Perry v Roads and Traffic Authority
[2000] NSWLEC 179
•08/08/2000
Land and Environment Court
of New South Wales
CITATION: Perry v Roads and Traffic Authority [2000] NSWLEC 179 PARTIES: APPLICANT:
RESPONDENT:
Perry
Roads and Traffic AuthorityFILE NUMBER(S): 30009 of 1996 CORAM: Bignold J KEY ISSUES: Compensation :- Order for payment of compensation moneys - Costs of proceedings. Abandoned claim to compensation for a liability to capital gains tax. LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991 CASES CITED: DATES OF HEARING: 8 August 2000 DATE OF JUDGMENT:
08/08/2000LEGAL REPRESENTATIVES:
APPLICANT:
Mr J J Webster, Barrister
SOLICITORS
Levy PeatmanRESPONDENT:
Mr J Ayling, Barrister
SOLICITORS
Crown Solicitors
JUDGMENT:
IN THE LAND AND Matter No . 30009 of 1996
ENVIRONMENT COURT OF Coram : Bignold J.
NEW SOUTH WALES 8 August 2000
Applicant
v
THE ROADS AND TRAFFIC AUTHORITY
Respondent
JUDGMENT
Bignold J:
1. By Notice of Motion filed in Court today, the Applicant seeks final orders in the proceedings which involve a claim to compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) in respect of the compulsory acquisition by the Respondent of part of a rural property owned by him at Repton. The Notice of Motion is made pursuant to the liberty to apply granted in respect of a number of matters that were reserved in my judgment delivered on 7 May 1999.
2. The orders made in that judgment were as follows:
1. Subject to Order 2, compensation is determined in the sum of $1,130,430.
2. The questions of whether any further compensation is payable to the Applicant in respect of (i) valuation fees and legal costs (as referred to in s 59(a) and (b) of the Just Terms Act and (iii) any capital gains tax liability incurred by the Applicant in consequence of his receiving the payment of compensation awarded in these proceedings are reserved.
3. Exhibits may be returned.
4. Question of costs is reserved.
5. Liberty to apply on 3 days notice.
3. The Applicant had earlier sought final orders as set out in his Notice of Motion filed on 9 May 2000. The relief then claimed, sought a determination of further compensation in respect of (i) valuation fees and legal costs (as referred to in s 59(a) and (b) of the Just Terms Act and (ii) an amount in respect of any capital gains tax liability incurred by the Applicant in consequence of his receiving the payment of compensation awarded in the proceedings.
4. Additionally, the Notice of Motion also claimed amounts pursuant to par (c) and par (d) of the Just Terms Act s 59.
5. The total amount claimed pursuant to s 59(a), (b), (c) and (d) was $83,714.
6. The Notice of Motion also sought the payment by the Respondent of the Applicant’s capital gains tax liability, calculated in accordance with a private ruling of the Australian Taxation Office dated 2 May 2000 and the calculations of the amount of that liability by Mr Bentley (the Applicant’s Accountant), in the sum of $600,000.
7. Additionally, the Notice of Motion sought an order that the Respondent pay compensation money determined by the Court within 28 days and that the Respondent pay the Applicant’s costs of the proceedings.
8. At the commencement of the hearing of the Notice of Motion on 17 May 2000, the Applicant sought and obtained leave (without objection from the Respondent) to file an amended Notice of Motion and to proceed on that Motion in lieu of the original Notice of Motion.
9. The amended Notice Motion abandoned the claims made under s 59(c) and (d). Significantly, it also abandoned the specific claim made in respect of capital gains liability and instead sought alternative relief in the form of orders or declarations as follows:
2.1 That the Applicant is entitled to be paid such amount of capital gains tax as is found to be payable by the Commissioner of Taxation upon the compensation for the acquisition of the land as assessed for market value.
2.2 That the Applicant have liberty to apply to this Court for further determination of the compensation upon any liability for capital gains tax being assessed on the compensation as paid for market value.
10. The amended Notice of motion maintained the claims for (i) further compensation pursuant to s 59(a) and (b) of the Just Terms Act; (ii) an order for payment of compensation as determined by the Court, together with statutory interest; and (iii) an order that the Respondent pay the Applicant’s costs in the proceedings.
11. In explaining why the specific claim contained the original Notice of Motion to compensation in respect of the Applicant’s capital gains tax liability had been abandoned, Mr Webster Counsel for the Applicant stated that the case that had been presented to the Australian Taxation Office for a private ruling was flawed inasmuch as it relied upon a valuation of the compulsorily acquired land as at 24 January 1995 (when the whole of the property was transferred to the Applicant by his mother) in the sum of $66,000. Mr Webster stated that it was intended that a further application be made to the Australian Taxation Office on the basis that there was no material difference in the value of the compulsorily acquired land as at that date and its value as at the later date of 3 November 1995 (being the date of compulsory acquisition) when this Court determined its value in the sum of $1 million.
12. It was accepted by Mr Webster that if the Australian Taxation Office accepted the fact that there was no difference in the value of the compulsorily acquired land as at the two material dates, then prima facie, there would be no capital gains tax liability flowing from the compulsory acquisition, the subject of the present proceedings.
13. However, it was to guard against the future contingency of the Applicant incurring any capital gains tax liability that the Applicant sought the alternative relief set forth in par 2.1 and par 2.2 of his amended Notice of Motion.
14. Because the question of any capital gains tax liability was at this stage hypothetical (or at least contingent upon the decision of the Australian Taxation Office), the Applicant’s preferred position was that he have liberty to apply in the future event of any capital gains tax liability being incurred.
15. Mr Downes, Senior Counsel for the Respondent, opposed the question of any compensation in respect of capital gains tax liability being reserved for possible future determination.
16. His opposition was founded on both legal and factual consideration.
17. The legal objection was founded upon the requirement that compensation for compulsory acquisition be determined once and for all.
18. His factual opposition was that more than one year had elapsed since my judgment which had reserved the question at the invitation of the Applicant and in the face of the Respondent’s submission that no compensation was recoverable under the Just Terms Act in respect of any capital gains tax liability of the Applicant.
19. After some argument, the Applicant, in support of his case that he be given liberty to apply for additional compensation in respect of capital gains tax liability offered to pay the Respondent’s costs, should any such costs be incurred. Additionally, he agreed to pay the Respondent’s costs of Notice of Motion in the agreed amount of $7,000.
20. Agreement having been reached between the parties as to the amount of additional compensation payable under the Just Terms Act s 59(a) and (b), and as to the payment by the Respondent of the Applicant’s costs in the proceedings (save for the costs of the present Motion), I was then invited to make orders finally determining compensation payable in terms of the Just Terms Act but subject only to the future possibility of additional compensation in respect of any capital gains tax liability that might be incurred by the Applicant in consequence of the compulsory acquisition.
21. I was also invited to order payment by the Respondent to the Applicant of the amount of compensation as determined by the Court.
22. As I have earlier noted, Senior Counsel for the Respondent submitted that the Court did not have the power to reserve the question of any further compensation that might be recoverable in these proceedings in respect of any capital gains tax liability that might be incurred by the Applicant. This submission was founded upon the principle that in assessing compensation, the Court must make one assessment once and for all. Reference was made to the decision of the Compensation Court of the Federal Court of Australia in Joondalup Gate Pty Ltd v Minister for Lands (1996) 33ATR 327.
23. In the course of hearing, the parties agreed that the additional compensation payable pursuant to the Just Terms Act, s 59(a) and s 59(b), be determined in the sum of $34,364.31.
24. In response to the Applicant’s request that the Court now order the Respondent to pay to the Applicant the full amount of compensation that had been determined, the Respondent sought a stay of the order for payment in view of its pending appeal to the Court of Appeal against my judgment of 7 May 1999. This application for a stay was made without notice and was not supported by any evidence. Nonetheless, it prompted the Applicant to amend its request for an order for full payment by seeking instead the following orders:
(i) Pursuant to s68 of the Land Acquisition (Just Terms Compensation) Act 1991 the Respondent pay to the Applicant the sum of $1,130,340 plus $34,364.31 (equal to $1,164,704.30) together with statutory interest in 28 days less any sums that may have already been paid.
(ii) Of the amount paid by the Respondent the sum of $538,704.30 (being $1,164704.30 less $626,000) shall be maintained by the solicitor for the Applicant in a controlled monies account until further order of the Court.
25. The Applicant explained the rationale for granting the Applicant immediate access to the amount of $626,000 by reference to an analysis of the reasons for judgment of 7 May 1999, by isolating an amount that would be legitimately insulated or immunised from the ambit of any appeal which is limited to error of law: vide the Land and Environment Court Act 1979 s 57(1). The amount of $626,000 is comprised of three distinct components:
(i) agreed land value $158,000 (ii) added value of potentiality of a commercial quarry use $100,000 (iii) disturbance allowance if the Court had not adopted a value based upon the “Raja” decision $368,000
26. Of these three components, the only possible doubt as to whether the payment would be immunised or insulated from the appeal process concerns the amount of $368,000 attributable to “disturbance”. The doubt arises because that precise amount was not actually determined in my judgment. The reason why this was so was explained in par 285 of my judgment as follows:
- In view of the results of my determinations of the value of the compulsorily acquired land reflecting its special potentiality ( $1 million for the Raja valuation and $258,000 for the land reflecting its commercial quarry potential in addition to its existing use value), I propose to confine my consideration of the Applicant’s disturbance claims to the limited disputed claims set forth in Exhibit 90 flowing from my adoption of the Raja valuation, because it is obvious that the wider disturbance claims even if wholly successful, when combined with the market value of $258,000 , would produce a figure that falls very far short of the $1 million Raja value determination. (For completeness I would add that I would be disposed to the view that the Applicant has generally established all the other disputed disturbance claims.)
27. My determination of the Applicant’s “ limited ” disturbance claims that were disputed by the Respondent resulted in an award of $101,400 (out of a total claim of $113,145): vide par 286 to par 307 of the judgment.
28. Additionally, the judgment in par 311 records acceptance of the parties’ agreement (Exhibit 91) that certain other disturbance claims be allowed in the sum of $29,030.
29. Accordingly, of the Applicant’s suggested “insulated” or “immunised” amount of $626,000, some $238,000 for disturbance allowance, stands upon the basis not of an actual determination by the Court (because the case did not call for such a determination: vide par 285) but upon the following foundation expressed parenthetically in par 285 of the judgment:
- For completeness I would add that I would be disposed to the view that the Applicant has generally established all of the other disputed disturbance claims.
30. Concerning the aforesaid amount of $238,000, it may be noted that one of the principal items of disturbance claimed by the Applicant was the amount of $187,498, being the cost of installing a DAF system to treat wastewater from the abattoir, which amount I was disposed to allow as an item of disturbance had I not ultimately adopted a higher valuation reflecting the “ Raja ” principle, and thereby rendered that disturbance claim irrelevant.
31. In my judgment, the Applicant’s suggested orders concerning payment of the compensation moneys are an appropriate response by the Applicant to the Respondent’s application without notice (and unsupported by any case) that payment to the Applicant of the full amount of compensation would expose the Respondent to a risk of non-recovery in the event of a successful appeal against my judgment of 7 May 1999.
32. Whilst judgment on the Applicant’s Amended Notice of Motion was reserved, the Applicant’s Solicitor, by letter dated 27 July 2000 to the Registrar requested that by consent, the proceedings be re-listed before me for the purpose of allowing the Applicant to formally withdraw his claim for compensation in respect of any liability to capital gains tax arising from the compulsory acquisition by the Respondent of the Applicant’s land and this Court’s determination of the compensation payable in respect of that acquisition.
33. When the matter came before the Court today, the Applicant, without objection from the Respondent, obtained leave to file its Amended Notice of Motion dated 8 August 2000 in substitution for the Amended Notice of Motion filed on 17 May 2000. The Applicant also sought and obtained leave to withdraw that earlier Amended Notice of Motion but both parties relied upon the submissions that they had made at the hearing on 17 May 2000 in respect of those matters that were still relevant to the current Amended Notice of Motion.
34. I have already dealt with the apportionment of an order for immediate payment to the Applicant of the compensation that has been determined upon the terms I have discussed because of the pending appeal to the Court of Appeal.
35. The only other matter debated concerned the costs order.
36. The Respondent submitted that in view of the Applicant’s belated abandonment of his claim to compensation in respect of any capital gains tax liability, not only should the Applicant not receive his costs on that issue, but the Respondent should receive its costs on that issue.
37. In this respect, it is to be noted that when the Applicant’s now withdrawn amended Notice of Motion was before the Court on 17 May 2000, the Applicant agreed to pay the Respondent’s costs of that Motion in the sum agreed of $7,000.
38. However, it is possible that the Respondent incurred additional costs at the trial which would not be adequately compensated for by an order that the Applicant pay the Respondent’s costs of that earlier Motion. In this respect, I should note that at the trial, the Respondent did not adduce any evidence on the Applicant’s claim for compensation in respect of any capital gains tax liability. Rather, it contented itself with making submissions that no compensation in this respect was recoverable as a matter of legal principle. The matter is briefly discussed at par 308 to par 312 of my judgment of 7 May 1999.
39. Accordingly, I am of the opinion that although the Applicant is entitled to his costs of the proceedings by virtue of his being entirely successful in the litigation, the Respondent should, in the special circumstances of the case, be entitled to its costs on the issue of the Applicant’s claim to compensation in respect of capital gains tax liability, now entirely abandoned by the Applicant.
40. The costs order I propose gives effect to this determination.
41. Rather than make supplemental orders to those contained in my judgment of 7 May 1999, it is appropriate that I now pronounce final orders in the proceedings as follows, such orders being in substitution for orders 1, 2 and 4 made on 7 May 1999—
1. Compensation is determined in the sum of $1,164,794.
2. The Respondents shall pay to the Applicant the compensation and statutory interest thereon less any amount already paid and the Applicant shall maintain that part of the compensation monies in excess of $626,000.00 in a controlled money account with the Applicant’s solicitors, until further order.
3. The Respondent pay the Applicant’s costs in the proceedings except for costs incurred in respect of the Applicant’s claim to compensation in respect of any capital gains tax liability in respect of which the Applicant shall pay the Respondent’s costs. Such costs (in each case) are to be in the sum agreed or failing agreement, as assessed.
4. The Court notes the agreement between the parties set out in Exhibits 54, 55 and 86 which shall form part of the Orders of the Court.
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