Roads Corporation v McGuinness

[2018] VSC 802

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

VALUATION, COMPENSATION & PLANNING LIST

S CI 2018 02485

ROADS CORPORATION	Plaintiff
v
JOHN LEONARD MCGUINNESS	Defendant

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JUDGE:	Garde J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 December 2018
DATE OF JUDGMENT:	14 December 2018
CASE MAY BE CITED AS:	Roads Corporation v McGuinness
MEDIUM NEUTRAL CITATION:	[2018] VSC 802

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LAND VALUATION AND COMPENSATION – Land compulsorily acquired for public purposes – Partial acquisition – Preliminary question – Pointe Gourde principle – Whether Public Acquisition Overlay should be disregarded –  Land Acquisition and Compensation Act 1986 (Vic) ss 41(3), 43(1)(a) and (d)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Goubran	Russell Kennedy
For the Defendant	Mr P Chiappi	Waters Lawyers

HIS HONOUR:[1]

Introduction

[1]The judgment which follows is a written version of an oral judgment given on 14 December 2018.

1. The claim for compensation arises from the acquisition on 27 June 2013 and 4 October 2013 of a total of 1.56 ha of the defendant’s land at 3775 South Gippsland Highway, Koo Wee Rup, for the South Gippsland Highway - Koo Wee Rup Bypass.  The  subject land had a total area of 37.4 ha prior to the acquisition, and 35.8 ha after.  It is used for the agistment and training of horses and for grazing. It contains two dwellings and other improvements including a trotting track.

1. At the acquisition dates, the subject land was in a ‘Green Wedge Zone’, and was subject to a Land Subject to Inundation Overlay.  It was also affected by a Public Acquisition Overlay, extending over 87 per cent of the ‘after’ land area.

1. The claim for compensation was referred to the Victorian Civil and Administrative Tribunal, and transferred to the Court by consent of the parties on 25 July 2018.

1. By a summons dated 18 July 2018, the defendant seeks to have the Court hear and determine a preliminary question:

When assessing the ‘after’ value of the claimant's land at 3775 South Gippsland Highway, Koo Wee Rup, on a ‘before’ and ‘after’ basis as required by s.41(3) of the Land Acquisition and Compensation Act 1986, is the Public Acquisition Overlay to be taken into account?

Preliminary question

1. The determination of a preliminary question may provide benefits to the parties and the Court in particular circumstances.  The defendant referred to McCann v Roads Corporation,[2] Streetworks Pty Ltd v Linking Melbourne Authority,[3] and Rigby v Secretary to the Department of Sustainability and Environment[4] as examples of the determination of separate question in the Valuation, Compensation and Planning List. In these cases, the Court had to determine what the hypothetical zoning of the subject property would have been in the ‘before’ situation, had the acquisition not taken place. This permitted the valuers to assess compensation on a ‘before’ and ‘after’ basis.

   [2][2011] VSC 96.

   [3][2011] VSC 264.

   [4][2012] VSC 427.

Present case

1. In the present case, if the Public Acquisition Overlay applies to the subject land in the ‘after’ situation, the defendant will receive greater compensation. It is common ground that the value of the subject land in the ‘after’ situation would be decreased by the overlay if it were permissible to take it into account.

Statutory position

1. The Land Acquisition and Compensation Act1986 (‘LACA’) provides express direction as to how compensation is to be assessed. Under s 41(3), if less than the whole of a parcel of land is acquired, the market value of the acquired interest is the difference between the market value of the interest before the acquisition and the market value of the interest after the acquisition.

1. Under s 43(1), certain matters must be disregarded in assessing compensation.  They include:

(a)any increase or decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired;

…

(d)In a case where the land in which the acquired interest subsists is reserved for a public purpose in a planning instrument, any restrictions upon the use or development of that land which are imposed by, or are a consequence of, the reservation;

1. Section 43(1) does not state that the matters described in (a) and (d) are to be disregarded in the ‘before’ but not in the ‘after’ situation.  It directs that they be disregarded ‘in assessing compensation’. 

1. The language of the statute is clear.  In the present case, the land ‘in which the acquired interest subsists’ is the whole of the subject land. Section 43(1)(d) requires the valuer to disregard restrictions on the use and development of the subject land caused by the reservation for public purposes.  They must be disregarded in the valuation of both the ‘before’ and ‘after’ situations.

An illustration

1. The position could not be otherwise, as can readily be seen from an example.  If an authority by stages acquires parts of a parcel of land affected by a reservation for a public purpose, compensation for the first acquisition would be determined on a ‘before’ and ‘after’ basis with due allowance for the value of the land acquired and any resulting severance.

1. Clearly, the value of the land in the ‘after’ situation for the first acquisition must be the same as the value of the land in the ‘before’ situation for the second acquisition.  The position cannot be that the value of the land in the ‘after’ situation for the first acquisition, affected by the public purpose reservation, differs from the value of the land in the ‘before’ situation for the second acquisition because in the ‘before’ situation, the land is free from the reservation, but in the ‘after’ situation it is not. Unless the reservation is disregarded in both the ‘before’ and ‘after’ assessments, anomalous, if not absurd, results might follow.

Authority

1. Although there are many decided cases dealing with the relevant provisions and principle,[5] the defendant did not cite any authority where a court or tribunal has held or suggested that a public purpose overlay can be disregarded in the ‘before’ situation but not in the ‘after’ situation. 

   [5]Below n 12.

1. Coastal Estates Pty Ltd v Bass Shire Council[6] was cited by the defendant but it is plainly not such a case.  Gobbo J accepted ‘the principle that increases and decreases in land value which arise from the scheme of acquisition must be disregarded’ and that ‘planning restrictions that are merely a step in the process of resumption must be disregarded’ for the purpose of assessing compensation.[7]  His Honour also noted that it was common ground that the reservation of the acquired land under the Shire of Bass Planning Scheme had to be disregarded.[8]

   [6][1993] 2 VR 566.

   [7]Ibid 573.

   [8]Ibid 574.

1. I am of the view that there is insufficient substance for the proposed question to be decided as a preliminary question in this proceeding. The suggested issue is resolved by the application of ss 41(3), 43(1)(a) and (d) of the LACA. These provisions to a large degree (although not entirely) reflect the principle known as the Pointe Gourde principle.[9] 

   [9]Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565.

1. This principle and the statutory successors of this principle have been discussed and applied by the High Court in Housing Commission v San Sebastian Pty Ltd[10] and the Privy Council in Melwood Units Pty Ltd v The Commissioner of Main Roads,[11] and in many other decisions.[12]  There is no doubt as to the effect of this principle in the present case.

   [10](1978) 140 CLR 426, 205.

   [11][1979] AC 426.

   [12]See for example in the High Court Springfield Land Corporation (No 2) Pty Ltd v Queensland [2011] HCA 15; Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; Boland & Webster v Yates Property Corporation Pty Limited [1999] HCA 64; Emerald Quarry Industries Pty Ltd v Commissioner Of Highways (S.A.) (1979) 142 CLR 351; Collins v Livingstone Shire Council (1972) 127 CLR 477; in the Court of Appeal Love v Roads Corporation [2014] VSCA 129 (Nettle and Whelan JJA and Almond AJA); Love v Roads Corporation [2014] VSCA 30 (Maxwell P, Whelan and Santamaria JJA); in this Court Wilson v Melbourne Water [2018] VSC 555 (Ginnane J); Secretary to the Department of Business and Innovation v Murdesk Investments Pty Ltd [2012] VSC 319 (Emerton J); Streetworks Pty Ltd v Linking Melbourne Authority [2011] VSC 264 (Osborn J); Roads Corporation v Love [2010] VSC 537 (Vickery J); Halwood Corporation (in liquid) v Roads Corporation [2008] VSC 28 (Osborn J); Roads Corporation v Love [2006] VSC 389 (Osborn J); Murdesk Investments Pty Ltd v Roads Corporation Pty Ltd [2006] VSC 363 (Osborn J); King & Ors v Minister for Planning and Housing [1993] 1 VR 159 (Gobbo J).

Discretion

1. Quite apart from a lack of substance in the proposed preliminary question, I also accept the Corporation’s submissions as to the exercise of the Court's discretion.

1. In my view, the determination of the proposed preliminary question at a separate trial is not justified as:

(a)        the proceeding will be ready for hearing and determination on all issues by April 2019; and

(b)        the ultimate assessment of land value in the ‘before’ and ‘after’ situations is a mixture of factual enquiry, expert evidence and legal principle.

1. I am informed that there are only two issues left in dispute in this proceeding; namely, market value and solatium.  There is no practical benefit, cost or time saving, resulting from the determination of a preliminary question followed by a final hearing as opposed to a final hearing on all issues.  The final hearing will largely be confined to valuation issues and involve only the calling of valuers and evidence as to solatium.

1. I find that the resolution of this proceeding will be delayed, not expedited, if the trial of the proceeding is bifurcated in the manner requested by the defendant. 

Conclusion

1. I reject the defendant's application for the determination of a preliminary question.  I am not satisfied that the proposed preliminary question raises any real controversy.  The issue posed is resolved by statutory interpretation and decided authority. 

1. If on reflection the defendant still wishes to contest the issue, he will have the opportunity of doing so at trial and obtaining a final, as distinct from an interlocutory, decision on the question. 

1. The defendant’s summons dated 18 July 2018 is dismissed.