Nevis Pty Ltd v Department of Main Roads
[2002] QLAC 48
•13 June 2002
LAND APPEAL COURT OF QUEENSLAND
CITATION:Nevis Pty Ltd & Others v. Chief Executive, Department of Main Roads [2002] QLAC 48
PARTIES: Nevis Pty Ltd Australian Self-Storage Pty Ltd, Australian Self-Storage Pty Ltd as trustee for the Australian Self-Storage Superannuation Fund and Body Corporate for 4032 Pacific Highway Community Titles Scheme 22755
(appellants)
v
Chief Executive, Department of Main Roads
(respondent)
FILE NO: LAC2002/0011
DIVISION: Land Appeal Court
PROCEEDING: Land Appeal Court Appeal against decision of Land
Court not to grant leave to rehear the matter.
ORIGINATING COURT: Land Court DELIVERED ON: 13 June 2002
DELIVERED AT: Brisbane
HEARD AT: Brisbane
JUDGE/MEMBERS Mullins J
Mr RP Scott, Member Dr NG Divett, Member
ORDER:1. The appeal is allowed and the order of Mrs CAC MacDonald made on 10 December 2001 is set aside.
2.The appellants’ application for leave to have the matter reheard is granted in respect of the issue of further compensation based on the decision in Marshall v Director-General, Department of Transport (2001) 75 ALJR 1218.
3. The matter is remitted to the learned President for rehearing in respect of that issue.
CATCHWORDS: 1. PRACTICE AND PROCEDURE - Application for re-hearing - principles to be adopted; analogous to re-opening principles; only allow when re-hearing could make a significant and substantial difference to the decision. [10][11][12] [25]
2.PRACTICE AND PROCEDURE - Application for re-hearing - comparison with old and new provisions - s.44 Land Act 1962, s.12 Land Court Act 2000 - relationship to appeal provisions and limitations thereon; use of Minister's Second Reading Speech to clarify new provisions.
[13] [14] [20] [30] [31]
3.PRACTICE AND PROCEDURE - Application for re-hearing - rationale of new provisions for re-hearing; circumstances where it intended to be used; Minister's Second Reading Speech use to clarify interpretation.
[31] [41]
4.PRACTICE AND PROCEDURE - Application for re-hearing - "Usual route" for a dissatisfied party is appeal - existence of such is relevant to exercise of discretion to grant re-hearing - "usual route" consideration not a principle but an accurate observation of operation of Act.
[18] [27] [32]
5.PRACTICE AND PROCEDURE - Application for re-hearing - normal protective course under s.12: lodge re-hearing and appeal applications together, same time limits (42 days); contrast old provisions under s.43 of Land Act 1962.
[28]
6.PRACTICE AND PROCEDURE - Appeal to Land Appeal Court - aspect must involve alleged wrong principle of law or conclusion as to value characterized as "entirely erroneous"; Emerald Quarry case.
[31]
7.PRACTICE AND PROCEDURE - Application for re-hearing - no requirement that application be heard by same Member who heard initial
case; original Member to conduct re-hearing, if practicable.
[35]
8.PRACTICE AND PROCEDURE - Application for re-hearing - test applied in special leave application to High Court (in the point is fairly arguable) not relevant here; such ignores difference between re-hearing and appeal.
[18] [36]
9.PRACTICE AND PROCEDURE - Application for re-hearing - if alleged errors are not obvious or patent such should be dealt with in usual way ie by appeal to Land Appeal Court; challenge to methodology or exercise of discretion not a matter for re-hearing.
[41] [50] [51]
10.PRACTICE AND PROCEDURE - Application for re-hearing - long established approach of Land Court (on allowance for claimants' time) altered (by Heavey Lex) after initial hearing of this case but before decision - but claimants had claimed for such without supporting evidence - not sufficient basis to remit for re-hearing.
[60]
11.PRACTICE AND PROCEDURE - Application for re-hearing - long established authority (Edwards) overruled by High Court (Marshall) after initial hearing of this case but prior to decision - valuer could have led further and different evidence if new authority (Marshall) available at date of hearing - case remitted to original Member on this issue only.
[70] [71] [77]
12.PRACTICE AND PROCEDURE - Application for re-hearing - Court able to refer back on limited issue or on terms - s.12 and s.10 Land Court Act 2000 - also individual issue may not justify re-hearing but, cumulatively, issues may do so.
[79] [81]
SOLICITORS Dibbs Barker Gosling Lawyers for the appellants Crown Solicitor for the respondent
This appeal arises out of the compulsory acquisition of the appellants’ land situated at Loganholme by the respondent on 25 June 1999 for transport and incidental purposes in connection with the upgrading of the Pacific Motorway from six lanes to eight lanes. On 23 March 2001 the learned President of the Land Court determined compensation in the sum of
$854,719.
The appellants conducted a self storage business on the land of which the resumed land had formed part. There were a number of storage blocks (Blocks A to K) and a building used as an office and caretaker’s accommodation. Before resumption the appellants’ intention was to develop two further storage blocks, Blocks L and M, which would have resulted in the site being fully developed. The resumption resulted in the loss of the building which housed the office and caretaker’s accommodation and the whole of storage Block A. In order to relocate the office/caretaker’s accommodation eight modules of the twelve module Block B were demolished. Loss of the storage capacity therefore involved Block A and eight modules of Block B. The appellants reinstated the lost office/caretaker’s building and brought forward the construction of Block L and Block M, in order to accommodate the lost storage space from Block A and part of Block B. The learned President concluded that the "before and after" assessment of compensation, valuing the self storage enterprise as a going concern by capitalising net profits both before and after the resumption was the appropriate method to adopt. The compensation of $854,719 was calculated as follows:
A Loss of going concern value
(for loss of profit during future roadworks see head
$301,040.00 of claim H) B
Construction costs of new office/caretaker’s accommodation
$466,573.00
C
Other miscellaneous costs incurred in demolition and reconstruction are included under head of claim B
D
Compensation for time of directors
$21,000.00
E
Legal, valuation and accounting fees incurred in preparation of claim (agreed)
$24,880.69
G
Bank charges (agreed)
$4,825.00
H
Loss of profits and other costs that will be incurred during future roadworks
$32,673.00
I
Work required to reconfigure and transfer lots
$3,727.29
TOTAL
$854,719.00
On 4 May 2001 the appellants applied to the Land Court under s 12(1) of the Land Court Act 2001 for leave to have the matter reheard by the Court limited to the matters referred to in schedule 1 to the application. The schedule set out six grounds. The appellants filed two affidavits in support of the application. The affidavit of the appellants’ solicitor, Mr RS Gregory, exhibited two statements, one undated and one dated 26 July 2001, of the appellants’ valuer, Mr John Olive, and two statements dated 27 July 2001 of Mr John Kreicbergs, a director of Nevis Pty Ltd and a person associated with each of the other appellants. The affidavit of Mr Kreicbergs was filed on 9 August 2001. The appellants did not appeal against the decision of the learned President.
At the hearing of the application before the learned Member of the Land Court, Mrs C A C MacDonald, on 9 August 2001, it was indicated that agreement had been reached between the parties on grounds 5 and 6, they were not continued with and leave was sought and granted to add two new grounds 7 and 8. On 10 December 2001 the learned Member declined to grant the application for the rehearing. This appeal is against that decision.
Grounds for the application for rehearing
Grounds 1 to 4 of the application for rehearing were:
"1.As regards the claim for the loss in value of the business (at Judgment pp.34- 37):
(a)for blocks A-K, the court treated the assessed 1999 total income as being the income for those blocks in 3 years time (that is, without any increase reflecting the effluxion of time), and then discounted that income to a present value (having commenced with a 1999 figure) (whereas a correct calculation would simply capitalise the 1999 income for blocks A to K on a before and after basis);
(b)the court assumed a total storage capacity of 4,394.2m2 for blocks A to K at the resumption date, based upon a snapshot of 1 January 1999, whereas a more accurate area was 4,125.2m2, based on the snapshot of 2 July 1999;
2.As regards the claim for miscellaneous costs of $14,328.32 (at Judgment pp.48-49), the court considered that they were sufficiently encompassed in the award of $466,573, whereas, at least to an amount of $5,101.03, they were actual additional costs;
3.As regards the claim for compensation for time spent by directors and staff (at Judgment pp.49-52):
(a)the court accepted that directors time was compensable, but required quantified claims, rather than the evidence of the quantity surveyor, and the claimants should be afforded the opportunity to now present such claims;
(b)the court did not allow any staff costs relating to security during reconstruction of the office/caretaker’s building on the ground that the necessity for and reasonableness of the expenditure claimed had not been established, whereas either those matters had been established, or a further opportunity should now be afforded to the claimants to establish them;
4.As regards the claim for monitoring costs incurring during future road works (at Judgment pp.56-57), the court made an assessment based upon the cost of an additional card-reader, whereas that is not a solution for the expected difficulties;"
Ground 7 was described in the learned Member’s reasons for judgment as follows:
"7.The High Court decided in Marshall v Director-General, Department of Transport (2001) 75 ALJR 1218 that, following a resumption for road purposes, an owner with residual land is entitled to compensation for injurious affection to the residual land which results from the construction of the road and its subsequent use. The claimants say that their residual property will be adversely affected by a reduction in exposure to highway traffic and also by the future road works. They submit, therefore that since the time for making a rehearing application or instituting an appeal had expired, in this case, before the High Court’s decision in Marshall was handed down, the Court should rehear this aspect of the matter, and assess compensation in accordance with the principles laid down in Marshall."
Ground 8 was described in the learned Member’s reasons for judgment as follows:
"8.The learned President awarded interest on the amount ordered to be paid at the rate of 6.25%. The claimants seek the opportunity to provide evidence, at a rehearing, to the effect that they borrowed money to complete the construction works and paid interest rates which varied between 7.95% and 8.75%. They therefore wish to have reheard the question of whether the interest rate of 6.25% should be increased to a higher rate."
Relevant legislation
Section 12 of the Act provides:
"Power to rehear matters
12.(1) A party to a proceeding who is dissatisfied with the Land Court’s decision may apply to the court for leave to have the matter reheard.
(2) The application must be made within 42 days after the court’s decision is given to the party.
(3) If the application is granted, the matter must be reheard, if practicable, by the member who gave the decision on which the rehearing is sought."
Section 10 of the Act provides:
"Terms of orders
10. The Land Court may make an order, give leave or do anything else it is authorised to do on the terms the court considers appropriate."
Decision on application for rehearing
The learned Member’s decision is the first consideration undertaken by the Land Court of s 12(1) of the Act. The learned Member considered the legislative history of statutory provisions allowing for rehearing by the Land Court and relevant authorities, before concluding at para [10] of her reasons that the following principles remained applicable to an application for rehearing under s 12(1) of the Act:
"· An application for rehearing must be considered on its merits (Jobin- Décor v Valuer General (1991) AV90-205 (unreported) at 2). (citation inserted)
·The Land Appeal Court is the court established by law for reviewing the proceedings and decisions of the Land Court (Jobin-Décor at 3).
·It is for the applicant to establish a substantial basis for the grant of an order for rehearing (Jobin-Décor at 2).
·A rehearing would be appropriate in cases where inadvertently one or other party has led evidence which was later found to be incorrect (Jobin-Décor at 2).
·A rehearing may be appropriate where errors of substance can be identified after the decision has been given (Cousin v Department of Lands (1998) AV94-559 (unreported) at 2; Re Applications (2) for a Rehearing (1993) V92-64 and V92-65 (unreported) at 3 and 4 referring to Re Alexander’s Appeal (1901-1902) 2 CLLR 189 at 190).
·A rehearing will be granted where an injustice would occur if an appellant were put to an appeal when an appellant for reasons of accident, infirmity or misfortune has been denied an opportunity to present a case to the Land Court (Re Applications (2) for Rehearing at 3 and 4).
·A rehearing will not be granted on the basis that the applicant says that there are matters which were not stressed by him or her on the hearing (Jobin-Décor at 2).
·A rehearing is not the appropriate action if the application constitutes no more than a plea for reconsideration of the evidence already before the court (Cousin at 2; Re Applications (2) for a Rehearing at 3 and 4)."
The learned Member for the reasons given in Despot v Thuringowa City Council (1998) A97-
14 (unreported) and by reference to the approach in Marshall v Director-General, Department of Transport (2000) 106 LGERA 349, 355-356 also concluded that it was appropriate to have regard to the common law cases on reopening:
"In an application for a rehearing, therefore, it is considered that it is legitimate to apply the common law concerning reopening, in so far as they are consistent with
s.12 and the principles of equity and good conscience which guide the Land Court, remembering that this is a case in which the claimants should receive just compensation for the land that has been resumed."
The learned Member analysed the principles applicable to reopening at common law that could be relevant to an application under s 12 of the Act. These principles included that the power should be exercised having regard to the public interest in maintaining the finality of litigation (Smith v New South Wales Bar Association (1992) 176 CLR 256, 265); whether the interests of justice were better served by granting or refusing the application (Urban Transport Authority of NSW v Nweiser (1994) 28 NSWLR 471, 476); and, where the basis of the application was that the applicant wished to adduce new evidence, the reasons for why that evidence was not adduced during the trial were important (Urban Transport Authority of NSW v Nweiser at 475).
The learned Member also considered the relationship between an application for a rehearing under s 12 of the Act and appeal under s 64 of the Act. Matters referred to included that the application for a rehearing or the appeal must be instituted within 42 days after the relevant decision of the Land Court; the appeal is as of right, whereas the application for a rehearing is
by the leave of the Court; there is now no equivalent provision in the Act to s 44(11)(a) of the Land Act 1962 which permitted a party to appeal against the original decision of the Land Court not later than 14 days after the refusal of the Court to grant a rehearing when an application for a rehearing was made; and a party who is refused a rehearing under s 12 of the Act has no further opportunity to ventilate the issues of concern, other than by a successful appeal against the refusal to grant a rehearing, unless that party also had instituted an appeal against the original decision of the Land Court. The learned Member concluded:
"Given the difference in the wording of ss.64 and 12 of the Act, it is considered that the usual route that a dissatisfied party should take is to appeal against the decision in issue – the Act gives a right of appeal. By way of contrast, a party must apply to the Court for leave to have a matter reheard."
The learned Member found support for this conclusion in the decision of the Land Court in
Jobin-Décor and the Explanatory Notes to the Land Court Bill 1999 which stated:
"Clause 12 provides a power to rehear matters as opposed to appealing to a higher Court. The circumstances where such power is likely to be used would be relatively rare. It could occur where there was a valid reason (not merely tactical) for not submitting evidence at the initial hearing but where the absence of such had an important bearing on the decision."
andalso made reference to the observations of Rix LJ in the context of an application for reopening, where draft reasons had been circulated, but judgment had not been pronounced or entered, in Compagnie Noga D’Importation et D’Exportation SA v Abacha [2001] 3 All ER 513, 526:
"Clearly, it cannot be in every case that a litigant should be entitled to ask the judge to think again. Therefore, on one ground or another, the case must raise considerations, in the interests of justice, which are out of the ordinary, extraordinary, or exceptional. An exceptional case does not have to be uniquely special. 'Strong reasons' is perhaps an acceptable alternative to ‘exceptional circumstances’. It will necessarily be in an exceptional case that strong reasons are shown for reconsideration."
The learned Member also concluded:
"… the fact that the claimants no longer have the right to appeal against the original decision, after refusal of an application for a rehearing, does not of itself mean that a rehearing should be granted."
An issue arose before the learned Member as to whether the grant or refusal of leave for a rehearing should be affected by the differing tests for admission of fresh evidence on a rehearing compared to that on an appeal to the Land Appeal Court. The learned Member was prepared to assume that the test for the admission of fresh evidence on a rehearing was more liberal than that now applied on appeal to the Land Appeal Court, but concluded that that did not of itself provide a ground for rehearing, as it is necessary to distinguish between the reasons which might be relevant to a decision to grant a rehearing and the processes involved
in a rehearing once leave has been granted, drawing an analogy with what was stated in Smith v New South Wales Bar Association at 266 about distinguishing between an application for reopening and the process involved in reconsideration of the case, after it had been reopened.
We will deal with the learned Member’s separate reasons for each of the grounds for the application for rehearing, when dealing with the specific arguments addressed to each of the grounds on the appeal.
Whether errors in principle
The appellants submitted that in the basic approach which the learned Member adopted to the application for a rehearing, the learned Member erred in principle in four material respects. The first of those was said to be that it was wrong to rely upon, or to develop, a principle or rule that "the usual route" for a dissatisfied party is by way of an appeal. It was argued that the learned Member’s approach deprived the right to apply for a rehearing of any real utility. Second, it was submitted that the learned Member failed to have regard to the restraints upon intervention by the Land Appeal Court in an appeal. Third, it was submitted that the learned Member overlooked that, if the application for a rehearing were granted, the matter must be reheard, if practicable, by the Member who gave the decision in respect of which the rehearing is sought. This was on the basis that this Member would be more conversant with the issues and the evidence than the Land Appeal Court. Fourth, the appellants submitted that the rejection by the learned Member of their contention that the test to apply in determining whether to grant a rehearing was analogous to that applied in an application for special leave to appeal to the High Court (i.e. whether the point was fairly arguable) meant that the learned Member adopted too stringent an approach.
Section 12 of the Act is a novel provision. Although it has its genesis in s 43 of the Land Act 1962, there are differences between s 12 and its predecessor which, as the learned Member identified, require the authorities relating to the earlier provision to be scrutinised in the light of those differences. Section 43 of the Land Act 1962 provided:
"Upon application lodged in the office of the Registrar within twenty-eight days after the pronouncing of any decision of the Court upon any matter wherefrom the Crown or any person aggrieved may appeal, the Court may, if it thinks fit, and upon such terms as it thinks reasonable, grant a rehearing of the matter.
Subject to being lodged within the aforementioned period of twenty-eight days the application may be dealt with thereafter and wherever practicable shall be dealt with by the member who pronounced the decision.
If it grants a rehearing the Court shall appoint a day for rehearing the matter, and shall rehear it accordingly.
An appeal shall lie from the decision on such rehearing in the same manner as if it had been a decision on a first hearing of such matter."
The differences between s 43 of the Land Act 1962 and s 12 of the Act can be summarised as:
1.Under s 43 of the Land Act 1962, the time limit for making the application was 28 days after the decision which was less than the time limit of 42 days for instituting an appeal, whereas the time limit under the Act for making the application for rehearing is the same as the time limit for instituting an appeal;
2.Where an application for rehearing under s 43 of the Land Act 1962 was made but refused, time for the purposes of an appeal to the Land Appeal Court did not commence to run until the refusal of the Land Court to rehear the matter.
Although not strictly a difference between s 43 of the Land Act 1962 and s 12 of the Act, there are restrictions on the right to admit new evidence in the Land Appeal Court in s 56 of the Act for which there was no comparable provision in the Land Act 1962, until 1994, which makes a difference to the context in which s 43 of the Land Act 1962 operated prior to 1994 and the context in which s 12 of the Act operates.
Allowing for these differences, we agree that the list of principles set out in para [10] of the learned Member’s reasons which were taken from the authorities on the earlier provision remain applicable to the consideration of an application for rehearing under s 12 of the Act, subject always to giving s 12 of the Act the effect and meaning which follows from its construction in its current statutory context. As the appellants submitted on this appeal, and as is apparent from the learned Member’s reasons, that list in para [10] of the learned Member’s reasons is not an exhaustive list of the principles applicable to whether or not leave for a rehearing should be granted or refused.
What s 12 of the Act requires to be the subject of the rehearing is "the matter". This is no different to what was required under s 43 of the Land Act 1962. This aspect of s 43 of the Land Act 1962 was considered in Despot v Thuringowa City Council where the learned Member, Mr RP Scott, stated at 3:
"Let me dispose of one matter raised in the wording of s.43, and that is where it provides 'upon any matter wherefrom the Crown or any person aggrieved may appeal' and then goes on to say 'grant a rehearing of the matter. It would appear that if the word 'matter' is to retain a consistent meaning throughout the provision, then it would be a rehearing of the whole matter that would be contemplated by the section. I think that any grant of an application for rehearing under s.43 would properly be a grant to rehear the whole matter, however, given the breadth of the discretion in the Court to grant such application on terms, and I note that the discretion is not confined to costs, then it will be open to the Court to grant the application on the basis, however, that the only fresh evidence which the Court is to consider is evidence sufficient to address a particular aspect of the case."
In respect of the subject application for rehearing, "the matter" for the purpose of s 12 of the Act must refer to the appellants’ application for compensation for the resumption. Although
the appellants properly specified particular aspects of the matter on which they were seeking a rehearing and, in effect, put these forward as aspects of the matter on which a rehearing of the matter was justified, the question that was determined on the application for rehearing was whether the whole application for compensation should be reheard. As the appellants’ complaints were pursued in respect of six specified aspects of the decision on the matter, the practical result sought from any rehearing was that it would be confined to those six specified aspects.
The fact, however, that it is the application for compensation itself which would be the subject of the rehearing is relevant to the approach that must be taken to whether or not an application for rehearing is granted. That has been reflected in the earlier authorities on s 43 of the Land Act 1962 that require the applicant to establish a substantial basis or errors of substance for the grant of an order for rehearing. As it is the overall decision in respect of the application which was before the Land Court which must be the subject of the rehearing, it follows that the areas of dissatisfaction which are the basis for the rehearing must have some consequence for that decision.
The fact that leave is required for a rehearing necessarily incorporates that the interests of justice must be served by the granting of leave and also reflects the public interest in the finality of litigation. The issue of leave must be considered in the context of the nature of the matter. It follows that the rehearing may be granted only where it is anticipated that the basis for the rehearing could make a significant or substantial difference to the decision in the matter. What is a significant or substantial difference in any particular case will obviously depend on the nature of the matter. This approach to whether or not leave for a rehearing is granted is confirmed by the Explanatory Notes for cl 12 of the Land Court Bill 1999.
We shall now deal with the four errors of principle which the appellants submit can be discerned from the learned Member’s reasons.
[27]With respect to what the appellants characterised as the first error, it is not a fair characterisation of the reasons of the learned Member to submit that the learned Member relied upon or developed a principle that the usual route under the Act for a dissatisfied party is by way of appeal. It is an accurate observation of the operation of the Act that an appeal is the usual route for a dissatisfied party. The existence of a right of appeal must be relevant to the exercise of the discretion conferred by s 12 of the Act. It would be an error to ignore the fact that the Act confers an appeal as of right in respect of a decision of the Land Court and the appellants did not submit otherwise. The observation by the learned Member which is now challenged was not a statement of principle but simply a reference to one of the factors relevant to the exercise of the discretion as to whether or not to grant leave for a rehearing.
[28]As the appellants submitted, this may have the result that few parties would risk confining themselves to a rehearing application and would file both an application for a rehearing and a notice of appeal, in order to protect the right to pursue the matters of complaint on appeal, if the rehearing application were unsuccessful. That is the result of the time limit for an application for rehearing being the same as the time limit for appealing. That is not an incongruous result when the intention of the Legislature is clearly that the circumstances in which a rehearing can be granted is confined to "relatively rare" cases.
The appellants seek to characterise as the second error in principle that the learned Member failed to have regard to the restraints upon intervention by the Land Appeal Court in an appeal from a decision of the Land Court which are found in s 56 of the Act which provides:
"Evidence admissible on appeal
56.(1) An appeal in the Land Appeal Court must be decided on the evidence on the record of the proceedings in which the decision appealed against was made.
(2)However, the court may admit new evidence if-
(a)the court is satisfied admission of further evidence is necessary to avoid grave injustice; and
(b)the party applying to have further evidence admitted gives the court an adequate reason for the evidence not previously being given; and
(c)application to have further evidence admitted is made before the hearing of the appeal."
[30]Implicit in this submission of the appellants is an assumption that the Legislature intended to give a party to an application decided in the Land Court the widest possible avenues of review and an assumption that to the extent to which the limitations of an appeal preclude a party from raising particular complaints about the decision of the Land Court, that party must be intended to be able to pursue those complaints on a rehearing. These assumptions are not reflected by the terms of the Act.
[31]It is not consistent with the purpose of s 12 of the Act to give it a construction which would authorise leave to be granted for a rehearing in respect of an aspect of a matter merely because that aspect could not be pursued on an appeal from the decision of the Land Court, because it did not involve a wrong principle of law or the conclusion as to value could otherwise be characterised as "entirely erroneous": Emerald Quarry Industries Pty Ltd v Commissioner of Highways (SA) (1979) 142 CLR 351, 355-356.
In any case, as set out earlier in these reasons, the learned Member at paras [34] to [36] of her reasons dealt specifically with the argument of the appellants based on what the appellants described as the differing tests for admission of fresh evidence on a rehearing compared to that on an appeal to the Land Appeal Court.
There is no basis whatsoever for the submission of the appellants which they seek to characterise as the third error in principle that the learned Member overlooked that, if the
application for a rehearing were granted, the matter must be reheard, if practicable, by the learned President, as the maker of the decision in respect of which the rehearing is sought. The learned Member dealt specifically with the appellants’ submissions based on s 12(3) of the Act commencing at para [26] of her reasons.
It is appropriate to address a matter raised in oral argument when Mr Gore of Queen’s Counsel who led Mr Trotter for the appellants was dealing with s 12(3) of the Act due to the subject application for rehearing not having been heard by the learned President. In Despot Mr Scott heard an application for rehearing in respect of the decision on compensation which had been given by him and referred to the fact that, in each of the three decisions on applications for rehearing which he had located, the application had been made to the Member who had made the decision which was sought to be reheard.
The only requirement of s 12(3) of the Act is that the rehearing be conducted before the Member whose decision is the subject of the rehearing, if practicable. There is no similar requirement in relation to the application for rehearing. As the application for rehearing can be made only after the Land Court’s decision has been given, it is not necessary that it be brought before the Member who made the decision.
The contention of the appellants which forms the basis of what they characterise as the fourth error in principle made by the learned Member was that the test to apply in determining whether to grant a rehearing was whether the point was fairly arguable. There is no warrant for that test, when s 12 of the Act is construed in context. In addition that test ignores the difference between a rehearing and an appeal.
The appellants are therefore unsuccessful in showing that there was an error in principle in the learned Member’s approach to whether or not the application for rehearing should be granted.
Issue 1
Although the expression "grounds" was used in the application for rehearing and by the learned Member in her reasons, the parties referred to each of the grounds on the appeal as an issue. We will also refer to the grounds as issues.
Issue 1(a) attacked the use of 1999 income by the learned President for the following years in the calculation of the loss of value of the business, without allowing for an increase in storage fees for those years, when the learned President then discounted the net income calculated after three years to ascertain the present value in 1999. This was implicitly described in issue 1(a) as an “incorrect” calculation which asserted that a "correct" calculation would capitalise the 1999 income for Blocks A to K on a before and after basis. Issue 1(b) was also concerned
with the calculation for the loss in value of the business and sought to contend for the use of "a more accurate area" of 4125.2m² than that used by the learned President of 4394.2m².
Before the learned Member, the evidence of Mr Olive was that the compensation would be increased by nearly $75,000, if these two aspects of the calculation contended for by the appellants were adopted.
The learned Member concluded that neither issue 1(a) or 1(b) was sufficient to warrant the grant of leave to reopen the matter on the basis that the appellants had not established a substantial basis for the grant of an order for rehearing or strong reasons as to why, in the interests of justice, the case should be reopened. At para [40] of her reasons the learned Member stated:
"The suggested errors are not of the type that occurred in Smith v New South Wales Bar Association nor the Spice Girls case where the court made a factual error as to the evidence. If there are errors, they would be errors of interpretation or application. The issues in question were carefully considered by the President in a reserved judgment. If there are errors, then they are not obvious or patent and these issues should be dealt with in the usual way, that is by appeal to the Land Appeal Court."
On the hearing of this appeal, the appellants were asked to detail the effect of each of issue 1(a) and 1(b) on the calculation of the additional compensation. Mr Olive undertook the calculations which were provided in Exhibit 3 and were the basis of a submission that making the correction sought in issue 1(a) could result in an increase in compensation of $50,125 and making the correction sought in issue 1(b) could result in an increase in compensation of
$23,666.
The learned President had comprehensively analysed all the evidence related to the valuing of the enterprise before and after resumption. After rejecting Mr Olive’s calculations of estimated net profit based on what had been described as "a stabilised trading year", the learned President undertook his own calculations. The learned President started with the 1999 income figures which showed that the enterprise was capable of producing a gross return of approximately $501,000. As in the before resumption situation Blocks L and M would have been taken up progressively to economic capacity over 3 years from July 1999, the learned President stated that a prudent purchaser would expect annual income to reach
$610,400 in those 3 years. The learned President estimated that the operating costs for the enterprise would increase over the period of 3 years to $174,850 from $160,000, so that within 3 years from the date of resumption a prudent purchaser could have assumed an annual net income of $435,550. The learned President then discounted that figure to a present value of $376,250 at the date of resumption.
As Blocks L and M were completed at or soon after the date of resumption, the learned President adopted the same reasoning, as in the calculations for the before resumption situation, and stated that the additional income from the economic capacity provided by Blocks L and M could be expected progressively over the next 3 years to increase income from $453,600 to $562,990. On the basis that over the same 3 years operating costs could be assumed to increase from $156,500 to $171,000, the learned President stated that within 3 years of the date of resumption a prudent purchaser could have assumed an annual net income of $391,990 which would have to be discounted to a present value of $338,620. Adopting a capitalisation rate of 12.5%, the learned President made the following calculation:
Capitalisation of net profit before resumption $3,010,000 Less capitalisation of net profit after resumption
2,708,960
Loss in value of the enterprise as a result of the resumption
$301,040
The learned President also did a check method of calculation by assessing that a potential purchaser of the enterprise might view the potential loss at the date of resumption as $37,750 (using net profit figures calculated for the before and after situations in 1999 and ignoring Blocks L and M) which capitalised to an amount of $302,000. (Although Mr Olive is critical in his undated statement of this check method, the criticism does not deal with the fact that both the before calculation and the after calculation are affected in the same way, although not identically in amount, by the use of 1999 income figures.)
In relation to the method which the learned President employed to assess the loss in value of the enterprise as a result of the resumption, he stated in his reasons:
"The method which I have adopted lacks the detailed consideration of the accountants’ methods, but in my view it better takes into account the potential loss of earning capacity of the enterprise before and after resumption, without the distraction of changing configuration and number of units. To more finely tune the calculations may give the appearance of accuracy, but to my mind would not improve the final result which, at best is only an estimate."
[47]With respect to issue 1(a) it was put in oral submissions on the appeal that the appellants did not quarrel with any part of the learned President’s methodology, but disputed one of the "inputs" for the calculation namely the present value of the net income on the basis that the learned President started with 1999 income figures, took them forward without change to 2002 and then discounted them back to 1999.
These submissions were based on Mr Olive’s undated statement exhibited to Mr Gregory’s affidavit which made the criticism of the learned President’s assessment in the following terms:
"In effect current total income levels are being used as the basis for a future estimate of income to allow for the leasing up of blocks L & M and the total is being discounted back to a present value using a discount rate of 5% after total outgoings escalated at 3% have been deducted.
A correct calculation would be to capitalize existing income from the blocks A-K on a before and after basis and only project and discount the income from blocks L & M for the required three year period."
If the appellants were merely seeking to "correct" the learned President’s calculation, one would have expected them to suggest that the income for 2002 in each instance allow for increases in fees between 1999 and 2002. As is apparent from Mr Olive’s suggested method of correction set out above, he proposes that in both the before situation and the after situation that only the income from Blocks L and M be calculated after 3 years and then discounted to calculate the present value of that income in 1999 and that result should be added to the existing income from Blocks A to K attributed respectively to the before and after situations.
Despite the submission that the appellants did not wish to quarrel with the learned President’s methodology, it is not appropriate to characterise Mr Olive’s complaint as merely the correction of one of the "inputs". Mr Olive has proposed a change to the learned President’s methodology. The increase in compensation of $50,125 which the appellants attribute to issue 1(a) is that calculated using the method proposed by Mr Olive, rather than allowing for an increase in fees due to effluxion of time for Blocks A to K when projecting the existing income forward for 3 years. In Exhibit 3 Mr Olive has simply eliminated from each of the before and after valuations, the amount attributable to discounting the income from Blocks A to K at 5% per annum for 3 years. Although Mr Olive’s criticism of the learned President’s method of projecting 1999 income figures forward to the year 2002 was on the basis of the failure of the learned President to allow for increase in fees over that time, Mr Olive does not deal with the lessening of that effect due to the fact that the before and after valuation proceeded on this same basis.
There was no error on the learned Member’s part in the matters which she identified as relevant to the exercise of her discretion to refuse a rehearing of the matter on the basis of issue 1(a). We agree that, if there were any substance in Mr Olive’s criticism of the learned President’s methodology which had the consequence of increasing the compensation for head of claim A by approximately one-sixth, that would be a matter of erroneous valuation which could be the subject of an appeal. We also consider that it was not an inappropriate description for the learned Member to describe issue 1(a) as neither "obvious or patent", as
our analysis of Mr Olive’s criticism indicates. This is an appeal against the exercise of discretion by the learned Member. We cannot find any error in exercising that discretion against a rehearing of the matter in relation to issue (a).
With respect to issue 1(b), the learned President used the area of 4394.2m² for the area of Blocks A to K which was that set out in the "snapshot" of the appellants’ trading for the week ending 1 January 1999. The appellants had put in evidence as "snapshots in time" the details for a trading week taken at each 6 month period from June 1995 to June 2000. The appellants contend that the learned President should have used "a more accurate area" of 4125.2m² taken from the snapshot for the week ending 2 July 1999. On the hearing of this appeal the appellants relied on the fact that at the foot of the page on which the figures for the week ending 1 January 1999 were set out, there was the notation "Some units doubled up due to remodelling". It does not appear, however, that there was any specific evidence given in respect of that qualification. In any case, the learned President chose the area in use according to the snapshot for the week ending 1 January 1999, after considering all the evidence from accountants, valuers and Mr Kreicbergs. It was merely one aspect of very complex calculations which the learned President expressly recognised was calculating what "at best is only an estimate". We do not consider that the learned Member’s discretion miscarried in refusing a rehearing on the basis of issue 1(b).
Issue 2
The learned Member rejected issue 2 on the basis that the appellants had not established sufficient reasons to support the grant of a rehearing in respect of an amount of $5,101.03 for miscellaneous costs and that, if there were an error on the part of the learned President, the appropriate way to deal with the matter was by an appeal.
Although this issue was presented on this appeal on the basis that "the appellants essentially sought to correct some mathematical errors", it transpired that the learned President’s reason for rejecting this claim was borne out by the evidence of Mr Kreicbergs that was before the learned President. The appellants had contended for compensation of $556,573 for the construction costs of the new office. As the new building was an improvement in terms of size and design on that which had been demolished, the learned President concluded that there should be an allowance for that and adjusted the claim by $90,000. That adjustment was and could not be a precise figure. The appellants’ head of claim C was for miscellaneous costs of $14,328.32 which it was asserted before the learned President was not included in the construction costs claimed under head of claim B, but were otherwise incurred in the demolition and reconstruction of the site.
In his affidavit filed on 9 August 2001 Mr Kreicbergs stated that upon receipt of the learned President’s decision, he had reviewed the items that had been included in the costs of the demolition and reconstruction of the caretaker’s office and checked those against his own list of additional costs and calculated that the sum of $5,101.03 had not been included.
[56]This is consistent with Mr Kreicbergs’ evidence before the learned President where, when cross-examined on the claim under head C of $14,328.32, he stated that "Some of the items Mr Tanner had, some were doubled up." It does not seem that the exercise which Mr Kreicbergs did for the purpose of his affidavit filed on 9 August 2001 was done before then.
It makes it difficult to challenge the learned President’s statement that the claim under head C was "sufficiently encompassed in the award of $466,573", particularly when the reduction that was allowed to arrive at that amount was itself not a precise calculation.
We agree with the learned Member’s conclusion that the appellants did not establish sufficient reasons to support the grant of a rehearing in respect of issue 2. Having regard to the ultimate amount of the quantum which is now pursued in respect of this issue and how it was dealt with by the learned President, it is not possible to conclude that issue 2 is of any significance to the decision of the learned President.
Issue 3
Issue 3(a) relates to a claim of $8,000, being 100 hours for each of Mr and Mrs Kreicbergs at
$40 per hour, for conferring with the Main Roads Department and consultants with respect to the resumption. The learned President made no award in respect of these items under head of claim D.
[60]At the time of the hearing before the learned President there was a well established line of authority in Queensland that such claims for owners’ time in conferring with the resuming authority and professional advisers about the resumption was not compensable. The Land Appeal Court delivered its judgment in Heavey Lex No 64 Pty Ltd v Chief Executive, Department of Transport (2001) A97-43 (unreported) on 22 February 2001, while the learned President’s decision was reserved. In Heavey Lex, the court reviewed the existing authorities and relevant principles on claims for owners’ time in preparation of the compensation claim and concluded that they strongly suggested that "the approach previously taken in this State to claims of the nature of those under consideration may be unduly restrictive".
The learned President therefore proceeded to consider the evidence of the appellants in relation to this claim for the directors’ time in consulting with the resuming authority and its advisers. The learned President referred to the evidence of Mr Kreicbergs that the time spent by each of Mrs Kreicbergs and him would have exceeded 100 hours, but that the claim was for 100 hours for each of them on the basis of the advice of the appellants’ quantity surveyor,
Mr Hunter, who had suggested that 100 hours each was reasonable. The learned President found:
"Mr Kreicbergs could provide no further apportionment of the time spent by himself and Mrs Kreicbergs, apart from saying it was a continuous process, with perhaps half the time before the notice of intention to resume and half after."
In refusing a rehearing on issue 3(a), the learned Member referred to the fact that the appellants did make the claim for compensation for the directors’ time in consulting with the respondent and its advisers, despite the fact that such a claim would have been considered as having little chance of success, prior to the decision of the Land Appeal Court in Heavey Lex. The learned Member on the application for rehearing found that, having made the claim, it should have been substantiated and that no adequate explanation was put forward as to why that was not done.
There was no attempt made by the appellants on the hearing of the application before the learned Member to outline the better evidence that they would seek to adduce, if given an opportunity to have a rehearing on issue 3(a). The explanation on the hearing of this appeal for the evidence not being before the learned President was:
"The appellants’ overall compensation claim raised various contentious issues. Confronted with a long line of authority of the Land Court which had disallowed 'directors time' claims, it is not surprising that costs to substantiate the claim were not unduly wasted. Now that this disturbance claim has considerably better prospects, there is adequate explanation for that earlier approach, and adequate justification for a rehearing. The disturbance claim now has prima facie prospects that it did not have before."
The respondent submitted that the appellants’ submission set out above assumed that the appellants could demonstrate by properly quantified claims that they suffered that economic loss, when there was no indication in the material on this appeal that there is any evidence which would make a different outcome on this issue a possibility.
No error can be shown in the approach taken by the learned Member to issue 3(a) on the material that was before her.
Issue 3(b) relates to a claim of $7,923.35 for work performed by an employee of the appellants, Mr Heusler, and an amount of $270 in respect of work performed by another employee, Mr Redington, in providing security at the site during reconstruction of the office/caretaker’s building. The learned President made no award in respect of these claims, as neither the necessity for nor the reasonableness of the expenditure claimed had been established.
The learned Member found that if there were an error on the part of the learned President, an appropriate course of action was to appeal and that there was no reason why the appellants should be given a second opportunity to prove their claim.
Again, there was no evidence put forward on this appeal to show that a different outcome for issue 3(b) was a possibility and there was no explanation for why any relevant evidence had not been adduced before the learned President. We agree with the learned Member’s approach to issue 3(b) that this provides no basis to justify giving the appellants a second opportunity to prove this claim.
Issues 4 and 8
It was conceded on behalf of the appellants that it was difficult to argue that either issue 4 or issue 8 warranted a rehearing. The basis on which the appellants pursued a rehearing in respect of each of these issues was that, if they were successful in contending that any other issue entitled them to a rehearing, it would not take much additional time to deal with issues 4 and 8.
Issue 7
The learned Member accepted in principle that the change in law brought about by the decision of the High Court in Marshall v Director-General, Department of Transport (2001) 75 ALJR 1218 may have provided grounds for a rehearing. This was also accepted by both the appellants and the respondent on the hearing of this appeal. The learned Member concluded, however, that she was not satisfied that the appellants had established sufficient reason for a rehearing on this ground by reference to the evidence that was put forward by the appellants on this issue on the application for rehearing. The learned Member stated at para [53] of her reasons:
"Having considered the matter, including Mr Olive’s report, I have accepted the respondent’s submission that there is no explanation as to why Mr Olive now believes there will be a significant reduction in exposure to highway traffic."
[71]Prior to the decision of the High Court in Marshall, it was generally accepted that, on the basis of authorities such as Edwards v Minister of Transport [1964] 2 QB 134, compensation for injurious affection to the balance land could not be granted unless the damage was caused by works performed or the use of works performed on the resumed land. The change effected by the decision in Marshall is gleaned from para [20] of the joint judgment of Gleeson CJ and Gummow, Kirby and Callinan JJ in dealing with s 20(1)(b) of the Acquisition of Land Act 1967:
"In our opinion, however, the language of s 20(1)(b) of the Act could hardly be plainer. In assessing compensation, regard is to be had not only to the value of the land taken but also to the damage caused by the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other [the
remaining, severed] land. The section does not say 'the exercise of any statutory powers by the constructing authority on and only on the land taken …'. The section clearly distinguishes between the land taken and the severed land. It does not seek to distinguish between the various activities carried out by a constructing authority in the exercise of its statutory powers: for example, the conduct of a survey, the construction of a road, the building of a bridge, the installation of drainage or footpaths beside the road and the subsequent use of everything that has been done or brought into existence as, and for the purposes of, a road, In truth, all of these can relevantly and properly be characterised as part and parcel of the construction, and subsequently the use of the road. Once the constructing authority acquires land for a statutory purpose and carries out the statutory purpose, it must, pursuant to s 20(1)(b) of the Act, compensate the dispossessed owner for the injurious effect upon the residual land resulting from the undertaking and the implementation of that purpose, actual and prospective."
Mr Olive in his statement dated 26 July 2001 which is Exhibit RSG2 to the affidavit of Mr Gregory stated that the decision in Marshall "allows me to include within my report the reduction in value of the property due to the whole of the works to be constructed as a part of the Pacific Highway upgrading works rather than being restricted to the works to be constructed on the resumed area". It is implicit in this statement that Mr Olive applied Edwards when he prepared his report for the hearing before the learned President. He then stated:
"Having regard to the construction to be completed in the area I consider that the subject property will suffer a significant reduction in exposure to highway traffic and as a result have changed my assessment of the 'After Resumption' calculations originally contained within page 19 of my report. The amendments essentially relate to the occupancy or operating level achievable after the resumption, I consider a 5% reduction in occupancy rate will be caused by the reduction in exposure to passing traffic. Additionally I consider a prudent purchaser would adopt a more conservative Capitalisation rate to the property in the 'After Resumption' scenario due to the greater risk in operating the complex with inferior Highway exposure."
Mr Olive then modified the calculations of the loss in value of the enterprise as a result of the resumption undertaken by the learned President by reducing occupancy to 80% from that used by the learned President of 85% and increasing the after capitalisation rate to 13% which resulted in an increase in compensation of $257,422 above that allowed by the learned President for head of claim A.
Mr Kreicbergs’ statement which is Exhibit RSG4 to Mr Gregory’s affidavit also deals with matters relevant to a claim for injurious affection which would be permitted to be pursued as a result of Marshall. Mr Kreicbergs dealt with his experience of the diminished exposure for his business from the Pacific Highway, after resumption and reconstruction of his office building. Mr Kreicbergs also wished the court to reconsider the effect on the appellants’ business for the duration of all roadworks to be completed within the area, as head of claim H
was assessed by the learned President on the basis of loss of business during the actual roadworks to be completed on the resumed land at $32,673 over a period of 25 weeks. Mr Kreicbergs’ statement raises other matters which do not appear to be strictly related to the change in the law under Marshall.
Mr Olive’s valuation before the learned President was Exhibit 4. He stated at p 4 of that report:
"The property is located on The Pacific Highway Service Road at Loganholme, providing the development with outstanding visibility to traffic travelling in both directions on the Pacific Highway."
At p 5 of the report he stated:
"The Pacific Highway Service road is two-land bitumen sealed road. It provides access to the Pacific Highway approximately 200 metres to the North of the subject site. Access to the property at this point is considered to be good."
In choosing a capitalisation rate of 11.5%, Mr Olive stated at p 23 of his report that one of the factors that influenced that was:
"The location of the property in the Loganholme Commercial and residential area on a major arterial road with excellent exposure."
Mr Olive made no mention in his report before the learned President of the constraints on his valuation due to Edwards. There is no attempt in Mr Olive’s statement dated 26 July 2001 to reconcile his reliance in his earlier report on the outstanding visibility and excellent exposure of the property with the statements that are now made by him about the significant reduction in exposure to highway traffic.
The fact remains, however, that the law in relation to compensation under s 20(1)(b) of the Acquisition of Land Act 1967 was changed or clarified in a significant aspect by Marshall. Although the evidence put forward by the appellant on the application for rehearing in relation to issue 7 has the weakness identified by the learned Member, there is enough evidence to show that issue 7 has the potential to substantially affect the decision of the learned President, if a case based on reduction and exposure to passing traffic, as a result of the exercise by the respondent of statutory powers in connection with the purpose for which the relevant land was resumed can be made out.
We therefore conclude that it was not open for the learned Member not to be satisfied that the appellants had established sufficient reason for a rehearing on the basis of issue 7.
Extent of rehearing
Although s 12 of the Act does not expressly provide for leave for rehearing to be given on terms, s 10 of the Act applies to an order granting leave for rehearing. Consistent with the need to identify specific aspects of a decision on which a rehearing is sought, it will usually
be appropriate for the court to impose terms on the grant of rehearing limiting the rehearing to those aspects of the decision which have been found to justify the rehearing.
Apart from issues 4 and 8, this appeal was argued by the appellants on the basis that consideration should be given to whether each issue justified the rehearing of the matter.
Conceivably an application for rehearing could be brought in respect of a matter where there is dissatisfaction by one of the parties with a number of issues each of which separately does not justify a rehearing, but cumulatively the effect of the issues may be significant enough to the decision to justify a rehearing in relation to a number of those issues.
The question arises in this appeal of whether the fact that a rehearing will be ordered on issue 7 should be used to allow the appellants to agitate issues 4 and 8 or any of the other issues on the rehearing.
It would not be consistent with the principles which underlie the discretion to grant a rehearing to give the appellants an opportunity to revisit the aspects of the decision which are affected by issues 4 and 8, when it was properly conceded that each of those issues could not warrant a rehearing. For the respective reasons on which we have disposed of each of the other issues, we have also concluded that it is not appropriate to give the appellants an opportunity to revisit each of those issues at the same time as the rehearing of issue 7.
The appellants in their application for rehearing sought directions relating to the rehearing. As we are remitting the matter to the learned President for rehearing in relation to issue 7, we consider that it appropriate that directions relating to the rehearing be given by the learned President.
Orders
We therefore make the following orders:
1.The appeal is allowed and the order of Mrs CAC MacDonald made on 10 December 2001 is set aside.
2.The appellants’ application for leave to have the matter reheard is granted in respect of the issue of further compensation based on the decision in Marshall v Director- General, Department of Transport (2001) 75 ALJR 1218.
3. The matter is remitted to the learned President for rehearing in respect of that issue. [86] We will require submissions from the parties in relation to the costs of this appeal.
25
(Mullins J) JUSTICE OF THE SUPREME COURT
(RP Scott) MEMBER OF THE LAND COURT
(NG Divett) MEMBER OF THE LAND COURT
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