits that applying the LAC Act to the facts, what occurred in this case was as follows:
(a)The offer made on 18 January 2007 for $645,000 was the initial offer of compensation under s 31. Accordingly, s 31(8) applied, so that in respect of the part that was not disputed, the amount offered was binding on the Authority unless the Authority could demonstrate that the information contained in the offer and relied upon by it in making the offer was incorrect.
(b)On 2 May 2007, the Authority made another initial offer of compensation for $1,460,000. Accordingly, s 31(8) applied and the offer was binding on the Authority to the extent that the amount of $1,460,000 was not disputed, unless the Authority could demonstrate that the information contained in the offer and relied upon by the Authority making the offer was incorrect.
(c)It followed that in order for the offer of $1,460,000 not to be binding on the Authority, the Authority had to establish that the information contained in the offer and relied upon by it was incorrect. The information in question was limited to information of a formal nature such as the size and ownership of the land.
(d)On 21 November 2007, Mr Longo responded to the offer in terms of s 33(1)(b), that is, by serving a notice of claim stating the amount of compensation to which he claimed to be entitled.
(e)Having received Mr Longo’s claim for compensation made under s 33(1)(b), the Authority was required to respond under s 36. Pursuant to s 36(2), the Authority had three options open to it, namely:
(i)to admit the claim as to whole or to part (pursuant to s 36(2)(a)); or
(ii)to offer to vary the amount of the compensation previously proposed in relation to the claimant’s interests (pursuant to s 36(2)(b)); or
(iii)to reject the claim and repeat its offer under s 31 (pursuant to s 36(2)(c)).
In its letter of 3 December 2007, the Authority took the option in s 36(2)(c) by rejecting Mr Longo’s claim and repeating the offer contained in its letter of 2 May 2007.
(f)It followed that s 36(9) applied and the claim became a disputed claim for the purposes of the LAC Act.
(g)However, there were two further consequences of the Authority repeating its offer of 2 May 2007:
(i)section 31(8) continued to apply to bind the Authority in respect of the amount of the offer that was not disputed. This was the amount of $1,460,000; and
(ii)pursuant to s 36(9) the extent to which the Authority rejected the claimant’s claim was the amount above $1,460,000, making the disputed claim $705,774.85.
On this analysis, it was not open to the Authority to withdraw its offer of compensation for $1,460,000. This was barred by s 31(8) and because, having taken the option in s 36(2)(c) to reject the claim and repeat its offer, the LAC Act did not permit the Authority to change to the option in s 36(2)(b) to increase or vary the compensation previously offered.
Mr Longo further submitted that, in any event, the Authority could not decrease its offer under s 36(2)(b) because the word ‘vary’ in that context did not include to ‘decrease’. According to Mr Longo, by specifically referring to increase but not to decrease, Parliament evinced an intention that ‘vary’ not include to decrease. This was consistent with the use of the word ‘vary’ in the heading to s 87 of the LAC Act, which provided that in a compulsory conference, the Authority was allowed to increase any offer it had previously made. It was also consistent with the decision of Gobbo J in Coastal Estates v Shire of Bass,[12] in which his Honour observed that s 36(6) plainly contemplated that the Authority might increase its offer and that there appeared to be no limit to the number of times such an increase in the offer could be made.
[12][1994] 1 VR 210, 213.
The Authority’s submissions
The Authority accepted that the $1,460,000 offer was an ‘initial offer’ for the purposes of s 31 of the LAC Act. However, it contended that s 31(8) did not apply to bind the Authority to that offer, as the information contained in the offer and relied upon by the Authority in making the offer was incorrect. This was so, because the letter of 2 May 2007 identified that the offer was based on planning advice and it was clear from the evidence of the Authority’s valuer that the valuation referred to in the letter had proceeded on the erroneous view that the Authority’s planner had advised that the grant of a planning permit for a freeway service centre was likely. The valuation – and the certificate of valuation attached to the letter – was based on this mistaken premise. According to the Authority, the information contained in the offer – the valuation based on the planning advice – was therefore incorrect. As a result, so the Authority contended, it had demonstrated that the offer was ‘incorrect’ within the terms of s 31(8) and it was not bound by it.
In the alternative, the Authority submitted that as Mr Longo rejected the whole of the offer made on 2 May 2007 and thereby disputed the amount of compensation offered by the Authority, s 31(8) did not operate to bind the Authority to that offer.
The Authority further contended that the LAC Act did not expressly prohibit the reduction of an offer. Section 36(2)(b) expressly allowed the Authority to ‘vary’ its position and there was no reason to read down that power to limit the variation to an increase in the amount of compensation offered.
Analysis
Mr Longo’s argument relies heavily on the words in s 31(8) of the LAC Act, ‘to the extent that an amount of compensation offered under this section [s 31], or any part thereof, is not disputed, the amount offered is binding on the Authority’. According to Mr Longo, if the claimant claims more than the amount of compensation offered, it does not dispute the amount offered but claims an additional amount and only the difference between what is offered and what is claimed is in dispute. The amount initially offered therefore represents a ‘floor price’ below which the amount of compensation cannot fall, because it is not an amount that is ‘in dispute’ for the purposes of s 31(8) of the LAC Act.
For the reasons that follow, I reject this submission. In my view, the amount of $1,460,000 offered as compensation for the acquisition was ‘disputed’ for the purposes of s 31(8) in that Mr Longo claimed a higher amount for the market value of the subject land as well as further amounts for other forms of loss.
The offer of the amount of $1,460,000 was made on the same terms and conditions as the initial offer made on 18 January 2007. The Authority assessed the market value of the land as at the acquisition date and offered a further amount for expenses.[13] The offer was accompanied by a statement given pursuant to s 31(4)(c) of the LAC Act which included the following statement:
[13]That offer was based on the amount of $630,000 in the attached certificate of valuation and an allowance of $15,000 for valuation and planning expenses.
What to do with the offer
You may –
(a) accept the offer in full (Complete Part A of Form 11); or
(b) accept the offer in part (Complete Part B of Form 11); or
(c) reject the offer (Complete Part C of Form 11).
Within 3 months after service of the offer (unless the time is extended by agreement or by the Minister) you must give VicRoads a notice of acceptance or claim.
If you do not reply within that time, VicRoads may assume that you reject the offer and dispute it. A dispute is determined by the Victorian Civil and Administrative Authority or by the Supreme Court.
Although the amount of $630,000 was advanced to Mr Longo on 16 February 2007, Mr Longo did not accept the offer - in full or in part - or reject the offer within the three month period referred to in the statement.
On 2 May 2007, the Authority again wrote to Mr Longo referring to the ‘settlement’ (payment) of the advance and to planning advice that had caused it to review the valuation upon which the offer made on 18 January 2007 was based. The Authority stated that it had received revised valuation advice and was prepared to offer Mr Longo the sum of $1,460,000, ‘less the sum of $630,000 previously advanced’. The revised offer was expressed to be made on the same terms and conditions as those set out in the letter of 18 January 2007. A certificate of valuation was attached for $1,460,000.
The amount of $1,460,000 was intended to reflect the market value of the land acquired. It was expressed to be for the unencumbered fee simple of the area taken (7.909 hectares) and for all loss or damage which might have been sustained by Mr Longo as a natural and direct consequence of the acquisition in accordance with the provisions of the LAC Act. In other words, on 2 May 2007, the Authority again offered Mr Longo compensation for the market value of the land. The offer did not include compensation for the following:
(a) any ‘special value’ to Mr Longo;
(b) any loss attributable to severance;
(c) any loss attributable to disturbance; or
(d) the enhancement or depreciation in value of other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired.
Mr Longo responded by letter dated 7 May 2007, in which he said, ‘I do not accept this offer at this time but request an advance of the additional $830/eight hundred and thirty thousand dollars’.
Much later, on 21 November 2007, Mr Longo served on the Authority a notice of claim in the form of a ‘Response to Offer’[14] in respect of the offer made on 2 May 2007. Under Part C, Mr Longo stated:
I dispute the amount of compensation which the Roads Corporation has offered and claim the sum of $2,165,774.85 for compensation made up as follows:
[14]Form 11.
Mr Longo’s Response to Offer then set out how the amount of $2,165,774.85 was made up. It included an amount for the value of the land of $1,591,020, solatium of $159,102 and amounts totalling approximately $350,000 for interest on loans taken out by Mr Longo in 2003 and 2005 which had had to be maintained at a high rate of interest (in the case of one loan) or taken out at a high rate of interest (in the case of a second loan) due to the ‘blot’ on the title of the subject land caused by the Public Acquisition Overlay imposed by Amendment C43 to the Melton Planning Scheme in October 2004.
On 3 December 2007, the Authority wrote to Mr Longo rejecting his claim and repeating its offer of 2 May 2007 (that is, the offer of $1,460,000). This letter stated that the claim was now a disputed claim for the purposes of s 36(9) of the LAC Act.
On 21 February 2008, well after the claim had become a disputed claim, the Authority made an offer of $657,600 made up of compensation for market value of $630,000, solatium of $12,600 and an allowance for legal, valuation and like expenses of $15,000. Mr Longo did not accept this offer.
Mr Longo’s claim was subsequently referred to the Tribunal as a disputed claim.
In my view, this sequence of events, viewed in the context of the statutory regime, establishes that:
(a) The offer made on 2 May 2007 with the revised figure for land value of $1,460,000 was a revised ‘initial offer’ for the purposes of s 31;
(b) The Authority was bound by that offer –
(i) to the extent that the amount of compensation offered or any part thereof was not disputed; and
(ii) for so long as the Authority did not demonstrate that the information contained in the offer and relied upon by the Authority in making the offer was incorrect;
(c) Although Mr Longo accepted advances totalling $1,460,000, he rejected the initial offer in whole, which comprised an amount for the market value of the land, and claimed a higher amount for market value, along with further compensation for disturbance (interest on loans) and amounts for solatium and expenses;
(d) The amount of compensation in the initial offer was therefore disputed in full by Mr Longo. No part of the compensation was ‘not disputed’;
(e) As a result, the Authority was not bound by that offer, whether or not it was based on incorrect information;
(f) The Authority rejected Mr Longo’s claim in whole. In reply to Mr Longo’s notice of claim, it rejected the claim and, pursuant to s 36(2)(c), repeated its offer of 2 May 2007;
(g) Because the Authority rejected Mr Longo’s claim, the claim became a disputed claim by operation of s 36(9) of the LAC Act;
(h) Thereafter, the Authority made a further offer of $657,000, which was not accepted.
In my view, s 31(8) had no application from the time Mr Longo served his notice of claim on 21 November 2007. No part of the amount of compensation offered was not disputed: Mr Longo rejected the offer in whole, disputing the amount of compensation for market value and making further substantial claims for solatium, disturbance and expenses.
There is provision in the LAC Act for the partial acceptance of offers and claims. The LAC contemplates that part of an offer or claim may be accepted,[15] and that offers, claims and acceptances may leave specified matters to be determined by negotiation.[16] Thus, for example, s 35 provides that a claimant may accept the amount of compensation offered by the Authority but may claim to be entitled to further amounts of compensation[17] and may specify in the notice of claim any further matter which the claimant regards as being subject to negotiation.[18] In the present case, it was open to Mr Longo to accept the offer of compensation for the market value of the land but to specify the further amounts claimed for disturbance, solatium and expenses and/or to specify those matters as being subject to negotiation. In such circumstances, the amount offered for market value would have been ‘not disputed’ for the purposes of s 31(8). The processes contemplated by s 36 and in Part 10 of the LAC Act in respect of ‘disputed claims’ would have attached to the elements of the claim that remained unresolved or in dispute.
[15]Section 34(2) and (3)
[16]Section 35(1)(c) and (2); s 36(4), (7) and (8).
[17]Section 35(1)(c).
[18]Section 35(2).
In circumstances where the Authority offered $1,460,000 for the market value of the land and Mr Longo filed a notice of claim claiming $1,591,020 for market value, the amount of compensation for market value was not ‘not disputed’ and the offer of $1,460,000 formed part of a disputed claim. In my view, s 31(8) ceased to bind the Authority to the offer of $1,460,000 once Mr Longo put the amount of the offer in dispute.
Moreover, the Authority’s rejection of Mr Longo’s claim and the repetition of the offer made on 2 May 2007 did not make that offer binding. The offer was repeated in accordance with s 36(2)(c), which provides for rejection of the claim and repetition of the offer. Section 36(9) provides that to the extent that the Authority rejects the claim by the claimant, the claim becomes a disputed claim. The repetition of the offer cannot, therefore, be regarded as binding. It is made in order to crystallize a dispute, which, in the absence of successful negotiations to settle the dispute, will be resolved by the Tribunal or the Court. The exercise of discretion by the Authority to make an offer does not bind the Tribunal or the Court. Section 89 of the LAC Act provides that on an application or referral of a disputed claim under Part 10, the Tribunal or Court is to determine the amount of compensation in accordance with the LAC Act. This means that the Tribunal or Court must decide for itself how much compensation is payable on the basis of the evidence before it.
Furthermore, what is referred to the Tribunal or the Court is not a dispute about the difference between the amount offered and the amount claimed. It is a dispute about what compensation the claimant is entitled to, having regard to the to the requirements of the LAC Act and, in particular, the provisions governing the measure of compensation in Part 4 of the Act. The Tribunal or Court must decide for itself what was the market value of the land as at the acquisition date, and whether compensation is payable in respect of the other factors. In this context, the definition of the ‘amount in dispute’ in s 81 of the LAC Act - being the difference between the amount claimed by the claimant and the amount of the final offer made by the Authority - is unhelpful. That definition is relevant to determining the forum for the resolution of the dispute; it does not shed light on whether an amount of compensation is disputed for the purposes of s 31(8) or whether or when a claim becomes a disputed claim under Part 3 of the LAC Act.
Given that the Authority’s rejection of the claim and repetition of its initial offer under s 36(2)(c) generates a ‘disputed claim’ by reason of s 36(9), the repeated offer is not for an amount that is ‘not disputed’ for the purposes of s 31(8).
If I am wrong about this, and the amount of $1,460,000 in the offer made on 2 May 2007 and repeated on 3 December 2007 was ‘not disputed’ by Mr Longo for the purposes of s 31(8), then it was open to the Authority to demonstrate that the information contained in the offer and relied upon by it was incorrect.
Section 31(8) provides that an offer that would otherwise be binding is not binding if the Authority ‘can demonstrate that the information contained in the offer and relied upon by the Authority in making the offer was incorrect.’ There must therefore be incorrect ‘information’ that is ‘contained in the offer’ and ‘relied upon by the Authority’ for this exemption to apply.
The Authority submitted that the information contained in the offer and relied upon by it in making the offer of $1,460,000 was incorrect. It said that an error occurred because its valuer misread the report provided by its planner about the prospects of obtaining a permit for a freeway service centre on part of the subject land. The planner reported that, had there been no recent approval for a freeway service centre in the vicinity of the subject land, the site was a suitable site for a service centre. However, a recent approval nearby prejudiced the opportunity to obtain a permit and ‘it was difficult to see how a proposal for the Longo land in this circumstance would be able to satisfy the Freeway Service Centre Guidelines.’[19] The valuer misread this advice and understood that there was a prospect that a permit would be granted for the site. He changed his ‘before’ assessment to allow four hectares to be used for a service centre at a certain value per hectare.
[19]Affidavit of Andrew James Gunter sworn 5 July 2013, Exhibit AJG 1, Report of David Whitney dated 2 February 2007, 20.
On this basis, the Authority submitted that the incorrect information contained in the offer and relied on by it was the statement in the letter of offer of 2 May 2007 that it had received planning advice that had caused it to request the review of the valuation upon which its offer of 18 January 2007 was based.
Mr Longo submits that the type of information that may be ‘incorrect’ for the purposes of s 31(8) is limited to information of a formal nature such as the address, size or description of the land and the section does not apply to an incorrect interpretation of its own material. I reject this submission. Section 31(3) refers to the information available to the Authority to settle on amount as a fair and reasonable estimate of the amount of compensation payable to the claimant. ‘Information’ in that context would include planning advice and advice based on the planning advice, for only on the basis of such information could a fair and reasonable estimate of the market value of the land be arrived at. ‘Information’ in s 31(8) should be understood in the same way.
In this case, the Authority relied on the valuation given by the Valuer-General’s office in making the offer for $1,460,000 for the market value of the land as a ‘fair and reasonable estimate’ of the amount of compensation payable to Mr Longo. That valuation was based on the mistaken understanding that some of the land could be developed as a freeway service centre. The valuation was incorrect, not in the sense that it contained an opinion about the value of the land that other valuers – or the Tribunal or Court – might disagree with, but because it was based on a mistaken premise. I am satisfied that ‘information’ in s 31(8) should not be read restrictively and that the valuation upon which the offer of $1,460,000 was based was itself incorrect in that it was based on a mistaken understanding of the planning advice. The planning advice did not say what the valuer thought it said and the valuation would have been different had the valuer read the planning advice correctly. There was therefore an error embedded in the valuation supporting the offer made on 2 May 2007, so that the information contained in the offer was ‘incorrect’.
As a result, s 31(8) did not bind the Authority to the offer made on 2 May 2007.
Much argument before the Court turned on whether the terms of s 36 prevented the Authority from making a subsequent offer for a lower amount than the initial offer. According to Mr Longo, the effect of s 36 is to limit the response by the Authority to a notice of claim to accepting the claim (in whole or in part), varying the amount of compensation offered or rejecting the claim and repeating the offer under s 31. In s 36(6), it is provided that ‘if the Authority offers to increase or vary the compensation previously offered’, then the claimant must respond by accepting or rejecting the offer within a specified period. Mr Longo submits that the reference to ‘increase or vary’ means that the amount of the offer cannot be reduced by the Authority.
Although the provision dictating what the Authority may or may not do in response to the notice of claim refers simply to offering to ‘vary’ the amount of compensation previously proposed, I agree that s 36, read as a whole, does not appear to envisage that the amount of the offer will be reduced. The LAC Act generally reflects the fact that, in the usual course, offers made by the Authority will be increased rather than reduced. If the claim is rejected, the initial offer must be repeated. It would be unusual that, in the absence of a mistake, an offer for market value assessed as ‘fair and reasonable’ by the Authority in accordance with s 31(3) could later be significantly reduced and still be considered ‘fair and reasonable’. Furthermore, as the Authority’s initial offer will usually be limited to amounts for the market value of the land and legal and other expenses (the Authority is unlikely to be in a position to include in the initial offer amounts for disturbance, special value or severance), an increase rather than a decrease in the offer of compensation is more likely after the receipt of a notice of claim. I note also that s 87 of the LAC Act, which concerns variation of offers or claims in the context of compulsory conferences, provides for the Authority to increase the amount of any offer made to the claimant.
However, I am not persuaded that the word ‘vary’ in s 36 precludes the reduction of the amount offered for the value of the land, any other element of the compensation package or the package as a whole. There is no warrant to read the term so restrictively. This is especially so having regard to the fact that the amount of compensation offered and claimed may be made up of a number of components that may be subject to adjustment over the course of the process. In such circumstances, it may be difficult to assess whether there has been an ‘increase’ or a ‘decrease’ in the offer. It makes little sense in this context for the legislation to provide that the aggregate amount offered must always be equal to or higher than the initial offer.
In the circumstances of this case, it is unnecessary to decide this issue. In my view, the claim became a ‘disputed claim’ on 13 December 2007 when the Authority rejected the claim in Mr Longo’s notice of claim and repeated its offer, and thereafter there was no impediment to the Authority making such further offer or offers as it saw fit. Part 3 of the LAC Act provides a framework for the making and acceptance of offers and claims that allows an Authority and a claimant to negotiate and to resolve or reduce the extent of the claim. However, if the parties do not reach agreement through this process, the claim becomes a disputed claim to be resolved by other means. Under Part 10 of the Act, either party can refer the disputed claim to the Tribunal or the Court and it is then the task of the Tribunal or Court to determine the appropriate amount of compensation. The Authority is not required to go into the proceeding standing by its initial offer or any revised offer made under s 36 of the LAC Act.
Although the offer of $657,600 made by the Authority on 21 February 2008 was apparently thought by the Authority to have been made pursuant to s 36 of the LAC Act,[20] in fact it was an offer made after the claim had become a disputed claim and was not governed by the terms of s 36, in my view. Once the claim became a disputed claim, the Authority could make such further offers as it considered appropriate, and was not inhibited by restrictions (if any) arising from the process specified in Part 3.
[20]The letter of offer asks Mr Longo to respond within two months in accordance with s 36(6).
Conclusion
It follows, on the Court’s analysis, that:
(a)The offer made on 2 May 2007 was an initial offer of compensation under s 31. However, s 31(8) applied to bind the Authority to the offer only to the extent that the offer was not disputed;
(b)On 21 November 2007, Mr Longo responded to the offer in terms of s 33(1)(b), that is, by serving a notice of claim rejecting the offer and stating the amount of compensation to which he claimed to be entitled. The offer of $1,460,000 was rejected in whole by Mr Longo. No part of the offer was ‘not disputed’ and the Authority was therefore not bound by the offer under s 31(8);
(c)Furthermore, as the Authority established that the information contained in the offer and relied upon by the Authority making the offer was incorrect, the Authority was not bound by the offer under s 31(8);
(d)Having received Mr Longo’s claim for compensation made under s 33(1)(b), the Authority was required to respond under s 36. It responded by rejecting the claim and repeating its offer under s 31;
(e)Repeating the offer made under s 31 did not bind the Authority to that offer but had the effect of making the claim a ‘disputed claim’ for the purposes of the LAC Act;
(f)Once the claim had become a disputed claim, there was nothing in the LAC Act binding the Authority to any particular previous offer or precluding the making of further offers for reduced amounts.
Accordingly,
(a)The Tribunal did not err in holding that it was open to the Authority to withdraw its offer of compensation of $1,460,000;
(b)The Tribunal did not err in not holding that the offer of compensation of $1,460,000 continued to be open for acceptance at the hearing of the application to the Tribunal or that the offer had been duly accepted by Mr Longo or remained open for acceptance;
(c)The Tribunal did not err in ordering Mr Longo to pay to the Authority the difference between the amounts advanced and the amount of compensation determined by the Tribunal.
The grounds of appeal are not made out. The appeal must be dismissed.
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