Mooliang Pty Ltd v Shoalhaven City Council

[2001] NSWLEC 83

Reported Decision: 114 LGERA 45

Land and Environment Court

of New South Wales

CITATION:	Mooliang Pty Limited & (12) Ors v Shoalhaven City Council [2001] NSWLEC 83
PARTIES:	APPLICANTS: Mooliang Pty Limited & (12) Ors RESPONDENT: Shoalhaven City Council
FILE NUMBER(S):	30008 of 2000
CORAM:	Lloyd J
KEY ISSUES:	Compensation :- highest and best use - subdivision not an enlargement or expansion or intensification of an existing use - special value Practice & Procedure :- parties - application for joinder - whether applicants for joinder have an interest in land Construction & Interpretation :- interest in land - tenancy at will is an interest in land
LEGISLATION CITED:	Conveyancing Act 1919 s 23C and s 23D Environmental Planning and Assessment Act 1979 s 94, s 107 and s 108 Land Acquisition (Just Terms Compensation) Act 1991 s 4, s 37 and s 57 Local Government (Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 1995 State Environmental Policy No. 21 cl 6 City of Shoalhaven Local Environmental Plan 1985
CASES CITED:	Anderson v Toohey's Limited (1937) 37 SR (NSW) 70; Chelsea Investments Pty Limited v Federal Commissioner of Taxation (1966) 115 CLR 1; Commonwealth v Reeve (1949) 78 CLR 410; Commonwealth Life (Amalgamated) Assurance Limited v Anderson (1948) 46 SR (NSW) 47; Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151; Pastoral Finance Association Limited v the Minister [1914] AC 1083; Peter Croke Holdings v Roads and Traffic Authority of New South Wales (1998) 101 LGERA 30; Radaich v Smith (1959) 101 CLR 209; Teller Properties Pty Limited v Randwick City Council, NSWLEC, Bannon J, 14 June 1994, unreported; Teller Properties Pty Limited v Randwick City Council, NSWLEC, Talbot J, 15 September 1994, unreported; West & Ors v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 266
DATES OF HEARING:	24/10/00, 27/11/00, 28/11/00, 29/11/00, 30/11/00, 30/01/01 and 02/02/01
DATE OF JUDGMENT:	05/08/2001
LEGAL REPRESENTATIVES:	APPLICANTS: Mr W R Davison SC SOLICITORS: Kearns & Garside RESPONDENT: Mr J J Webster (Barrister) SOLICITORS: Morton & Harris

JUDGMENT:

1

IN THE LAND AND Matter No.: 30008 of 2000
ENVIRONMENT COURT Coram: Lloyd J
OF NEW SOUTH WALES Decision date: 8 May 2001

Mooliang Pty Limited, Sidlist Pty Limited,

Veney Bros Pty Limited,

Gregory Wayne Fleming, Deborah Ann Fleming,

Graham Maurice Quinton, Wendy Kerr Quinton,

Elaine Joy Hart, Ian Stanley Hart,

Jilgain Pty Limited,

Phonda Harle, George Harle and Hatarlee Madden

Applicants

v

Shoalhaven City Council

Respondent

REASONS FOR JUDGMENT

1. The first applicant objects to the amount of compensation offered by the respondent, Shoalhaven City Council (“the council”), following the compulsory acquisition by the council of the first applicant’s land. The land, known as lot 3 in deposited plan 231481, Berrara Road, Berrara, Parish of Cudmirrah, County of St Vincent, comprises an area of about 2832 square metres. It was acquired by Notice of Compulsory Acquisition published in the New South Wales Government Gazette No. 120 on 15 October 1999 for the purpose of public recreation.

2. At the relevant date, 15 October 1999, the land was the subject of an approval granted by the council under the Local Government (Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 1995 as a caravan park accommodating nine short-term sites for moveable dwellings and was used for that purpose. The land was zoned 7(d2) under the relevant environmental planning instrument, the City of Shoalhaven Local Environmental Plan 1985. The use of the land as a caravan park is prohibited within this zone, but its use was protected as an existing use under the Environmental Planning and Assessment Act 1979 (“the EP&A Act”). At the relevant date the improvements on the land comprised water and sewage reticulation to each of the nine sites together with a sewage pump and collection tank (approved by the council on 13 March 1998), electricity to each site and to the access road, a fire-fighting stand pipe and associated hoses and various concrete hard-standing areas. Eight of the nine sites were occupied with caravans and annexes. One site was vacant because the caravan and annex on it had recently been destroyed by fire.

3. The subject land has a frontage to the high water mark of Berrara Creek. It possesses access to and views over the creek, the tidal inlet to the creek and the adjacent beach and ocean. The land was not subject to any foreshore building line or other building set-back.

4. Pursuant to the Court’s Expert Witness Practice Direction, I directed the parties’ expert witnesses to confer on a “without prejudice” basis and to endeavour to agree and to make a joint statement specifying matters agreed and not agreed together with the reasons for any such disagreement. This proved to be a useful exercise and resulted in agreement on some (but not all) issues which were raised in the proceedings.

A preliminary issue of joinder

5. The application was brought by the first applicant (the owner of the land). The various unit holders of the Mooliang Unit Trust have applied to be joined as parties, each of whom claim to have an interest in the land within the meaning of section 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (“Just Terms Act”).

Facts

6. In 1995 the caravan owners who occupied the caravan park proposed to join together to purchase the land to enable them to continue using it as a holiday destination for themselves and their families.

7. Mr G W Fleming and Mr B D McLaughlin, two of the caravan owners, received legal advice that the best way to proceed was to form a proprietary company to purchase the land as trustee of a unit trust; and that it could be arranged so that ownership of a group of units in the trust would entitle that owner to exclusive use and occupancy of a caravan site on the land. On 4 August 1995 Mr Fleming and Mr McLaughlin accordingly entered into a contract to purchase the land for $150,000 on behalf of a company to be formed and to be known as Mooliang Pty Limited which was to be controlled by the caravan owners.

8. The purchasers’ solicitor, Mr T I Johnston, arranged for the acquisition of the applicant as a shelf company and it was incorporated on 4 December 1996. The subscriber shares were transferred to Mr McLaughlin and Mr Fleming on that date. The company’s records show that the other shares were issued to the other caravan owners between 31 October 1997 and 31 December 1999 and that each shareholder was appointed a director when such shares were issued. There is some discrepancy between the company’s records and the records of the Australian Securities and Investment Commission which disclose that at 11 March 2000 the only shareholders were Mr and Mrs McLaughlin, Mr and Mrs Fleming and Mr and Mrs Choma.

9. Mr Johnston also prepared the unit trust deed, which was executed on 5 December 1996. The company’s records show that at the time of compulsory acquisition the unit holders in the Mooliang Unit Trust were the parties whose application for joinder is now before me. It should be noted that the unit holders of the Mooliang Unit Trust and shareholders/directors of Mooliang Pty Limited were not legally identical, some of the units being held by proprietary companies, whereas the shareholders appear on the register as individuals.

10. Attached to Mr Fleming’s affidavit are the minutes of three meetings described as general meetings of Mooliang Pty Limited, including one held on the 4 January 1997 at which the following resolution was passed:

Each unit holder is entitled to one caravan site. Unit holders will be given the first option to buy other sites should they become available. They will then be entitlement for that site.

11. The significance and effectiveness of this resolution will be examined presently.

12. The sale of the land was completed on 11 March 1997, the title being acquired by Mooliang Pty Limited. The caravans, which remained on site in the caravan park, were expressly excluded from the sale. There is no record of any formal declaration of trust being made by the company at this time or at any later time. The unit holders may, however, have been under the impression that nothing further was required to make them beneficial owners of the land. Mr Fleming, for example, in his affidavit, testifies to his belief that “(t)he only land ever owned by the Applicant is the land the subject of this application and this was held by the Applicant as trustee for the Mooliang Unit Trust. The Applicant has never owned any land in its own right or on behalf of any other trust”.

13. Meanwhile the caravan owners continued to occupy their respective sites as they had before the sale, although there was no formal resolution allocating specific sites to specific parties. They also contributed one-ninth per site to the expenses of the caravan park and to the administration of Mooliang Pty Limited.

The relevant statutory provisions

14. Section 4 of the Just Terms Act relevantly provides:

Interest in land means:

(a) a legal or equitable estate or interest in the land; or

(b) an easement, right, charge, power or privilege over, or in connection with, the land.

15. Section 37 of Just Terms Act provides:

37 An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.

The respondent’s submissions

16. Mr J J Webster, appearing for the for the respondent council, contends that the unit holders do not, by virtue of their status as unit holders, have a beneficial interest in the subject land because the land never became the property of the trust. He makes the following submissions in favour of this proposition:

(1) Mooliang Pty Limited acquired absolute legal and beneficial title of the land when the purchase was completed on 11 March 1997 and retained it up to the date of compulsory acquisition. He points to the absence of any other interest recorded in the second schedule, and the absence of any evidence of a declaration of trust by the company in favour of the unit holders either at the time the land was purchased, or subsequently. He also refers to the Trust Deed as conferring no rights on unit holders in respect of any land held by the trust.

(2) Since no documentary evidence of a declaration of trust has been adduced, the requirements of writing in the Conveyancing Act 1919 prevent a trust of the land from being created in another way. Specifically, section 23C(1) of the Conveyancing Act 1919 provides that no interest in land can be acquired “except by writing” and section 23C(1)(b) of that Act requires that any declaration of trust be “manifested in writing”.

(3) Regarding the so-called general meeting of Mooliang Pty Limited of 4 January 1997, since only two of the eight persons present were shareholders of the company at the time, this was not a general meeting of shareholders but a meeting of unit holders. According to Mr Webster, it follows from this that since the unit holders had no title to the subject land, any purported grant of rights by this meeting was ineffective.

17. Regarding any claim over the land which the applicants may assert as shareholders rather than unit holders, Mr Webster points out that the shareholders and unit holders are not identical. He cites the general proposition that shareholders do not, because of their share holding, have any legal or beneficial interest in land held by the company.

18. Regarding the applicants’ claim to enjoy rights as tenants at will rather then as unit holders, Mr Webster submits that a tenancy at will is a personal rather than a proprietary interest and argues that it is therefore not an interest in land for the purposes of section 4(a) of the Just Terms Act. He further submits that the decision of the Court of Appeal in Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151 precludes the court from finding that a tenancy at will satisfies paragraph (b) of the definition of “interest in land” in section 4. He particularly relies upon the judgement of Meagher JA (at 155) to the effect that the rights here recognised “must be limited to jura in re aliena, proprietary or quasi proprietary rights less than a fully-fledged estate, that is, easements, charges, profits prendre, profits rendre, licences coupled with interests etc”. He submits that this decision overrules the earlier case of West & Ors v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 266.

The applicant’s submissions

19. Mr W R Davison SC submits that the meeting of 4 January and other circumstances show that “there was an intent on the part of those who were the mind of Mooliang” to declare a trust for the benefit of the unit holders of the Mooliang Unit Trust, that they believed that such a result had been achieved and they conducted themselves consistently with this belief. He submits that this course of action, if it does not create the interest intended, should create an interest in land to the same effect and that this is relevantly an interest in land.

20. Mr Davison submits that the meeting of 4 January 1997 was a genuine general meeting of Mooliang Pty Limited, since it was attended by the two then shareholders, and that any failure in record-keeping relating to company membership and the minutes should not operate to deny the effectiveness of the resolution then made which granted at least a right of exclusive occupancy equivalent to a tenancy at will to the unit holders of the Mooliang Unit Trust. He submits that this resolution was effective whether made by Mooliang Pty Limited as trustee or absolute beneficial owner of the land.

21. Peter Croke Holdings v Roads and Traffic Authority of New South Wales (1998) 101 LGERA 30 and West & Ors v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 266 are cited in support of the proposition that persons with a right of occupancy such as that enjoyed by tenants at will have an interest which is recognised by the Just Terms Act. Mr Davison submits that although a tenancy at will was referred to in Anderson v Toohey’s Limited (1937) 37 SR (NSW) 70 as a personal interest, this only reflects the terminology of the time and does not prevent it from being regarded relevantly as an interest in land. He argues that this proposition is not detracted from by Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151 because that case appears to be concerned only with paragraph (b) of the definition.

22. Mr Davision further submits that the Just Terms Act should not be read in a legalistic way so as to deprive people of compensation who have clearly suffered a loss as a result of the compulsory acquisition of land.

Conclusions

Beneficial Ownership

23. For the subject land to have become part of the Mooliang Unit Trust, the trustee, Mooliang Pty Limited, would have to have made a declaration of trust at some stage. Section 23C(1)(b) of the Conveyancing Act requires a declaration of trust respecting land to be “manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will”.

24. No express declaration of trust is to be found in the Trust Deed, which declares that the prime object of the Trust is to carry on the business of a Caravan Park Proprietor “and to invest the Fund in any property or investment which the Trustee in its absolute discretion think fit”. The Schedule refers to a settled sum of $10.00 and the fund being divided into ten units of one dollar each. There is no mention of any land being part of the trust fund at the time of execution or of any entitlement of unit holders to occupy land held or acquired by the Trust.

25. The only documentary evidence adduced by the parties which could be taken to show a declaration of trust are the minutes of the supposed general meeting of Mooliang Pty Limited of 4 January 1997. This meeting was improperly constituted in that of the eight people present only two, Mr Fleming and Mr McLaughlin, were at that time directors or shareholders of Mooliang Pty Limited. The record of meeting is signed by Mrs Wendy Kerr Quinton who calls herself secretary/treasurer, although there is no mention of her being appointed to that position until a subsequent meeting of 27 February 1997; and according to the company’s other records she only became a shareholder and director on 31 October 1997. The supposed resolution made at this meeting therefore lacks both effectiveness as a resolution of the company and the formality of authorised signature required by section 23C(1)(b) of the Conveyancing Act for a valid declaration of trust.

26. Moreover, it does not appear from the evidence that the company really intended to declare a trust in such a meeting. The words “each unit holder is entitled to one caravan site” may mean entitled to occupy rather than beneficially entitled. In context, what these minutes really seem to represent is not an attempt to declare a trust, but rather all parties proceeding on the basis of an erroneous assumption that the land is either already part of the trust or will automatically become part of the trust upon completion. The company is by such resolution not attempting to confer beneficial ownership, but an entitlement - occupancy of a single caravan site - which was to flow from the beneficial ownership which it was assumed would come into existence.

27. While it cannot be denied that, as Mr Davison says, “there was an intent on the part of those who are the mind of Mooliang to achieve the result as deposed to by Mr Fleming” (that is, the transfer of the beneficial interest), without evidence of any steps being taken to put that intention into effect, and especially in light of the requirements of writing in the Conveyancing Act, such an interest cannot be recognised by the court.

28. Neither is it clear that an effective declaration of trust would have assisted the applicants, since the rights of unit holders in a unit trust are a proportional beneficial interest in the fund as a whole rather than a beneficial interest in specific assets of the fund. No submission was made as to how such an interest might qualify as an interest in land.

29. Mr Davison submits that the parties’ belief that an interest has been created and their conduct consistent with this belief, if it does not create the interest intended, should nevertheless create an interest to the same effect and that this is relevantly an interest of land. If such an interest were to be recognised, however, in my opinion it would be necessary to be specific about what interest is supposed to have arisen and what aspect of the parties’ conduct gave rise to it. Mr Davison does not explicitly state what interest, apart from a tenancy at will, he is asserting. It can be said, however, that any such “equivalent” interest would have to take the form of an entitlement to an equitable remedy in personam which would have less claim than a tenancy at will to be recognised as an interest in land for the purposes of section 4 of the Just Terms Act. My conclusion is, therefore, that the individual unit holders in the Trust did not acquire any relevant beneficial interest in the land as a consequence of their respective interests in the Trust.

Tenancy at Will

30. The caravan owners’ tenancy at will was created by virtue of their being in possession of their respective sites with the assent of the landowner. The assent of the landowner, although it was never formalised, cannot be denied, given that the landowner was a company controlled by the caravan owners and that the whole purpose of forming the company and purchasing the land was to enable them to continue to occupy those sites. The resolution of the supposed general meeting of 4 January 1997 is not necessary to found the tenancy at will.

31. The creation of such an interest without writing is not precluded by section 23C(1)(a) of the Conveyancing Act which provides that “no interest in land can be created or disposed of except in writing...”, because this provision is expressed to be subject to the provisions regarding the creation of interests by parol. Section 23D(1) then goes on to provide that interests in land created by parol have “... the force and effect of interests at will only”. Indeed the fact that the creation of interests in land is expressed to be subject to the creation of interests at will by parol lends weight to the proposition that interests at will may be regarded as interests in land.

An Interest in Land

32. In Peter Croke Holdings v Roads and Traffic Authority (1998) 101 LGERA 30 Bignold J had to determine the entitlement to compensation of a company which occupied a site owned by its parent company. The “lessor” had been in occupation of the site for twenty years. There was no written agreement, but rent had been paid as a book entry between the companies. His Honour found that there was an interest in land under the Just Terms Act, which he explained (at 35):

In my judgement, and having regard to Mr Croke’s evidence concerning the relationship between the two companies, which was unchallenged and which I accept, it is clear that the second applicant’s occupation of the acquired land for the continuous period 20 years prior to the acquisition date constituted an interest in the acquired land within the meaning of the Just Terms Act being a legal or equitable leasehold estate or interest.

In so concluding, I do not think it is necessary to determine the precise form of the tenancy, it being sufficient to say that it was probably a periodic tenancy from year to year (either at common law or in equity) or at the very least a statutory tenancy at will in terms of s127 (1) of the Conveyancing Act 1919 (NSW). Either type of tenancy qualifies as a legal or equitable estate in the acquired land.

33. The circumstances of that case, however, are relevantly different from the present, as the decision in Peter Croke was based on the finding that the applicant enjoyed a periodic tenancy from year to year or at least a statutory tenancy at will (which requires notice of termination).

34. In Anderson v Toohey’s Limited (1937) 37 SR (NSW) 70 at 74, Jordan CJ said that a tenancy at will “constitutes a personal relation between the landlord and tenant” which is not capable of being assigned and which terminates on the death of either party. However, this statement should be read in conjunction with the following statement in Commonwealth Life (Amalgamated) Assurance Limited v Anderson (1945) 46 SR (NSW) 47 at 49-50 in which Jordan CJ refers to a tenancy at will as an “estate”, which tends to suggest that it is an interest in land. Jordan CJ also explains its lack of assignability and its termination at the death of either party in a way which implies that they may be consequences of the nature of the tenancy rather than the lack of an interest in land.

A tenancy at will exists whenever, by virtue of an express or implied agreement between the land-owner and another person, the other is in exclusive possession of the land, otherwise than as servant or agent of the owner, for an estate which is not of freehold or for a term.... Since the existence of the tenancy depends upon the will of the parties, the death of either terminates his will, and therefore, the tenancy. ... The estate created by the tenancy is unassignable, because a purported assignment terminates as soon as it comes to the notice of the owner...

35. In support of the proposition that tenants at will may be regarded as holders of an interest in land, Radaich v Smith (1959) 101 CLR 209 may be cited. That case concerned the position of a tenant under the Landlord and Tenant (Amendment) Act 1948 who had received notice to quit but not yet been ordered by a court to vacate. Taylor J (at 218) did not exclude tenancies at will, however, when he described the possession of an interest in land as a defining attribute of a tenancy (as distinguished from a licence).

36. Windeyer J made a similar point (at 221-2):

The distinction between a lease and a licence is clear. A dispensation or licence properly passeth no interest, nor alters or transfers property in anything but only makes an action lawful which without it had been unlawful: Thomas v Sorrell (1958) 1 QB 513.... What then is the fundamental right which a tenant has that distinguishes his position from that of a licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some stipulated purpose or purposes....

37. In Chelsea Investments Pty Limited v Federal Commissioner of Taxation (1966) 115 CLR 1 the High Court also focussed on exclusive occupation as the hallmark of a tenancy. It found that the right of exclusive occupation was an interest in land (and therefore a tenancy), even when this right was short lived and not assignable. Windeyer J provided some historical explanation of why tenancies are sometimes regarded as personalty rather than realty, but ultimately concluded that they are of their nature an interest in land (at 6-7):

It seems to me that it really begs the question to say that after the notice to quit Virgona had no estate or interest in the land. He had in the ordinary sense no proprietary right, because he could not assign his right to remain in occupation. He had of course no estate in the feudal sense. What we now call a tenancy was not a tenure. Not until the end of the fifteenth century could it be said that a termor had an estate in land. Thereafter it could be, because the action of ejectment secured the tenant in his possession. What rights did the law actually give to Virgona? That, rather than their description, is the essential question. It gave him a right to continue in occupation subject to his performing in favour of his landlord the taxpayer what had formerly been his contractual obligations under the lease, to pay rent and so forth. Until he should be ordered by a competent court to give up possession, he had a right to exclusive possession as against all others including his landlord. Such a right, when it flows from contract with the landlord, is the very essence of tenancy. It creates an interest in land: Radaich v Smith. It seems to me that this same right when it flows from statute rather than from contract is an interest in relation to the land, if not, in a technical sense, an estate in the land. It is true that this statutory tenancy does not fit into the earlier known categories. ... It is true that this statutory tenant cannot assign his right of occupation. It is a personal right although in some cases it descends upon his death. Doubtless a right to assign the term to a stranger is an incident of an ordinary leasehold, although it may be restricted by the provisions of the lease. But this seems to me to be of itself inconclusive.

38. The applicants in the present case, having a tenancy at will, also had a right to exclusive possession. They were not mere licensees. This right as against the landlord may have been rather ephemeral, since technically the landlord could at any time have revoked the tenancy without notice. It was, however arguably no more ephemeral than the right of a statutory tenant who has not yet been ordered by a court to vacate.

39. Notwithstanding the fact that a tenancy at will may be terminated by either party at any time, there was in the present case a unity of interest between the landowner and the tenants that made such a termination highly unlikely. If it occurred, the shareholders may have had an equitable remedy for oppressive or unfair conduct, or a statutory remedy under Part 2F.1 of the Corporations Law. In this case the tenancy at will has been terminated at the instance of neither the landowner nor the tenants.

40. The authorities cited above support the proposition that the applicants as tenants at will should be regarded as having an interest in land according to common law principles. This, together with particular circumstances of their tenancy, means that they fall within the definition of having an interest in land within the meaning of paragraph (a) of the definition of “interest in land” in section 4 of the Just Terms Act. They may, therefore, be joined and may claim their respective losses for being forced to remove their chattels and structures from the land as losses attributable to disturbance.

41. This is sufficient to permit both the claims for joinder and for compensation. For completeness, however, it is worth considering whether the applicants are also so entitled under paragraph (b) of the definition of “interest in land” in section 4 of the Just Terms Act.

An interest under paragraph 4(b)

42. In my opinion, the applicants may also be described as having a privilege in connection with the land under paragraph (b) of the definition of “interest’ in land” in the section 4 of the Just Terms Act. Two analogous decisions in the Land and Environment Court are consistent with this finding.

43. In West & Ors v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 266, a company occupied the downstairs part of a house owned by two of the company’s shareholders. The company paid rates and expenses for the property, but Talbot J found that it did not pay rent as such and did not have exclusive possession of any part of the house; therefore, it could not be described as holding a lease. Nonetheless, it was found to have, for the purpose of paragraph (b) of the definition “rights and privileges in connection with the land”. In making this finding, Talbot J drew attention to the mutual obligations between the parties (although not the obligations of landlord and tenant) and the fact that the company “was occupying part of the premises for its own purposes under a legal right derived from the owners” (at 274).

44. I do not believe the principles applied in West are discounted by the following gloss placed on section 4 by Meagher JA in Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151 (at 154-5) to which I have previously referred:

Some limitation must be placed on the words. Whilst the rights which fall within par (b) must be wider than the rights which fall within par (a), I feel that they must be limited to jura in re aliena, proprietary or quasi-proprietary rights less than a fully-fledged estate, that is, easements, charges, profits prendre, profits rendre, licences coupled with interests etc.

45. In that case it was decided that a council which had mere rights of management over the land in question was not entitled to claim compensation. The case can be distinguished from West and from the present case on the basis that the claimant council had no right of occupancy over the land.

46. The rights recognised in West might be described as “quasi-proprietary” or a “licence coupled with an interest”, in that they were not strictly proprietary, but granted the right of occupancy on a more secure footing than a common licence or even a tenancy at will, because of the mutual interests of the parties and their interconnectedness.

47. Similarly, the rights of the applicants in this motion for joinder are more than those of mere licencees in each instance. Their roles as directors and shareholders of Mooliang Pty Limited rendered their rights as tenants, although they were technically only tenants at will, more secure than those of most tenants for a term. Even supposing that the company had tried to act contrary to their interests, in their capacity as shareholders the applicants would have had equitable remedies against the company, or statutory remedies under Part 2F.1 of the Corporations Law. In light of these circumstances, their interest should fall within paragraph (b) of the definition.

48. Moreover, the applicants each had a right of exclusive occupancy of their respective sites which can aptly be described as a privilege in connection with the land. On this basis they are also within paragraph (b) of the definition and thus entitled to be joined.

Town planning issues

49. It is convenient to record those facts relating to the use of land upon which there is agreement. I have noted that the site is and was not subject to a foreshore building line, although a foreshore building line exists on the adjoining land. Pursuant to the State Environmental Planning Policy No. 21 (“SEPP 21”), one form of moveable dwelling can be replaced by another. In other words, caravans could have been replaced with manufactured homes (also known as relocatable homes) without the need to obtain development consent. The replacement of caravans (and annexes) with other forms of moveable dwellings would not have altered the use of the land as a “caravan park”, which is defined in SEPP 21, clause 6, as “land (including a camping ground) on which caravans (or caravans and other moveable dwellings) are, or are to be, installed or placed”. Neither would it have amounted to an alteration to, or enlargement, expansion or intensification of the existing use.

50. On 7 July 1999 the applicant made a development application for a proposed change of use and a community title subdivision of the land from that of “a tourist development with nine caravans” to “a community titled tourist development with nine cabins and ten allotments, one being the neighbourhood lot”. The development application had not been determined when the land was compulsorily acquired on 15 October 1999. A similar development to that which was proposed exists on the land which adjoins the subject land to the north.

51. The parties do not agree on what was the highest and best use of the subject land at the relevant date. Was it as a tourist facility comprising nine holiday cabins with community title subdivision, or as a caravan park for nine short-term moveable dwellings with the ability to upgrade the structures to manufactured or relocatable homes? Moreover, would a community title subdivision have been approved for whatever development existed or was otherwise allowable or would otherwise be approved on the land?

52. Evidence on this issue was given by two town planners, Mr C A Stoddard on behalf of the applicant and Mr S J O’Connor on behalf of the respondent.

53. It is clear that a manufactured home could have been placed on each site in place of each caravan and annexe structure which previously existed, including the structure that had been burned down; and this could have been done without development consent. As I have noted, the substitution of manufactured homes for caravans would not effect either a change of use or an enlargement, expansion or intensification of the use. Some manufactured homes are reasonably substantial and comfortable structures, containing all the usual home comforts including a kitchen, bathroom, living room, bedrooms and decking. They are just as comfortable and commodious as permanent cabins. I should record the fact that a view of the site and of other caravan parks in the vicinity was taken in the presence of representatives the parties. In the course of such view the presence of manufactured homes (or relocatable homes) was observed on other caravan parks.

54. It is apparently conceded by the applicant that a subdivision of the land, whether under the Community Land Development Act 1989 or otherwise, would have required development consent. The respondent submits that this necessarily involves an abandonment of the use of the land for a caravan park or a change of use. I do not agree. The use of the land and of the moveable dwellings thereon, whether they be caravans or manufactured homes could continue pursuant to the existing use rights under section 107(1) of the EP&A Act. The subdivision would not effect a change of use, neither would it amount to an enlargement, expansion or intensification of the use, but merely reflect a change in title. The use of the land and the method by which such use operated prior the subdivision would be able to continue unchanged after subdivision. Planning controls are concerned with the use of land rather than the method of ownership or the identity of the owners.

55. The conclusion that a subdivision of the land (whether under the Community Land Development Act or otherwise) does not amount to either an abandonment of the use or a change of use is supported by Teller Properties Pty Limited v Randwick City Council (NSWLEC, 14 June 1994, unreported), in which Bannon J held that the conversion of an existing motel building into strata units would not alter the use of the building for a motel. Bannon J ‘s judgment was followed by Talbot J in Teller Properties Pty Limited v Randwick City Council (NSWLEC, 15 September 1994, unreported) in which his Honour said that conversion of a motel building into strata is a matter going merely to title and not to use.

56. Since a community title subdivision of the land would not have amounted to either an abandonment of the use, or a change of use, but would merely amount to a change in title and to the method of ownership and the identity of owners, then there seems to be no reason why such a subdivision of the subject land would not have been approved. Moreover, it is difficult to discern any reason why such a subdivision could have been refused. The council submits that, as with the holiday cabin development on the adjoining land, a condition of approval would have been imposed upon any consent to subdivision requiring the dedication to the council of a strip of land fronting Berrara Creek as public open space. According to the submission, this in turn would have reduced the potential number of community lots to five or, at most, six. I do not agree. The adjoining development apparently involved a change of use. Moreover, the dedication gave effect to the zoning of the dedicated strip of land as open space and was part of the contribution required under section 94 of the EP&A Act. In the present case, however, on an application for mere subdivision of land under the Community Land Development Act there would be no change of use or intensification of the use and hence no justification under section 94 of the EP&A Act or otherwise for requiring any such dedication.

57. It was suggested by the respondent that since the subject land is within 40 metres of a creek then the application for subdivision would have been recognised as an application for integrated development and would require a permit under Part 3A of the Rivers and Foreshores Act 1998. Both the town planners who gave evidence agreed that the question of the need for a permit under Part 3A of the Act and for a set-back from the creek are matters upon which the Department of Land and Water Conservation has given varied and inconsistent advice. Since the subdivision in this case would involve no change of use or intensification of use of land I am inclined to question the justification for either a need for a permit, or for any set-back, as suggested by the council. It is reasonable to expect that under those circumstances, since any works associated with the subdivision would be minimal, the matter would be approached no differently from the way in which the application to construct the sewerage was approved in 1998, namely to merely require restoration of the bank of the creek. The Department of Land and Water Conservation acknowledged, in a letter dated 3 August 2000 to Mr O’Connor, that it does not have authority to amend the location of existing structures on freehold land. As I have said, the proposal does not amount to a change of use or the intensification of an existing use. It is merely a change in title and in ownership. Moreover, unlike the adjoining land, there is no foreshore building line which applies to the subject land.

58. I also prefer generally the views of the town planner called by the applicant, Mr Stoddart to those of the town planner called by the respondent, Mr O’Connor, on the issue of whether a community title subdivision as suggested by the applicants would have been approved. The whole tenor of Mr O’Connor’s report appears to rely heavily on provisions of the City of Shoalhaven Local Environmental Plan 1985, which provisions “have no force of effect”, being provisions which derogate or have the effect of derogating from the incorporated provisions which apply to existing uses (see section 108 of the EP&A Act). Moreover, Mr O’Connor does not appear to take account of the operation of SEPP 21. I thus find as a fact that the highest and best use of the subject land at the relevant date was as a caravan park containing nine manufactured homes (which could be placed on the land without development consent) and subdivision of the land under the Community Land Development Act 1989 into nine community title lots and one community lot.

Valuation issues

59. Only one valuer who gave evidence, Mr K J Parkinson, valued the land upon the basis that the hypothetical purchaser (of the vacant land) would have first bought and placed on the land manufactured homes (or relocatable homes) and then applied for and obtained consent to a community title subdivision for nine lots (plus one community lot).

60. Since only one valuer gave consideration to this as being the highest and best use of the land, I am prepared to adopt the valuation he made on that basis. I therefore adopt Mr Parkinson’s valuation, which he amended during the hearing (Exhibit Z) to take account of the value of the community title lots, agreed to by all the valuers during the hearing, of $90,000 each for gross realisation purposes.

61. Mr Parkinson adopted a lower profit and risk factor than the respondent’s valuers. The variances or differences between them depended on the advice provided by each party as to the likely success of a development application for the community title subdivision. In view of my conclusion that there would appear to be no basis for a refusal of such a development application, I thus accept Mr Pakinson’s profit and risk factor as representing the most realistic approach to the question of valuation in this case.

62. I also accept Mr Parkinson’s statement, confirmed by the view taken in the presence of representatives of the parties, that “the subject land enjoys an idyllic location” with direct frontage to the creek and direct access to both the creek and the beach. The subject land also has views of the both the creek and the beach. None of the other caravan parks relied upon as comparable sales enjoy the same level of amenity. As the evidence of Mr Parkinson showed, land which enjoys beach and ocean views is invariably more valuable than land which does not.

63. I reject the suggestion, however, that there should be an allowance in the development costs (for a community title subdivision) for a contribution under section 94 of the EP&A Act. In my opinion no such contribution would be payable because there would be no change of use and no intensification of use to justify the same. That is to say, the subdivision would not cause any increase in demand for works or services. The subdivision would be merely a reflection of the existing use of the land. Mr Pakinson had allowed for a contribution under section 94 of $1,000 for each of the nine lots. I assume that the omission of the section 94 contribution as a cost would mean that Mr Parkinson’s amended valuation (Exhibit Z) must be adjusted by an amount of $9,000 so as to increase his valuation from $506,000 to $515,000. This would then represent the market value of the land at the date of acquisition.

64. The applicants also claim special value to the owner based upon the unique attributes of the land. Mr Fleming gave evidence that the additional price which he (and the other unit holders) would be prepared to pay rather than lose the land was at least $180,000 (being $20,000 per unit holder). According to Mr Davison’s submission, this is the true measure of special value in this case. There is no other land upon which the applicant could re-establish itself and which would enjoy a similar amenity. (Mr Davision relied upon Pastoral Finance Association Limited v The Minister [1914] AC 1083 and The Commonwealth v Reeve (1949) 78 CLR 410).

65. In Pastoral Finance the Privy Council held that the compensation payable to the owner of land which had been resumed under the Public Works Act 1900 (NSW) was the amount which a prudent person in the position of the owner would have been willing to give rather than fail to obtain it. Lord Moulton, who delivered the judgment said (at 1087 and 1088):

The appellants were clearly entitled to receive compensation based on the value of the land to them. This proposition could not be contested. The land was their property and, on being dispossessed of it, the appellants were entitled to receive as compensation the value of the land to them whatever that might be.

...

Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.

66. In The Commonwealth v Reeve Latham CJ said (at 418):

The value of land to the owner is what he can get for it. He can never get for it more than other people will give for it. But what other people will give for it is not unaffected by what the owner is prepared to take for it, and if the sale of the land would involve him in costs and expenses that fact may be an element which would affect the amount which he is willing to take.

67. In the same case Dixon J said (at 428):

Ultimately what is to be found is the value to the owner of the interest taken. All the actual and potential advantages to the proprietor of the interest enter into that value to him.

68. Special value is defined in the Just Terms Act (section 57) as the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person’s use of the land. In the present case, however, the special attributes possessed by the land having regard to the use of the land are reflected in the valuation of Mr Parkinson (and to a lesser extent the valuations of the other valuers). The special attributes of the land are not those which only the dispossessed owner could exploit. Any purchaser would have had regard to the special attributes of the land in arriving at a purchase price and would have purchased the land for the same use as the dispossessed owners. There is no special advantage which the latter held over any potential purchaser of the land. The additional financial advantage which the owner had is reflected in the market value. I thus reject the claim for special value to the owner based upon the unique attributes of the land.

69. I find that the remaining claims of the applicants (other than Mooliang Pty Limited), namely the unit holders, for either special value or for loss attributable to disturbance are, however, valid in this case. Each of them reasonably incurred losses in having to dispose of the chattels and structures which existed in situ. Those losses are directly related to the actual use of the land at the date of compulsory acquisition, as a direct and natural consequence of that acquisition. They are each entitled to the difference between the values of the chattels and structures in situ and their values for sale purposes. They are identified in the valuation of Mr G McDonald (Exhibit B, page 26) who states that the values for sale purposes represent the actual figures achieved. I accept Mr McDonald’s statement of the various values in situ, since he was the only valuer who gave evidence who saw them in situ.

70. The applicants are, of cause, also entitled to valuation, legal and other costs reasonably incurred as a result of the acquisition.

Conclusion

71. I direct the applicants to bring in short minutes of orders by arrangement with my associate to give effect to the above-mentioned findings. I will also hear counsel on the question of costs on that occasion.

72. The exhibits, other than Exhibits B, J, W, X and Z may be returned.