Michele Melino and three others in their capacity as executors of the Estate of the late Costanzo Melino v Roads and Maritime Services

[2017] NSWLEC 118

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Michele Melino and three others in their capacity as executors of the Estate of the late Costanzo Melino v Roads and Maritime Services [2017] NSWLEC 118
Hearing dates:	24, 25, 26 and 27 July; 4 September 2017
Decision date:	14 September 2017
Jurisdiction:	Class 3
Before:	Moore J
Decision:	See directions at [239]
Catchwords:	RESUMPTION COMPENSATION - injurious affection - claim for injurious affection to land used for sugarcane production – applicants’ valuer considered injurious affection to be at the same rate across the whole of the eastern portion of the landholding – respondent’s valuer agreed with injurious affection rate for portion of the eastern landholding but disagreed about the land which was cane fields or which was wetland – respondent’s valuer contended that there was no injurious affection to these elements - consideration of respondent’s valuer's comparative sales evidence concerning acquisition of sugarcane production land - evidence discloses valuation element in those sales for ambience and outlook - ambience and outlook of the cane fields in the acquisition affected lands impacted by the road project - injurious affection established for the cane fields - injurious affection at half the agreed rate for the agreed lands - no injurious affection to the lands classified as wetlands RESUMPTION COMPENSATION - injurious affection - injurious affection claim for western element of the applicants landholding - statutory requirement for land to adjoining acquired land - western element of landholding separated from eastern element of landholding by 330 m - western element functionally connected to eastern element by “grace and favour” track through adjoining property - track used for human and cattle movement between two landholding elements - two landholding elements also connected by an impassable paper road - having regard to the landholding and land use pattern, the western element of the landholding did not adjoining the eastern portion - claim for injurious affection to the western element of the landholding rejected RESUMPTION COMPENSATION - injurious affection - consideration of the extent of injurious affection to the western element of the landholding if it should be regarded as adjoining the eastern element for statutory purposes - competing evidence of the valuers - evidence of the respondent’s valuer to be preferred - no injurious affection to the western element of the landholding RESUMPTION COMPENSATION - claim for compensation to permit construction of a new dwelling, new cattle yards and new Colorbond shed - proposed structures to replace those acquired by the respondent and demolished as part of the compulsory acquisition - compensation for acquired land included full value compensation for fixtures acquired and demolished - no basis for claim - claim rejected RESUMPTION COMPENSATION - claim for provision of services and improved access to proposed new dwelling and constructed replacement Colorbond shed - provision of services and access necessary as a consequence of the need to relocate dwelling and farm management facilities as a consequence of the acquisition - compensation properly claimable under the statutory disturbance provisions - claim allowed RESUMPTION COMPENSATION - separate basis for consideration of improved access to Colorbond shed for farm management purposes - claim for access maintainable on a separate basis RESUMPTION COMPENSATION - claim for cost of investigation of removing existing dwelling to new location on the retained property – dwelling not moved – costs not claimable RESUMPTION COMPENSATION - claim for cost of plans and associated statutory and administrative fees - claim separate from the claim for the cost of the new dwelling - proper basis to claim these costs - claim allowed. RESUMPTION COMPENSATION - claim for lost rent - claim for reduction in rent because of proposed acquisition of dwelling for the public purpose - claim for compensation for reduction in rent valid - claimed reduction to be adjusted to ensure compensation was for the net loss of rent after having regard to past gross rent including agent’s fees and commission - claim for lost rent after acquisition for period up to proposed resumed occupation of dwelling by owner - income from resumed dwelling not compensable as acquisition price encompasses all future income potential from acquired land and fixtures thereon - second element of claim (for future potential income foregone) rejected. RESUMPTION COMPENSATION - costs of loan establishment and drawdown interest for construction of replacement facilities on retained property - statutory regime provided for the payment of interest - statutory regime is exhaustive - interest and loan establishment fee claim rejected
Legislation Cited:	Ballina Local Environmental Plan 2012 Civil Procedure Act 2005, s 63(1)(a) Environmental Planning and Assessment Act 1979 Land Acquisition (Just Terms) Act 1991, ss 49, 55 and 59(1) Land Acquisition (Just Terms Compensation) Amendment Act 2016 Land Acquisition (Just Terms Compensation) Bill 1991 Land Acquisition (Just Terms Compensation) Bill (No 2) 1991
Cases Cited:	Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Hornsby Shire Council v Malcolm (1986) 60 LGRA 429 Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2017] NSWCA 188 Konduru T/as Warringah Road Family Medical Centre v Roads and Maritime Services; Konduru v Roads and Maritime Services; Konduru v Roads and Maritime Services [2017] NSWLEC 36 McDonald v Roads & Traffic Authority of NSW (2009) 169 LGERA 352; [2009] NSWLEC 105 Moloney v Roads and Maritime Services (No 2) [2017] NSWLEC 68 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Roads & Traffic Authority of NSW v McDonald (2010) 175 LGERA 276; [2010] NSWCA 236 Speter v Roads and Maritime Services [2016] NSWLEC 128 Sydney Water Corporation v Caruso [2009] NSWCA 391 Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161
Category:	Principal judgment
Parties:	Michele Antonio Melino (First Applicant) Tonina Maria Melino (Second Applicant) Domenica Margherita Fox (Third Applicant) Anna Colomba Bufalino (Fourth Applicant) Roads and Maritime Services (Respondent)
Representation:	Counsel: Mr I Hemmings SC/Ms A Pearman, barrister (Applicants) Dr S Pritchard SC/Mr N Eastman, barrister (Respondent)   Solicitors: Stacks Law Firm (Applicants) Clayton Utz (Respondent)
File Number(s):	342887 of 2016
Publication restriction:	No

Contents

Judgment

Introduction

The statutory framework for compensation

In whose names should the proceedings be conducted?

Introduction

Ms Melino's access to documents

The 7 September mention and outcome

The Melino family claims

The Melino family landholding

The severed land

The site and valuers’ sales evidence inspection

The hearing

Injurious affection

Introduction

Injurious affection and the eastern landholding

The Just Terms Act and the western element injurious affection claim

The relevant geography

Extent of injurious affection, western element of Melino landholding

The proposed new dwelling, the cattle yards and the Colorbond shed claim

Introduction

The Melino position

The RMS response

Consideration

The low-level roadway

Building design costs, development application and other regulatory costs

Costs of the abandoned proposal to relocate the existing dwelling

The lost rent claim

The loan establishment fee and interest claim

Other s 59(1) claims

Conclusion

Directions

ANNEXURE A

ANNEXURE B

ANNEXURE C

ANNEXURE D

Judgment

Introduction

1. Roads and Maritime Services (the RMS) have been undertaking an extensive construction programme, over many years, to turn the Pacific Highway into a dual carriageway highway as far as the Queensland border. Construction to fulfil this project will continue for a number of years into the future. To enable the RMS to undertake this project, various parcels of land have needed to be acquired, compulsorily, along the project’s route, a route which, for a deal of its length, does not follow the alignment of the existing Pacific Highway.

The statutory framework for compensation

2. When land is acquired for such purposes, the dispossessed owners are entitled to compensation for the acquisition of the land that is taken from them. The framework for determining the compensation to which such dispossessed landholders are entitled is provided by the Land Acquisition (Just Terms) Act 1991 (NSW) (the Just Terms Act). This legislation, a number of provisions of which require to be considered in these proceedings, provides, in s 55, the various categories of compensation to which a dispossessed landholder may be entitled, depending on establishing a proper basis for compensation, arises for the particular dispossession. The available heads of compensation are set out in s 55 in the following terms:

55   Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(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)   the disadvantage resulting from relocation,

(f)   any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

In whose names should the proceedings be conducted?

Introduction

3. On Monday, 4 September 2017, an application was made to the Registrar of the Court for permission to examine the Court file in this matter. That application was made by Ms Rosa Melino. She gave as her reason for seeking such access the following explanation:

I am beneficiary in this estate and have not been informed of Court case. As the above brother is not keeping other beneficiaries informed, we need to know what is the outcome as there is some compensation to be paid to beneficiaries.

4. As the hearing had concluded, and I had not only reserved my decision but had advised the Court's Listings Manager that it was my intention to hand down my decision on the afternoon of Thursday, 7 September 2017, Ms Melino's application was referred to me to advise the Registrar on the appropriate response to be made. I concluded that there were two steps properly to be taken.

5. The first of them was to arrange for access to be given to Ms Melino to the publicly available documents which had come into evidence during the course of the trial (a little more needs to be said about this process, below, as the trial had been conducted as a paperless one) and to defer the giving of my decision until I had been able to resolve the question of in whose names the proceedings should have been conducted and whether it was necessary to make any amendments by invoking the powers available to me under s 63 and/or s 64 of the Civil Procedure Act 2005 (the Civil Procedure Act).

6. As to clarifying the procedural position, I had my Associate notify the legal representative of the nominated Applicants and the legal representative of the RMS that the matter was set down for mention on the Thursday afternoon. This arrangement, self‑evidently, caused me to defer the handing down of judgment in this matter. My Associate’s advice to the legal representatives was in the following terms:

His Honour has asked me to advise you that, yesterday, a person attended the Court's Registry seeking access to documents on the Melino file.  The basis upon which access was sought was that the person was a beneficiary under the will of the late Costanzo Melino but was not a party to the proceedings and was not being kept informed about, or had any detailed understanding of, the proceedings being conducted.

Under these circumstances, despite the fact that his Honour had expected to deliver judgment in these proceedings in the very near future, his Honour considers that it is not appropriate to do so until the question of who might properly be the applicants in the proceedings has been clarified.

If the appropriate applicant is the Estate of the Late Costanzo Melino, his Honour would be in a position to exercise his powers pursuant to s 63 and/or s 64 of the Civil Procedure Act 2005 to substitute that name for the names of the four members of the Melino family who are presently nominated as the Applicants in the proceedings.  That would require his Honour to be satisfied that the application has been made, appropriately, by those persons who are the executors of the estate.

His Honour has listed this matter at 4.15 pm on Thursday 7 September 2017 to enable this issue to be addressed.

Ms Melino's access to documents

7. I also requested the Court's Assistant Registrar to e-mail Ms Melino informing her of arrangements I proposed for her to be able to access the publicly available elements of the Court file, elements that were held electronically. That e-mail also incorporated a copy, for her information, of the text of the e‑mail that my Associate had sent to the legal representatives of the parties.

8. For abundant caution, I asked the Assistant Registrar to telephone Ms Melino and advised her that the e-mail had been sent, as I wished to ensure that she had maximum notice of the mention set for Thursday, 7 September 2017 should she wish to attend. During the course of the Assistant Registrar’s phone conversation with Ms Melino, after the e-mail had been despatched, Ms Melino advised the Registrar that there was a further beneficiary to the estate of the late Costanzo Melino who was not one of the nominated Applicants in these proceedings. Ms Melino said that that person, like her, was another daughter of the late Costanzo Melino. Ms Melino requested that the Assistant Registrar make contact with her sister, who lived in Queensland, and advise her of what had occurred. The Assistant Registrar indicated that this was not appropriate but that Ms Melino would be free to convey, herself, such information as she would obtain after her examination of the Court’s file.

9. To enable Ms Melino to have appropriate access, she was requested to make contact with my Associate so that access could be arranged in my courtroom under the supervision of my judicial researcher. An appointment was subsequently made and Ms Melino attended to examine the electronic files.

10. She was assisted to access the documents held on the USB thumb drive that was Exhibit A in the proceedings. This access was provided on a computer disconnected from the Court’s network system. Ms Melino was assisted by my judicial researcher to the confined extent of enabling her to understand the nature of the documents that were being made available for her inspection, but no information was provided to her, informally, by my researcher, concerning how the trial had been conducted or what had taken place during it. Ms Melino was, however, offered access to an electronic copy of the transcript of the two-day hearing at Ballina Court House and the final day of submissions in Sydney.

11. Ms Melino requested copies of a number of documents from those that were publicly available and these were subsequently provided to her, electronically, by e-mail.

12. During the course of the supervised inspection, Ms Melino indicated that she was unable to attend the scheduled mention on Thursday, 7 September 2017 because of a prior commitment. When I was informed of this, I had her advised, in the e-mail that transmitted the copy documents to her, that if she wished to e-mail any comments to me for my consideration, and the consideration of the legal representatives of the parties, I would make those comments available at the scheduled mention. Ms Melino did provide a response which I provided to the parties’ representatives. The response did not seek further action on my part.

The 7 September mention and outcome

13. At the mention, Mr Dunn, solicitor for the Applicants, advised me that the four members of the Melino family, in whose name the proceedings had been commenced, were the four executors of the will of the late Costanzo Melino. He tendered a copy of the sealed order of the Supreme Court which confirmed that this was the position. (Incidentally, this single sheet of paper became Exhibit B, the sole paper exhibit in the proceedings!).

14. I indicated that I considered it prudent to exercise the discretion given to me by s 63(1)(a) of the Civil Procedure Act and amend the terms of the application so that it was made expressly clear that the proceedings were brought by the four nominated members of the Melino family, in their capacity as executors representing the estate rather than as individual claimants. Mr Dunn raised no objection to this course. I therefore ordered that:

1. Pursuant to Section 64(1)(a) of the Civil Procedure Act 2005 that, in lieu of the proceedings being conducted in the name of the four presently nominated applicants as individuals, the proceedings be amended to be conducted by those four named individuals in their capacity as executors of the Estate of the late Costanzo Melino.

15. As Ms Rosa Melino had not been able to attend the mention, I had the Court's Assistant Registrar e-mail her advising her that I had made this order.

The Melino family claims

16. For the purposes of these proceedings, the claims made by the Melino family interests fall to be considered as to whether they are available pursuant to s 55(a), (c), (d) or (f) or not. To the extent that a claim arises for disturbance pursuant to s 55(d), such a claim engages the terms of s 59(1) which sets out the various categories of claim able to be sustained under the heading of “Disturbance”. The relevant portion of s 59(1) reads:

59   Loss attributable to disturbance

(1)   In this Act:

loss attributable to disturbance of land means any of the following:

(a)   legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,

(b)   valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),

(c)   financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),

(d)   stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired),

(e)   financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage),

(f)   any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

The Melino family landholding

17. The Melino family has been farming land at Wardell, south of Ballina and on the northern bank of the Richmond River, for at least the past 40 years. Mr Costanzo Melino, the late father of the Applicants in these proceedings, resided on the eastern portion of the Melino landholding until, as a result of his advancing years, he needed to take up residence in a nursing home.

17. I have been informed that when Mr Costanzo Melino died, he left his landholding to be divided amongst his children. His son, Mr Michele Melino (referred to hereafter as Mr Melino), was left the eastern portion of the landholding, whilst the western portion was shared amongst his other children.

18. It will be necessary to consider, later, in some detail, the nature of the overall landholding; the relationship between the eastern and western portions of the landholding; the nature of the land uses of each of the portions of the landholding; and the impact of the route of the new element of the Pacific Highway that has resulted in a strip near the eastern edge of the eastern portion of the landholding being compulsorily acquired for road construction purposes. The nature of the road construction, relative to each of the eastern and western portions of the Melino landholding, is described in more detail later.

19. It will also be necessary to consider the extent to which the future construction of this section of the Pacific Highway upgrade project will injuriously affect the eastern and western portions of the Melino landholding; the extent to which compensation is payable for such injurious affection (both as to extent and as to legal entitlement) and the rate at which such compensation as might be due should be paid.

20. Reproduced as Annexure A to this decision is an A4, marked-up air photo showing both the eastern and western elements of the Melino landholding, post-acquisition.

The severed land

22. A portion of the eastern element of the Melino landholding to the east of the Pacific Highway upgrade project has been severed from the remainder of this element of the Melino landholding by the acquisition. The valuers (Mr Frogley, the expert valuer giving evidence on behalf of the Melinos, and Mr Hamilton, the expert valuer giving evidence on behalf of the RMS) have agreed that this island portion was worth $10,000 per hectare prior to acquisition and $250 per hectare post-acquisition.

23. As the consequence of this agreement, no matters remain to be determined concerning this portion of the eastern element of the Melino landholding.

The site and valuers’ sales evidence inspection

24. At the commencement of the hearing, the first day was given over to an inspection of the eastern and western portions of the Melino property and drive-by inspections of some of the sales relied upon by the valuers. Although the valuers had relied upon a broader range of sales for the purposes of their individual expert reports, the inspection did not encompass all of the sites upon which each of them relied.

25. The day commenced at the entrance to the eastern portion of the Melino landholding. As is able to be seen from the marked-up air photo reproduced as Annexure A showing the route of the new Pacific Highway across the eastern portion of the Melino landholding and the extent of the land resumed from the Melino landholding for the purposes of highway construction, the highway will commence to traverse what had been the Melino land virtually at the point where the eastern section of the Melino landholding is entered from Back Channel Road.

26. The new Pacific Highway will be on an elevated structure spanning the river and the access road, some five metres above the access road. The consequence of this is that access to the eastern portion of the Melino landholdings will remain unaffected after the road is completed.

27. We then continued the drive into the eastern portion, stopping briefly at the site of what had been the Melino residence and the associated structures that had been located in its vicinity. These structures supported the Melino farming activities. The house, and these associated structures, had been acquired by the RMS as part of the compulsory acquisition and had subsequently been demolished.

28. From this location, we drove, on the internal roadway, to the location which has been identified by Mr Melino as the site on which he proposes to erect a replacement residence. Mr Melino has had erected a new Colorbond shed a little to the north of the identified new residence site. The shed is used for plant and equipment for Mr Melino’s farming activities. It replaces the storage facilities that formed part of the RMS acquired structures demolished post-acquisition.

29. Traversing the property to this house site and shed involved driving across approximately 150 metres of lower-lying land, including land which had cane fields on either side of it. We stopped at approximately the mid-point of this section of roadway to permit Mr Melino to explain the reasons why he considered it was necessary to raise the roadway some 500 millimetres above its present level in order to provide access to the house site (and Colorbond shed noted above) in a fashion that minimised (but did not entirely eliminate) future instances where such access would be impossible as a consequence of the low-lying cane and grazing lands being inundated by flooding after rain events. Mr Melino explained that he had undertaken some preparatory work but more required to be done to meet Ballina Shire Council’s (the Council) access requirements (Affidavit of Michele Melino of 4 July 2017). Entitlement to compensation for the past raising of the road, and the intended additional raising of this road, is a matter of contest between the parties, as is the quantum of such compensation (if I was to find such an entitlement arose).

30. We then proceeded to the location at the end of this road, at the south‑western corner of this eastern portion of the landholding, where:

1. Mr Melino has had erected the substantial, new Colorbond farm shed; and

2. there is, nearby, a slightly more elevated house site on a grassy knoll overlooking the Richmond River and separated from the river by a thin wetland strip.

31. The claim for compensation to provide for the construction of this proposed dwelling, and all the ancillary and associated costs that would go with that (provision of a power supply to the proposed dwelling, for example), is in contest between the parties, as is, if there was any entitlement to such compensation, the quantum of that compensation. A similar dispute arises concerning the cost of the Colorbond shed.

32. During our return to the point where the now-demolished dwelling had been located, we stopped at a set of substantial, new, modular steel cattle yards that had been erected on the higher ground at the eastern end of the earlier-described, less elevated roadway across the flatland of this portion of the Melino landholding. An issue concerning the cost of these cattle yards (ones which replaced cattle yards that had been located near the former house but which had also been demolished) is also the subject of a dispute as to entitlement to, and quantum of, compensation.

33. From this location, we drove along a rough bush track toward the north‑western corner of this portion of the Melino landholding. From the point where this track became impassable for our minibus (being, in essence, at the north-western corner of the cleared land on this element of the landholding), we walked some hundreds of metres up a road (of what might be described as good fire-trail standard), through the bush toward the western portion of the Melino landholding.

34. We walked along this track until we reached the boundary of the eastern portion of the Melino landholding where it abuts a landholding described as Lot 96, Deposited Plan 755691, owned by a Mr Rigby. The Melinos have had, for several years, a “grace and favour gentleman's agreement” with Mr Rigby that has permitted the Melinos to use the continuation of this road as it traversed what is now Mr Rigby’s landholding to link the eastern and western portions of the Melino landholding. This has facilitated the movement of cattle between the two elements of the landholding and to provide (at least) four-wheel-drive access between the two elements of the landholding. The distance required to be traversed across Mr Rigby's landholding for this purpose is some 250 - 270 metres. There are two observations to be made concerning this:

1. First, without this permission to traverse the 250 - 270 metres of track through the bush, it would be necessary to drive some eight kilometres along public roads to move between the eastern and western portions of the Melino landholding; and

2. There is an unmade (and not presently usable), dogleg-shaped “paper road” running to the north from the north-western corner of the eastern portion of the Melino landholding and turning to the west, at right angles, in a fashion that continued up to, and then between, elements of the western portion of the Melino landholding toward its southern end.

35. As an aspect of the injurious affection claim made by the Melinos concerning the impact of the new highway on the western portion of the Melino landholding, how this connecting, informal access is to be regarded for the purposes of satisfying a statutory test mandated by the Just Terms Act requires later, detailed consideration.

36. It was Mr Melino's evidence that, although the “paper road” was now unable to be traversed, it had, prior to storm damage several years ago, been able to be used to transit between the two elements of the Melino landholding. Portion of a marked air photo tendered for the RMS is reproduced below (not to any particular scale), showing the relevant boundaries of the Melino landholdings (in blue); a general depiction of the alignment of the track through Mr Rigby's landholding (shown in yellow); and the alignment of the “paper road” (shown in pink):

37. After returning to our minibus, we drove the over eight kilometres to access the western portion of the Melino landholding.

38. After our arrival at the western portion of the Melino landholding, we walked up a slope to the top of a ridgeline to a point approximately in the middle of the east-west dimension of this landholding and at approximately the “paper road” dividing Lot 38 in Deposited Plan 755691 (this being the most northern element of the western portion of the Melino landholding) and Lot 1 in Deposited Plan 523854 immediately to the south of Lot 38 and separated from it by this “paper road”. At this point, a power line traverses the western portion of the Melino landholding, running in a north-south alignment, providing a ready power supply to any dwelling which might be erected in the vicinity of where we stood atop the ridgeline.

39. It is not contested that, to permit the construction of a dwelling at some future time, Lot 1 and Lot 38 would need to be consolidated in order to provide a landholding of sufficient area to satisfy the minimum allotment size required by the Council under the Ballina Local Environmental Plan 2012 (the BLEP 2012) necessary to attract such an entitlement. As part of the dispute between the Melinos and the RMS concerning the claim for compensation for what is said to be the injurious affection to the western portion of the Melino landholding, Mr Frogley and Mr Hamilton were in dispute as to the extent to which there might be injurious affection to Lots 1 and 38 and, if there was such injurious affection, what diminution of value should be found to have been occasioned to each of these two allotments.

40. After leaving the western portion of the Melino landholding, we then undertook drive-by inspections of eight properties relied upon by Mr Frogley and/or Mr Hamilton for comparative purposes to demonstrate what each of them said provides a foundation for his conclusion as to the percentage reduction in value to be applied (whether in whole or in part, also being in dispute) to the western portion of the Melino landholding. Given my conclusion as to the unavailability at law (and as a matter of fact) of a claim for injurious affection for the northern portion of the western element of the Melino landholding, it is unnecessary to set out any detail concerning these inspected sites.

The hearing

41. After the full day's inspection, a two-day hearing of the evidence in the proceedings was held at Ballina Court House. On the day after the completion of the hearings in Ballina, closing submissions were heard in Sydney.

42. During the course of the Ballina hearings, evidence was given on behalf of the Melino family by:

• Mr Melino (who also provided three affidavits read in the proceedings); and

• Mr Neale Frogley, an expert valuer.

43. Evidence was given for the RMS by:

• Mr Laurie Hamilton, an expert valuer; and

• Mr Tony Makin, an expert quantity surveyor.

44. Each of the expert witnesses provided written evidence by one or more written reports, whilst Mr Frogley and Mr Hamilton had conferred and produced a joint expert report.

Injurious affection

Introduction

45. Injurious affection arises when an owner of land’s ability to exercise the right of quiet enjoyment to their property is adversely impacted by the carrying out, in the context of the Just Terms Act, a “public purpose”, and where the “public purpose” has necessitated the acquisition of part of the landowner’s holding. In these circumstances, the Just Terms Act creates a statutory right to compensation for the injurious affection contained in s 55(f), a provision which reads:

(f)   any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

46. In these proceedings, the claim is made for compensation for injurious affection of both the eastern and western portions of the Melino landholding.

47. The RMS concedes that there is compensable injurious affection to the eastern portion of the Melino landholding (although there are differences concerning how the injurious affection impact falls and, consequently, how compensation for it should be calculated).

48. Such a concession is not made by the RMS with respect to the western portion of the Melino landholding. The RMS resists the claim for compensation for injurious affection for the entirety of the western element on two bases.

49. First, the RMS says that, as a matter of proper interpretation of the relevant provision of the Just Terms Act, there can be no entitlement to compensation for injurious affection for this land, even if injurious affection was to be established as occurring for any portion of that land.

50. Second, the RMS says that, even if the statute does permit a claim for injurious affection to this portion of the Melino landholding, there has, as a matter of fact, been no such injurious affection and, therefore, questions of calculation and awarding of compensation do not arise as a practical matter.

Injurious affection and the eastern landholding

Introduction

51. Although, initially, Mr Frogley and Mr Hamilton did not agree as to what should be regarded as the highest and best use of the eastern portion of the Melino landholding, by the end of the oral evidence Mr Frogley had agreed with Mr Hamilton's characterisation that the highest and best use of this portion of the landholding was one which had a number of facets and, as a consequence, the overall highest and best use of this land was one which incorporated differing uses (as at the date of acquisition) across varying portions of the land. In summary, these components of the overall mixed use can be described as:

1. The cane fields (being an area of approximately 40 hectares in size and of a generally triangular shape with the apex of the triangle being toward the north-western corner of the eastern landholding);

2. The grazing lands which comprise the remainder of the cleared lands on this portion of the eastern element of the Melino landholding. The grazing lands incorporate the grassy knoll at the south-western corner of this element of the Melino landholding, with this being the location of the identified site for the proposed new dwelling;

3. The woodland area along the north-eastern boundary of this portion of the Melino landholding, being an element of the landholding which is contiguous with the boundary of the land acquired by the RMS, together with a small woodland element at the north-western corner of this element of the Melino landholding; and

4. Wetland areas to the west of the cane fields (the predominant wetland area) and a smaller patch of wetlands along the southern boundary of this element of the Melino landholding and adjacent to the Richmond River.

52. Mr Hamilton and Mr Frogley agree that it is appropriate to aggregate the grazing lands and the woodland areas under the general descriptor as constituting “lifestyle lands”; they agree that the cane fields and the wetlands should be regarded as the second and third categories of use, which, together with the “lifestyle lands”, constitute the mix giving rise to the highest and best use, overall, of the eastern element of the Melino landholding.

53. In this context, it is not necessary to deal with the fact that, pre-acquisition, the house on this element of the Melino landholding was tenanted. This is dealt with later.

54. The overall area of the eastern element of the Melino landholding, in the before, is approximately 108 hectares. I have earlier observed that the cane fields comprise approximately 40 hectares. Mr Hamilton and Mr Frogley agree, in the before, that the “lifestyle lands” comprise approximately 50 hectares and the remainder, 18 hectares, comprise the wetlands. In the after, Mr Hamilton and Mr Frogley agree that the cane fields and wetlands remain approximately the same, whilst the remaining “lifestyle lands” comprise approximately 35 hectares.

Injurious affection and the “lifestyle lands”

55. Mr Hamilton and Mr Frogley agree that it is appropriate to apply a 35% reduction in the value of the “lifestyle lands” to reflect the diminution in amenity that will arise as a consequence of the visual prominence of the new elevated roadway and river crossing, when coupled with what will be the acoustic impact of the significant daily volumes of traffic that will pass along this roadway. They also agree on the initial rate per hectare, pre-acquisition, as the value of this land and, hence, agree on the reduction in value resulting, finally, in agreement as to the compensation for injurious affection arising from the impact on the “lifestyle lands”.

Injurious affection of the cane fields

56. Mr Hamilton and Mr Frogley agree on the pre-acquisition value per hectare of the cane fields. They do not, however, agree about whether or not this land will suffer injurious affection as a consequence of the construction of the new highway.

57. Mr Frogley’s position is a simple one, namely, that the injurious affection falls evenly across the whole of the eastern element of the Melino landholding and that a uniform 35% reduction in value should be applied to the derived value for each category of land within this element of the Melino landholding.

58. Mr Hamilton does not accept this proposition. Although, as earlier noted, Mr Hamilton and Mr Frogley agree to the rate per hectare to be applied to the cane fields, Mr Hamilton says that there is no injurious affection to this land, and therefore no compensation arises with respect to it.

59. Before turning to consider what is the appropriate resolution of this dispute, it is to be observed that neither Mr Frogley, nor Mr Hamilton, was able to find any sales of cane fields where those cane fields were located in proximity to the Pacific Highway upgrade project. There is, therefore, no comparative sales’ evidence available to be considered between such impacted land and cane fields sold where there was no such potential for impact.

60. Mr Hamilton set out, in his statement of evidence, his analysis of the sales of five properties that were either fully developed for the production of sugarcane, or were sufficiently given over to that purpose, that their value should be regarded as being derived from cane-growing as the highest and best use being for that purpose. Mr Hamilton analysed each of these sales for the purposes of deriving the value that he ascribed to the cane fields’ portion of the eastern element of the Melino landholding. In his analysis, he made adjustments, as is conventionally the case for professional valuers exercising their skills.

56. The headings pursuant to which Mr Hamilton made adjustments (with the adjustments varying between the sales being analysed) were for market movement, area, location, and shape and topography. With respect to his adjustments for location, these were based on the distance of each of the sale properties from Ballina as its relevant significant centre of population and services. He explained that this adjustment reflected the fact that a person farming the cane might choose to live in Ballina and travel to and from the land farmed for sugarcane. Adjustments for market movement and area do not assist in addressing the issue of injurious affection. For these latter adjustments, questions of amenity or ambience of the cane fields do not arise.

57. However, the shape and topography adjustments that Mr Hamilton made were ones that related to such aspects of the cane fields, such as proximity to the river; views across the river to Pimlico Island (this, apparently, being regarded locally as a desirable aspect of an outlook); and proximity to the ocean.

58. With respect to these elements of Mr Hamilton's adjustments, Mr Hemmings SC for the Applicants rhetorically put it that “the cane doesn't care about views and outlook” (or indeed, proximity to a road such as the Pacific Highway upgrade project).

59. I am satisfied that such aspects arise from an anthropocentric appreciation of the attributes of the land. They, in the absence of any impacted dwelling, clearly arise out of how those attributes contribute positively to the experience of those farming those cane fields when they attend and work the land for the purpose of sugarcane-growing. Although Mr Hamilton was not prepared to concede the truth of this proposition, it is an inevitable conclusion to be reached when there is no other rational explanation as to why there should be an incorporated element of the value of those lands, a variable element, that arises from what can only be seen as the visual ambience of, and from, those lands.

60. The consequence of this conclusion is that it must also necessarily follow that, when that broader ambience for those who farm cane fields is diminished by some adverse impact (injurious affection) on that ambience, that would be reflected in an adverse impact on the value of that land. If that conclusion is to be drawn (and I am satisfied that it must), then that conclusion must equally be drawn with respect to the cane fields’ portion on the eastern element of the Melino landholding being adversely impacted by the Pacific Highway upgrade project.

61. The conclusion that the Pacific Highway upgrade project must have an adverse impact on the cane fields (such a conclusion being reinforced by the fact that there is accepted by Mr Hamilton of the existence of such injurious affection on land on each side of these cane fields) does not automatically mean that this mandates the adoption of the same percentage diminution of value of the cane fields as has been agreed by Mr Hamilton and Mr Frogley to be appropriate to be applied to the “lifestyle lands”.

62. This is an area where I, as the judicial valuer, am obliged to do as best I can with such limited evidence as I might have to assist me on this point. In considering this, I have no evidence concerning (nor do I have any “life knowledge” of) cane-farming. However, it was evident from both the established cane fields on the Melino landholding, and the established cane fields we observed during portion of the other site inspection elements, that whenever a cane crop was substantively established on the cane fields, it would be highly unlikely that the owner of the land would be strolling through the dense growth of the cane fields in order to enjoy such ambience as might be suggested should be derived from such an experience.

63. As we also observed during the course of other elements of the inspection, when cane-harvesting activities could be seen being undertaken, there is quite an intensive human presence on the cane fields after it has been prepared for harvesting and harvesting has commenced. During this period, it is reasonable to assume that the sugarcane farmer, and those assisting her or him in the harvesting activities, would partake of enjoyment of the ambience of that sugarcane land for such period as those activities were being undertaken.

64. I have no evidence or knowledge as to the extent of the subsequent human activities, post-harvest, that are necessary for land preparation for the establishment of the next cropping cycle for such land (nor, whether such cropping cycle is annual or at some other greater or lesser frequency). However, it seems to me to be reasonable under the circumstances to conclude that there must necessarily be at least some ancillary farming activities required to be undertaken after harvest for the preparation of the land for the next crop (or, if the land is to be taken out of production for rotation purposes and put to legume for soil replenishment purposes, as seemed to be the case of several cane fields we passed during the inspection). It follows that there would be human activity in those cane fields, to some extent, for such purposes.

65. Whilst that which I have set out above is the limit of the basis upon which I can make a judicial valuer’s assessment of the extent of the injurious affection on the cane fields, it seems to me that it must necessarily be less extensive as a diminution of value than arises from what Mr Hamilton and Mr Frogley have agreed should be regarded as the “lifestyle lands”. The “lifestyle lands” can, in general terms, be enjoyed throughout the year, contrary to the position with the cane fields.

66. It would seem to me likely that the practical restriction on the quiet enjoyment of the cane fields in the same fashion, as would be the position for the “lifestyle lands”, would occur for, perhaps, a little less than half of each year. As a consequence, doing the best I can on the scant information available to me to make some passingly informed assessment of the injurious affection impact on the cane fields, I have concluded that (taking a Sydney Water Corporation v Caruso [2009] NSWCA 391 (Caruso)) approach to adopting the more favourable position to the dispossessed owner when there are rationally available alternative conclusions), the cane fields will suffer a 17.5% reduction in value (being half the rate for the “lifestyle lands”) as a consequence of injurious affection occasioned by the Pacific Highway upgrade project. This percentage should be applied to the agreed per hectare value to the 40 hectares identified as cane fields to derive an amount of injurious affection compensation for this portion of the eastern element of the Melino landholding.

Injurious affection and the wetlands

72. Mr Frogley and Mr Hamilton agree that there are approximately 18 hectares of wetlands in the eastern element of the Melino landholding. They also agree that the unaffected land value of the wetlands was $5,000 per hectare before the acquisition by the RMS and the future impact of the Pacific Highway upgrade project.

73. Mr Frogley, as earlier noted, proposes that there should be a uniform application of an injurious affection factor of 35% across the whole of the eastern element of the Melino landholding. I have explained, in the above section dealing with the sugarcane land, why I consider that this approach is inappropriate and simplistic.

74. At the commencement of this chapter dealing with injurious affection, I set out how I understood this concept was derived with respect to the quiet enjoyment of the land that was available (without the impact of the Pacific Highway upgrade project) and how the ability to enjoy the land would be adversely impacted by the carrying out of that Pacific Highway upgrade project. This has led me, for the reasons explained, to derive a differential injurious affection value for the sugarcane land but, nonetheless, to derive a value for such an impact, despite Mr Hamilton's view that no such impact arises.

75. The wetlands are, as I understand the evidence, mangrove wetlands and are places where it is unlikely that they will be subject to regular (if any) visitation by occupiers of this portion of the Melino landholding or by the occupiers’ guests.

76. From the limited view I had of them when looking to the south-east from the identified new prospective home site, they did not appear to provide opportunities for casual strolling to enjoy the ambience of this element of the Melino landholding (whether before or after the carrying out of the Pacific Highway upgrade project). Under these circumstances, where Mr Frogley has provided no express justification for why such an injurious affection impact should be found to fall upon the wetland area (with those making such a claim having a persuasive burden to establish a proper basis for meeting that claim), I am unable to find any satisfactory basis upon which I could conclude that there is any injurious affection of the wetlands areas.

Conclusion concerning the eastern element of the Melino landholding

77. It therefore follows that, in summary, compensation is due to the Melinos on the basis of a 35% diminution of the agreed value of the “lifestyle lands”; compensation at the rate of 17.5% diminution of the agreed value of the sugarcane land; and no compensation for injurious affection arising in respect to the wetlands forming part of the eastern element of the Melino landholding.

The Just Terms Act and the western element injurious affection claim

The statutory test

78. I have earlier set out the terms of s 55 of the Just Terms Act, the provision that establishes the six broad headings under which compensation may arise when a public authority compulsorily acquires land to carry out a public purpose. Relevant to this aspect of the Melino family claim is s 55(f) which defines the circumstances under which a claim for injurious affection of land remaining in the ownership of a dispossessed party can be made. It is appropriate to repeat the provision as it imposes a statutory test which requires to be considered in these circumstances. Only if the test is satisfied with respect to the western element of the Melino landholding can the claim for injurious affection compensation be sustained. The provision reads:

55   Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(f)   any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

79. Relevantly, in the first instance, that which requires to be considered is whether or not the western element of the Melino landholding satisfies the requirement that it “adjoins” the eastern element of the Melino landholding. The claim for injurious affection for the western element of the Melino landholding can only succeed if this element does “adjoin” the eastern element on a proper understanding of the use of the word “adjoins” in s 55(f).

The relevant geography

80. The air photo in Annexure A shows two aspects (one being uncontroversial) relevant to consideration of the meaning of the word “adjoins” in this statutory and geographic context.

81. First, it can be seen that the western element of the Melino landholding is fragmented. In land title terms at the date of acquisition, it comprises three allotments. These are:

1. Lot 38 in DP 755691;

2. Lot 1 in DP 523854; and

3. Lot 2 in DP 523854.

82. As can be seen, Lot 38 is separated from Lot 1 by a paper road. Lot 1 has a common boundary with one of the portions of Lot 2. Lot 2, itself, is internally fragmented, with the fragments separated by either paper roads or, as the most northern of the divisors of Lot 2, the constructed public road known as Old Bagotville Road.

83. For the purposes of considering s 55(f) of the Just Terms Act, the RMS concedes that each of the portions of the western element of the Melino landholding “adjoins” another, relevant element of this landholding so that, for the purpose of the statutory test, the whole of the western element of the Melino landholding can be treated as a unitary whole for the purposes of this statutory provision.

The status within the western element of the Melino landholding

84. Although the decision of the Court of Appeal, in Hornsby Shire Council v Malcolm (1986) 60 LGRA 429 (Hornsby), concerning the meaning of the word “adjoins” was made in the context of interpreting a State Environmental Planning Policy (being an environmental planning instrument) made under the Environmental Planning and Assessment Act 1979, the Court of Appeal's determination was that land in one land use zone could adjoin land in another, different land use zone in circumstances where the two parcels of land are separated by only a public road. It is clear from a reading of the judgments in Hornsby that the reasoning would, in my assessment, inevitably be applied in these analogous circumstances to the western element of the Melino landholding leading to its treatment as a unitary whole for these purposes. The concession by the RMS on this aspect is, self-evidently, both proper and pragmatic.

RMS and the relationship between the two elements of the Melino landholding

85. However, the position as to whether the western element of the Melino landholding, taken as a whole, “adjoins” the eastern element of the Melino landholding is not conceded by the RMS. It therefore falls to me to determine, in this factual context, whether the western element “adjoins” the eastern element, thus triggering the need for an assessment of the compensable extent (if any) of injurious affection to the western element of the Melino landholding as a consequence of the Pacific Highway upgrade project.

86. There are two connections between the two elements of the Melino landholding. I have earlier set out, at [34] to [36], a brief description relevant to this issue and inserted an extract of a marked-up air photo illustrating that explanation. It is unnecessary to repeat that material.

The connection between the two elements of the Melino landholding

87. It is clear that the eastern element of the Melino landholding is connected to the western element, in a legal sense, by the dogleg-shaped paper road shown on the air photo, marked in pink at [36]. It is also the fact that, for practical farm management purposes, there is also the functional connection along the grace-and-favour track across Lot 97 in Deposited Plan 755691 owned by Mr Rigby, marked in yellow at [36]. The distance of the connection along the paper road is some 330 - 350 metres, measured along its mid-point, whilst the distance along the functional access track is approximately 250 - 270 metres.

88. It is in this context that it is necessary to consider whether or not, in this statutory test context, the western element of the Melino landholding “adjoins” the eastern element.

Statutory and dictionary resources

89. First, it is to be observed that the Just Terms Act, itself, provides no assistance. The word “adjoins” is used in s 55(f) but is not elsewhere defined, nor is it repeated elsewhere in the statute.

90. It is appropriate to have cautious regard to dictionary definitions of the word (the need for caution being explained, recently, by Basten JA in Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2017] NSWCA 188 at [77] – [78]):

77.    … Resort to dictionaries to determine the meaning of a word used in a legal context is rarely favoured. Such judicial disfavour is not a result of some dismissive or precious attitude towards the compilers of dictionaries. The point is rather that dictionaries reflect common usage and common usage may not be reflected in a particular statutory context. Thus, it used to be said that the ordinary meaning of a word, other than a technical term, is a question of fact, whereas the construction of the statutory provision in which the word is found is a question of law. Since Collector of Customs v Agfa-Gevaert Ltd that distinction is no longer applied. As explained by Lord Hoffmann in R v Brown, referred to in Agfa-Gevaert:

“The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole.”

78.    That is not to say that dictionaries may not be helpful, or are not used, although they are rarely referred to in judgments. Their function is, however, limited.

91. I turn, first, to reproduce the definition from the Macquarie Dictionary (that being the preferred dictionary source. This definition of “adjoin” reads:

verb (t) 1.  to be in connection or contact with; abut on: her house adjoins the lake.

–verb (i) 2.  to lie or be next, or in contact: the two houses adjoin.

92. Second, I turn to the Oxford English Dictionary to reproduce its definition of “adjoin”. This definition is in the following terms:

2.

a. trans. To be located next to or very near (a thing, place, or person); to be adjacent or contiguous to; (also) to be physically joined, attached, or connected to.

b. intr. To be located next to or very near a specified or implied location; to be adjacent or contiguous. Sometimes: spec. to share a common border.

93. As can be seen from these two definitions, it is possible for two parcels of land to adjoin without abutting or being contiguous (in the sense that contiguity was recently explained in North Sydney by Basten JA between [60] and [106]). However, these dictionary definitions provide little assistance in the present context as to what distance might permissibly separate two parcels of land so that the relationship between them might be such that each should be regarded as continuing to adjoin the other.

94. I have, therefore, turned to the library on the website of Parliamentary Counsel for New South Wales to see what might be found elsewhere in the statutory lexicon of this state. There are 27 enactments in the “in force” collection which use the word “adjoins”. An examination of them shows that the word is used in a variety of fashions, with some having the necessary contextual implication that “adjoins” means “abutting” or “contiguous”, whilst others evince a more flexible (but not always precisely defined) meaning should be taken to the word’s use. Taken overall, there is no thematically consistent pattern, either from the nature of the legislation or the drafting era in which it was prepared by Parliamentary Counsel.

95. Next, I have turned to search the same library for the word “adjoining” to see whether, for the present purposes, the use of this expression in statutory drafting in this State could provide some assistance. There are 70 statutes currently in force which use this word; however, an examination of the context of its use in each instance shows that, across these statutes, the same range from precision to flexibility also exists. As a consequence, the use of “adjoining” can also provide no broad contextual assistance.

96. A list of the Acts in each category explored is set out in Appendix B.

97. I should observe, finally, that I have examined the Hansard transcript of the Second Reading Speeches on the introduction of the first version of this proposed legislation - being the Land Acquisition (Just Terms Compensation) Bill 1991. This legislation was introduced on 11 April 1991 by the (then) Deputy Premier, the Hon W J T Murray MP (Second Reading speech - Hansard, pages 1974 to 1979) and there is no mention of the relevant provision or the concept of “adjoining” in that transcript.

93. After the 1991 state election, the Bill was reintroduced as the Land Acquisition (Just Terms Compensation) Bill (No 2) 1991 on 2 July 1991 (Hansard, page 84). The Bill was reintroduced by Mr Murray, with a shorter Second Reading Speech explaining some minor drafting tweaking which had been made during the intervening period. This Second Reading Speech also makes no mention of the provision here being considered.

94. For completeness, although s 55 of the Just Terms Act was amended in 2016 by Sch 1[14] of the Land Acquisition (Just Terms Compensation) Amendment Act 2016, this amendment did not relate to s 55(f) of the Just Terms Act.

The parties’ submissions

100. Having undertaken this research to no practical utility, it is now appropriate to turn to the submissions made on behalf of the Melino family and on behalf of the RMS on this point.

101. The written submissions on behalf of the Melinos on this point were in the following terms (excluding footnotes):

The Adjoining Land

40. An entitlement to compensation arises under s 55(f) only if there is, relevantly, a decrease in value of other land of the dispossessed that "adjoins" the acquired land.

41.    As the Applicants now understand the Respondent's position, this is to be approached either simply as a question of fact or, alternatively as a question of law to which the facts are then to be applied.

42. Dealing with the first proposition. The Respondent correctly, it is submitted, concedes that separation by a paper road does not result in the land not relevantly "adjoining". As a result, the whole of the Western Sector is treated as one adjoining parcel of land for the purposes of s 55(f). Similarly, the Respondent's acceptance of an injurious affect across the whole of the Eastern Sector, notwithstanding interventions of paper roads and cadastral boundaries, again demonstrates an acceptance that legal separation is irrelevant.

43.    As a result, and considered simply on its facts, and applying that approach the East and West Sector relevantly adjoin. They are separated by the paper road. That paper road does not sever that link.

44. Next, it is relevant - as a matter of law- to consider the correct approach to the use of the word "adjoin" in s 55(f). The term is not defined and, according to the Applicants' research, has not been considered in the s 55(f) context.

45.    In order to consider the meaning of the word it is appropriate therefore to consider the word both in its context and also having regard to the scope object and purpose of the Act.

46.    Dealing firstly with its context. The language used is not "directly adjoins". The Applicant notes that such a distinction in relation to similar language is identified by Preston CJ in Kiama. In the absence of the requirement for land to directly adjoin, or to be immediately adjoining, the Court of Appeal's approach in Hornsby v Malcolm that the language of the section identifies the sufficient proximity if the two relevant parcels of land are "near to", "insufficient proximity to" or "neighbouring on" each other is apposite.

47. Such an approach is also consistent with the scope object and purpose of the Act. The purpose of s 55(f) is to broaden the reach of the compensation provisions. It is a beneficial provision. As a result, and applying ordinary principles of statutory interpretation, that beneficial provision should be given the broadest meaning its words can bear.

48.    Although dealt with in more detail below, accepting for the purposes of this submission that the Western Sector of the farm is injuriously affected, in circumstances where that farm has been operated as a single unit it is entirely consistent with the scope object and purpose of the Just Terms Act to allow for a decrease in value of that land.

49.    Turning then to the specific facts:

•     the East and West Sector have been operated as a single farm for many years;

•     the East and West Sector are legally connected by the (unformed paper) road;

•     practical physical access has been available between the two sectors of the farm for many years and according to Mr Melina's evidence at all times they have owned the farm and indeed through successive owners of the intervening property.

50.    Of course, fine questions may arise as to when - as a question of fact - two sectors of a farm may no longer "adjoin" notwithstanding a lawful connection (road), a physical connection and a combined operation. The Court would be satisfied, in the circumstances of this case, that the land relevantly "adjoins".

102. Mr Hemmings’ oral closing submissions dealing with this were (Transcript 27 July 2017, page 118, line 35 to page 121, line 40):

HEMMINGS: …

We then turn to the western sector and of course the first thing to deal with is the question of adjoining. Could you please, the Court of Appeal decision in Hornsby v Malcolm which is 60 LGRA 429? While that's being brought up, we deal with this in two ways, starting at our para 42, because of the concession made, and in answer to your Honour's question and with respect it's a concession properly made, and that is when your Honour was asking about the western sector made up of a number of parcels of land separated by paper roads, whether they be treated as relevantly adjoining for the purpose of 59(f) or not, it's a concession that they do adjoin, concession properly made.

If your Honour looks at the eastern sector, and again we know in the eastern sector there are paper roads, there are cadastral boundaries, and there is no suggestion that the separation by cadastral boundaries, so different lots, different legal lots, doesn't mean that the land does not adjoin.

There's some further discussion I can have before we go to the text of the judgement. On the basis of those concessions we say that your Honour is able in fact to deal with the matter purely as a question of fact applying the same approach that the respondents have taken before one even needs descending to the question of law as to the correct interpretation of the meaning of adjoined for the purposes of 55(f), and that's because this land is connected by the paper road, that in and of itself in our submission‑‑

HIS HONOUR: Hornsby v Malcolm doesn't deal with connection; it deals with proximity. Two sides of the same road.

HEMMINGS: Yes, so I'm not dealing with the Hornsby v Malcolm approach yet; at the moment I'm just dealing with the concession as made as to how the Court would approach it. I'll try and deal with‑‑

HIS HONOUR: I understand that but I'm saying the concession was made in terms of the plan that was, the marked up air photo that was on the board, on the basis that, for example, Lot 38 and Lot 1 were separated by a paper road, presumably you know one chain wide or whatever it happens to be, but it is a separate, the question there is separation by the road, not linkage by the paper road. And as I understand it the concession is not made about linkage, it is made, and properly made, based on Hornsby Shire v Malcolm, about the opposite sides of the same separating road corridor, I think is the way I would describe it. And I don't understand, I'll be corrected if I'm wrong, but I don't understand that the concept of connection by a road is conceded.

HEMMINGS: Yes.

PRITCHARD: That's correct.

HEMMINGS: If your Honour goes in Hornsby v Malcolm to p 433.

HIS HONOUR: Yes I'm there.

HEMMINGS: Where the discussion by..(not transcribable)..of the word "adjoins" starts in the second paragraph dealing with the facts. "No contest but…upon the context". Over the page at 434 about half way through the second paragraph, "Words in the…physical contiguity nowadays" - and this is 1986 - "that idea tends…immediate physical proximity," and then, ultimately, on the facts in that case, at the end of the next paragraph - and there is still a sufficient close proximity in the facts of the present case - to uphold the conclusion that the proposed development adjoined urban land.

Then your Honour moves over to p 443 and we're now in the decision of Glass J and in 1986 it definitely wasn't me that was arguing it, "Mr Hemmings argued for…is contiguous with," referring to doing a textual analysis of the EP&A Act. "In my opinion…sense is not," and found no error of law in Bignold J's approach. Your Honour's detailed analysis that you have carried out in the Hunters Hill decision focusing more on the question of contiguity than the adjoining, your Honour has the extracts from Hornsby v Malcolm.

Your Honour has been through the historical analysis of Auckland v Lye, Hornsby v Malcolm and the Chief Judge's decision in ACN. What we do see relevantly in the progression of cases - and in Preston J's decision in ACN his Honour usefully summarises a series of cases, useful because it shows the factual scenarios in which land has been held to adjoin even though it was not contiguous or coterminous or immediately adjoining, but what his Honour does do is we see from 1986 when the Court of Appeal was talking about the language then, by 2006 his Honour in ACN is still satisfied that there are two different ways in which the word "adjoins" is used in our language.

So we look to the context to see if it needs to be immediately adjoining or if it is the less direction connection and, in our submission, the Court comes forward to 2017 and there's no relevant change in the usage of the word "adjoins", and so the Court would start on an approach to the interpretation of 55(f), unless there's something otherwise to suggest would start with an approach, that the use of the word "adjoins" is to be contrasted with the potential use, a parliamentary draftsperson must surely have known, of the possibility of identifying the need for the immediate adjoining, the immediate connection, rather than the looser description accepted by the authorities.

As we say at 46, the language is not "directly adjoins" and we've given your Honour the reference to what we've cited as Kiama - just because it's easier than trying to say the ACN 115 840 509 - decision, the reference to the Court of Appeal authority, and there's a typographical error in the bottom of 46. "There are three different"--

HIS HONOUR: There should be a space, yes; I understood.

HEMMINGS: "There are three different tests which were used." We talk about near to, we talk about neighbouring on and we talk about in sufficient proximity. It might be my friend would say the proximity is insufficient. But those are different expressions the Court has used in order to describe the meaning of "adjoin", where "adjoin" is used in a context where the Court was otherwise satisfied it was to be different from "immediately adjoin" and, in our submission, that would be an appropriate that the Court would apply.

The second relevant matter to consider, of course, is the scope, object and purpose of the legislation, how the word is used and why. Of course, the Just Terms Act is concerned with the payment of compensation for land that is taken, and that's what the market value claim does. 55(f) is a beneficial provision and it's beneficial and facultative. It broadens the reach of the compensation claim beyond just the land that the acquiring authority has purchased but also to land that is affected.

Because it is, therefore, a beneficial provision, applying ordinary statutory principles the Court gives the words the broadest meaning that they can bear. There's many different descriptions of that task of interpretation but that's one that we've pulled out of DEM, to give the beneficial provision the broadest meaning its words can bear.

The other thing we have not said there but we've said it throughout these submissions otherwise is, of course, the constant reminder that we get from the High Court from Gaudron J out of Marshall that, because these are provisions that are affecting proprietary rights, we do not read in limitations that are not in the text. And we have an approach taken by the Court of Appeal already that tells us in our language there is a difference between "adjoins" and "immediately adjoins" to take an approach to the requirement of "adjoins" to read it as if it is "immediately adjoins" is, in our submission, inconsistent with the interpretative task but is inconsistent with the High Court's approach, because it is, in fact, reading an additional limitation into the language which does not appear in the words and so falls foul of Marshall. The Court, on our submission, would not be looking for the direct connection. Rather, the Court would be looking now as a question of fact to determine whether, for the purposes of an award of compensation to the owner of land than does relevantly adjoin.

Turning then to the facts, there is no doubt that the east and west sector of the farm has been operated as a single farm for many, many years. I say that in para 49 and your Honour has got transcript and footnote and evidence references; I don't need to take your Honour to them. It has been operated as a single farm for many years. They are legally connected and so are legally able to operate as that single unit and they are both legally connected and practically, physically connected, whether it's a gentlemen's agreement or otherwise, however one wants to describe it, because of the physical access which has been used out of convenience rather than the legal access between the two, and that's a connection, the physical access, that's been in place the entire time the Melino family has been operating the farm as a single farm and, indeed, as Mr Melino tells us, even through the successive ownership of the intervening property between the two.

As we note at para 55, this being now a question of fact, we accept that there is a line, obviously, that needs to be drawn somewhere for the purposes of now the Just Terms Act where the beneficial operation of this section is to afford compensation for the diminution in value of adjoining land owned by the person who has had some land taken, but there will be a point at which they become too separated for that purpose, but in this case, where you've got a single operation with a physical connection and a lawful connection, in our submission, the Court would be satisfied that, for the purposes of 55(f), the land relevantly adjoins.

103. Contrary to this position, the written submissions for the RMS on this point were in the following terms (excluding footnotes):

B.   ISSUE 2: INJURIOUS AFFECTION FOR NON-CONTIGUOUS PARCEL

70. The applicants also claim for the loss of value, under s 55(f), for the non-contiguous parcel of land at 428 Old Bagotville Road, Wardell, the Old Bagotville Road property. The respondent is not aware of such claim having been previously made, under s 55(f), by a dispossessed landowner in relation to non-contiguous parcels of land.

71. The issue is whether the Old Bagotville Rd holding is, for the purposes of s 55(f), "any other land of the person at the date of acquisition which adjoins … the acquired land … ".

72.   This raises questions of statutory construction, as well as questions of fact.

73.   The evidence in relation to the relationship between the parcel of land at 428 Bagotville Road and the Back Channel Road property is as follows:

(a)    at the date of acquisition, there was a distance of about 350 metres between the northwestern corner of the Back Channel Road property (Lot 88 in DP 755691) and the closest boundary of the Old Bagotville property (Lot 2 in DP 5238354) (the two Melino properties) (Frogley, CB 407);

(b)    the two Melino properties were separated by two intervening parcels of land in different ownership:

(i)   to the north of Lot 88 - Lot 96 in DP755691 (Lot 96); and

(ii)   to the east of Lot 88 - Lot 97 in DP755691which was at the date of acquisition in the separate ownership of a Mr Rigby (Lot 97)(Frogley CB 407);

(c)   at the date of acquisition, there was an unformed road reserve along the boundary between Lots 96 and 97 which “connected” the two Melino properties (Frogley CB 407);

(d)   some time prior to the date of acquisition, the unformed road reserve suffered flood damage, and access between the two Melino properties was by way of a four-wheel track not situated within the road reserve, but within Mr Rigby’s property (Frogley CB 407); and;

(e)   as at the date of acquisition and until the sale of Lot 2 in September 2016, cattle were able to move between the two Melino properties along the four-wheel track pursuant to a casual or “gentlemen’s” agreement with Mr Rigby.

Question of statutory construction

74.   As to the question of statutory construction, it is uncontroversial that the word “adjoins” must be construed having regard to its ordinary meaning, the statutory context in which it appears and the discernible purpose of the legislation.

75. In their opening submissions, the applicants at [32] refer to approach taken by this Court and the Court of Appeal in relation to similar language in the old SEPP 5 as “instructive”, citing the decision of the chief judge in ACN 115 840 509 Pty Ltd v Kiama Municipal Council (2006) 145 LGERA 147 concerning clause 4(1) of SEPP SL.

76.   In that case, the chief judge held that it was not necessary for the subject land to answer the description of being land that “adjoins” land zoned primary for urban purposes within the meaning of clause 4(1) to be coterminous with (that is, have a common boundary with) or to be immediately adjoining to the 2(a) residential land which was land zoned primarily for urban purposes. It was sufficient that the land was “near to” or was “neighbouring on” or “in sufficient proximity” to the 2(a) residential land.

77. It might be accepted that in some statutory contexts the word “adjoins” might bear such an expansive meaning and connote a degree of separation. However, in other contexts it requires physical contiguity: see discussion in Hornsby Shire Council v Malcolm (1986) 60 LGRA 429 per Kirby P at 433-434. See also Hunter’s Hill and ors v Minister for Local Government [2016] NSWLEC 124 per Moore J, his Honour concluding at [337]- [338], after an extensive review of the authorities, that the word “contiguous” in s 204(3) of the Local Government Act 1993 (NSW) be given a narrower and more confined meaning.

78. In the context of s 55(f) of the Acquisition Act, and the right to compensation of an owner of an interest in land compulsorily acquired (within the meaning of s 37) for injurious affection, “adjoins” should be given its primary meaning of physical contiguity. Section 55(f), and the word “adjoins” which appears in it, would not be construed to compensate the owner of land compulsorily acquired for injurious affection to other land “near to” that land in circumstances where no compensation for injurious affection is available to the owner of immediately contiguous land which has not been compulsorily acquired. The policy of the Acquisition Act is not to compensate for injurious affection owners of land which has not been compulsorily acquired.

79. That “adjoins” in s 55(f) requires physical contiguity is also supported by the language of s 55(f) as a whole, and in particular the expression “or is severed”. That language can only mean a prior direct physical connection, and reinforces the Act’s policy that owners of land which is immediately adjacent to, but not part of the acquired land, have no entitlement to compensation for injurious affection.

Question of fact

80.   As a question of fact, the Old Bagotville property does not adjoin either the acquired land, or any part of the Back Channel Road property residue, within the meaning of physically contiguous.

81.   It might be accepted that the determination of whether land answers the description of being land that “adjoins” within this meaning - namely, “physically contiguous” - involves matters of fact and degree.

82.   In particular, the respondent accepts that the presence of a road reserve or paper road along the cadastral boundary of a Lot, separating land in the same ownership which would otherwise be viewed as one parcel, would not deprive that Lot of answering the description of land that adjoins the other land in the same ownership.

Costs of the abandoned proposal to relocate the existing dwelling

213. Although Mr Melino had contemplated lifting and moving the pre-existing home to relocate it to the now identified, prospective new home site in the south‑western corner of the eastern portion of the Melino landholding, an inspection of the structure revealed that this was not feasible because of the need to strip the structure of its asbestos cladding. Had Mr Melino carried through with this initial intention, the value of the dwelling would not have been included in the acquisition compensation for the strip of land acquired. However, as this relocation proposal was not viable, the house was acquired and demolished, along with all the related structures.

214. As these costs were not connected with an actual relocation (s 59(1)(c) or an actual use of the land, they are not recoverable.

The lost rent claim

215. After Mr Costanzo Melino needed to move from the family home on the eastern portion of the Melino landholding and into a care facility, the house was rented. From 2010, the home was rented at $365 per week and managed by a local real estate agent. This arrangement continued until June 2015.

216. From August 2015, a lower rental of $250 per week was obtained and the property was managed by Mr Melino. He said that this was because of the pending RMS acquisition. His evidence on this point was (Exhibit A, CB21, First Melino Affidavit of 4 July 2017, folio 546 at [16]):

16.   The old house where I grew up has been rented out since 2010. Until approximately June 2015 the old house was managed by Century 21 in Ballina. At that time the property was achieving $365 per week rental. From August 2015 and with the acquisition pending I managed the property. At that time, in the shadow of the acquisition I could only achieve $250 a week rental. The Rental Agreement was for six months from August 2015. At the expiry of that period the tenant continued to hold over on a month to month basis. Annexed and marked “A” are examples of rental receipts when the property was managed by Century 21 in Ballina; a copy of Century 21’s rental income statement for the property for the 2014/15 financial year; a copy of the Residential tenancy Agreement and rent receipts issued from 29 January 2016 to 16 June 2016 when the rental income from the property ceased.

217. It was also his evidence that he had intended to return to reside in the home after he retired in 2018 from his (now part-time) teaching position in Lismore, the city in which he presently lives (Exhibit A, CB21, First Melino Affidavit of 4 July 2017, folio 546 at [17]). As earlier explained, the home was acquired by the RMS as part of its compulsory acquisition and has been demolished.

218. The claim for lost rental is set out in the Melinos’ Points of Claim in the following terms (Exhibit A, CB08, Points of Claim, folios 109H to 109I):

The Lost Rent

25.   Prior to the acquisition and up until approximately June 2015 the dwelling on the east sector ("the Dwelling") was managed by an agent and occupied by a tenant paying rent as at June 2015 in the amount of $365 per week.

PARTICULARS

i.   Century 21 Ballina owner statements 2015

ii.   Century 21 Ballina Owner Income and Expenditure for July 2014 to June 2015

26.   From 20 August 2015 and up until 16 June 2016 the Dwelling was managed by Melino.

PARTICULARS

i.   Residential Tenancy Agreement between Melino and Bejay Thorn.

ii.   Rent receipts in the sum of $250 per week.

27.   From March 2016 up until 16 June 2016 the tenant occupied the Dwelling on a month to month basis.

28.   The reduced rent was a consequence of the impending acquisition.

29.    It is reasonably anticipated that that the replacement Dwelling will not be constructed and available for occupation by a tenant until 30 June 2018.

30.   The Applicants claim loss rent in the amount of $44,625 until the new dwelling is built.

PARTICULARS

i.   24 months rent (July 2016 - June 2018) @ $365 per month = 104 weeks@ $365 = $37,960

ii.   $155 per week from 20 August 2015 to 16 June 2016-43 weeks@ $155 = $6,665

219. It seems to me that there are two distinct aspects to the way in which the lost rent claim requires to be considered. These arise even though the claim itself has been expressed to be one that runs until the anticipated date of Mr Melino's retirement in 2018, the time when he has attested it is his intention to return to reside on the eastern portion of the Melino landholding. The first relates to the period between August 2015, when Mr Melino commenced managing the property at a reduced rental, and the date of acquisition in June 2016 (the reduced rental period) and the second to the claim for compensation from the date of acquisition until 2018, the time when Mr Melino anticipated returning to take up occupation (the post-acquisition rental claim).

220. With respect to the reduced rental claim, I have set out the relevant extract from Mr Melino's affidavit, rent receipts and rent statements that demonstrate the lower rental level achieved from August 2015 until the date of acquisition. For this period, there is a clearly demonstrated reduction of $115 per week in the rental achieved for the dwelling. This reduction, on Mr Melino's uncontradicted evidence, was clearly a loss incurred as a direct consequence of the proposed acquisition to carry out the public purpose. A loss in such circumstances is clearly compensable pursuant to s 59(1)(f) of the Just Terms Act.

221. Whilst, superficially, the difference in rent from August 2015 to the date of acquisition appears to be $115 per week, that is not strictly the position to which regard should be had for the purposes of the Just Terms Act. The proper rental difference is one derived by the calculation of deducting the rent achieved by Mr Melino, when he undertook management of the property, from the rent paid actually paid to the Melinos when the real estate agency, Century 21, was managing the property. The rent receipts in evidence demonstrate that the real estate agency charged a management fee.

222. However, the rent statements from Century 21 show properties at Old Bagotville Road and 604 Back Channel Road aggregated (Annexure A from Michele Melino affidavit of 4 July 2017 – reproduced at Annexure D to this decision) so that no breakdown of management charges can be seen.

223. As a consequence, whilst $115 per week may have been the gross rental differential, it does not reflect the loss to the Melinos, as that loss must be the net loss derived by subtracting from $115 the estate agent’s commission on the full $365 achieved when the agency was managing the property. The relevant management fee/commission amount requires to be deducted from the $115 gross lost rental. Compensation for lost rental between the relevant date in August 2015 and the date of acquisition in 2016 is to be calculated on this weekly basis.

224. It therefore follows that there is an entitlement to compensation for lost rent at the rate of the net loss per week (not the gross loss per week) between the commencement of the lease at the reduced rental in August 2015 until the date of acquisition. The precise quantum of this compensatory amount can be settled by the parties’ legal representatives.

225. I have earlier explained why the full value of the fixtures incorporated in the acquisition price negates any claim pursuant to s 59(1) of the Just Terms Act for further compensation to enable reimbursement for the cattle yards and the Colorbond shed or anticipatory reimbursement for the cost of a future dwelling.

226. Equally, the element of the compensation for the acquisition that reflects the value of the house that was acquired incorporates, necessarily, all the future income generation potential of the house for the reasons discussed by Pain J in Moloney (No 2) at [315] to [317] (applicable by analogy).

227. Had there been a lease to the tenant in occupation of the house at the time of the acquisition, this would have been a matter requiring consideration. However, there was not, as Mr Melino's evidence discloses that the tenant was in occupation pursuant to the holding-over provisions, on a month-by-month basis, of an expired lease. There is, therefore, no entitlement to compensation for rental income potentially forgone until the expected return of Mr Melino to reside on the eastern portion of the Melino landholding post his retirement in 2018.

The loan establishment fee and interest claim

228. Mr Melino has borrowed money for the purposes of carrying out works and replacement structures for demolished items, in anticipation, with those works and structures forming part of the claim for compensation. Mr Melino has, already, paid an establishment fee for this loan and accrues interest on whatever moneys have been drawn down from such a loan. The claim is made for compensation for the establishment fee for the loan and for such interest as has accrued on it (and will accrue until compensation is paid).

229. Section 49 of the Just Terms Act makes provision for the payment of interest on compensation. It is in the following terms:

49   Interest on compensation

(1)   Interest is payable (subject to subsection (2)) on any amount of compensation under this Part from the date the land is acquired until the payment is made. Any such interest becomes part of the amount of compensation payable.

(2)   Interest under this section is not so payable on any amount of compensation paid into a trust account under this Part or into the Consolidated Fund by the authority of the State. However, money earned from the investment of any such trust account becomes part of the compensation concerned.

230. I have, in the past, rejected a submission by Mr Hemmings where he sought compensation between the actual interest rate paid and the interest rate determined pursuant to the statute (Konduru T/as Warringah Road Family Medical Centre v Roads and Maritime Services; Konduru v Roads and Maritime Services; Konduru v Roads and Maritime Services [2017] NSWLEC 36 at [130] to [156]). The discussion in Konduru dealt with two claims for additional interest sought to be awarded above the statutory rate. In dealing with the first of these claims, I set out the history of the relevant statutory provision (at [130] to [141]); the details of the claim and the RMS’ response to it (at [142] to [152]); and my consideration and rejection of any basis existing for such a claim (at [153] to [156]). The first and third of these elements are engaged for consideration in dealing with this aspect of the claim made by the Melinos.

231. The first relevant element from the decision in Konduru was in the following terms:

The mortgage interest claim for 40 and 42 Bantry Bay Road

Introduction

130 First, it is to be observed that s 55 of the Acquisition Act codifies, exclusively, the six potential heads under which compensation is able to be claimed by a dispossessed holder of an interest in land compulsorily acquired.

131 Losses attributable to disturbance are identified by s 55(d) as one of these six categories. What can fall within the concept of loss attributable to disturbance is, itself, codified, exhaustively, by s 59(1) of the Acquisition Act where six categories are identified, with s 59(1)(f) reading:

Any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

132   Although the Acquisition Act provides, in s 61, matters of limited exception, that provision is not engaged for the purposes of these proceedings.

Section 49(1) of the Acquisition Act and its history

133   It is now convenient to set out the terms of s 49(1) of the Acquisition Act, this being the provision that mandates the payment of the statutory interest at the rate applicable. The provision is in the following terms:

(1)   Interest is payable (subject to subsection (2)) on any amount of compensation under this Part from the date the land is acquired until the payment is made. Any such interest becomes part of the amount of compensation payable.

134   This provision was contained in these terms in the Land Acquisition (Just Terms Compensation) Bill 1991 (the Bill) when it was introduced into the Parliament by the then Deputy Premier and Minister for Public Works, the Hon W J T Murray MP, on 11 April 1991. An examination of the Minister’s Second Reading Speech, on that date, does not disclose any reference to the provision that became s 49 in the enacted legislation.

135   In the Minister’s Second Reading Speech in Reply, on 17 April 1991, there appears in the Hansard of that date, at page 2378, the sole reference to this provision. The reference is in the following terms:

Clause 49 is clear about when interest on compensation is payable. The Treasurer must take into account the rates set by banks. [emphasis added]

136   After the completion of the passage of the Bill through the Legislative Assembly, it was not able to be dealt with prior to the intervention of the 1991 state election.

137   However, the legislation was reintroduced as an early Bill in the following Parliament. An examination of the Legislative Assembly and Legislative Council Hansard for the Bill when reintroduced discloses that there was no mention of cl 49 (it becoming s 49 in the Acquisition Act) in the second reading or committee stage debates in either the Legislative Assembly or the Legislative Council. The legislation was passed and came into effect as the Acquisition Act. As a consequence, there is nothing in the Hansard that would engage s 34(2)(f) of the Interpretation Act 1987 for the purposes of understanding how s 49(1) of the Acquisition Act should be interpreted.

138 Similarly, an examination of the Explanatory Notes provided to the Parliament with the Bill (for the Bills in both the 49th and 50th Parliaments) discloses that there is no mention of cl 49 within the commentary on the group of clauses within which it appears. As a consequence, there is nothing in the Explanatory Notes that would engage s 34(2)(e) of the Interpretation Act 1987 for the purposes of understanding how s 49(1) of the Acquisition Act should be interpreted.

139   The provision has not been amended since its original enactment.

Section 50(1) of the Acquisition Act and its history

140   It is next convenient to set out the terms of s 50(1) of the Acquisition Act, this being the provision that mandates how the rate of statutory interest is to be set. The provision is in the following terms:

(1)   The rate of interest payable on any payment of compensation under this Part is such rate as the Treasurer may from time to time determine by notification published in the Gazette.

141   The Parliamentary process for s 50(1) was the same as for s 49 and need not be repeated. As with s 49, s 50 has not been amended since its original enactment.

232. The second relevant element from the decision in Konduru was in the following terms:

Consideration

153   This claim, it seems to me, whether novel or not, thus requires simply to be dealt on a first principles’ statutory construction basis by considering:

1.   Whether s 50(1), as Mr Eastman submitted, covers the field and deals with any entitlement to interest that a claimant has; and

2.   If not, whether the terms of s 59(1)(f) are satisfied to make the interest differential claimable.

154   I have earlier set out the terms of s 50(1). Its terms are concise and simple. For me to accept this element of the claim advanced for the Kondurus, it would be necessary for me to read s 50(1) as if it read, “The minimum rate of interest payable on any payment of compensation under this Part is such rate as the Treasurer may from time to time determine by notification published in the Gazette”.

155   Whilst such an approach is permissible if the context demands it (see Taylor v The Owners-Strata Plan 11564 (2014) 253 CLR 531; [2014] HCA 9), there is absolutely no contextual imperative to do so. The provision expressly has the Treasurer determine the rate of interest. There is no suggestion that this has not taken place. Mr Eastman’s submission is correct - the clear language of s 50(1) makes it clear that, for the purposes of s 49(1), the Treasurer’s s 50(1) determination is exhaustive.

156   The claim for reimbursement of the additional interest, above the statutory interest rate, for the period between acquisition date and the date of payment of the s 48 advance payment is rejected.

233. In these proceedings, Mr Hemmings has sought to persuade me to revisit the position I adopted in Konduru. The element of his written submissions seeking to have me do so was in the following terms (excluding footnotes):

Loan establishment

151.   Clearly, in order to continue the operation of the farm it was necessary to replace some of the farm improvements. That was so, notwithstanding that an Applicant is entitled to wait to see if, and how much, compensation it will receive before incurring any costs.

152.   Costs have been incurred in relation to the construction of the replacement farm shed, the replacement cattle yards, part of the new access track and obtaining necessary approvals.

153.   In order to fund those works it was necessary for Mr Melina to take out a loan.

154.   To establish the loan he incurred a loan establishment fee in the amount of $200,000• Those costs satisfy the requirements ofs 59(1)(f).

Interest

155.   Upon the establishment of the loan Mr Melina incurred interest charges on the borrowed amount until the advance payment of compensation was received in February of 2017.

156.   The Applicant notes that this claim is made potentially contrary to the Court's conclusion in Konduru. With respect, to the extent the Court rejected the payment of a component of compensation (being interest on borrowed funds) because of the operation of s 49 of the Just Terms Act, that is wrong. It is wrong, at least in part, perhaps because of the approach taken to the claim in Konduru.

157.   In Konduru the claim was made for the difference only between the interest paid on the borrowed funds and the statutory rate of interest. That had the potential to confuse the claim by conflating two different provisions.

158.   As discussed above, a disturbance claim stands or falls based upon whether or not it fits within the requirements of- in these circumstances- s 59(1)(f).

159.   The Court will be satisfied that it was reasonable to borrow funds in order to carry out the works and so as a consequence the claim for interest falls within the requirements of s 59(1)(f).

160.   Confusion then arises if that component is then referred to as "interest". To maintain the distinction between the claim and s 49 interest, it may properly be described as "borrowing costs". Once s 59(1)(f) is satisfied, those "borrowing costs" are no properly being described as "compensation".

161.   Once it is recognised that it simply forms a component of "compensation" then it is apparent that the regime for the payment of statutory interest "on any amount of compensation" cannot be said to reduce the amount of compensation otherwise payable.

162.   Indeed, an emphatic approach was adopted by Tobias JA in McDonald at [136] where his Honour commented that how the statutory entitlement [to interest on an amount of compensation] can be used to deny, whether in whole or in part, compensation for loss attributable to disturbance "defies explanation".

163.   With respect, that conclusion of Justice Tobias is both correct, and binding.

164.   Once the Court is satisfied - as it will be - that the borrowing costs form part of the compensation, they are neither decreased because of the statutory interest regime nor denied.

234. During the course of his oral closing submissions, he addressed this point saying (Transcript 27 July 2017, page 141, lines 22 to 29, and page 141, line 38 to page 143, line 19):

HEMMINGS: … We then come to interest. Your Honour deals with a claim for interest in Konduru and because of the statutory interest regime in s 49 of the Just Terms Act your Honour declined to award interest claimed in those proceedings for the funds borrowed. It's an almost precisely analogous situation. I either need to distinguish it and I can't or satisfy your Honour that, with the greatest respect, your Honour was wrong and your Honour was wrong because the applicant in those proceedings confused the Court.

…

We accept on the one hand there is an interest regime in pt 2 of the Act. On the other hand, there is a compensation regime in pt 3 of the Act. Importantly, the interest regime proscribes for the payment of interest on compensation. That's important because what tended, with respect, to me confuse on the last occasion was a cross-pollination between the concept of interest in 49 and the claim for interest under pt 3.

For the purposes of the discussion we do this. Don't call the claim interest for the moment. Give it a different description so that the terms don't confuse. It is now a claim for borrowing costs. Ignore s 49 for a moment. The Court will do what the Court of Appeal tells us to do and will determine whether or not my borrowing costs meet the requirements of the five parts of 59(1)(f).

Assume for present purposes the Court is satisfied that those borrowing costs meet the requirements of s 59(1)(f). Those borrowing costs therefore are properly described as compensation. The statutory regime then allows for the payment of interest on compensation and as soon as it is recognised that the compensation might include the borrowings costs and that the statutory regime is to allow for interests on the compensation, which includes borrowing costs, it is actually the opposite of the legislative regime rather than application of it to say I will not allow or reduce the borrowing costs because you are going to get interest. It confuses and conflates the two. The other thing that I didn't do and should--

HIS HONOUR: Let me just stop you there. Let's assume one applies the word "borrowing costs" to the interest on the loan. You then say that one should get interest under pt 2 on the borrowing costs as well, being interest.

HEMMINGS: Yes. No, it didn’t just on interest, but that's because--

HIS HONOUR: One is borrowing costs and the other is pt 2 interest.

HEMMINGS: So one is, and that's why we do it in a step-wise way, because that's where, with respect, I didn't deal with it adequately and I didn't understand. I'm being as brutally honest as I can. Tobias Js quote that we'll go to in McDonald, compensation is a global description of all of the elements that one's entitled to. It's market value, it's special value, it's solatium, it's all those sorts of things. For example, solatium, an ex gratia payment that you get that you don't get from the acquisition date but you don't get for six months, you get statutory interest on it.

A component of compensation, which is the payment of interest because in order to, and it has to meet 59(1)(f) first, but because I've had to incur costs to do work and part of the incurring of the costs includes the borrowing of funds and the consequence of the borrowing of the funds is additional cost, that forms my compensation. To then say in fact I will reduce the compensation, you're otherwise entitled to because you get statutory interest, ignores the words in s 49 because s 49 in fact is to - we should go to it. Section 49(1), "Interest is payable (subject to (2)," which is not relevant, "on any amount...land is acquired," and that's the timing mechanism. Then 50 tells us it's statutory interest.

The Court might not find 59(1)(f) satisfied. All of this is predicated upon the fact that the borrowing costs are meeting the requirements of 59(1)(f). As soon as it is, because 59(1)(f) is one of the means, one of the methods by which you obtain 55(d), compensation, because of the operation of s 55 that borrowing cost is then merely the compensation as defined. This is a provision, the purpose of which is to increase the overall payment so that you get interest on compensation because you didn't get the money at the time the land was acquired, you didn't get it 'til some time later.

As we say, with respect, a provision, the purpose of which is to make for a payment in addition to the compensation cannot and to the extent your Honour was led into error by us, me, came to the conclusion otherwise, with the greatest respect, your Honour was mistaken.

Tobias J in McDonald was remarkably emphatic and understood now, if I might say with that background, if we go to the decision of the Court of Appeal in McDonald and go to para 136 - sorry - it's [2010] NSWCA 236 then go to 136, "Furthermore Talbot J was...disturbance defies explanation." With respect, it does, now properly considered, when we accept that the disturbance claim forms part of the compensation, this is the regime to get interest on that compensation, how the fact that you can get that interest can be used to reduce or offset the compensation, with the greatest respect his Honour is correct, defies explanation.

It's a conclusion that is, as we say at 163, is with respect to his Honour, both - sorry, with respect to Tobias J correct and with respect to your Honour binding. As a consequence, your Honour would be satisfied that to the extent Konduru might suggest the interest payment is not available, that is wrong and your Honour will be satisfied that the interest is available.

235. I see no need to alter the conclusions that I set out on this point in Konduru. To the extent that anything further needs to be said, in addition to my adopting the portions of Konduru earlier set out, it is to add that, although Dr Konduru’s commercial loan and the interest thereupon was for the fitting-out of her new medical centre premises in an urban setting, there is no functional difference between her position and that of Mr Melino, in that the moneys which have been borrowed and expended by him appear directed to the carrying out of his farming activities, activities which are, essentially, also commercial in nature.

236. It therefore follows that the loan establishment fee and interest differential claim fails. This conclusion is drawn as a matter of first principle without regard to whether or not the expenditure of the borrowed funds was on compensable items claimed.

Other s 59(1) claims

237. I note that, by email to my Associate on 23 August, the parties advised that agreement had been reached on s 59(1)(a) and (b) claims with this agreement being in the amount of $62,378.64 (including GST).

Conclusion

238. I have reached the following conclusion with respect to each of the contested items in these proceedings:

1. The claim for injurious affection for the cane fields on the eastern element of the Melino landholding is upheld. For the reasons I have set out, doing the best I can as the judicial valuer, the rate for this injurious affection is to be 17.5%, rather than the 35% agreed by the valuers for the “lifestyle lands”;

2. The claim for injurious affection for the wetlands on the eastern element of the Melino landholding is rejected;

3. The western element of the Melino landholding does not adjoin the eastern element for the purposes of s 55(f) of the Just Terms Act and thus there is no statutory basis to consider any claim for injurious affection to Lot 38 and Lot 1 at the northern end of that element of the Melino landholding;

4. However, if I am wrong as to the proper construction of s 55(f) of the Just Terms Act and the western element of the Melino landholding should correctly be regarded as adjoining the eastern element, on a proper analysis of the factual situation, there is no injurious affection to Lot 38 and Lot 1 when considered together as a consolidated site for the purposes of achieving a dwelling entitlement;

5. The claim for costs for the Colorbond shed, the modular steel cattle yards and the proposed new dwelling are rejected, as the appropriate value for the items of the same nature that have been acquired by the RMS and demolished is to be taken as reflected in the quantum of compensation payable by the RMS for the acquisition of the strip of land required for the Pacific Highway upgrade project;

6. The claim for the cost of the past and future construction of the access road to the site of the proposed new dwelling (on the basis of those works providing access to the proposed new dwelling), together with costs for future provision of electricity and fixed line telephone connections to the site of the proposed new dwelling are allowed. My allowing of the claim for the access road upgrade for the purposes of accessing the dwelling site is separate from my standalone consideration, on an alternative basis, leading to the conclusion that the costs of the access road upgrade should separately be allowed by virtue of being relevant to, and appropriate for, the continued undertaking of farming activities requiring to be supported by the plant and equipment stored in the new Colorbond shed;

7. The claim for the cost of past and proposed future works to elevate the low-level roadway element through the centre of the eastern element of the Melino landholding is separately allowed for access to the Colorbond shed (this compensation is to be calculated on the bases proposed by Mr Makin with the exception of the price for the imported fill where the upward revised quote is accepted in preference to Mr Makin’s no upward time adjustment position);

8. The claim for design, development application and other regulatory or administrative costs associated with preparation of, and seeking development consent for, the proposed new dwelling are claimable as disturbance;

9. Costs claimed in connection with the abandoned proposal to relocate the existing dwelling on the eastern portion of the Melino landholding are rejected;

10. The claim for compensation for the lower rent achieved for the now-demolished house between August 2015 and acquisition by the RMS is allowed but is confined to the net loss of rent after allowing for deduction of agents fees/commission from the $365 per week rent rather than the gross difference of $115 per week;

11. The claim for lost rent post-acquisition is rejected; and

12. The claim for reimbursement of Mr Melino’s loan establishment fee, and for any interest on the drawings on that loan, for the purposes of re-establishment of items such as the Colorbond shed; the steel cattle yards or the elevation of the linking roadway through the cane fields is rejected.

Directions

239. The parties are to provide my Associate, electronically, with settled terms of Short Minutes of Order to give effect to this decision:

1. The Short Minutes of Order are to be provided by the close of business on Wednesday 27 September 2017;

2. The matter is listed for mention in the LVC List on Friday 29 September 2017 at 9.15 am; and

3. If settled Short Minutes of Order are provided by 27 September as directed, I will make orders in chambers and vacate the mention on 29 September 2017.

**********

ANNEXURE A

ANNEXURE B

Acts in force with text including “adjoins”

1. Coastal Management Act 2016 No 20

2. Coastal Protection Act 1979 No 13

3. Commons Management Act 1989 No 13

4. Crown Land Management Act 2016 No 58

5. Crown Lands (Continued Tenures) Act 1989 No 7

6. Duties Act 1997 No 123

7. Electricity Network Assets (Authorised Transactions) Act 2015 No 5

8. Environmental Planning and Assessment Act 1979 No 203

9. Environmental Planning and Assessment Amendment Act 2008 No 36

10. Firearms Act 1996 No 46

11. Land Acquisition (Just Terms Compensation) Act 1991 No 22

12. Local Government Act 1993 No 30

13. Local Land Services Act 2013 No 51

14. Mining Act 1992 No 29

15. National Park Estate (Southern Region Reservations) Act 2000 No 103

16. National Parks and Wildlife Act 1974 No 80

17. Native Title (New South Wales) Act 1994 No 45

18. Parliamentary Precincts Act 1997 No 66

19. Petroleum (Offshore) Act 1982 No 23

20. Place Management NSW Act 1998 No 170

21. Ports and Maritime Administration Act 1995 No 13

22. Rail Safety National Law (NSW) No 82a

23. Real Property Act 1900 No 25

24. Roads Act 1993 No 33

25. Transport Administration Act 1988 No 109

26. Water Management Act 2000 No 92

27. Work Health and Safety (Mines and Petroleum Sites) Act 2013 No 54

Acts in force with text including “adjoining”

1. Access to Neighbouring Land Act 2000 No 2

2. Australian Oil Refining Agreements Act 1954 No 34

3. Brigalow and Nandewar Community Conservation Area Act 2005 No 56

4. Cabramatta Park Act 1922 No 35

5. Callan Park (Special Provisions) Act 2002 No 139

6. Coastal Management Act 2016 No 20

7. Contaminated Land Management Act 1997 No 140

8. Conveyancing Act 1919 No 6

9. Criminal Procedure Act 1986 No 209

10. Crown Land Legislation Amendment Act 2017 No 17

11. Crown Land Management Act 2016 No 58

12. Crown Lands Act 1989 No 6

13. Dividing Fences Act 1991 No 72

14. Electricity Supply Act 1995 No 94

15. Encroachment of Buildings Act 1922 No 23

16. Environmental Planning and Assessment Act 1979 No 203

17. Environmental Planning and Assessment Amendment Act 2008 No 36

18. Fire and Emergency Services Levy Act 2017 No 9

19. Firearms Act 1996 No 46

20. Fisheries Management Act 1994 No 38

21. Glen Davis Act 1939 No 38

22. Governor General’s Residence (Grant) Act 1945 No 32

23. Growth Centres (Development Corporations) Act 1974 No 49

24. Hay Irrigation Act 1902 No 57

25. Health Administration Act 1982 No 135

26. Land Tax Management Act 1956 No 26

27. Landlord and Tenant (Amendment) Act 1948 No 25

28. Law Enforcement (Powers and Responsibilities) Act 2002 No 103

29. Local Government Act 1993 No 30

30. Local Land Services Act 2013 No 51

31. Local Land Services Amendment Act 2016 No 64

32. Long Service Leave (Metalliferous Mining Industry) Act 1963 No 48

33. Lotteries and Art Unions Act 1901 No 34

34. Marine Safety Act 1998 No 121

35. Mining Act 1992 No 29

36. Mosman Anzac Memorial Hall Act 1938 (Private Act)

37. National Park Estate (Lower Hunter Region Reservations) Act 2006 No 90

38. National Park Estate (Reservations) Act 2002 No 137

39. National Park Estate (Reservations) Act 2003 No 24

40. National Park Estate (Reservations) Act 2005 No 84

41. National Park Estate (Riverina Red Gum Reservations) Act 2010 No 22

42. National Park Estate (South-Western Cypress Reservations) Act 2010 No 112

43. National Park Estate (Southern Region Reservations) Act 2000 No 103

44. National Parks and Wildlife Act 1974 No 80

45. Oakdale State Coal Mine (Sale) Act 1968 No 66

46. Parliamentary Precincts Act 1997 No 66

47. Petroleum (Offshore) Act 1982 No 23

48. Plantations and Reafforestation Act 1999 No 97

49. Port Kembla Inner Harbour Construction and Agreement Ratification Act 1955 No 43

50. Property NSW Act 2006 No 40

51. Public Works and Procurement Act 1912 No 45

52. Real Property Act 1900 No 25

53. Residential Tenancies Act 2010 No 42

54. Retail Leases Act 1994 No 46

55. Retirement Villages Act 1999 No 81

56. Roads Act 1993 No 33

57. Rural Fires Act 1997 No 65

58. Strata Schemes Development Act 2015 No 51

59. Surveillance Devices Act 2007 No 64

60. Swimming Pools Act 1992 No 49

61. Sydney Bethel Union Extension Act 1908 (Private Act)

62. Sydney Olympic Park Authority Act 2001 No 57

63. Terrorism (Police Powers) Act 2002 No 115

64. Transport Administration Act 1988 No 109

65. Trees (Disputes Between Neighbours) Act 2006 No 126

66. Trustee Act 1925 No 14

67. University and College Lands and Victoria Park Act 1924 No 36

68. Valuation of Land Act 1916 No 2

69. Water Management Act 2000 No 92

70. Western Lands Act 1901 No 70

ANNEXURE C

ANNEXURE D

Amendments

21 February 2018 - A typographical error in [236] was corrected. The correction is in the last line of the paragraph and corrects "as" to "was", "... borrowed funds was on compensable items claimed"

Decision last updated: 21 February 2018