Peak v Roads and Traffic Authority

[2006] NSWLEC 3

Land and Environment Court

of New South Wales

CITATION:	Peak & Anor v Roads and Traffic Authority [2006] NSWLEC 3
PARTIES:	APPLICANTS: Donald Richard Peak Judith Gwen Peak RESPONDENT: Roads and Traffic Authority
FILE NUMBER(S):	31027 of 2004
CORAM:	Pain J
KEY ISSUES:	Compulsory Acquisition of Land :- whether compensation payable for relocation of dwelling on residue land where noise affected by the public purpose Words and Phrases :- meaning of "land" in s 59(c) and s 59(f)
LEGISLATION CITED:	Land Acquisition (Just Terms Compensation) Act 1991 s 54, s 55, s 59, s 66
CASES CITED:	Besmaw Pty Limited v Sydney Water Corporation (2001) 113 LGERA 246; Blacktown City Council v Fitzpatrick Investments Pty Limited [2001] NSWCA 259; Fitzpatrick Investments Pty Limited v Blacktown City Council (No 2) [2000] NSWLEC 139; Gosford Shire Council v Green (1980) 48 LGRA 201; Johnston v Roads and Traffic Authority [2000] NSWLEC 111; Marshall v Director-General of the Department of Transport (2001) 205 CLR 603; McBaron & Ors v Roads and Traffic Authority (1995) 87 LGERA 238; Peter Croke Holdings Pty Limited & Ors v Roads and Traffic Authority (1998) 101 LGERA 30; Richardson v Roads and Traffic Authority (1996) 90 LGERA 294; Roads and Traffic Authority v Muir Properties Pty Limited [2005] NSWCA 460
DATES OF HEARING:	07/11/2005 08/11/2005 09/11/2005 10/11/2005 11/11/2005
DATE OF JUDGMENT:	01/12/2006
LEGAL REPRESENTATIVES:	APPLICANTS: Mr J Webster SC SOLICITORS: Stacks RESPONDENT: Mr P Tomasetti (barrister) SOLICITORS: Clayton Utz

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

12 January 2006

31027 of 2004 Donald Richard Peak and Judith Gwen Peak v Roads and Traffic Authority

JUDGMENT

1 Her Honour: These are Class 3 proceedings brought by the Applicants appealing against the offer of compensation by the Roads and Traffic Authority (“the RTA”) for acquisition of land owned by the Applicants. The RTA acquired the land on 30 April 2004 (“the date of acquisition”). The Applicants have appealed to this Court under s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”).

Background

2 The Applicants are the registered proprietors of a property known as 14112 Pacific Highway, Nabiac. By compulsory acquisition, the RTA acquired part of the Applicants’ property being Lots 13 and 14 in DP 106465 (“the acquired land”) for the purposes of works to be undertaken on the Pacific Highway. The acquired land has a total area of 4.005ha. The residue land being Lot 11 DP 1060465 has an approximate area of 14.59ha (“the residue land”). The Valuer-General determined compensation payable to the Applicants for the acquired land plus disturbance to be an amount of $429,564. The compensation ultimately claimed by the Applicants in final submissions was $617,918.50.

3 The Applicants’ property is a rural parcel of land located on the eastern side of the Pacific Highway, south of Nabiac. Part of the property lies on the western side of the highway with access under the existing highway bridge into Nabiac. The northern and eastern borders of the property abut the Wallamba River. The Applicants operate a cattle stud farm on the property, with facilities for artificial insemination and embryo transfer of cattle. Access to the property is off the Pacific Highway via a gravel road. The Court had the benefit of a view of the site and several comparable sales on 7 November 2005.

4 The Applicants’ dwelling is located on the eastern portion of the property approximately 90m from the nearest edge of the existing highway. It is not on the acquired land. Following completion of the proposed works to the Pacific Highway, the Applicants’ dwelling will be approximately 55m from the nearest edge of the highway. A new access entrance and road from the highway had also been established.

5 The Just Terms Act regulates the basis on which compensation is payable in these circumstances. Section 54(1) of the Just Terms Act states that:

The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

6 Section 55 of the Just Terms Act states that:

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):
(a) the market value of the land on the date of its acquisition,
(b) any special value of the land to the person on the date of its acquisition,
(c) any loss attributable to severance,
(d) any loss attributable to disturbance,
(e) solatium,
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

7 Section 59 of the Just Terms Act states that for the purposes of that Act, loss attributable to disturbance of land means any of the following:

(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,
(b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land,
(c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),
…
(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

Valuation approach

8 As only part of the Applicants’ land was resumed, a “before and after” approach was adopted by the parties’ valuers. This approach is consistent with the Court of Appeal decision in Gosford Shire Council v Green (1980) 48 LGRA 201. In that case, Reynolds JA considered at 208 that the “before and after” approach:

… refers to a method of arriving at the amount of compensation payable under s 124 of the Public Works Act where part only of the claimant's land is resumed. It has been pointed out by Walsh J in Parkes Developments Pty Ltd v Burwood Municipal Council (1969) 17 LGRA 257 at 264 that the whole provision deals with a single concept of compensation in which the figure arrived at takes account of damages caused by severance as well as enhancement and the reference in the question is to a convenient method of arriving at this sum of compensation and dealing with both damages for severance and enhancement in value at one stroke. It is a method which was expounded by Roper J in Realty Corporation Ltd v Commissioner for Main Roads (1940) 14 LGR 204 as being the easiest and proper way to ascertain the compensation to be paid: see also Kerswell v Commissioner for Main Roads 13th July 1978 Court of Appeal unreported. If the whole parcel is valued at the time of resumption and then the residue is valued, the difference is the ascertained amount of compensation, and severance damage and enhancement of the value of the residue are comprehended without any necessity for specification.

9 Injurious affection under s 55(f) is thus incorporated into this approach as any loss in the value of any other land belonging to the Applicants at the date of acquisition which adjoined or was severed from the acquired land, is taken into account.

Land

10 The parties’ experts agreed, applying a “before and after” valuation approach, that the value of the Applicants’ land under s 55 of the Just Terms Act was $750,000 before the date of the acquisition and $590,000 after the date of the acquisition.

Improvements

11 There were several improvements located on the Applicants’ land as follows:

(i) The Applicants’ dwelling located on the residue land;

(ii) The yards/artificial insemination and embryo transfer (“AI and ET”) complex located on the residue land;

(iii) The bails/dairy show complex on the acquired land;

(iv) The calf shelters on the acquired land and residue land;

(v) Other improvements located on the residue land.

12 The bails/dairy show complex and one of the calf shelters were previously located on the acquired land and have now been removed. The other improvements are erected on the residual parcel.

13 The parties agreed that the market value of the calf shelters (iv) was $6,000 before the date of acquisition and $4,000 after the date of acquisition and of items described as “other improvements” (v), including the gazebo, the hay shed and the machinery shed, was $26,000 before the date of acquisition and $20,000 after the date of acquisition. However, the value of the Applicants’ dwelling (i), the yards/AI and ET complex (ii) and the bails/dairy show complex (iii) on the acquired land remained for determination by the Court.

Disturbance

14 The amount of compensation attributable to disturbance also remained for determination by the Court.

Noise

15 The Applicants’ case relied extensively on proving that the existing house occupied by the Applicants on the residue land would be uninhabitable as a result of the highway extension. The Applicants relied on the expert acoustic evidence of Mr Steven Cooper. The RTA relied on the expert acoustic evidence of Mr Graham Atkins. The Pacific Highway upgrading undertaken by the RTA was the subject of an environmental impact assessment in October 2001 which incorporated an acoustic assessment prepared by Wilkinson Murray (“the Wilkinson Murray Report”). This recommended a noise barrier 700m long and 3.5m high be built (location unspecified). No such barrier is planned for construction in this area. Mr Cooper is critical of the environmental impact assessment and considered it substantially underestimated the noise impact on the Applicants’ residence.

16 Approval was granted by the Minister for Planning for the proposed upgrade of the Pacific Highway. The conditions of consent stated the following:

Operation Noise Management
Operational Noise Criteria
56. The sound pressure level due to road traffic noise emissions when measured one metre from the façade of a residential building or any other noise sensitive premises must be designed to meet the operational noise criteria for redevelopment of an existing arterial road. These are:
(a) LAeq15hour 60 dB(A) (7:00am to 10:00pm); and
(b)LAeq9hour 55 dB(A) (10:00pm to 7:00am).

These criteria must apply unless otherwise identified in the Operation Noise Management Report.
…

Operational Noise Monitoring
60. Monitoring of operation noise must be undertaken in accordance with Practice Note VIII of the RTA’s Environmental Noise Management Manual. The Proponent must, in consultation with the Director General, assess the adequacy of the traffic noise mitigation measures at a time between six months and one year of opening the Project. The assessment must consider the operation noise criteria specified in the Conditions of Approval and the Operation Noise Management Report. Should the assessment indicate traffic noise levels exceeding those predicted in the Operation Noise Management Report, the Proponent must investigate and implement further reasonable and feasible mitigation measures in accordance with the NSW Government’s Environmental Criteria for Road Traffic Noise and RTA’s Environmental Noise Management Manual. The selection of these measures must be undertaken in consultation with affected landowners and/or occupiers and be consistent with the Operation Management Report.

17 In order to address conditions 56 and 60 an Operation Noise Management Report was prepared by Richard Heggie Associates dated 20 August 2004 (“the Heggie Report”). The Heggie Report adopts the external noise criteria of LAeq(15hr) 60dBA during the hours of 7.00am – 10.00pm (day time), and LAeq(9hr) 55dBA during the hours of 10.00pm – 7.00am (night time) (same as condition 56), and the passive recreation noise criteria of LAeq(1hr) 55dBA during the day time. The Heggie Report predicts that the noise criteria for the Applicants’ residence will not be met in 2006 and 2016. The Heggie Report was not available at the date of acquisition.

18 In the course of their evidence the acoustic experts referred to relevant noise measurement criteria for road traffic noise in the following:

· Environmental Criteria for Road Traffic Noise (“the ECRTN”), published by the Department of Environment and Conservation in May 1999.

· Environmental Noise Management Manual (“the ENMM”), published by the RTA in December 2001.

· Noise Guide for Local Government, published by the Department of Environment and Conservation in June 2004 (after date of acquisition).

19 The noise experts referred to four relevant noise goals as contained in the ECRTN, ENMM and Noise Guide for Local Government as follows:

(i) External noise criteria, as outlined in Table 1 of the ECRTN and adopted by the ENMM and in condition 56;

(ii) Passive recreation noise criteria for freeway/arterial roads, as outlined in Table 2 of the ECRTN;

(iii) Indoor noise criteria, as outlined in the ECRTN and adopted by the ENMM;

(iv) Sleep disturbance criteria, as outlined in the ECRTN and adopted in the Noise Guide for Local Government.

(i) External noise criteria

20 Table 1 of the ECRTN states that the noise criteria is an average level of LAeq(15hr) 60dBA during the hours of 7.00am – 10.00pm (day time), and LAeq(9hr) 55dBA during the hours of 10.00pm – 7.00am (night time) measured one metre from the façade that is most exposed to traffic noise and at a height of 1.5m from the floor level. This is the measure adopted by condition 56 in the development consent.

21 Mr Cooper and Mr Atkins agreed that these noise criteria were not currently being met and the noise level will only increase with the highway upgrade. Mr Cooper considered that the criteria could be met by the construction of a 700m long wall at least 3.5m high along the highway but did not consider this was reasonable. Mr Atkins considered that the noise criteria could not be addressed by reasonable ameliorative measures.

(ii) Passive recreation (i.e. outdoor) noise criteria

22 Table 2 of ECRTN states that the passive recreation criteria is an average level of LAeq(15hr) 55dBA. Mr Cooper and Mr Atkins agreed that the passive recreation noise criteria were not currently being met and would not be met in the future. They disagreed whether there were reasonable ameliorative measures available to achieve the criteria.

23 Mr Cooper gave evidence that the criteria could be met by the construction of 120m long walls plus returns that were 3m high built on the perimeter of the Applicants’ existing yard around the house. The Applicants did not consider such barriers reasonable in the rural environment as they would block the view from the house and substantially alter amenity around the house. Mr Atkins considered that the criteria could be met with the construction of two courtyard walls, one on the northern side and one on the eastern side, facing the highway. This would involve walls located 4.5m north of the dwelling approximately 20m in length and 2.5m in height. It was unnecessary to protect the recreation area from the south as the dwelling would provide sufficient attenuation.

(iii) Indoor noise criteria

24 The ECRTN (at p 14 – Internal noise levels) states that for living areas apart from bedrooms, internal noise levels 10dBA below external levels, being an average level of LAeq(15hr) 50dBA during the hours of 7.00am – 10.00pm, and LAeq(9hr) 45dBA during the hours of 10.00pm – 7.00am, are recommended on the basis of windows being opened sufficiently to provide adequate ventilation. For sleeping areas, the ECRTN recommends an internal level of 35 – 40dBA at night time. Internal noise is measured at the centre of the habitable room that is most exposed to the traffic noise.

25 Mr Cooper stated that the internal noise criteria were not currently being met. In his view, reasonable ameliorative measures involving building treatments such as glazing et cetera, could be used to meet the criteria during the day. However criteria for the bedrooms during the night could not be met even with these measures. Mr Atkins agreed that the internal noise criteria were not currently being met. In his view, sealing of openings around doors, double glazing of windows, closed windows and mechanical (not air conditioning) and borrowed ventilation could be implemented to achieve the indoor noise criteria.

(iv) Sleep disturbance criteria

26 The ECRTN states that maximum internal noise levels below 50 – 55dBA are unlikely to cause awakening reactions. In addition, one or two noise events per night with maximum internal noise levels of 65 – 70dBA are not likely to affect health and wellbeing significantly.

27 The Noise Guide for Local Government states that the appropriate noise level is background noise plus 15dBA, measured from outside the bedroom window.

28 Mr Cooper’s opinion was that the sleep disturbance criteria were not currently being met and that it could not be satisfied with reasonable ameliorative measures to the Applicants’ dwelling. Mr Atkins stated that the sleep disturbance was not relevant to this case and no fixed criteria is specified as mandatory in the ECRTN. In any event, it was not possible to determine if the sleep disturbance criteria was, or could be, met without an analysis of the layout of the Applicants’ dwelling, which he had not undertaken.

Noise in the “before and after” situation

29 The Wilkinson Murray Report contained within the environmental impact statement does not provide measured noise levels at the subject site. No measurements of the noise levels prior to the commencement of roadworks at the site exist. However, the Wilkinson Murray Report provides predicted levels for 2006 and 2016. The Wilkinson Murray Report predicted a daytime noise level of LAeq(15hr) 61dBA in 2006 for the subject land and a night time level of LAeq(9hr) 57dBA. In 2016, the report predicted a daytime noise level of LAeq(15hr) 64dBA and a night time level of LAeq(9hr) 61dBA. As a result of the new alignment, noise levels would increase by 2dBA.

30 The Heggie Report provides some analysis of noise levels measured in the vicinity of the site. It measured background levels in the area to be regularly below 30dBA and maximum levels of 80dBA. The noise experts agreed that this represented a significant breach of the sleep disturbance criteria of background plus 15dBA. The Heggie Report also predicted that in 2006 and 2016, the area surrounding the site would have day time noise levels of LAeq(15hr) 62dBA and LAeq(15hr) 67dBA respectively, and night time noise levels of LAeq(9hr) 60dBA and LAeq(9hr) 65dBA respectively and that accordingly, the noise levels exceeded the criteria stated in the ECRTN.

31 In April 2005, Mr Cooper undertook an acoustic assessment of the site. At the time that Mr Cooper undertook his assessment the RTA had commenced earthworks in preparation of the new road alignment. Mr Cooper’s results indicated that outdoor noise levels in November 2004 were LAeq(15hr) 61dBA in the day time and LAeq(9hr) 58dBA in the night time. The background level was in the range of 30 – 50dbA with maximum levels from 62 – 70dBA, indicating the potential for sleep arousal and disturbance. In oral evidence, Mr Cooper stated that the roadworks undertaken by the RTA would have increased noise levels for the Applicants which Mr Cooper estimated to be 6 – 9 dBA.

What would a hypothetical purchaser do in relation to noise at the house?

32 At the date of acquisition a hypothetical purchaser would have available to them the environmental impact statement, the conditions of development consent, the ECRTN and the ENMM. They would be likely to obtain the advice of an acoustic expert in my view, given the highly technical nature of this material. It is likely that expert would take noise measurements at the Applicants’ residence as Mr Cooper did.

33 In Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, Talbot J considered the role of the Court in reconciling conflicting expert evidence in valuation cases (overturned on appeal but not on this issue). His Honour stated at [119] that:

Having regard to the whole of the evidence, particularly the expert evidence of architects and town planners, it is highly probable that the hypothetical purchaser would have received conflicting advice about the potential yield, in terms of residential units, that could be achieved from the site. It is unlikely, however, that the same purchaser would have had the benefit of the far-ranging and wide scope of advice and competing argument of the type that has been made available to the Court through the presentation of evidence by a plethora of experts and voluminous submissions by counsel. Nevertheless, the purchaser would, in my view, have had the benefit of over-arching assessments of the potential for the site that would have identified the range of possibilities and the associated degree of risk. It is necessary, therefore, that the Court balance the evidence made available to it by having regard to the practical context of the willing but not anxious purchaser dealing with a vendor of the same mind.

34 In Stephen Anthony Horton and Kay Elizabeth Horton v Wyong Shire Council [2004] NSWLEC 571, Talbot J noted at [38] in reconciling conflicting expert evidence:

…that in the process of forging an agreement, the prudent purchaser would identify every defect or constraint that has an effect on price, whereas the prudent vendor would concentrate on the positive aspects.

35 The relevant test is not what the Applicants perceive in relation to noise, but rather what decisions a hypothetical purchaser would make based on this information. Given the agreement of the two noise experts that the criteria in Table 1 of the ECRTN (and therefore condition 56 of the conditions of consent) cannot be met even with ameliorative measures, and that there is real doubt given the experts’ conflicting opinions that the passive outdoor area criteria can be met with acceptable measures, this is likely to be an issue in relation to which a hypothetical purchaser would act very cautiously.

RTA measures to ameliorate noise

36 The ENMM states in Practice Note iv (b) that acoustic treatment of individual dwellings may be considered as a road traffic noise control option by the RTA. The acoustic treatments provided by the RTA are limited to fresh air ventilation systems (not air conditioning), upgraded windows and glazing, upgrading windows and door seals, the sealing of wall vents and the installation of external screen walls. Practice Note iv (b) also states that in most cases the limit per residence on the funding provided by the RTA for acoustic treatments is $20,000 where the external noise will exceed the target noise by more than 10dBA. Practice Note iv (b) states that additional funding may be provided, however, where site-specific circumstances prevail. It is clear that in this case the increase in noise level is likely to exceed 10dBA when the highway upgrade is completed.

37 The RTA argued that a hypothetical purchaser would be aware of Practice Note iv (b) in the ENMM and would expect to obtain $20,000 for acoustic treatment for the dwelling located on the site.

38 I consider that a hypothetical purchaser would factor in an element of risk as to whether the RTA would agree to pay the full amount of $20,000. I consider an amount of $10,000 is reasonable to assume as a sum a hypothetical purchaser may receive for noise control measures.

Market Value of improvements on the Applicants’ property

39 The Applicants relied on the expert valuation evidence of Mr Owen Allsop. The RTA relied on the expert valuation evidence of Mr Graham McDonald. The two valuation experts also provided the Court with a joint report. Mr Allsop provided two valuation methods in relation to the market value of improvements on the Applicants’ property and the calculation of disturbance. However, the second option was not pressed by the Applicants and I will not consider it.

(i) The Applicants’ dwelling

40 The Applicants’ dwelling is an aged building with a timber frame on brick piers and clad with weatherboards. The roof is corrugated steel and windows are timber and aluminium framed. Internal linings are fibro and timber strips and some treated pine linings as well. The house contained three bedrooms, a lounge room, dining room, a kitchen with adjacent pantry, a partially enclosed verandah, an open verandah, a bathroom and a laundry off the verandah. The house has an area of 162sq m comprising the dwelling and 45sq m of verandah. It is partly renovated.

41 In analysing the value of the improvements on the property, both valuers adopted the “before and after” method of valuation, ascribing a value to the various improvements on the land in the “before” and in the “after” situation. In determining the value of the Applicants’ dwelling, the expert valuers had regard to three comparable sales:

(i) “Mandaley”, 13200 Pacific Highway, Coolongolook;
(ii) 223 Failford Road, Failford; and
(iii) 23 Candoormakh Crescent, Nabiac.

Mr Allsop’s evidence

42 Mr Allsop described the dwelling as an attractive “yesteryear style home”. He acknowledged the existence of the older kitchen and regarded the house as well maintained.

43 Mr Allsop ascribed a value to Mandaley of $315,000 describing it as superior to the Applicants’ dwelling. Mr Allsop considered that the properties had ancillary improvements of similar value. Mandaley was superior because it was in a better location in relation to the highway, and was a larger residence with five bedrooms, two bathrooms, a granny flat and a garage. Both valuers agreed that the house at 223 Failford Road equated to a value of $100,000 including surrounding improvements. The Failford Road house was a three bedroom, timber frame, fibro clad farmhouse which had been renovated in 1990. In relation to the Candoormakh Crescent house, Mr Allsop ascribed a value of $25,000. The Candoormakh Crescent house consisted of a three bedroom weatherboard residence very close to the highway and subject to highway noise.

44 Having regard to the comparable sales, Mr Allsop ascribed a value to the Applicants’ property of $240,000 before the date of acquisition and nil after the date of acquisition because he accepted Mr Cooper’s evidence that the house would be uninhabitable and, therefore, there would be no purchaser available for it. I have already held that I consider a prudent hypothetical purchaser would be prepared to pay $10,000 in the “after” situation for the house.

Mr McDonald’s evidence

45 Mr McDonald ascribed a value to Mandaley of $300,000 describing it as a four bedroom cedar clad residence with surrounding verandahs and a modern home with additional improvements comprising a detached granny flat, laundry and adjacent carport. Mr McDonald agreed with the value ascribed to the 223 Failford Road property. Mr McDonald considered the value of the Candoormakh Crescent residence to be $50,000.

46 Mr McDonald described the Applicants’ dwelling as basic. Mr McDonald calculated the value of the Applicants’ dwelling on a summation basis by calculating the price of the dwelling per square metre minus depreciation. Taking into account the age of the residence and the renovation works completed, Mr McDonald depreciated the dwelling by 50 per cent. On a “before” basis, Mr McDonald ascribed a value of $130,000 and $50,000 on the “after” basis.

Finding on (i)

47 Having viewed the Applicants’ dwelling and comparable sales I accept Mr Allsop’s “before” value of $240,000 as accurate, given the appearance and presentation of the property. In relation to the “after” value, I do not consider the sale at Candoormakh Crescent relied on by Mr McDonald is indicative that a sale of this property, which is of a far superior character, is likely to fetch $50,000 in the market. Given the substantial noise impact of the highway upgrade on the Applicants’ residence, which will render the outdoor area around the house unusable without extremely intrusive walls and substantially impact on the day and night time amenity inside the house, I do not consider a prudent hypothetical purchaser would be prepared to pay more than $10,000. I consider the “after” value is $10,000.

(ii) The bails/dairy show complex

48 The bails/dairy show complex comprised an aged, weatherboard and steel roofed building with attached yards. The complex was utilised for the preparation of cattle to be shown to the Applicants’ clients. The complex has now been demolished, having been located on the land acquired. Both valuers agreed the “after” value was nil.

Mr Allsop’s evidence

49 Mr Allsop ascribed a value of $40,000 to the bails/dairy complex in the “before” situation which he inspected before demolition. Mr Allsop considered that the complex was a specialised asset which was part of the Applicants’ cattle operations. Mr Allsop also noted that the replacement costs of the complex would be approximately $64,000.

Mr McDonald’s evidence

50 Mr McDonald was unable to inspect the bails/dairy show complex as it had been demolished prior to his inspection. Mr McDonald’s evidence in relation to the bails/dairy show complex is based on information he was given and photographs. In the “before” situation, Mr McDonald ascribed a value of $15,000 and nil in the “after” situation.

Finding on (ii)

51 As Mr McDonald was unable to inspect the bails/dairy show complex before it was demolished but rather relied on photos and his instructions as to its condition, I consider that Mr Allsop’s estimate of the value of the bails/dairy show complex to be more reliable. I accept that the value of the bails dairy/show complex was $40,000 in the “before” situation. It is nil in the “after” situation because the complex was on the acquired land and has been demolished.

52 A remaining issue I will deal with later is whether I should allow $40,000 under s 55 or the replacement value of $64,000 under s 59(f).

(iii) The yards/AI and ET complex

53 The AI and ET complex includes a covered yard area enclosed by post and rail fencing, a cattle loading ramp, cattle crush and undercover handling area. It has a modest building used as an office and a metal covered enclosure. The complex has access to power and water and is in good condition.

Mr Allsop’s evidence

54 Mr Allsop ascribed a “before” value of $50,000 to the AI and ET complex and an “after” value of $42,500. Mr Allsop considered that the AI and ET complex was a specialised operational asset of the Applicants complete with an office building. Mr Allsop also took into consideration the fact that the Applicants were not using the complex optimally at the time of acquisition.

Mr McDonald’s evidence

55 Initially, Mr McDonald ascribed a “before” value of $25,000 to the AI and ET complex and an “after” value of $25,000. However, in oral evidence Mr McDonald was willing to allow for some factor of overcapitalisation in the “after” situation and reduced the value of the complex to $22,500. In ascribing a value to the AI and ET complex, Mr McDonald noted that the complex was of aged condition, was not in constant use by the Applicants, and of the market may be unwilling to pay for a facility of such a size on a parcel of land of the size owned by the Applicants.

56 I note that there is a relatively small difference between the “before and after” valuations of the valuers of $5,000. Mr Allsop’s ascribes an “after” value of $7,500 less than his “before” value, while Mr McDonald ascribes an “after” value of $2,500 less than his “before” value. Mr McDonald’s valuation appears conservative given the specialised nature of the yards built by the Applicants in terms of their AI and ET operations. I agree that loss in the productive capacity of the AI and ET complex results in a degree of overcapitalisation in the “after” situation. I accept Mr Allsop’s “before” and “after” valuations.

Amount of loss attributable to disturbance

57 The Applicants’ counsel argued that because the highway upgrade would result in the Applicants’ house being uninhabitable they were entitled to the costs, in part, of establishing a new house elsewhere on the property by virtue of s 59(f) of the Just Terms Act, or alternatively, s 59(c). The Applicants argued that the costs of relocating to a new house 300m from the highway, although not the costs of the new house, were compensable. They therefore claimed the costs of a new road to the new house site, a development application for the new house, disconnection of electricity and connection of electricity at the new site, a new septic tank and plumbing at the new site. In total, the Applicants claimed $114,004 for disturbance.

58 The RTA admitted loss attributable to disturbance in the order of $28,440. This sum related to the loss attributable to the resumption of the acquired land. The RTA, however, disputed the remaining items claimed by the Applicants on the basis that they did not relate to the acquisition of the acquired land, but rather, related to the residue land not acquired by the RTA. Accordingly, the remaining items were not compensable matters under either s 59(c) or s 59(f). Prior to further analysing the valuation evidence in relation to disturbance, it is necessary to determine what matters are compensable under s 59(c) and s 59(f) of the Just Terms Act.

Applicants’ submissions

(i) Section 59(f)

59 The Applicants submitted that the costs involved in relocating their existing dwelling or building a replacement dwelling and associated structures further from the highway upgrade was a financial cost reasonably incurred as a direct and natural consequence of the acquisition pursuant to s 59(f) of the Just Terms Act. As a result of the acquisition, the Applicants’ residence and curtilage would be rendered uninhabitable due to the noise, glare and lack of privacy due to the proximity of the residence to the proposed carriageway. The Applicants’ primary submissions did not address the specific wording in s 59(f) which refers to the “actual use of the land”. The RTA argued this meant the land acquired, not the Applicants’ residue land on which the dwelling was located.

60 In reply the Applicants argued that as the acquired land was part of the Applicants’ business and the use of the residue land and the house were so intimately connected that it was an “actual use” of land within the meaning of s 59(f).

(ii) Section 59(c)

61 The Applicants argued that, alternatively, these financial costs were reasonably incurred as relocation costs under s 59(c) of the Just Terms Act.

RTA’s submissions

(i) Section 59(f)

62 The RTA submitted that the Applicants have no claim under s 59(f) because the financial costs claimed were not reasonably incurred, and would not reasonably be incurred, in relation to the actual use of the land that was acquired by the RTA. Rather, the costs claimed by the Applicants related to the use of the residue land which was not acquired.

63 The RTA further submitted that, although not framed in these terms, the Applicants were claiming for loss resulting from a nuisance from the public purpose, namely the highway upgrade, and were unable to make a reinstatement claim for building a new dwelling on an area of the residue land due to adverse amenity impacts of the public purpose.

64 The loss in value of the Applicants’ dwelling as a result of the noise from the highway was taken into account in the “before and after” valuation approach. Further, the location of the Applicants’ dwelling had nothing to do with the actual use of the acquired land, namely as a cattle facility. Rather, the location of the dwelling related solely to the use of the residue land.

65 In addition, the RTA argued that the Applicants were not entitled to compensation for the improvements associated with the reconstruction of the new house being the new road to the house site, the connection of electricity at the new site, a new septic tank and plumbing at the new site. These constituted improvements to the residue land and were not compensable under s 59(f).

(ii) Section 59(c)

66 The RTA argued further that the Applicants could not establish a claim under s 59(c). That section was directed at circumstances where a residence or business has been acquired and the owners are required to relocate to another property. There was no relocation within the meaning of s 59(c) in the circumstances of this case where the Applicants are relocating to another part of the residue property.

Finding on disturbance
(i) Section 59(f)

67 The Applicants relied on the judgment of Gaudron J in Marshall v Director-General of the Department of Transport (2001) 205 CLR 603 at [38] in relation to a claim for injurious affection to argue that s 59(f) and (c) should be construed with “the generality that their words permit”. However, relying on that broad principle in Marshall cannot overcome the need for the Applicants to frame their claim for compensation in accordance with the terms of the Just Terms Act. While there are cases which state that the legislation should be construed to give expression to the intention of the Just Terms Act to ensure compensation on just terms, there are also several cases which emphasise that the basis on which compensation is payable is wholly defined by the terms of the Just Terms Act. It is necessary to come within the provisions of the Act before its provisions can be construed generally.

68 The Court was referred to a number of cases which have allowed claims for compensation pursuant to s 59(c) and s 59(f) of the Just Terms Act. None of the cases to which I was referred dealt with the argument before me where the claim is made in relation to land that has not been acquired.

69 In Fitzpatrick Investments Pty Limited v Blacktown City Council (No 2) [2000] NSWLEC 139, the respondent compulsorily acquired land from the applicant which operated a property development business and held the acquired land as an investment property. Justice Lloyd considered whether the respondent was required to compensate the applicant for stamp duty payable in obtaining an equivalent property. At [20] Lloyd J stated that:

Paragraph (f) of section 59 is wider than the preceding paragraphs. It is a “catch-all” provision: “ any other financial costs reasonably incurred (or that might reasonably be incurred) relating to the actual use of the land, as a direct and natural consequence of the acquisition ”. As a “catch-all” provision, the words “ any other financial costs ” should not, in my opinion, be read down. This does not mean, however, that this paragraph opens the flood-gates. The costs must be “ reasonably incurred ” and must relate to the actual use of the land, as a direct and natural consequence of the acquisition.

70 Consequently, Lloyd J considered at [22] – [25] that the respondent was required to compensate the applicant for stamp duty costs reasonably incurred in connection with the purchase of the replacement property pursuant to s 59(f) of the Just Terms Act. While the Applicants relied on the above passage it must be noted that the claim under s 59(f) in that case related to the use of the acquired land. On appeal, the Court of Appeal in Blacktown City Council v Fitzpatrick Investments Pty Limited [2001] NSWCA 259 agreed with the construction favoured by Lloyd J of the meaning of “actual use” in s 59(f) as I discuss shortly in par 77.

71 A number of other cases where compensation claims under s 59(f) of the Just Terms Act have been upheld for improvements located on the acquired land were referred to by the Applicants. In Peter Croke Holdings Pty Limited & Ors v Roads and Traffic Authority (1998) 101 LGERA 30, Bignold J considered at 63 that the cost to relocate display homes located on the acquired land was a cost recoverable by the applicant under either s 59(c) or s 59(f) of the Just Terms Act. In Besmaw Pty Limited v Sydney Water Corporation (2001) 113 LGERA 246, Sheahan J considered that the applicant was entitled to compensation for the limitations imposed on the applicant’s access to its land as a result of the acquisition by the respondent of an easement over the applicant’s land.

72 The only cases the Court has been referred to where the Court has awarded compensation under s 59(f) where the compensation related to the use of the residue land, are McBaron & Ors v Roads and Traffic Authority (1995) 87 LGERA 238 and Johnston v Roads and Traffic Authority [2000] NSWLEC 111. Neither judgment suggests the arguments raised by the RTA in this case were argued as they are not mentioned. The RTA argued both cases were wrongly decided.

73 In McBaron, the respondent compulsorily acquired farming land owned by the applicants. The applicants operated a dairy farm on their property, and as a result of the acquisition the dairy farm facilities were severed from a significant portion of the farming land. The dairy farm facilities were not located on the acquired land. The applicants gave evidence that as a consequence of the acquisition, they were unable to utilise the dairy farm facilities and that it would be necessary to relocate the facilities to the western portion of the property. The applicants argued that they should be entitled to the costs of relocating the dairy farm under either s 59(c) or (f). Justice Talbot stated at 245 that:

Where improvements, such as the dairy, are fixtures, they form part of the land and any increase or decrease in the value of those fixtures can be taken into account pursuant to s 55(f) or if they need to be replaced or modified, the costs might be recovered as a loss attributable to disturbance pursuant to s 59(c) or (f).

74 Having regard to the location of the dairy farm Talbot J accepted at 246 that it would not be practicable to maintain the dairy facilities in their current location and that the cost of replacing the dairy was claimable as disturbance. Accepting that the dairy farm would lose its present utility as a result of the acquisition, his Honour considered at 247 that it was appropriate in the circumstances for the applicant to be compensated for the costs of relocating the dairy as an item of disturbance under s 59(c) or s 59(f).

75 In Johnston, the respondent acquired land owned by the applicant for the purposes of re-aligning the Pacific Highway. Justice Cowdroy had to consider whether the respondent was required to compensate the applicant for the costs of relocating the applicant’s dwelling on the residue land pursuant to s 59(f) of the Just Terms Act. At [59], his Honour considered that as the re-alignment of the highway would cause the applicant’s dwelling to be exposed, its relocation was essential, and held that the respondent was required to compensate the applicant for the costs of doing so. That case appears to have similar facts to this matter but the issue as argued before me does not appear to have been raised before his Honour.

Meaning of “land” in s 59(f)

76 A key issue is whether “land” in s 59(f) refers to the acquired land or to the residue land. This issue was considered in Blacktown City Council v Fitzpatrick Investments Pty Limited [2001] NSWCA 259, on appeal from the decision of Lloyd J in Fitzpatrick Investments Pty Limited v Blacktown City Council (No 2) [2000] NSWLEC 139. Reliance by the Applicants on Blacktown City Council v Fitzpatrick Investments Pty Limited [2001] NSWCA 259 ignores the statement by Brownie AJA at [10] that it was common ground between the parties that the expression “the land” as it appears in s 59(f) of the Just Terms Act was a reference to the acquired land. While on one view that statement is obiter it would also appear to be self-evident. A reading of s 55 and the other parts of s 59 of the Just Terms Act suggests that this approach must be correct. The Just Terms Act distinguishes between “the land” meaning the acquired land and any other land wherever that distinction is to be drawn. It is therefore necessary for the Applicants to demonstrate that they come within the terms of s 59(f) given that the actual use of land refers to the acquired land.

“Actual use” of land in s 59(f)

77 It is also relevant to consider what the “actual use” of the land means. Is that use of the land before acquisition rather than after when the use of the land becomes part of the public purpose for which it was acquired? In Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, the Court of Appeal analysed the meaning of the term “actual use” of the land. In Fitzpatrick Brownie AJA (with whom Stein JA and Ipp AJA agreed) considered at [24] that the relevant use was the use prior to acquisition. Applying their reasoning to this case, the actual use of the land was the use of the acquired land prior to the date of acquisition, namely as part of a cattle grazing and stud farm.

78 Claims under s 59(f) of the Just Terms Act are potentially broad. As demonstrated in McBaron, where the use of the residue land is directly related to the use of the acquired land, I consider a claim under s 59(f) would be maintainable. While the RTA argued that I should not follow McBaron because Talbot J was incorrect in allowing the cost of replacing the dairy on the residue land, I do not agree. It is clear the use of the dairy was directly related to the use of the acquired land. However, I do not consider the facts in this case are the same as in McBaron so that it does not follow that the same approach ought be taken in relation to the partial costs of the new house.

79 The costs of relocating the dwelling are not able to be claimed under s 59(f) as the reason the Applicants’ wish to build a new house is due to the public purpose, namely the highway, not because of the disruption to the Applicants’ business as was the case in McBaron. In that case the use of the acquired land and the residue land was so intimately connected that a claim under s 59(f) was maintainable.

80 The logic of the case for compensation under s 59(f) argued by the Applicants’ counsel was not entirely clear to me, given the existence of s 55(f) of the Just Terms Act which is the means by which “injurious affection” claims are dealt with. There are many statements of this, most recently in the decision of the Court of Appeal in Roads and Traffic Authority v Muir Properties Pty Limited [2005] NSWCA 460. In considering the “before and after” valuation exercise called for by s 55(f), Tobias JA (with whom McColl JA and Hunt AJA agreed) stated at [103] that:

It is often the case that when only part of a dispossessed owner's land is compulsorily acquired, a " before " and " after " valuation exercise of the whole of that owner's land is conducted. In other words, the market value of the land before acquisition is determined (including the acquired land) as is its value after acquisition (excluding the acquired land). In this way the difference between the two values determines not only the market value of the acquired land but also captures any injurious affection to the retained land by reason of the acquisition for the public purpose.

81 Given that the “before and after” valuation approach adopted by both valuers incorporates an element of injurious affection because the loss due to excessive noise from the proposed highway upgrade is included in the loss of value of the Applicants’ land and improvements in the after situation, it is unclear to me that there can be a further, or alternative, claim under s 59(f) based on essentially the same issues.

82 The approach in McBaron, which appears to be correct, suggests that an applicant may choose between a claim for loss of value of improvements under s 55(f) or as disturbance under s 59(f) where the latter section is satisfied. The approach in McBaron was to allow a claim under s 59(f) or s 59(c). Given my finding that the partial cost of establishing a new dwelling is not compensable under s 59(f), are there any other matters which fall into this category as identified in McBaron?

83 The Applicants have claimed the value of the bails/dairy show complex which was on the acquired land under the “before and after” approach and as an item under s 55(f). However, the cost of replacing the bails/dairy show complex could be claimed under s 59(f) in my view given that it was located on the acquired land. The section refers to costs incurred or reasonably likely to be incurred. Mr Allsop assessed the costs of replacing the bails/dairy show complex at $64,000. I consider it is appropriate to award this amount as an item of disturbance under s 59(f), not as an item under s 55(f) of the claim. Accordingly, the Applicants are entitled to compensation for the replacement of the bails/dairy show complex in the amount of $64,000. It does not matter whether or not the Applicants are intending to replace the bails/dairy show complex in the future. This is supported by the decision of Sheahan J in Besmaw as to the meaning of what costs might be reasonably incurred under s 59(f). His Honour stated at 258 that “the Court cannot limit [an] applicant to what has so far been done…”, rather, it must have regard to what might reasonably be done by the applicant.

84 For similar reasons, the new entrance and access road to the existing dwelling and remaining improvements on the residue land from the highway necessitated by the highway upgrade is also compensable under s 59(f). The RTA built the new access point. The balance of the road built to the existing improvements is compensable. That part of the road going to the new house site is not. The Applicants sought to claim about $38,500 (exclusive of GST) for the whole of the new access road on the property including a bridge. The quotation in evidence (see Exhibit Q) suggests the new road alone costs $5,500. No separate costing of the new access road up to the existing house has been undertaken by the Applicants, but I consider that it is appropriate to allow the Applicants $2,000 towards the cost of part of the road.

(ii) Section 59(c)

85 The phrase “loss attributable to disturbance of land” in s 59 of the Just Terms Act suggests that the financial costs reasonably incurred in connection with relocation under s 59(c) of the Just Terms Act refers to relocation from the acquired land. Further, “the land” referring to the acquired land is specified in s 59(a) and (b), supporting this interpretation. In McBaron, Talbot J considered at 245 – 247 that the costs of relocating a dairy farm on the residue land that was essential for the carrying out of a dairy business could be claimed under either s 59(c) or s 59(f). He does not further analyse which section is applicable. In circumstances such as those in McBaron a claim under s 59(c) is possible, in other words, where the relocation under s 59(c) relates to the use of the acquired land before acquisition. That is not the circumstance here however.

86 In order to make a claim under s 59(c) of the Just Terms Act, the Applicants are required to show that they have incurred financial costs in connection with relocation from, or in a way closely related to, the use of the acquired land.

87 I consider that the Applicants’ case as claimed was misconceived in relation to s 59(c). The claim for relocation of the dwelling relates to the residue land and not to the use of the acquired land. Accordingly, part of the Applicants’ claim for disturbance under s 59(c) and (f) fails.

(iii) “Improvements” not compensable

88 The RTA also argued at par 65 above that the services for the new house were not compensable as these were improvements to the property and that to compensate would allow the Applicants to “double-dip”. I consider this argument is supported by Richardson v Roads and Traffic Authority (1996) 90 LGERA 294. In that case the respondent compulsorily acquired land used by the applicant as a nursery. The applicant sought compensation pursuant to s 59(c) of the Just Terms Act for the costs of relocation. In his judgment Talbot J at 302 required the respondent to compensate the applicant for the costs of relocation. At 303, Talbot J outlined the extent to which an applicant could be compensated for relocation costs:

The value of existing improvements on the acquired property have been allowed as part of the market value. The cost of re-establishment of a business on a property which proves to be unsuitable for that purpose is not a cost of relocation. If a dispossessed owner is fortunate enough to find a replacement property which suits his particular needs without requirement for further capital expenditure beyond the purchase price, that has no effect on the amount of compensation for which he would be entitled for disturbance. Equally, the dispossessed owner is not entitled to purchase a property which requires significant improvement and capital expenditure and then expect the resuming authority to always pay for the cost of the improvements as a cost of relocation. The scheme of the Just Terms Act is that the owner is to be compensated for the loss of property and the actual cost of relocating… They are costs associated with the bringing of another property into a condition which approximates the condition of the property resumed. It would be a classic case of "double dipping" to allow compensation for existing improvements on the acquired property and then to allow further compensation as the cost of reinstating the equivalent fixtures and improvements on another property…

89 I consider that the Applicants’ claim in relation to the improvements to the new house must also be refused on this basis. I agree with the RTA that it would be a case of “double dipping” to allow for the cost of improvements on the residue land as the loss of value has been incorporated into the assessment of the value of the improvements under s 55.

90 Following my reasons above, compensation is determined at $499,940 (subject to the final assessment of legal costs and valuation costs pursuant to s 59(a) and s 59(b) of the Just Terms Act) as follows:

Section 55(a) and 55(f) Before After
Land $750,000 $590,000
Improvements:
(i) House $240,000 $ 10,000
(ii) Yards/AI and ET $ 50,000 $ 42,500
(iii) Calf Shelters $ 6,000 $ 4,000
(iv) Other Improvements $ 26,000 $ 20,000
Total $1,072,000 $666,500
Market Value $405,500

Section 55(d)
(i) Legal costs TBA
(ii) Valuation costs TBA
(iii) Reinstate Mortgage (agreed) $ 1,100
(iv) Financial costs due to severing (agreed) $ 2,200
(v) Rework underground water lines (agreed) $ 15,440
(vi) New internal fencing (agreed) $ 9,700
(vii) Replacement bails/dairy show complex $ 64,000
(viii) Access road costs $ 2,000
Total $ 94,440

Total compensation $499,940

91 The parties have 28 days in which to advise the Court of the amount agreed for legal costs and valuation costs and to file short minutes of order in accordance with this judgment.